Welcome to Episode 8 of Yahoo Finance’s Stocks in Translation with master statistician Jared Blikre. This week, Jared and guest co-host Brooke DiPalma converse with Caleb Silver, Editor in Chief of Investopedia. They discuss the cost of the American dream, steps new investors need to take and how gardening can improve your portfolio.
Read more: https://finance.yahoo.com/video/why-todays-market-dynamics-tale-160000787.html
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[Music] welcome to stocks and translation our essential conversation cutting through the market Mayhem the noisy numbers and the hyperbole to give you the information you need for your portfolio I’m Jared blicker and today I am in Jo I am joined by Caleb silver he’s the Investopedia CEO and Brook DePalma as well thank you for joining us here today um guys our theme for today is retail and guess what this is a it’s kind of a loaded term because we are exceeding see an explosion in the meme trade right now we got some big retail earnings on deck and also disappointing retail sales this week on Wednesday so we’ll talk about that and our word of the day is diversification it’s more about it’s more than just owning a bunch of stuff we’re going to break down what that stuff could be and this episode is brought to you by the number 3.4 million that’s the calculated cost of the American dream according to our guest in Investopedia we’re going to tell you why and how much by Americans are coming up short now Caleb and brook let’s dive in want to talk to you about meme stocks here it’s been blowing up our Yahoo finance training tickers I can only imagine the Search terms you’re getting on Investopedia so what are you seeing right now yeah thanks to roring kitty for coming back into the mix here we needed him back to the party brought every excitement’s here the part’s back he brought everybody back so everybody’s wondering who is roaring Kitty again in case they forgot what happened in 2021 or they haven’t seen dumb money got I got a little piece in that movie myself so there’s that there are people looking at Short squeezes what is shorting what’s a naked short don’t naked short folks that is extremely dangerous we got people looking for different ways that they can play this market right now as well they’re looking into trading halts what does it mean when stocks are halted for trading what is a circuit breaker at the exchange is there literally a circuit that somebody has to reset no but people want to know this cuz they forgot what happened a few years ago or some of these people are experiencing this type of activity in the market for the first time and it’s exciting we need this type of action yeah and let’s talk about what’s happening in the market right now briefly we have the S&P 500 the NASDAQ at record highs the Dow is very close right now um how are you seeing the market yeah are you not entertained stocks at record highs right now we got meme stocks back in in uh in play right now so the market the market seems like you know it’s okay but we have this tale of two countries right you have the stock market at alltime highs you have median home prices right at alltime highs asset owners share holders are doing great right now the real feel of the economy not so great so that’s what we’re feeling on Investopedia we have something we call the Investopedia anxiety Index this is our readers search traffic to fear or anxiety based terms and as far as the markets go that’s brilliant by the way yeah thank you uh they’re not concerned because the market’s at record highs it’s just been churning higher and higher couple a little bit of a reversal in April but they’re not worried about that they’re not too worried about the macro environment although inflation has been the dominant theme and that’s their number one concern they’re more concerned about their own personal finances so you have people who are run up too much credit they haven’t been able to keep up with Rising inflation maybe they got a raise but it’s just not keeping up and then the things that we have to buy insurance food rent the things that you can’t get away from they can’t get away from and it’s eating into their ability to invest so we’re seeing a little bit of a pullback just in terms of enthusiasm we survey our readers every couple months and right now I would say they are cautiously optimistic but not necessarily promiscuous not really getting into it the mem craze may have woken them up a little bit though I want to tap into that further because like you said before there are so many new investors who are just learning about this for the first time maybe they didn’t even think about investing back in 2021 now they’re like hey I want to get into this what are some key areas or key things that they should watch before they do jump into this Market yeah see they’re going to want to get in those that have been enticed by the mem stock Madness by the fact yeah like oh I can get into this and take advantage and make a quick Buck we all know that is trading at best most of that is gambling and if you’re just getting in for the first time you’re going to get spit out by that that we call catching falling knives not what you do what you want to do if you want to get in you want to own a little piece of one of these stocks that’s fine but build yourself a stable Foundation of a portfolio with some index funds or some ETFs that represent the stock market understand the way the market works and understand how you’re investing know what you own we always say that then if you want to do some things on the edge to understand how to research stocks and maybe trade them indiv ually that’s fine but if you haven’t built the foundation you