Bigger returns. Guaranteed income for life. Retiring five years early. Every one of these sounds like an obvious yes, until you see the invoice that comes with it. Joe puts Doc G, OG, and Jesse Cramer through a rapid-fire “in or out” game: he pitches five genuinely appealing financial ideas, and each of them has to decide whether they’d actually take the deal, and name the worst realistic thing that could go wrong if they did.
What You’ll Walk Away With
- Why leveraged ETFs have historically wiped out the vast majority of investors who hold them for more than a few years
- The real, academically-supported case for and against thematic and “beat the market” investment funds
- A clear framework for handling a single stock that’s grown into 40% of your portfolio, including a simple trick for spreading a big tax bill across two tax years
- Why “guaranteed income for life” almost always means giving up the one thing that actually protects you from inflation over a multi-decade retirement
- A genuinely helpful explanation of what a Monte Carlo simulation’s “80% success rate” actually means, and why it’s not the cliff-edge failure people assume
- Why retiring five years earlier isn’t automatically the right move, even when the math technically works
- A real cost-benefit gut check on working an extra year or two specifically to fully fund a child’s college education
Why This Matters Now
The financial products and strategies that sound the most appealing, guaranteed income, market-beating returns, an earlier retirement, all have a cost that isn’t obvious from the pitch alone. That cost isn’t always dishonest or hidden on purpose, but it only becomes clear once you ask the right follow-up questions. Learning to instinctively look for that fine print, what you’re giving up, what could go wrong, and whether the tradeoff actually serves your specific goals, is a far more useful skill than knowing the name of any single financial product.
From the Basement
A three-way tie atomizes the year-long trivia standings heading into the fourth quarter, decided by a question about how little Charles Schulz was paid for the very first month of Peanuts comic strips.
Resources Mentioned
Stacking Benjamins on OG’s calendar — for financial planning help
Earn & Invest podcast — Doc G’s show
Personal Finance for Long-Term Investors podcast — Jesse Cramer’s show
Granola — AI-powered meeting notes tool mentioned in the sponsor break
Our Topic: Money ideas that sound great until you examine the tradeoffs and fine print
During our conversation, you’ll hear us mention:
- Leveraged ETFs
- Thematic ETFs
- Investment fees
- Market benchmarks
- Beating the market
- Alpha vs. beta
- Investment goals
- Concentrated investing
- Portfolio diversification
- Single-stock risk
- Rebalancing
- Capital gains taxes
- Tax planning
- IRMAA surcharges
- Investment momentum
- Market reversals
- Downside protection
- Options strategies
- Long-term investing
- Guaranteed income
- Annuities
- Bond ladders
- TIPS ladders
- Retirement buckets
- Safe withdrawal rates
- Retirement guardrails
- Inflation risk
- Early retirement
- Monte Carlo simulations
- Sequence-of-returns risk
- College funding
- Work-life priorities Pasted markdown
Our Contributors
A big thanks to our contributors! You can check out more links for our guests below.
Jesse Cramer
Another thanks to Jesse Cramer for joining our contributors this week! Hear more from Jesse on his show, Personal Finance for Long-Term Investors – The Best Interest, on Spotify.
Learn how you can work with Jesse by visiting The Best Interest – Invest in Knowledge.
Doc G
Another thanks to Doc G for joining our contributors this week! Hear more from Doc G on his podcast, Earn & Invest, on Apple Podcasts.
Check out his latest book The Purpose Code: How to unlock meaning, maximize happiness, and leave a lasting legacy.
OG
For more on OG and his firm’s page, click here.
Doug’s Game Show Trivia
- How much money was Charles Schulz paid for his entire first month of Peanuts comic strips?
Join Us on Monday!
Tune in on Monday when we tackle the angel and devil of personal finance, credit cards, as new data shows issuers are targeting you with hot new offers, and we share how to go on offense with a smarter credit card strategy.
Miss our last show? Check it out here: Don’t Tell the Car Dealer Your Budget (And Other Money Moves That Actually Work) SB1904 | Stacking Benjamins.
Written by: Kevin Bailey
Episode transcript
[00:00:00] Doc G: God, Duke’s are going to corner the entire frozen orange juice market
[00:00:10] Doug: Live from the basement of the YouTube headquarters, it’s The Stacking Benjamins Show
[00:00:25] Doug: I’m Joe’s mom’s neighbor, Doug, and on today’s show, what are some money concepts that sound great until you hear the catch? Our team is bringing some of the whoppers lots of people fall for as Joe asks them, are you in or out on these money ideas? But that’s not all. Here’s the best idea ever. How about we continue our epic game show year with another dose of my weekly trivia contest?
[00:00:52] Doug: We’re into Q4, and our contributors are neck and neck. And now, a guy who is up to his neck in dad jokes, it’s Joe Saul-Sehy.
