Today's Market Is Different From Any One Before It
Summary
Market Outlook: The guest views this as a regular bull market with pockets of speculation, not comparable to 1999, supported by sustained earnings growth and falling interest rates.
Earnings and Rates: He emphasizes that earnings and interest rates are the primary drivers of stock prices, and currently both are favorable for equities.
AI: The AI trend is a major force in the bull market, but he expects it to eventually evolve into a bubble that ends badly, as most manias do.
US Equities: He highlights the enduring earnings power of American companies over decades and favors equity-heavy portfolios to meet long-term goals given longer lifespans.
Economic Regime Shift: Traditional recession playbooks (e.g., yield curve inversion, rate hikes halting growth) have failed recently due to a service/knowledge economy less sensitive to lending rates; future recessions likely come from exogenous shocks.
Risks and Behavior: He flags excessive speculation among younger investors and stresses the need to endure drawdowns, learn from failures, and avoid overemphasizing short-term market timing.
No Specific Stocks: No individual companies or tickers were pitched; the focus was on broad themes like AI and US equities within a constructive market framework.
Transcript
Welcome to the Stansbury Investor Hour. I'm Corey McLaclin, editor of the Stanberry Daily Digest. Uh Dan is actually on stage. We're at our Las Vegas conference. Um so I'm riding solo here, but uh lucky me, we have a fantastic guest, Josh Brown. uh just got done doing a presentation on stage and signing copies of his book. Uh you weren't supposed to see that. Um >> the mood is electric in this place. I don't know if you could feel from the moment I walked off stage. >> Yeah. >> Yeah. Yeah. It was a great presentation. >> I feel like I really brought it and uh feeling good. >> Yeah. Cool. >> So, we're happy for you to be here. You're of course CEO of Rit Holtz Wealth Wealth Management. >> Yes. >> Which now has almost 7 billion of assets under management, you said. And uh you likely seen him on CNBC and the great Compounded Friends podcast and YouTube channel. And perhaps most importantly, you're a Long Islander like myself. >> I am. >> And uh >> we're very proud of it, >> but I never left unlike you. >> Well, >> I'm sticking it out. >> It was a little too expensive for me at the time it that's how I ended up here, learning about money and whatnot and listening to cool people like you. So, >> um we could go a lot of directions here. Um, but maybe and we'll get into what you talked about in your presentation a little bit, but I just want to start by reading something back to you that you wrote in a blog post uh last year. So, that I think will kind of set the stage for our listeners and viewers pretty well. >> I will not confirm or deny that I actually said this >> if that's okay. >> Okay. Until I hear it. >> June 2024 on your website. >> Okay. I'm a former stock broker with no formal education in economics or econometrics, which the la the latter word I couldn't tell you what it means with a dictionary in my hand, which that's true. >> Which incidentally is very funny because our director of research, Matt Wine Shank, great guy, >> has a master's degree in econometrics. >> Well, holy that's the man I need to talk to. >> He's he's he's around. You can talk to him next. Um, you went on, I don't know anything. I started in this business cold calling Dun and Bradstreet index cards with the names and phone numbers of business owners. I'm an alumni of the speculative fever swamps of stockbroker land in Scios at Long Island. No pedigree, classically trained with a plastic black telephone, a headset, and an Acer monitor running Quotron. >> Yeah, but like most of you, I have my own two eyes and two ears and try to understand what's going on. These have been valuable if we've learned how to use them. I think that that says a lot about what what you do, I think. >> Yeah. I look, I I um I get to meet a lot of really brilliant people and a lot of people that do have a substantial impressive pedigree, where they went to school, what degrees they have, PhDs, um where they worked, what their first job was, who their mentors were. I get to meet like very impressive people. I think um what I bring to the table as not being one of those people, I think I am both the the um the go-between between those people and the audience and I'm also like in the audience too. >> So um I that's the way I see myself and my place in the financial media. Um and I'm very comfortable with that. I I uh I think I'm smart. It's not that I think I'm like an idiot. Um, but I don't put on errors and uh I don't come from a place of I know everything, therefore listen to me. I have opinions, I fight for them, you know, change them. I I I think that comes through. I think that's what my audience appreciates about what I do. And uh it's still sort of unique. I think most people in the financial media, >> they they only want you to know how smart they are and how great they are. And um I I guess I've never really come from that place and hopefully people appreciate that. >> That's kind of what I was going to ask you was like why do you think it's so hard for so many pe other people to learn to like trust their their eyes and ears? >> Oh, that's easy. >> Oh, wait. I thought you were going to ask me a different question. I jumped the gun. >> Why is it so hard for people to not act that way? >> No. Why is it so hard for people to trust their own eyes and ears um in investing in general? Oh, well, a lot of people shouldn't because if you don't have a lot of experience, >> right? >> And you haven't been around that long, you should be in search of other people's opinions. >> Okay. >> And you know, I don't trust my own eyes and ears when something's wrong and I go to a doctor. I kind of want to defer to the doctor. So, I I do think that there is a place for putting trust in professionals and listening to people who know what they're talking about. But I also think people um should have some confidence once they've been in the investing business or the investing game um for long enough. They should sort of be able to rely a little bit on their own instincts and uh it's you know it's a process like everything else. >> What question did you think I was going to ask you? And what >> I have no idea. [laughter] >> No, but you know what I so not to brag I interviewed the greatest investor of all time uh 10 days ago. >> Peter Lynch. >> Peter Lynch. >> I I watched it. >> Okay. So >> I asked him, >> I said, um, so he wrote the definitive book for individual investors, one of maybe the the bestselling investment book of all time, >> uh, One Up on Wall Street, still still a classic. Um, and I asked him after all these years later, he wrote it, I don't know, 30 uh 40 years agoish, late 80s. What is that? 36 years ago. [snorts] >> Yeah. say um I asked him like do you still think after all these years now we have institutional investors who are armed to the teeth with data and Bloombergs and charts and statistics and high frequency trading tools like do you still think that the regular investor can do it themselves and can um be one up on Wall Street and he said yes >> and he you know the names change the stocks change the markets sped up. There's a lot of things that are different, but like if you have common sense and you're willing to do research, you can still do this. So, I think that's a good message and uh I appreciated hearing Peter say that after all these years. >> Yeah. What was that like sitting there interviewing him? >> I was I mean >> nuts. Had he was like one of your >> So, you have to understand like um when I started in the business, I was 19 years old. It was in between my freshman and sophomore year of college. I was a cold caller one summer and um >> the first book they gave me. >> Yeah. >> This is 19 96. They I was I was 19. They say they say read this. >> Yeah. Wow. >> I had no idea what I read it. >> Yeah. >> I had no idea what any of the words in the book meant. I just I I just I listened to that. >> It's very familiar to me by the way. Yeah. >> But I read it and I revisited it, you know, since once I knew what the hell I was doing. Um but like that's that's like foundational for me. So to get to sit next to him and interview him >> for a live audience, it's like the most insane thing. It's probably one of the top highlights of my career. >> So yeah, >> I mean this is great, too. I don't [laughter] I don't want to give you the impression that that this is not >> No, this is cool. >> Me and Peter Lynch. >> Okay. All right. Okay. Okay. [laughter] >> Well, just for just so you know, this this is up there for me. >> All right. as well because you've, you know, you've established yourself clearly as a [snorts] >> probably one of one of the most prominent market commentators out there, right? I mean, people know you from from >> For better or for worse. >> For better or for worse, people know you from >> Prominent is a good way of putting it. Yes, people do have to hear. >> I'm a writer by nature, so there's I'm better with words than talking. >> I So I I don't know if this comes I hope this comes across. I love the stock market. Yes, >> I fell in love with it at that age. And um >> Why'd you fall in love with it? >> I just So I watched the senior brokers. I was not licensed so I could not pitch stocks. >> Okay. >> I was a cold caller just connecting people. >> Yeah. >> It's like, "Hey, you want to hear a stock idea? Hang on." Like that. >> But I got to watch these guys do what they did. And of course it's like silly now. like nobody does this anymore, but for a very long time that's how people bought stocks. They were pitched an idea. And so in that summer, I watched Callaway Golf, Snappal Ice Tea, um Boston Chicken, like they all came public and I watched these guys pitching these stocks and telling the story of why people should buy them. >> Yeah. >> Um Boston Chicken didn't work out so well. I don't know if you heard, but like >> Snapple's good though. I was captivated by the idea that anyone could learn