don’t have anything to build on and what about retail stocks in particular um Home Depot announced earnings earlier this week we have Walmart on Deck um this is going to be Thursday morning and we’re going to be releasing around noon but just in general the trends that you’re seeing in earning season and specifically with some of these retail stocks that are dropping now yeah so retail stocks have been sort of front and center in the question of whether or not consumers are tapped out right we say as far as inflation goes which is cool in a little bit or growing at a much slower rate that the cure for high prices is high prices because eventually consumers tap out right they can’t take it anymore well they haven’t proven that but we have heard from McDonald’s and now we’ve heard from Home Depot and others that they’re trading down a little bit right ticket uh ticket purchases the total costs are going down on average so consumers are being a lot more sensitive about that I’m uh the editor-in-chief of Investopedia thanks for the promotion earlier by the way I’ll take the paycheck but we are a part of the- Marth family of website and that includes uh real simple Better Homes and Gardens travel and Leisure in food and wine so we see the trends that consumers are thinking about across all these different categories so no one’s buying or selling a home but what are we doing we’re redoing our mud rooms we’re redoing our kitchens the little expenditures we’re making not the big ones not the deck not the roof but the little things on the side when people are shopping for food we learn from food and wine they’re going down Market a little bit maybe that middle section of the wine uh of the wine store instead of top shelf right now so you kind of feel it across Ross the portfolio yeah what we learned in Home Depot earnings was that people are pulling back on those large big ticket redos Renovations that DIY consumer really pulling back and and perhaps looking for other ways just to stretch their dollar the best they can yeah well I want to get to our word of the day this ties in with what we’re talking about it is diversification and typically about this time I go to Investopedia and I read the definition and there’s no reason why this should be any different so diversification is a risk management strategy that creates a mix of various Investments within a portfolio it should contain a mix of distinct asset types and investment vehicles in an attempt to limit exposure to any single asset or risk uh Caleb you have anything to add to this uh definition from Investopedia that is perfectly written and edited and you might have written yourself I never I but I refer to it all the time too and of course it is one of the foundations one of the bedrocks of building a real Investment Portfolio for the long term we always say that that said if you look at the last 20 years you could have really Diversified by picking an index fund picking an ETF thrown a few darts at the dartboard and been all right in a low interest rate environment right we’ve had an incredible secular bull market for a long time right now now there’s big question about whether or not that’s actually going to work going forward or if you need active management to really get you that higher Alpha that that a lot of investors are seeking we always think that diversification is cored no matter what you’re doing whether it’s investing across a broad portfolio of stocks or different asset classes or if you’re just Building Wealth through different things like real estate maybe a p owning a piece of a small business having a stock portfolio having some money in the bank diversification RIT large across everything you do you can’t go wrong yeah I would say a lot of people don’t think of real estate but that’s an important part of the mix and a lot of people have that exposure anyway you also have Commodities and volatility you know I was I I know that you are you have an interest in gardening I’m wondering if you can apply the mindset set that you have in Garden like maybe pruning uh your plants here to diversification and making sure that your portfolio has the right ingredients yeah we might call that tax loss or herb loss harvesting but I do think about what I have outside of my containers going in this weekend which is going to be a big broad set of different culinary herbs so you’ll have your basil right you’ll have your Rosemary you’ll have your oregano and when it comes time to make that Sunday gravy I’ll be using all of them and I’m jealous this sounds good come on over dinner up at my place in Harlem this Sunday Sunday gravy made with fresh herbs that’s diversification right so uh when you think about the way that we cook or the way and I come from the restaurant industry right you want that Misan plus all the different things you need well stocked well ordered in a good Supply I love how you’re running with this metaphor Year I’ll go all day long going all all day long I’ll throw the apron on right now and whip up some guacamole I don’t care so that’s the way you want to think of it when you in terms of building your portfolio or just building your foundational wealth what different pieces work into that mix all have different timings all have different risk mitigation strategies and as the CEO of your financial life there’s your CEO theme coming back you want to make sure you’re across all of those and manage them individually so collectively they work best the best together yeah and there’s so many asset classes that investors can jump into right now we hear a lot about the 6040 portfolio you want 60% stocks 40% bonds you know when you think about Commodities when you think about real estates when you