[00:01:06] Joe: Hey there, Stackers. Who doesn’t like a good dad joke, Doug? Happy Friday to you. We’re super happy that you’re here. If you’re here live with us, hanging out on YouTube, making the show.
[00:01:16] Joe: Either way, it’s gonna be a super hour because we are talking about these financial concepts. You know, it’s funny. I was talking to a creator. I was just recently at a industry conference called FinCon, and this creator was talking about one of the best things to do when you’re creating stuff to go viral online, right, that everybody wants to see, is to take the thing that everybody says they want, the thing that they think that they need, and then tell them they can have it, right?
[00:01:46] Joe: Just tell them, “Hey, guess what? This thing that you didn’t think you could do, you can have it.” Well, today we’re gonna talk about what could possibly go wrong when you do that. One thing that of course is, uh, never going wrong is, uh, hanging out with Doug. What’s up, man?
[00:02:00] Doug: I’m feeling all right, Joe. Uh, probably feeling the same way as one of my burritos when I make them myself, just held together by hope at this point.
[00:02:08] Joe: But just hope. Yeah, hope and… Well, not duct tape because you don’t wanna eat the duct tape- You don’t wanna
[00:02:13] Doug: do
[00:02:13] Joe: that …
[00:02:13] Doug: but just kinda- No.
[00:02:14] Joe: But you know why? It’s ’cause you stuff so much into the burrito. That’s why.
[00:02:17] Doug: The analogy still works.
[00:02:19] Joe: You know? You’re just hanging on to the burrito as, uh, that, uh, tortilla’s hanging on for dear life.
[00:02:23] Joe: Yeah,
[00:02:23] Doug: and there’s a lot stuffed into my life right now, so it’s perfect.
[00:02:26] Joe: Yes. And you know one thing that’s stuffed into your life right now is our co-host Mr. OG.
[00:02:31] Doug: That’s why it’s so uncomfortable.
[00:02:34] Joe: How are you, man?
[00:02:35] OG: I’m doing okay, except, uh, my thing here says that my connection is unstable. So sorry, guys. Oh.
[00:02:41] OG: I’ll see you later. Bye.
[00:02:42] Joe: Dougie, Dougie thinks it’s his connection that’s unstable. Do you wanna tell him, or you want me to tell him?
[00:02:47] OG: Oh, never mind. It says Tina’s.
[00:02:49] Joe: Oh.
[00:02:50] Doug: Yeah, Tina’s is, is unstable on, on mine. I see that.
[00:02:53] Joe: Yes. And a guy who we always refer to as stable when we talk about him- … just so he remembers it, up there in Upstate New York, Mr.
[00:03:02] Joe: Jesse Cramer’s here. How are you, man?
[00:03:04] Jesse: We went from burritos to unstable. Wasn’t sure what was coming next.
[00:03:08] Doug: Dude, you look like you should live in a stable.
[00:03:11] Jesse: Is that a horse joke or is that some other livestock, Doug? You are looking- Tell me more …
[00:03:15] Doug: rather equine today.
[00:03:18] Jesse: Joe, I got to see everybody at FinCon last week.
[00:03:21] Jesse: I got to see Joe. Well, I saw OG not at FinCon. I bumped into him at the beach, out in Huntington Beach. I saw Paula at FinCon. Doug was conspicuously absent, though.
[00:03:33] OG: He wasn’t invited.
[00:03:34] Joe: He was. Is Doug real or AI? That’s what everybody wants to know. Doug real or AI? By the way, Jesse, so I gotta ask you, you finally got to hang out with OG.
[00:03:46] Joe: Tell me what a glorious moment that must have been.
[00:03:49] Jesse: It was fun. It was really fun, actually. So I was… I got invited, don’t ask me how. I got wrangled. It was very nice, though. I got wrangled into, uh, speaking at this conference called Future Proof. I was on a panel. So, you know, we’re up on stage, we’re chit-chatting on the panel, talking with the audience, and then get done with the panel, and, you know, people are…
[00:04:07] Jesse: a few people are coming up, saying hi, shaking hands, “Thanks. Can I ask you a question?” And then this guy comes up to me, and I look, and, like, it takes me, like, a hot second. It’s OG. And we hung out, and it was great. It was glorious. We had a wonderful time.
[00:04:20] Joe: Yeah, it’s… Wow, did, did OG give you 10 bucks to say that?
[00:04:22] Joe: I ne-
[00:04:23] Jesse: I’m not sure if I can speak for OG
[00:04:26] Joe: Yeah, wait
[00:04:27] OG: Bye, Jesse.
[00:04:28] Joe: What
[00:04:29] OG: the Bye, E. And that’s what I thought about you being there
[00:04:34] Joe: I gotta just, I gotta make sure I don’t press that button, Jesse. I’ll be like, “Oh, hanging out with OG was a good time.” You’re gone.