the story of a company, put money, invest directly into it, >> and have that grow and become more money. Like, I don't gamble. We're in Vegas. >> Yeah. >> I didn't even look at a table or >> I don't have that gene. I don't have the gambling gene. I don't have It's not exciting for me. I don't get much out of it when I win. Um, so like I don't even bother, but I have the investing gene and I get really turned on by that idea of like, wait a minute, these are publicly traded companies. Anybody can buy in. All you have to do is learn the story and be right eventually and like you can make more money. That is the coolest thing on earth. And I still feel that way uh all these years later. >> Yeah. No, >> 28 years, 29 years, I still feel that way. >> Yeah. No, definitely comes through. Right. So, did you have any influences, mentors like from your f like before you got into the business like who were interested in businesses and stocks like from your family or anybody like how'd you get into that? >> So, the last chapter of my book actually tells the whole story, but I'll give you the abbreviated version. I had I had anti mentors. >> Yeah. >> I had people that I was only able to learn what not to do from. >> Yeah. >> Valuable. >> I mean, it doesn't feel that way in the in the moment, right? I worked for pirates, gangsters. Um, these were guys that were running some of the most notorious boiler room brokerages in the history of >> uh I wouldn't even call it Wall Street because all of this was Long Island, Brooklyn, Staten Island, New Jersey, Bokeh. >> I mean, these firms, >> these were firms that, you know, the NA, it was before it was called FIN, it was called the ND. The NSD had all of these firms on a list of uh companies we need to close down. That's where I learned the business. Not on purpose. I didn't know any better, >> right? >> All the guys were wearing suits. >> They all drove Porsches. I just assumed these are successful people. Um, but they were anti-mentors. And I guess that's not the worst thing. But I watched what they did with their clients to their clients and I just all the lessons were all right, never do that. >> Yeah. >> And I accumulated a lot of that. And that I guess is what enabled me to figure out okay what so if I don't want to be that what do I want to be? So that's the sort of mentor and for better or for worse it all worked out okay I'm not complaining but I didn't I never had a role model in the early days of like this is who I want to grow up to be in this business. Do you, this is might be a tough question to answer, but um do you do you feel financial media is how close is it to the ideal of what you would want it to be in general? >> I mean, I I don't care. I don't get upset. Like there are people that are like vocally displeased with financial TV, financial articles. They yell and scream at the Wall Street Journal or Bloomberg or CNBC. I don't give a honestly. I'm I'm trying to build a business and I'm trying to help my clients. I I don't have any other causes. I don't I don't I'm not looking for revolutions. I It doesn't It doesn't fase me to be honest. I show up. I do financial media. I'm a guest. I'm a host. I'm a contributor. I am what I am. and my job I feel is to communicate with the audience that cares about my opinion and I do the best I can. >> Can we talk about maybe a little bit about what we're seeing right now in the market? A little bit maybe about what you talked about on stage. um we're in this bull market that just keeps on going and I think it's a bull market AI trends and >> I think it's a bull market with some bubbles um within the bull market and some of them are small enough that there are no need for concern and some of them are maybe in the foothills of becoming really big bubbles and um I wouldn't say we're like in a full-fledged mania. I don't think this market is as reminiscent of 2021 as a lot of people do. I don't think it's 1999 and I was there. So, uh, you know, this is not something I read about in a history book. I lived it. I really don't think it's that carried away. Just think it's a regular bull market and yeah, there are some people acting extremely speculatively and what would you expect? They've made a lot of money doing so. >> Mhm. One of the things you talked about was just how underestimated the earnings the power of American company or the potential of American companies to just keep increasing their earnings over the last >> I think it's the whole thing >> 40 years. Yeah. >> The the two things that actually matter for stock prices are earnings and interest rates. >> I mean there's other factors. There's regulation, there's economics, there's demographics, um there's geopolitics, of course, like there are a lot of things, but like when you boil down what fueled bull and bare markets historically, were earnings growing or not? And were was the cost of money rising or falling? So, here's what we have right now. sustained earnings growth and falling interest rates. Like I don't I don't really think it's more complicated than that. >> Everybody wants to know if >> everybody want you talk to everybody. >> Everybody >> Okay. >> A lot of people want to know about is is this AI going to end up is the AI trend is going to turn into a bub. Is the boom going to turn into a bubble? >> Yeah, >> it is. >> It's going. >> Okay. You think we're in like 90 >> Oh man, I wish I wish I could I wish I wish I could be the person that could tell you that definitively. But you do think it'll end up >> Yeah, it always does though. It's not It's not a profound statement like >> Yeah. No, >> people like though this this >> this ain't going to end well. It never ends well. >> There's a great one of my favorite lines from the movies. Uh Cocktail. >> Um how old are you? >> 39. >> Remember Cocktail? >> No. >> No. >> All right. Tom Cruz at his apex. Peak Tom Cruz. >> It's got to be 89. >> Okay. Yeah. No, that was young. So anyway, Elizabeth Shu is his girlfriend and they're dating and then they start fighting and she said uh her family doesn't approve of him cuz he's just a bartender. She's like a rich girl and they have like this this fight and she says uh I something to the effect of like I don't want this to end badly, right? >> And he says he says everything ends badly otherwise it wouldn't end. It's It sounds so simple, but it's so profound. >> Of course, this ends badly. We The only question is when and to what extent, like how bad. >> Um but it's okay. >> Yeah. >> Like other bull markets have ended badly, too. And here we are. So I, you know, I'm not good at that game. Like what inning we in? >> Yeah. Okay, fair enough. Um so how do you translate kind of the way you you think about the market and about, you know, all these things we're talking about into advising clients? you know how that's a whole another thing like you have you can have your view but then your relationship with clients like managing um a lot of times what you would want to do may might not match up with their goals right or or or their personalities or or whatever. >> Yeah. So, I'm of the belief that um my client base, they're going to live way longer than they think and they're going to live way longer than the actuarial tables tell you >> because we work primarily with high net worth. And so, it's one thing to know that the average life expectancy in the United States for men is 74 and for women is 78 or whatever it is. Amongst the top 10% of wealthy households, it's definitely not that. It's way longer. Um, so people that think they're going to retire at 65 and be dead at 75, it's really not going to go that way. The reality is they could have decades of life long after they're earning income, which means they're going to need a lot more money later in life than they think they will, which necessitates risk-taking today. You can't not have risk. The only decision that you can make is when do you want it? So, we prefer to have people take their risk now um while they're still earning money and while they're able to. Um that means equityheavy portfolios and the emotional necessity of living through draw downs and accepting that that's part of the the deal. You can't have the upside if you're not willing to endure the temporary uh downside. And the reason that becomes so important is you may have a portfolio, you may have a lifespan that requires a portfolio um to grow for way a way longer period of time than prior generations. So our investing philosophy is to just be very aware of that as we build financial plans and then build portfolios that will satisfy those uh parameters. And um you know the other al the other alternative is okay you don't want to take a lot of risk today. Well your portfolio will not grow as much as it could have and then you have risk on the back end of your life. >> You didn't you didn't you didn't make enough money with your investments. >> And now what are you going to do? Now you're out of the most precious resource which is time. You need you need time to be able to compound. So if you are not compounding now, you ain't going to be able to do it later. So I think we're very frank about the expectations people need to have about taking risk. And I think overall we've done a pretty good job um given the growth of the firm and it's organic growth. >> Um we've given people that message. The market has done very well. So have they and it's been right. How has your firm changed since from the earliest kind of days to now where you got billions under management? >> We were cavemen like uh we started firm in 2013. There were four of us and an assistant, >> right? >> The assistant was uh right out of college, her first job. One day she said, "I'm going to go take a soul cycle class." Um and never came back. It's like uh there's four of us and we all wore 10 different hats. My partner my partner Barry was the uh was was handling payroll. It was hilarious. But >> he was like he was like on the phone with health insurance providers. >> All right. Yeah. All right. >> I was licking FedEx envelopes. >> Like we this is you start a firm. >> Yeah. >> It's uh it's a gorilla. It's a gorilla campaign. It's just like >> Who was your