think about cryptocurrencies other asset classes how should you sort of narrow these down in your head to say hey where do I even jump in yeah for white belts start with an index fund right start with some ETFs that represent the market understand that they can be sector specific if you want but in general index funds just so you understand all the different stocks that go into say the S&P 500 or the Russell 2000 build your foundation there when you’re getting a little bit better talking about Green belts here the blue belts here then maybe it’s time to mix in some tax mitig mitigation assets here maybe some imun work in your portfolio as you get older like me you’re thinking a little bit less about putting the pedal to the metal in terms of risk I don’t know if bonds are the right answer there we’ been pretty much in a bare market for bonds but I do have some Bond exposure you want to make sure that you are well positioned and well timed in terms of where you are in your life stages but also I do a lot of this work with my uh my planner and my adviser what’s the best tax advantageous way for us to be investing now to make sure that we get the benefit of those gains 20 years from now when we actually need them good points there I I’m wondering where we began this conversation talking about meme stocks and another asset class is cryptocurrencies which tend to be very streaky and when we see Bitcoin at record highs a number of things happen uh that’s when the Yahoo finance trending ticker list just explodes with these guys um I actually only get recognized on the street when Bitcoin is at a record high few and far between but true story um just wondering we haven’t talked about cryptocurrencies just wondering if you think there’s a place for those in people’s uh portfolios yeah I do and I own some and it’s a very small percentage of my portfolio it’s less than 5% and it probably always will be unless it explodes again and then maybe I’ll have to do some tax loss harvesting on my own but why do I own it well I do believe that 10 years from now Bitcoin will still be around I believe that ethereum in The Ether token will still be around there’s a few tokens that I see that have real use cases right now plus a lot of them are available to retail investors as we know through the spot Bitcoin ETFs so I want to own them so I understand them it makes me become an educated investor and when I own them I understand how they move when they move and what they’re tied to and what they’re not but I always make sure that it’s just a small piece of my portfolio along with other things that are on the higher risk end of things in general I’m a pretty boring investor why because I learned early on that I am not that smart when it comes to picking stocks I will tell you this I will actually ask you this name five of the best uh performing stocks of the past 30 years and you’ll probably get a couple of them right but a couple of them would never have been in your play go for Monster Amazon Amazon number one monster monster number two but you wouldn’t have picked it if you didn’t know it right there there’s a couple other there on that list that just don’t make any sense so stock picking is not something I learn that I learned that I was very good at so I went with the index funds and the ETFs and finally when I had enough assets and it got too confusing for me I went with a financial adviser and planner because I don’t know what I don’t know and I want a pro in charge it’s sounds like a Tailwind right there all right for our viewers on our live streaming platforms we’re going to take a quick volatility pause for everybody else we’re going to carry on with the show this episode is brought to you by the American dream and it’s cost anyway so we’re going to break this down Investopedia has Quantified the American dream as costing $3.4 million the problem is the median Life Time income for a person 25 to I believe 65 is 2.3 million so pretty big gap there Caleb how did you arrive at these numbers and just tell us about why you decided to go here yeah so the American dream was actually our term of the year for 2023 we look for the terms that had the most search volume and the most consistent search volume throughout the course of the year we have 15 million people a month coming to our site so though everybody’s coming with an individual question but when you look at it in aggregate month after month we saw that the American dream kept popping up month after month now it wasn’t as big as say bank failure because we didn’t have a you know because that only happened during a a distinct period of time right that was April of of last year but this was something that kept coming up and what we started to look at when we looked at some of the an anecdotal data and the searches around it was it was not people saying how do I get to it it was this feeling that a lot of people feel that they’re not going to be able to realize the American Dre live a better life than their parents they work hard they went to college now they have debt now they can’t keep up with the cost of living maybe they’ll never be able to afford that first home so they feel like that’s Out Of Reach so with our data journalism team we went and we Quantified reasonable expectations for what that dream would cost and these are reasonable expectations we’re talking about things like paying for a wedding for a child over time paying for a funeral right uh buying six used cars over your lifetime that’s not crazy if you own a car for 10 12 years uh maybe having health insurance for your family over 900 Grand sending a couple kids to college just for a couple years most people only do a couple of years of college we put all this