[00:04:41] Jesse: I was saying, I think when I got banished, I was saying I should probably just speak for myself.
[00:04:45] Jesse: I had a wonderful time. I don’t wanna put words in OG’s mouth.
[00:04:48] Joe: OG, how was it hanging out with the Jesse Cramer?
[00:04:52] OG: Uh, f- you know.
[00:04:54] Doug: Oof.
[00:04:55] Joe: Oof. Not reciprocating the enthusiasm. I felt rather offended that
[00:04:58] OG: he didn’t know who I was.
[00:05:00] Jesse: It’s like, you know, when you hear stories about someone who, when they get attacked, they’re like, “In that first second, I, I wasn’t sure what was going on.
[00:05:07] Jesse: I was kinda like, I was… Should I defend myself? What do I need to do?” That’s all. It’s like, next thing I knew, you know, I’ve got my personal space. I’ve got a little radius. Next thing I know, there’s someone in my radius. It’s OG. So for that first half second, just didn’t know what to do, but then once recognition came over me- It’s called the bro hug,
[00:05:24] OG: Jesse.
[00:05:24] OG: I was
[00:05:24] Jesse: going for it … then we, then we hugged it out. Then we hugged it out.
[00:05:27] Doug: You hugged somebody? OG.
[00:05:29] Joe: Wow.
[00:05:30] Doug: We
[00:05:30] Jesse: did not.
[00:05:31] Joe: OG. OG, just to be clear, that was a metaphor, Doug. Oh,
[00:05:36] Doug: I see. Okay. ‘Cause that’s, there’s a, there are a lot of things he won’t do, and that’s one of them.
[00:05:42] Joe: Yes. Speaking of somebody who is in our orbit at Stacking Benjamins, because he is our brother show, Earn and Invest, we would call him a guest, but he’s, he’s here far too often to be a guest.
[00:05:55] Doc G: I, I’m the stability of the podcast. You finally entered, there’s finally some stability here. We can now progress.
[00:06:02] Joe: You’re not hanging on like a burrito, Doc G?
[00:06:04] Doc G: No. No, no. I’ve got a little bit more than hope today.
[00:06:08] Joe: For people new to Stacking Benjamins and don’t know about the wonderful stuff you do at Earn and Invest, what’s going on over there, man?
[00:06:16] Doc G: We have been busy. By the time you’re listening to this, we’re gonna have Kristy Talarico on. We’re gonna talk about HR benefits and how they can serve people better. So we’ve just been busy talking to people. Been doing some solo episodes, getting ready for my book launch. The Happiness Code is coming in March, and so all that’s been going on.
[00:06:34] Joe: The Happiness Code. I can’t wait s- for us to dive into that. Well, today, Doc, how about we talk about The Misery Code? We’re gonna talk about- Because what happens is people get these ideas in their head that, “Hey, I’ve got all this cool stuff that I think should apply to me, right? That, that, that I can go get.
[00:06:53] Joe: The internet says that I can do it.” And then you find out that, well, maybe, maybe either you can’t or you shouldn’t. We’re going to find out what concepts those might be. Gonna ask Doc G, OG, and Jesse. I feel like we got some alliteration going there, Doug. I don’t know what’s going on. Uh, we’re gonna ask them what they think about these different concepts.
[00:07:17] Joe: What could go wrong when it comes to these concepts? But first, we have a couple of sponsors who help us keep on keeping on, make sure this is free for you every time we publish. So we’re gonna hear from them, and then we’re gonna come back and talk about- money moves you want until you see the actual bill
[00:07:42] Joe: Okay, guys. Today, I am giving you everything people say they want with money: bigger returns, guaranteed income, an earlier retirement, successful kids, and investments normally reserved for the velvet rope crowd. But every offer comes with an invoice, right? You go, “I’ll take that,” and then you actually see the fine print, and, uh, well, it gets, it gets ugly.
[00:08:05] Joe: So for each offer, I’m gonna ask each of you to vote in or out, and then name what you think is the worst credible invoice you believe comes with the deal. So I’m gonna submit to you a situation, and you go, “Yeah, I’m in, even though this is the downside.” OG, you and I a lot on the show, we talk about every investment has a downside.
[00:08:26] Joe: And if you think it doesn’t, you haven’t thought hard enough about it. So name whether you’re in or out, and the worst credible invoice you think comes with this deal. So let’s start with you with this one, OG. I can put 10% of my portfolio into a leveraged stock market fund with the potential to dramatically outperform the S&P 500 over the next decade.
[00:08:51] Joe: Are you in or out? And what’s the worst credible thing that could happen?
[00:08:56] OG: Uh, I’m out, and the worst thing that happens, which will actually happen, it’s not hypothetical, but it will, uh, you lose 98% of your money.