first client? >> You remember? >> We started the firm with 65 million in assets. >> 65. Okay. >> We lost our biggest client the week before we launched. It's a true story. >> Yeah. >> Our biggest client was $10 million. Wow. >> So, we thought we were launching with $75 million. And he called us up. He says, "I know you guys are about to leave and start your new firm, and I feel really bad telling you this, but I just bought a vacation home on the Jersey Shore, and I need to borrow money to close the transaction. Uh, I'm not, you know, my I can't get out of my company stock to do this. So, I kind of have to do a securities loan. And I'm like, "Well, I don't know what that is." He's like, "Yeah, no. I know you guys can't do that, but Goldman's going to do it for me." So, like, we He's like, "I love you. I love you guys. You've done a great job, but I literally have to borrow $5 million against my portfolio right now." Yeah. >> Um, so that was scary. So, we launched the firm minus our biggest client. And, uh, >> you know, the universe kind of conspired to make it work. like we put it on our blogs, >> right? >> I still have the link to the blog post I wrote. Barry wrote a blog post like, "Hey, we are now Rholtz Wealth Management. We launched our own firm and uh people just came pouring in. It was the coolest thing ever." Like, not only did people call us to open an account, they were sending gifts. Like, somebody sent a case of beer and opened an account. Like, like uh it was just it was a really special thing. And we realized very quickly like, holy we actually don't know what we're doing in a lot of areas, >> right? >> The good news is not only did clients come pouring in, but potential hires. So, we just got inundated by people that wanted to work with us. And that enabled us to actually build something that has obviously, you know, grown. Um, but we needed a lot of help. We didn't even know what we needed until we found it. And I guess that that that there was so much interest right off the bat. >> So that's the part we did know what we were doing. We we're very good communicators and um >> we had built up this really great track record >> saying saying smart things and sticking to our guns and not panicking people for clicks. And when others were writing these hyperbolic headlines about double dip recession and it's 1937 and all this like we would debunk that stuff and people over time really grew to appreciate our message >> and so we had that trust with the audience. So that part wasn't terribly surprising. I just didn't imagine the extent. I didn't know that we were going to be able to. We've grown at a um a kager of like 37% organically. >> Yeah. >> Over the last 12 years, we're still at that same growth rate and I never could have imagined it. So, um f fingers crossed things have gone pretty pretty good and we hope it'll continue. >> What are your goals now for the like the firm and overall you just just keep attracting more more clients? So what's changed now is we have a lot of um employees who are counting on us for this place to last forever, >> right? >> We have a lot of young, hungry, hardworking, dedicated people who love the firm. They fight for the culture. They they like they really care about what happens. And I have to figure out as the CEO, and I've never owned a business before, so I'm learning on the job, but I have to figure out how do I scale and continue to grow so that we can do more things for clients and we can provide backups and backups to the backups for our employees so people can be on vacation and the wheels don't fall off. Like, how do I scale but not lose the thing that made us special in the first place? >> Um, right. you you know like how do you add so we're 80 people >> how do I go to a hundred people without the firm feeling like it's a totally different place >> and people >> you know start saying things like oh man this has changed this used to be great I don't know what happened like that's the thing that >> I view as my primary responsibility um is to scale responsibly and I'll let you know I'll let you know how it goes [laughter] >> I'll watch how it goes for sure >> no people like well what do you you know what do you think not what keeps you up at night but like what's on your mind what do you think about like that's what I >> I spend a lot of time thinking about and not just for the employee sake for the client's sake >> like I don't want the clients >> that kind of your DNA goes through the whole thing >> we think of ourselves like Peter Luger best steakhouse in in the world >> we that's what we think of ourselves that's our opinion of our own service >> I don't want my clients to start feeling like it's McDonald's >> and we're serving 85 billion hamburgers and uh nobody really cares very much about, you know, what's coming out of the kitchen. >> So, I use a lot of restaurant analogies cuz I'm a big restaurant connoisseur. [laughter] >> Um, no, but that's how can the firm two and 3x from here but still feel the way it's always felt. >> You talked about on stage that you have what what four meetings with families before you even put the money to work. Is that essentially? >> Yes. >> Right. like >> this is our this is one of our natural advantages over other RAAS and we we don't really see other firms as competitors. I know they are >> um but we're very collaborative within the industry. We throw an event called future proof every year. >> Yeah. >> Um we had it two uh last month in Huntington Beach, California. 5,000 financial adviserss came from all over the country, all over the world. So, we don't they wouldn't come to our event if they thought we were like ruthlessly competing against them, >> right? >> Um, but what was the question? Oh, >> about about the family. >> Our natural advantage is that when we talk to a family who wants to become a client, >> yeah, >> if what they're looking for out of a financial advisory firm is reasonable, >> we're like very certain we're going to win the business. >> It doesn't matter who else they're talking to. because we've built up a trust with those people way before they ever reached out to us. >> Yeah. >> They didn't we didn't like randomly find them. We weren't assigned them at at a Schwab or a Fidelity branch like a referral like like these are people that listen to us religiously. >> They found you at some point. >> Yeah. They believe in what we're saying. So, it's like we're going to win that business. So, as a result, >> we're able to do three and four meetings before we get paid a dollar. >> Yeah. we're able to do all this upfront leg work. We can commit to doing that because there's a very light high likelihood that that person is going to become a client. Um, most firms can't afford to do that level of work prior to onboarding a family. So, that's one of our natural advantages of having built a fan base that becomes a client base. >> Cool. All right. You mentioned Peter the Peter Lynch interview before. It's a the highlight of your career. Not not not this. I'm That's okay. No, you're like this is [laughter] this is like top >> 50. >> Hey. Okay. You uh like and and the lessons that you've learned from from Peter [snorts] Lynch like are there any like maybe one or two or three things that lessons that you've taken from interviews that you've done >> or whatnot from the last 10 or 20 years that you've kind of like directly applied to how you manage the firm or how you manage money? So I think I've learned little large things and small things from people even if even if what we do looks nothing like what they do. >> So one of the first really established super successful people on Wall Street that actually took an interest in me um is Jim Chenos. Chainos is like obviously brilliant and one of the most successful people uh on Wall Street. We don't nothing that we do um is apples to apples with what he he's a he's a short biased hedge fund manager, >> right? >> Looks nothing like us. >> Yeah. >> But like I learn things from listening to people like that and you don't always realize what you're absorbing. >> So like >> yeah, >> it it's not always like uh you know some direct piece of advice like never do this on Tuesdays. All right, I won't do that on Tuesday. Sometimes you're just watching the way people carry themselves or how they think about the market or how you watch people how they're building their enterprise. So like I've met amazing business people who don't even work on Wall Street and I've picked up things about how they've built what they've built. Like my idols are people like uh Danny Meyer >> um Union Square uh hospitality group uh founder of obviously Shake Shack but like some of the best restaurants in Manhattan. He's got a book um he's got a book called setting the table and it's just about hospitality and his philosophy is people say they put their cl customers first. He actually puts his employees first because if you put your employees first they're going to put your customers first. like that like those types of things like I absorb stuff like that that's maybe not directly related to money management or investing but it's like oh yeah that makes perfect sense to me as an entrepreneur. >> Yeah. >> So there's a lot of stuff like that and uh I'm still learning every day. >> Why did you write the book that you know your latest book? >> The short answer is the publisher told me I should. >> Okay. [laughter] >> I you don't write books for money. >> Yeah. Did you do not? Yeah. I made a little bit of money, but it's like if you if you were to take the amount of hours and divide that by how much money you made, it's like it's like less than a minimum wage job. So, that's not really the the thing. The thing with the last book is I wanted to put a capper on an era of time in my life and in the markets and just like put a a a punctuation mark after it. So this is a collection of everything that I wrote from the start of my blog, my first blog in 2008 to the end in 23. And I put an end to the blog in 23. And this was like all of the best lessons and ideas and takeaways and insights from that period. So, I think it's a really great way to learn all the thing or for