together and it costs in today’s dollars $3.4 million staggering yeah actually yeah it’s a big number and when you think about the fact that well you can make that over your lifetime the median income only gets you to about 2. three so there’s that gap of over a million dollar between what it cost to have reasonable expectations to live and and run a household right raise a couple of kids and pay for these things have a couple pets and what you can actually make if you’re just making the median income and that Gap has to be filled how do we fill that Gap you have to fill it with question right that’s investing right that’s one of the ways to fill the Gap you have to make your money work for you so it’s not just you and your labor for the rest of your life that are trying to hit that number and this number is different for you it’s different for me it’s different for everybody we just took Basics B is like nine figures so yeah yeah yeah we’re going to have to we’re going to have to ratchet this one up for you you know what I I really am curious though when you think about this American dream and then you think about all the headwinds that are up against the everyday American right now inflation higher rental cost higher Auto cost how do you possibly recognize that in your head or reconcile all of it to say I can still pay for my kids go to college while still affording that Weekly grocery trip yeah that’s why you see that dissatisfaction you see it in the consumer sentiment numbers right you see it in the consumer expectation numbers for what inflation is going to be you see it in the gallop poles right why do people feel like even though GDP is actually all right right now stock market’s at a record high asset prices have risen you can get 5% in the bank people just have this dissatisfaction because they don’t feel like they can ever get on top of it now some of that is because we spend too much money right people always say I’m living paycheck to paycheck well what do you spending your P what are you doing are you traveling are you eating out what are you spending your paycheck on and what does it cost to be you a lot of people never determine that that is really the core the essence of financial planning what does it cost to be you today what is it going to cost to be the you you want to be in the future and a lot of people never really do that they just start spending and keeping up with the Joneses or getting the new truck or taking the V so hard to get swept into that it’s hard but you know we work hard in this country we’re a hardworking uh uh a bunch of Americans who want to take a vacation who want to do uh have nice experiences the thing is this if you are not putting money away and paying yourself in the future and and allowing that money to compound and grow over time you’re never going to be able to afford your time and you’re always going to feel like you’re behind it and never going to get to that dream whatever that dream is you you mentioned a key word here compounding and that could easily be one of the words of the day it’s a very powerful concept that Warren Buffett likes to talk about and it’s simply that if you do things on a regular periodic basis those things uh they multiply over time and they build on themselves what does that mean to you I know it’s it’s a little bit glib to say you know just let your money work for you but what does that actually mean to uh to you yeah it’s the ninth wonder of the world that’s what Einstein calls it for a reason right this is the fairy dust that is sprinkled over investing and this is allowing your money when you look at things like the rule of 72 how long it takes for your money to double at a certain interest rate but this is very real and it’s hard to realize this and I didn’t realize this when I was a younger investor because you don’t feel it when you’re dealing with small amounts but then it’s like everything all at once after about 15 20 years when the numbers start to get bigger and then you have some couple of big years in the stock market or three big years in the stock market like we had post pandemic then you’re like wow what just happen inside my portfolio I didn’t do anything no you didn’t yes you did you did it 10 years ago when you started investing on a regular basis and adding to it and letting that money work for you I love this analogy it’s a metaphor uh that I learned from Vivian 2 who says there you have two pools right now there is your labor pool the money you make and you get in your paycheck every two weeks or every month whenever you get paid that’s to sustain you and then you have this other pool of money that’s working that’s that 10% you’re kicking over to yourself you got to get that working too and one day you’re going to slow down your labor but your money is already going to be working in the background for you and that’s the money you’re going to live on a lot of people don’t realize that that that’s how it actually works look I’ve been doing this a long time when you put it that way a couple months ago I was like perfect you got to have this pile working over here cuz you’re going to eventually going to want to stop working that’s how that works yeah and what I do want to follow up and ask on that is is for for investors who didn’t come from families who think like this how do you alter that mindset and convince your spouse convince your siblings your parents even maybe to get in yeah well I didn’t come up from a family that thought like this right I’m I came from a family didn’t make a lot of good financial decisions and I’m not saying that you know we we were bereft or anything like that but we went from having nothing to having a lot to having nothing again and