people to um get this like panoramic view of everything that went on in the markets and in the economy and then also there's a lot of personal stuff in there >> and um I I thought it was just like a nice way to send off that era and begin a new chapter. So, that's that's the the real answer. >> Cool. All right. You go back to the market for a little bit. Uh you've seen a lot of the market a lot of market cycles. Um is there anything different and you talked about it a little bit? Anything different about this market now or is it the same stuff just dressed up in a different way with >> No, it's really different. The market has blown through so many things that used to be norms that just don't apply anymore. >> There's an open question about whether or not the type of economy that we're in could ever even have a cyclical recession again. Yeah, >> I think we'll have recessions. They'll be driven by exogenous events. But in in in the 70s and the 80s, if you raised interest rates, you would basically halt bank lending, >> right? >> And that halted bank lending would freeze financing throughout the economy. And then you would have companies dumping inventory and then you would have layoffs and it would be like this very predictable thing. We just had the most aggressive rate hike cycle, one of the most aggressive rate hike cycles outside of the early 80s in history and the market the the the economy didn't budge. Nothing happened. It's like this extraordinary thing. So like just recognizing that it is different this time. It's always different. It's this idea that like every environment you're in has to somehow rhyme with a previous environment from the past is just not how it works in real life. So, um there are so many uh we used to take it as gospel that um that uh a a yield curve inversion, >> right, >> was an automatic recession. You're on the clock. >> Yeah. >> Three years ago, >> right? Yeah. >> Where is it? >> Yeah. >> Like there's so many things like that. >> Yeah. So, um, I think that's the big takeaway is how how much things can change and permanently change. >> And I guess that speaks to your idea of just the importance of staying humble and not trying to be right. >> There's this really great story where from the turn of the century, 1900 to 1957, you could set your watch by this. anytime the dividend the the treasury yield and the stock market dividend yield reached parody mean right right you understand like um it it used to be that stocks yielded more than bonds that was the norm okay whenever stocks went up so much that their yield dipped below the treasury bond yield that was a sell signal for the stock market and it worked all the time instance after instance every decade when the stock market rallied, the dividend yield fell. And if it fell below the rate of the treasury, I think it was a 10-year. If it fell below the rate of the 10-year, that meant stocks were too expensive and you should sell them. And it worked. It worked. It worked. And you could just you could calibrate, you could set your watch by it. And then in 1957, for some reason, and no one knows what it is, dividend yield on the stock market went below the yield on the 10-year. And not only was that not a sell signal, the bull market ran into into like 1972, um, in 1957, not only was that a terrible time to sell, um, it actually never went back the other way again. >> The 10-year Treasury yield has been above the stock market um, dividend literally ever since. >> Yeah. >> So now in 1957, you're this know-it-all waving this sheath of papers around. Look, look at the dividend yield. It's a sell, >> right? You don't know that the world has permanently changed. How can you know? No one knows. You look like you're the smartest man in the room waving this this stat around. Guys, this is the sell signal. It always works. And then 75, here we are 70 almost 80 years later and things were never that way ever again, >> right? So, I collect these stories and I share them with with clients and other investing professionals because they have to know that things do change and sometimes they change permanently and you don't know if you're in one of those times. You won't know until later. >> Yeah. Why do you think the um why do you think we might not see these cyclical recessions again? I I've heard a Fed official, I forgot who it was, say >> uh Rick Reer is saying that. So >> he's probably in the running to be the next Fed chair. >> Um so smarter people than me are of this opinion. >> Yes. >> Um I think I think because we have gone from a manufacturing economy to a service economy and the service economy that's very heavily equity financed meaning the stock market is a bigger driver than lending rates for a lot of that service economy. >> Right. um we have a lot of stock-based compensation in that service economy. Um I just think it reacts to different things than overnight lending rates. Um >> I mean we just went through a very obvious period of that. So um I I think for that reason if you don't have that same debt dynamic hanging over a manufacturing sector that dominates the economy now it's a very different it's a knowledgebased economy. Um, I think that makes it a little bit harder to just have these cyclical run-of-the-mill recessions. I mean, we I'm sure it could happen. I wouldn't say it can't. >> I just think it's less likely than a lot of people that focus on the past think it is. So, what will bring about the next recession? Probably something insane that none of us can think of right now. >> Yeah, that's uh >> Sorry, but like that's just the reality. >> It is. Yeah. No, it is. Um, does anything concern you? Anything really worry you about this market right now? >> I mean, there's always things to be worried about no matter what the market environment is. So, I I do think there's a ton of speculative activity. I think unfortunately a lot of that is um concentrated amongst young people. I think a lot of young people don't really care for the investing process. I think they prefer the gambling. Um, maybe they'll grow up But for for right now, I think there's a lot of people taking a lot of risk that they don't understand. Some of it is paying off and they're learning all the wrong lessons. >> You don't learn anything from your success. You learn from failure. There hasn't been a ton of failure. There will be. >> Um, and so a lot of lessons will get learned. Maybe that's the silver lining, but that's one of the things I worry about. >> Okay. You worried about stock? >> Can't do anything about it. But >> you worry about stock valuations? >> No. >> No. All right. Fair enough. Well, I mean, they could come down, >> right? Right. >> I worry about stock prices. >> Prices. Yeah. >> Yeah. >> Not so much valuations, prices. >> Okay. >> I like them where they are. >> Cool. [laughter] >> So do a lot. So do a lot of people. Um, all right. I think we're we're wrapping up here, but we'll get to our last question that we do for every guest. Um, same for every guest. >> What is the fastest land mammal? [laughter] That's >> cheetah. >> Okay. >> Did I win? All right, Chad, >> that is not the question. >> What's the final question? >> Simple. If you need to leave our listeners or viewers with one thought, what would it be? >> Oh, man. I don't know if this is off off message for Stanbury, but like this is my honest opinion. People probably spend too much time focused on what the market's going to do, what stocks to buy. I think people are spending too little time away from the computer, away from the phone these days. I think people sort of take their time for granted and uh I end up in my profession I end up talking to a lot of people toward you know the end of their lives. Um not like the day before but you know >> like none of them are like I wish I had spent more time researching stocks. I wish I had spent more time reading economic reports. I wish I had spent more time listening to company conference calls. fun of them like they they don't I think the number one thing is what people never regret are the experiences they've had even the ones that weren't great in the moment like and so what we try to instill in our clientele and they don't need us to tell them this but sometimes sometimes people need to hear things from someone else to validate it right >> we have people that spent 50 years of their lives saving Everyone said, "Save, save, save, save, save." They listened. And now at 65, at 70, now we're telling them, "Flip the switch. Spend." It's hard. They don't want to hear it. But we have to explain to people. We have people millions of dollars. Uh, one day I'm going to get that that that car that when you think this shit's going to be more fun when you're 80, do it now. A lot of the job of financial planner these days, look, people's portfolios, >> psychologist, too. Yeah. >> People's portfolios have way outperformed what the financial planning software said would happen. >> Yeah. >> We're doing 15% a year in the S&P over over 15 years, >> right? >> People have way overshot their goals. >> So now it's like more important than ever. It's like you got to live, spend the money, buy the vacation home with enough bedrooms for your your children and grandchildren. >> Do the thing. do it right now. Like that's a lot of what my planners uh do these days and it's fascinating. >> Yeah. >> Um it's a it's people would say, "Oh, it's a good problem to have. You don't spend enough money." Yeah, fine. But it's still a problem. So, if I could leave people with anything, it's um don't wait. Don't wait. Do the thing. You'll uh you'll one day you'll be glad you did it. You won't regret that you did it. >> Yeah. No, I think that message will resonate with our audience. And um thank you so much for your time, man. My pleasure. Thanks for having me. >> All right, and that's another episode of the Stansbury Investor Hour here in Las Vegas. We hope you enjoyed that conversation with Josh Brown, as I truly did. And uh Dan will be back with us next week. Opinions expressed on this program are solely those of the contributor and do not necessarily reflect the opinions of Stanbury Research, its parent company, or affiliates.
Today's Market Is Different From Any One Before It
Summary
Transcript
Welcome to the Stansbury Investor Hour. I'm Corey McLaclin, editor of the Stanberry Daily Digest. Uh Dan is actually on stage. We're at our Las Vegas conference. Um so I'm riding solo here, but uh lucky me, we have a fantastic guest, Josh Brown. uh just got done doing a presentation on stage and signing copies of his book. Uh you weren't supposed to see that. Um >> the mood is electric in this place. I don't know if you could feel from the moment I walked off stage. >> Yeah. >> Yeah. Yeah. It was a great presentation. >> I feel like I really brought it and uh feeling good. >> Yeah. Cool. >> So, we're happy for you to be here. You're of course CEO of Rit Holtz Wealth Wealth Management. >> Yes. >> Which now has almost 7 billion of assets under management, you said. And uh you likely seen him on CNBC and the great Compounded Friends podcast and YouTube channel. And perhaps most importantly, you're a Long Islander like myself. >> I am. >> And uh >> we're very proud of it, >> but I never left unlike you. >> Well, >> I'm sticking it out. >> It was a little too expensive for me at the time it that's how I ended up here, learning about money and whatnot and listening to cool people like you. So, >> um we could go a lot of directions here. Um, but maybe and we'll get into what you talked about in your presentation a little bit, but I just want to start by reading something back to you that you wrote in a blog post uh last year. So, that I think will kind of set the stage for our listeners and viewers pretty well. >> I will not confirm or deny that I actually said this >> if that's okay. >> Okay. Until I hear it. >> June 2024 on your website. >> Okay. I'm a former stock broker with no formal education in economics or econometrics, which the la the latter word I couldn't tell you what it means with a dictionary in my hand, which that's true. >> Which incidentally is very funny because our director of research, Matt Wine Shank, great guy, >> has a master's degree in econometrics. >> Well, holy that's the man I need to talk to. >> He's he's he's around. You can talk to him next. Um, you went on, I don't know anything. I started in this business cold calling Dun and Bradstreet index cards with the names and phone numbers of business owners. I'm an alumni of the speculative fever swamps of stockbroker land in Scios at Long Island. No pedigree, classically trained with a plastic black telephone, a headset, and an Acer monitor running Quotron. >> Yeah, but like most of you, I have my own two eyes and two ears and try to understand what's going on. These have been valuable if we've learned how to use them. I think that that says a lot about what what you do, I think. >> Yeah. I look, I I um I get to meet a lot of really brilliant people and a lot of people that do have a substantial impressive pedigree, where they went to school, what degrees they have, PhDs, um where they worked, what their first job was, who their mentors were. I get to meet like very impressive people. I think um what I bring to the table as not being one of those people, I think I am both the the um the go-between between those people and the audience and I'm also like in the audience too. >> So um I that's the way I see myself and my place in the financial media. Um and I'm very comfortable with that. I I uh I think I'm smart. It's not that I think I'm like an idiot. Um, but I don't put on errors and uh I don't come from a place of I know everything, therefore listen to me. I have opinions, I fight for them, you know, change them. I I I think that comes through. I think that's what my audience appreciates about what I do. And uh it's still sort of unique. I think most people in the financial media, >> they they only want you to know how smart they are and how great they are. And um I I guess I've never really come from that place and hopefully people appreciate that. >> That's kind of what I was going to ask you was like why do you think it's so hard for so many pe other people to learn to like trust their their eyes and ears? >> Oh, that's easy. >> Oh, wait. I thought you were going to ask me a different question. I jumped the gun. >> Why is it so hard for people to not act that way? >> No. Why is it so hard for people to trust their own eyes and ears um in investing in general? Oh, well, a lot of people shouldn't because if you don't have a lot of experience, >> right? >> And you haven't been around that long, you should be in search of other people's opinions. >> Okay. >> And you know, I don't trust my own eyes and ears when something's wrong and I go to a doctor. I kind of want to defer to the doctor. So, I I do think that there is a place for putting trust in professionals and listening to people who know what they're talking about. But I also think people um should have some confidence once they've been in the investing business or the investing game um for long enough. They should sort of be able to rely a little bit on their own instincts and uh it's you know it's a process like everything else. >> What question did you think I was going to ask you? And what >> I have no idea. [laughter] >> No, but you know what I so not to brag I interviewed the greatest investor of all time uh 10 days ago. >> Peter Lynch. >> Peter Lynch. >> I I watched it. >> Okay. So >> I asked him, >> I said, um, so he wrote the definitive book for individual investors, one of maybe the the bestselling investment book of all time, >> uh, One Up on Wall Street, still still a classic. Um, and I asked him after all these years later, he wrote it, I don't know, 30 uh 40 years agoish, late 80s. What is that? 36 years ago. [snorts] >> Yeah. say um I asked him like do you still think after all these years now we have institutional investors who are armed to the teeth with data and Bloombergs and charts and statistics and high frequency trading tools like do you still think that the regular investor can do it themselves and can um be one up on Wall Street and he said yes >> and he you know the names change the stocks change the markets sped up. There's a lot of things that are different, but like if you have common sense and you're willing to do research, you can still do this. So, I think that's a good message and uh I appreciated hearing Peter say that after all these years. >> Yeah. What was that like sitting there interviewing him? >> I was I mean >> nuts. Had he was like one of your >> So, you have to understand like um when I started in the business, I was 19 years old. It was in between my freshman and sophomore year of college. I was a cold caller one summer and um >> the first book they gave me. >> Yeah. >> This is 19 96. They I was I was 19. They say they say read this. >> Yeah. Wow. >> I had no idea what I read it. >> Yeah. >> I had no idea what any of the words in the book meant. I just I I just I listened to that. >> It's very familiar to me by the way. Yeah. >> But I read it and I revisited it, you know, since once I knew what the hell I was doing. Um but like that's that's like foundational for me. So to get to sit next to him and interview him >> for a live audience, it's like the most insane thing. It's probably one of the top highlights of my career. >> So yeah, >> I mean this is great, too. I don't [laughter] I don't want to give you the impression that that this is not >> No, this is cool. >> Me and Peter Lynch. >> Okay. All right. Okay. Okay. [laughter] >> Well, just for just so you know, this this is up there for me. >> All right. as well because you've, you know, you've established yourself clearly as a [snorts] >> probably one of one of the most prominent market commentators out there, right? I mean, people know you from from >> For better or for worse. >> For better or for worse, people know you from >> Prominent is a good way of putting it. Yes, people do have to hear. >> I'm a writer by nature, so there's I'm better with words than talking. >> I So I I don't know if this comes I hope this comes across. I love the stock market. Yes, >> I fell in love with it at that age. And um >> Why'd you fall in love with it? >> I just So I watched the senior brokers. I was not licensed so I could not pitch stocks. >> Okay. >> I was a cold caller just connecting people. >> Yeah. >> It's like, "Hey, you want to hear a stock idea? Hang on." Like that. >> But I got to watch these guys do what they did. And of course it's like silly now. like nobody does this anymore, but for a very long time that's how people bought stocks. They were pitched an idea. And so in that summer, I watched Callaway Golf, Snappal Ice Tea, um Boston Chicken, like they all came public and I watched these guys pitching these stocks and telling the story of why people should buy them. >> Yeah. >> Um Boston Chicken didn't work out so well. I don't know if you heard, but like >> Snapple's good though. I was captivated by the idea that anyone could learn the story of a company, put money, invest directly into it, >> and have that grow and become more money. Like, I don't gamble. We're in Vegas. >> Yeah. >> I didn't even look at a table or >> I don't have that gene. I don't have the gambling gene. I don't have It's not exciting for me. I don't get much out of it when I win. Um, so like I don't even bother, but I have the investing gene and I get really turned on by that idea of like, wait a minute, these are publicly traded companies. Anybody can buy in. All you have to do is learn the story and be right eventually and like you can make more money. That is the coolest thing on earth. And I still feel that way uh all these years later. >> Yeah. No, >> 28 years, 29 years, I still feel that way. >> Yeah. No, definitely comes through. Right. So, did you have any influences, mentors like from your f like before you got into the business like who were interested in businesses and stocks