then scratching our heads wondering how did that happen so I had to figure it out for myself and that’s probably why I do what I do today so Financial trauma your financial history shapes you in a lot of ways but when you just look at the math right I do this a lot with high school kids and and even with uh with ninth graders and eighth graders we just look at that rule of 72 right what happens if you put $100 in the stock market every year for 10 years what about 20 what if you add another hundred to that every year what does that then look like and at the the the basics is this if you start investing when you’re 25 at an average of 6,000 bucks a month and no nobody at 25 has 6,000 bucks but by the time you’re 36 you might and we’re talking about a Roth IRA contribution here a little bit less if you do that every year until you’re 65 you’re going to have 3/4 of a million dollars right 6,000 a month on average if you start at 35 years old you’re going to have $450,000 not too shabby but there’s $250,000 that was just there because you started earlier so we always say at Investopedia the best day to start investing was yesterday the next best day is today it is now time for our Hollywood segment who work better and Caleb you are a documentary filmmaker so I’m especially glad to have you in the house here I’d like you to focus your powers of awareness around this very common investing dialectic that we’ve been talking about which is passive versus active investing passive versus act active and since the theme of our show is retail in the US I’m going to ask you what investment style are retail investors owning or wearing the best is it active investing or passive in investing well passive investing is something you can wear for all season so I would say for most retail investors and most of us do this anyway if we have a 401k or an IRA or a Roth IRA we decide where we’re going to put it whether that’s a Target date fund or a bunch of different mutual funds or index funds or ETFs and we just do it every couple of weeks as as I said earlier we survey our readers every two months about how they’re feeling right what’s the vibe and most of them and we always ask them what is your what are your top 10 stocks and what stocks would you buy now and hold for the next next 10 years just to see where their sentiment is they don’t change a lot it looks a lot like the top 10 stocks in the S&P 500 the herd follows the herd and the herd has been right more or less for the last 60 to 70 years so passive investing is something you can wear for All Seasons if you are the type of person that can spend the time to learn what you’re doing and trade your account when necessary but do it in a tax efficient way and pay attention to different things like patterns and put some stop orders in and some limit orders in to make sure you don’t get burned have real risk management uh uh techniques in place and rules-based investing then active investing is great it’s fun that’s how we learn you can learn for the rest of your life as an investor most people don’t do that and don’t want to pay attention to it and they think they can do it and they stop paying attention for a second that’s when the losses start that’s when they get burned and that’s when they jump out of the market you know how has your past informed what you’re doing at Investopedia here whether it’s your gardening whether it’s your film making efforts anything like that yeah I sound like a Martha Stewart here um not a bad thing I love it you love Martha uh look I I started my career in the restaurant business right because there was a lot of financial trauma man Chef bus boy cook prep cook line cook Glock maker waiter manager I did it all right because there was some Financial trauma and I didn’t want to leave my financial future in somebody else’s hands I didn’t feel like I could trust anybody with that so I started working very young probably too young uh for labor laws but back in the 80s anything was possible especially in New Mexico where I’m from so I did that and I started earning my own Capital right so that I could do the things that I wanted to do have some money in savings start investing early when I wanted to bought myself a television camera when I got out of college taught myself to shoot yeah beta cam if you you’re some of you who are old enough might remember that um and then became a documentary filmmaker and a news Stringer and a photo journalist even did some work here for Yahoo back in the day um so that I could earn my own Capital right all of these things taught me a how to run a small business B the the power of earning your money through Labor and what that does and then the power of saving and investing over time so with all of those things from my days as a as a cook making guacamole in Santa Fe New Mexico to my days as a documentary filmmaker chasing uh illegal logging activity through the through southern Brazil to what I’ve done at uh Bloomberg and CNM the through line is I love storytelling right I like working with teams right I like looking at how businesses actually work you know what makes them tick and putting all those things together and being able to be sort of the explainer and chief including the the editor and chief at Investopedia one of the greatest Gifts of all time I think I have a really cool job but I had to learn those things myself to become the person that I am today and I’m really grateful for it and we love those explanations over at Investopedia and really thank you for your time here and coming today we got to wind things down here at stocks and translation but keep your dial tuned to Yahoo finance [Music] oh
1 Comment
Dumb money is winning, because stocks only go up. 😂