like from your family or anybody like how'd you get into that? >> So, the last chapter of my book actually tells the whole story, but I'll give you the abbreviated version. I had I had anti mentors. >> Yeah. >> I had people that I was only able to learn what not to do from. >> Yeah. >> Valuable. >> I mean, it doesn't feel that way in the in the moment, right? I worked for pirates, gangsters. Um, these were guys that were running some of the most notorious boiler room brokerages in the history of >> uh I wouldn't even call it Wall Street because all of this was Long Island, Brooklyn, Staten Island, New Jersey, Bokeh. >> I mean, these firms, >> these were firms that, you know, the NA, it was before it was called FIN, it was called the ND. The NSD had all of these firms on a list of uh companies we need to close down. That's where I learned the business. Not on purpose. I didn't know any better, >> right? >> All the guys were wearing suits. >> They all drove Porsches. I just assumed these are successful people. Um, but they were anti-mentors. And I guess that's not the worst thing. But I watched what they did with their clients to their clients and I just all the lessons were all right, never do that. >> Yeah. >> And I accumulated a lot of that. And that I guess is what enabled me to figure out okay what so if I don't want to be that what do I want to be? So that's the sort of mentor and for better or for worse it all worked out okay I'm not complaining but I didn't I never had a role model in the early days of like this is who I want to grow up to be in this business. Do you, this is might be a tough question to answer, but um do you do you feel financial media is how close is it to the ideal of what you would want it to be in general? >> I mean, I I don't care. I don't get upset. Like there are people that are like vocally displeased with financial TV, financial articles. They yell and scream at the Wall Street Journal or Bloomberg or CNBC. I don't give a honestly. I'm I'm trying to build a business and I'm trying to help my clients. I I don't have any other causes. I don't I don't I'm not looking for revolutions. I It doesn't It doesn't fase me to be honest. I show up. I do financial media. I'm a guest. I'm a host. I'm a contributor. I am what I am. and my job I feel is to communicate with the audience that cares about my opinion and I do the best I can. >> Can we talk about maybe a little bit about what we're seeing right now in the market? A little bit maybe about what you talked about on stage. um we're in this bull market that just keeps on going and I think it's a bull market AI trends and >> I think it's a bull market with some bubbles um within the bull market and some of them are small enough that there are no need for concern and some of them are maybe in the foothills of becoming really big bubbles and um I wouldn't say we're like in a full-fledged mania. I don't think this market is as reminiscent of 2021 as a lot of people do. I don't think it's 1999 and I was there. So, uh, you know, this is not something I read about in a history book. I lived it. I really don't think it's that carried away. Just think it's a regular bull market and yeah, there are some people acting extremely speculatively and what would you expect? They've made a lot of money doing so. >> Mhm. One of the things you talked about was just how underestimated the earnings the power of American company or the potential of American companies to just keep increasing their earnings over the last >> I think it's the whole thing >> 40 years. Yeah. >> The the two things that actually matter for stock prices are earnings and interest rates. >> I mean there's other factors. There's regulation, there's economics, there's demographics, um there's geopolitics, of course, like there are a lot of things, but like when you boil down what fueled bull and bare markets historically, were earnings growing or not? And were was the cost of money rising or falling? So, here's what we have right now. sustained earnings growth and falling interest rates. Like I don't I don't really think it's more complicated than that. >> Everybody wants to know if >> everybody want you talk to everybody. >> Everybody >> Okay. >> A lot of people want to know about is is this AI going to end up is the AI trend is going to turn into a bub. Is the boom going to turn into a bubble? >> Yeah, >> it is. >> It's going. >> Okay. You think we're in like 90 >> Oh man, I wish I wish I could I wish I wish I could be the person that could tell you that definitively. But you do think it'll end up >> Yeah, it always does though. It's not It's not a profound statement like >> Yeah. No, >> people like though this this >> this ain't going to end well. It never ends well. >> There's a great one of my favorite lines from the movies. Uh Cocktail. >> Um how old are you? >> 39. >> Remember Cocktail? >> No. >> No. >> All right. Tom Cruz at his apex. Peak Tom Cruz. >> It's got to be 89. >> Okay. Yeah. No, that was young. So anyway, Elizabeth Shu is his girlfriend and they're dating and then they start fighting and she said uh her family doesn't approve of him cuz he's just a bartender. She's like a rich girl and they have like this this fight and she says uh I something to the effect of like I don't want this to end badly, right? >> And he says he says everything ends badly otherwise it wouldn't end. It's It sounds so simple, but it's so profound. >> Of course, this ends badly. We The only question is when and to what extent, like how bad. >> Um but it's okay. >> Yeah. >> Like other bull markets have ended badly, too. And here we are. So I, you know, I'm not good at that game. Like what inning we in? >> Yeah. Okay, fair enough. Um so how do you translate kind of the way you you think about the market and about, you know, all these things we're talking about into advising clients? you know how that's a whole another thing like you have you can have your view but then your relationship with clients like managing um a lot of times what you would want to do may might not match up with their goals right or or or their personalities or or whatever. >> Yeah. So, I'm of the belief that um my client base, they're going to live way longer than they think and they're going to live way longer than the actuarial tables tell you >> because we work primarily with high net worth. And so, it's one thing to know that the average life expectancy in the United States for men is 74 and for women is 78 or whatever it is. Amongst the top 10% of wealthy households, it's definitely not that. It's way longer. Um, so people that think they're going to retire at 65 and be dead at 75, it's really not going to go that way. The reality is they could have decades of life long after they're earning income, which means they're going to need a lot more money later in life than they think they will, which necessitates risk-taking today. You can't not have risk. The only decision that you can make is when do you want it? So, we prefer to have people take their risk now um while they're still earning money and while they're able to. Um that means equityheavy portfolios and the emotional necessity of living through draw downs and accepting that that's part of the the deal. You can't have the upside if you're not willing to endure the temporary uh downside. And the reason that becomes so important is you may have a portfolio, you may have a lifespan that requires a portfolio um to grow for way a way longer period of time than prior generations. So our investing philosophy is to just be very aware of that as we build financial plans and then build portfolios that will satisfy those uh parameters. And um you know the other al the other alternative is okay you don't want to take a lot of risk today. Well your portfolio will not grow as much as it could have and then you have risk on the back end of your life. >> You didn't you didn't you didn't make enough money with your investments. >> And now what are you going to do? Now you're out of the most precious resource which is time. You need you need time to be able to compound. So if you are not compounding now, you ain't going to be able to do it later. So I think we're very frank about the expectations people need to have about taking risk. And I think overall we've done a pretty good job um given the growth of the firm and it's organic growth. >> Um we've given people that message. The market has done very well. So have they and it's been right. How has your firm changed since from the earliest kind of days to now where you got billions under management? >> We were cavemen like uh we started firm in 2013. There were four of us and an assistant, >> right? >> The assistant was uh right out of college, her first job. One day she said, "I'm going to go take a soul cycle class." Um and never came back. It's like uh there's four of us and we all wore 10 different hats. My partner my partner Barry was the uh was was handling payroll. It was hilarious. But >> he was like he was like on the phone with health insurance providers. >> All right. Yeah. All right. >> I was licking FedEx envelopes. >> Like we this is you start a firm. >> Yeah. >> It's uh it's a gorilla. It's a gorilla campaign. It's just like >> Who was your first client? >> You remember? >> We started the firm with 65 million in assets. >> 65. Okay. >> We lost our biggest client the week before we launched. It's a true story. >> Yeah. >> Our biggest client was $10 million. Wow. >> So, we thought we were launching with $75 million. And he called us up. He says, "I know you guys are about to leave and start your new firm, and I feel really bad telling you this, but I just bought a vacation home on the Jersey Shore, and I need to borrow money to close the transaction. Uh, I'm not, you know, my I can't get out of my company stock to do this. So, I kind of have to do a securities loan. And I'm like, "Well, I don't know what that is." He's like, "Yeah, no. I know you guys can't do that, but Goldman's going to do it for me." So, like, we He's like, "I love you. I love you guys. You've done a great job, but I literally have to borrow $5 million against my portfolio right now." Yeah. >> Um, so that was scary. So, we launched the firm minus our biggest client. And, uh, >> you know, the universe kind of conspired to make it work. like we put it on our blogs, >> right? >> I still have the link to the blog post I wrote. Barry wrote a blog post like, "Hey, we are now Rholtz Wealth Management. We launched our own firm and uh people just came pouring in. It was the coolest thing ever." Like, not only did people call us to open an account, they were sending gifts. Like, somebody sent a case of beer and opened an account. Like, like uh it was just it was a really special thing. And we realized very quickly like, holy we actually don't know what we're doing in a lot of areas, >> right? >> The good news is not only did clients come pouring in, but potential hires. So, we just got inundated by people that wanted to work with us. And that enabled us to actually build something that has obviously, you know, grown. Um, but we needed a lot of help. We didn't even know what we needed until we found it. And I guess that that that there was so much interest right off the bat. >> So that's the part we did know what we were doing. We we're very good communicators and um >> we had built up this really great track record >> saying saying smart things and sticking to our guns and not panicking people for clicks. And when others were writing these hyperbolic headlines about double dip recession and it's 1937 and all this like we would debunk that stuff and people over time really grew to appreciate our message >> and so we had that trust with the audience. So that part wasn't terribly surprising. I just didn't imagine the extent. I didn't know that we were going to be able to. We've grown at a um a kager of like 37% organically. >> Yeah. >> Over the last 12 years, we're still at that same growth rate and I never could have imagined it. So, um f fingers crossed things have gone pretty pretty good and we hope it'll continue. >> What are your goals now for the like the firm and overall you just just keep attracting more more clients? So what's changed now is we have a lot of um employees who are counting on us for this place to last forever, >> right? >> We have a lot of young, hungry, hardworking, dedicated people who love the firm. They fight for the culture. They they like they really care about what happens. And I have to figure out as the CEO, and I've never owned a business before, so I'm learning on the job, but I have to figure out how do I scale and continue to grow so that we can do more things for clients and we can provide backups and backups to the backups for our employees so people can be on vacation and the wheels don't fall off. Like, how do I scale but not lose the thing that made us special in the first place? >> Um, right. you you know like how do you add so we're 80 people >> how do I go to a hundred people without the firm feeling like it's a totally different place >> and people >> you know start saying things like oh man this has changed this used to be great I don't know what happened like that's the thing that >> I view as my primary responsibility um is to scale responsibly and I'll let you know I'll let you know how it goes [laughter] >> I'll watch how it goes for sure >> no people like well what do you you know what do you think not what keeps you up at night but like what's on your mind what do you think about like that's what I >> I spend a lot of time thinking about and not just for the employee sake for the client's sake >> like I don't want the clients >> that kind of your DNA goes through the whole thing >> we think of ourselves like Peter Luger best steakhouse in in the world >> we that's what we think of ourselves that's our opinion of our own service >> I don't want my clients to start feeling like it's McDonald's >> and we're serving 85 billion hamburgers and uh nobody really cares very much about, you know, what's coming out of the kitchen. >> So, I use a lot of restaurant analogies cuz I'm a big restaurant connoisseur. [laughter] >> Um, no, but that's how can the firm two and 3x from here but still feel the way it's always felt. >> You talked about on stage that you have what what four meetings with families before you even put the money to work. Is that essentially? >> Yes. >> Right. like >> this is our this is one of our natural advantages over other RAAS and we we don't really see other firms as competitors. I know they are >> um but we're very collaborative within the industry. We throw an event called future proof every year. >> Yeah. >> Um we had it two uh last month in Huntington Beach, California. 5,000 financial adviserss came from all over the country, all over the world. So, we don't they wouldn't come to our event if they thought we were like ruthlessly competing against them, >> right? >> Um, but what was the question? Oh, >> about about the family. >> Our natural advantage is that when we talk to a family who wants to become a client, >> yeah, >> if what they're looking for out of a financial advisory firm is reasonable, >> we're like very certain we're going to win the business. >> It doesn't matter who else they're talking to. because we've built up a trust with those people way before they ever reached out to us. >> Yeah. >> They didn't we didn't like randomly find them. We weren't assigned them at at a Schwab or a Fidelity branch like a referral like like these are people that listen to us religiously. >> They found you at some point. >> Yeah. They believe in what we're saying. So, it's like we're going to win that business. So, as a result, >> we're able to do three and four meetings before we get paid a dollar. >> Yeah. we're able to do all this upfront leg work. We can commit to doing that because there's a very light high likelihood that that person is going to become a client. Um, most firms can't afford to do that level of work prior to onboarding a family. So, that's one of our natural advantages of having built a fan base that becomes a client base. >> Cool. All right. You mentioned Peter the Peter Lynch interview before. It's a the highlight of your career. Not not not this. I'm That's okay. No, you're like this is [laughter] this is like top >> 50. >> Hey. Okay. You uh like and and the lessons that you've learned from from Peter [snorts] Lynch like are there any like maybe one or two or three things that lessons that you've taken from interviews that you've done >> or whatnot from the last 10 or 20 years that you've kind of like directly applied to how you manage the firm or how you manage money? So I think I've learned little large things and small things from people even if even if what we do looks nothing like what they do. >> So one of the first really established super successful people on Wall Street that actually took an interest in me um is Jim Chenos. Chainos is like obviously brilliant and one of the most successful people uh on Wall Street. We don't nothing that we do um is apples to apples with what he he's a he's a short biased hedge fund manager, >> right? >> Looks nothing like us. >> Yeah. >> But like I learn things from listening to people like that and you don't always realize what you're absorbing. >> So like >> yeah, >> it it's not always like uh you know some direct piece of advice like never do this on Tuesdays. All right, I won't do that on Tuesday. Sometimes you're just watching the way people carry themselves or how they think about the market or how you watch people how they're building their enterprise. So like I've met amazing business people who don't even work on Wall Street and I've picked up things about how they've built what they've built. Like my idols are people like uh Danny Meyer >> um Union Square uh hospitality group uh founder of obviously Shake Shack but like some of the best restaurants in Manhattan. He's got a book um he's got a book called setting the table and it's just about hospitality and his philosophy is people say they put their cl customers first. He actually puts his employees first because if you put your employees first they're going to put your customers first. like that like those types of things like I absorb stuff like that that's maybe not directly related to money management or investing but it's like oh yeah that makes perfect sense to me as an entrepreneur. >> Yeah. >> So there's a lot of stuff like that and uh I'm still learning every day. >> Why did you write the book that you know your latest book? >> The short answer is the publisher told me I should. >> Okay. [laughter] >> I you don't write books for money. >> Yeah. Did you do not? Yeah. I made a little bit of money, but it's like if you if you were to take the amount of hours and divide that by how much money you made, it's like it's like less than a minimum wage job. So, that's not really the the thing. The thing with the last book is I wanted to put a capper on an era of time in my life and in the markets and just like put a a a punctuation mark after it. So this is a collection of everything that I wrote from the start of my blog, my first blog in 2008 to the end in 23. And I put an end to the blog in 23. And this was like all of the best lessons and ideas and takeaways and insights from that period. So, I think it's a really great way to learn all the thing or for people to um get this like panoramic view of everything that went on in the markets and in the economy and then also there's a lot of personal stuff in there >> and um I I thought it was just like a nice way to send off that era and begin a new chapter. So, that's that's the the real answer. >> Cool. All right. You go back to the market for a little bit. Uh you've seen a lot of the market a lot of market cycles. Um is there anything different and you talked about it a little bit? Anything different about this market now or is it the same stuff just dressed up in a different way with >> No, it's really different. The market has blown through so many things that used to be norms that just don't apply anymore. >> There's an open question about whether or not the type of economy that we're in could ever even have a cyclical recession again. Yeah, >> I think we'll have recessions. They'll be driven by exogenous events. But in in in the 70s and the 80s, if you raised interest rates, you would basically halt bank lending, >> right? >> And that halted bank lending would freeze financing throughout the economy. And then you would have companies dumping inventory and then you would have layoffs and it would be like this very predictable thing. We just had the most aggressive rate hike cycle, one of the most aggressive rate hike cycles outside of the early 80s in history and the market the the the economy didn't budge. Nothing happened. It's like this extraordinary thing. So like just recognizing that it is different this time. It's always different. It's this idea that like every environment you're in has to somehow rhyme with a previous environment from the past is just not how it works in real life. So, um there are so many uh we used to take it as gospel that um that uh a a yield curve inversion, >> right, >> was an automatic recession. You're on the clock. >> Yeah. >> Three years ago, >> right? Yeah. >> Where is it? >> Yeah. >> Like there's so many things like that. >> Yeah. So, um, I think that's the big takeaway is how how much things can change and permanently change. >> And I guess that speaks to your idea of just the importance of staying humble and not trying to be right. >> There's this really great story where from the turn of the century, 1900 to 1957, you could set your watch by this. anytime the dividend the the treasury yield and the stock market dividend yield reached parody mean right right you understand like um it it used to be that stocks yielded more than bonds that was the norm okay whenever stocks went up so much that their yield dipped below the treasury bond yield that was a sell signal for the stock market and it worked all the time instance after instance every decade when the stock market rallied, the dividend yield fell. And if it fell below the rate of the treasury, I think it was a 10-year. If it fell below the rate of the 10-year, that meant stocks were too expensive and you should sell them. And it worked. It worked. It worked. And you could just you could calibrate, you could set your watch by it. And then in 1957, for some reason, and no one knows what it is, dividend yield on the stock market went below the yield on the 10-year. And not only was that not a sell signal, the bull market ran into into like 1972, um, in 1957, not only was that a terrible time to sell, um, it actually never went back the other way again. >> The 10-year Treasury yield has been above the stock market um, dividend literally ever since. >> Yeah. >> So now in 1957, you're this know-it-all waving this sheath of papers around. Look, look at the dividend yield. It's a sell, >> right? You don't know that the world has permanently changed. How can you know? No one knows. You look like you're the smartest man in the room waving this this stat around. Guys, this is the sell signal. It always works. And then 75, here we are 70 almost 80 years later and things were never that way ever again, >> right? So, I collect these stories and I share them with with clients and other investing professionals because they have to know that things do change and sometimes they change permanently and you don't know if you're in one of those times. You won't know until later. >> Yeah. Why do you think the um why do you think we might not see these cyclical recessions again? I I've heard a Fed official, I forgot who it was, say >> uh Rick Reer is saying that. So >> he's probably in the running to be the next Fed chair. >> Um so smarter people than me are of this opinion. >> Yes. >> Um I think I think because we have gone from a manufacturing economy to a service economy and the service economy that's very heavily equity financed meaning the stock market is a bigger driver than lending rates for a lot of that service economy. >> Right. um we have a lot of stock-based compensation in that service economy. Um I just think it reacts to different things than overnight lending rates. Um >> I mean we just went through a very obvious period of that. So um I I think for that reason if you don't have that same debt dynamic hanging over a manufacturing sector that dominates the economy now it's a very different it's a knowledgebased economy. Um, I think that makes it a little bit harder to just have these cyclical run-of-the-mill recessions. I mean, we I'm sure it could happen. I wouldn't say it can't. >> I just think it's less likely than a lot of people that focus on the past think it is. So, what will bring about the next recession? Probably something insane that none of us can think of right now. >> Yeah, that's uh >> Sorry, but like that's just the reality. >> It is. Yeah. No, it is. Um, does anything concern you? Anything really worry you about this market right now? >> I mean, there's always things to be worried about no matter what the market environment is. So, I I do think there's a ton of speculative activity. I think unfortunately a lot of that is um concentrated amongst young people. I think a lot of young people don't really care for the investing process. I think they prefer the gambling. Um, maybe they'll grow up But for for right now, I think there's a lot of people taking a lot of risk that they don't understand. Some of it is paying off and they're learning all the wrong lessons. >> You don't learn anything from your success. You learn from failure. There hasn't been a ton of failure. There will be. >> Um, and so a lot of lessons will get learned. Maybe that's the silver lining, but that's one of the things I worry about. >> Okay. You worried about stock? >> Can't do anything about it. But >> you worry about stock valuations? >> No. >> No. All right. Fair enough. Well, I mean, they could come down, >> right? Right. >> I worry about stock prices. >> Prices. Yeah. >> Yeah. >> Not so much valuations, prices. >> Okay. >> I like them where they are. >> Cool. [laughter] >> So do a lot. So do a lot of people. Um, all right. I think we're we're wrapping up here, but we'll get to our last question that we do for every guest. Um, same for every guest. >> What is the fastest land mammal? [laughter] That's >> cheetah. >> Okay. >> Did I win? All right, Chad, >> that is not the question. >> What's the final question? >> Simple. If you need to leave our listeners or viewers with one thought, what would it be? >> Oh, man. I don't know if this is off off message for Stanbury, but like this is my honest opinion. People probably spend too much time focused on what the market's going to do, what stocks to buy. I think people are spending too little time away from the computer, away from the phone these days. I think people sort of take their time for granted and uh I end up in my profession I end up talking to a lot of people toward you know the end of their lives. Um not like the day before but you know >> like none of them are like I wish I had spent more time researching stocks. I wish I had spent more time reading economic reports. I wish I had spent more time listening to company conference calls. fun of them like they they don't I think the number one thing is what people never regret are the experiences they've had even the ones that weren't great in the moment like and so what we try to instill in our clientele and they don't need us to tell them this but sometimes sometimes people need to hear things from someone else to validate it right >> we have people that spent 50 years of their lives saving Everyone said, "Save, save, save, save, save." They listened. And now at 65, at 70, now we're telling them, "Flip the switch. Spend." It's hard. They don't want to hear it. But we have to explain to people. We have people millions of dollars. Uh, one day I'm going to get that that that car that when you think this shit's going to be more fun when you're 80, do it now. A lot of the job of financial planner these days, look, people's portfolios, >> psychologist, too. Yeah. >> People's portfolios have way outperformed what the financial planning software said would happen. >> Yeah. >> We're doing 15% a year in the S&P over over 15 years, >> right? >> People have way overshot their goals. >> So now it's like more important than ever. It's like you got to live, spend the money, buy the vacation home with enough bedrooms for your your children and grandchildren. >> Do the thing. do it right now. Like that's a lot of what my planners uh do these days and it's fascinating. >> Yeah. >> Um it's a it's people would say, "Oh, it's a good problem to have. You don't spend enough money." Yeah, fine. But it's still a problem. So, if I could leave people with anything, it's um don't wait. Don't wait. Do the thing. You'll uh you'll one day you'll be glad you did it. You won't regret that you did it. >> Yeah. No, I think that message will resonate with our audience. And um thank you so much for your time, man. My pleasure. Thanks for having me. >> All right, and that's another episode of the Stansbury Investor Hour here in Las Vegas. We hope you enjoyed that conversation with Josh Brown, as I truly did. And uh Dan will be back with us next week. Opinions expressed on this program are solely those of the contributor and do not necessarily reflect the opinions of Stanbury Research, its parent company, or affiliates.