[00:09:06] Joe: Oh, wait, what?
[00:09:08] Jesse: 98% of the 10%.
[00:09:11] OG: Yes, correct.
[00:09:11] Jesse: Yeah. Yes.
[00:09:12] OG: That’s if you don’t get stupid and go, “Wait, I should buy low.”
[00:09:16] Joe: What do you mean by that? Tell everybody why you think this is a bad deal.
[00:09:20] OG: Leveraged ETF positions are meant to be a daily traded thing. So you’re betting on the daily movement of that index or that thing, whatever you’re betting on. Honestly, I think you’d have better results if you’d, like, literally went on Calci and actually did betting because I think that it’s a little bit, uh, I think, I think you have better odds.
[00:09:40] OG: But because it’s a daily reset and the multiplier effect is 2X, 3X, whatever, if you have a negative day, it’s negative day times 3X, and now it resets back to zero. So it’s not like you can have, like, five straight days in a row and have them be good and offset one of the bad days. I think there was a study on this.
[00:10:01] OG: I don’t remember where I read it. Well, let me rephrase. I know there was a study on this. I don’t remember where I read it, but anybody that held it, I think the number was five years, they, they lost 98% of their money.
[00:10:12] Joe: 98% of their money. Holy cow. Jesse, let’s go to you. Let’s change the game just a little bit, uh, so it’s not the leveraged ETF where you’re gonna lose their money.
[00:10:20] Joe: Mm. Even though you and I see people do this all the time, well, heck, all of us see investors, brand new investors go, “Oh my goodness, I’ll just leverage it. I think the market’s going up.” Let’s say instead of leverage, let’s say it’s one of these, uh, newer active themed ETFs, right? Yeah. It has a theme, like the theme where you are tracking, uh, let’s say people in Congress, right?
[00:10:42] Joe: And what Congress people are investing in, you’re investing in the same thing. 10% of your investment’s into that. Are you in or out?
[00:10:51] Jesse: I’m not an expert on these thematic ETFs, not an expert. From what I know, I’m, I’m gonna lean toward out. Why? Well, for one reason, they are, likely they come with higher fees, right?
[00:11:01] Jesse: You’re not gonna get a thematic investment at, you know, hundredths of a percent. It’s probably gonna cost you half a percent or something like that. So higher fees, always a little cautious there. Another reason why is that I would want my investing philosophy to have some academic rigor if I had my choice.
[00:11:17] Jesse: I want it to be a little bit, you know, robust. A lot of these thematic ETFs are more, they’re more like jokes than anything else. Again, no relation, but he is my uncle, Jim Cramer. There’s the inverse Cramer ETF. Right? So it’s just like, well, we think Jim Cramer is a bit of a comic character on CNBC. He’s always pushing buttons, making sound effects.
[00:11:37] Jesse: Who does that? We’re just gonna do the exact opposite of him. Like, there’s no academic rigor there. It’s just kind of this, you know, it’s almost like a meme. It almost is like a meme. So for, for those reasons, I would avoid, if, if I was being serious, I would avoid the thematic ETFs.
[00:11:52] Joe: Okay, Doc, so what makes you change from out to in on this deal?
[00:11:57] Joe: We already heard that leveraged ETF is not out on that. Thematic, Jesse says he’s out on that. What sweetens the pot to some S&P beater that makes you go, “Yeah, I’m listening”?
[00:12:10] Doc G: Generally, I’m out, too, but I interviewed Alex Edmonds, who wrote a book and, and does actually research about how to beat the market.
[00:12:19] Doc G: And believe it or not, some of these thematic ETFs work. I mean, there is some real data behind, for instance, momentum in the short term and reversal in the long term. And so you can get these themed ETFs which do really deliver above and beyond market beta. But you’ve gotta pick the right person at the right time, which of course then puts us at risk.
[00:12:40] Doc G: So I generally am actually too lazy of an investor. I just don’t wanna think that hard about it for a perceived alpha that I may or may not get. I’m a big fan of market beta. But if you are interested in it, there are some academically proven ways to try to deliver a little bit better. We know there’s an equity premium, right?
[00:13:01] Doc G: Some people believe there’s a small cap value premium, so there are some premiums there and there are some themes that we could possibly follow, which may not take a huge amount of research or energy. But again, I’d rather stick with beta. I, I’m, I’m not too worried about the possibility of alpha.
[00:13:19] Joe: We’ve seen this, OG, with, uh, some fun families out there.
[00:13:23] Joe: I mean, dimensional funds come to mind, right? They’re not trying to pick what’s gonna win, they just kind of… It’s, it’s a little more obvious what we’ll probably lose when it comes to the index. Is that what gets you in on this idea of the possibility of an S&P 500 beater?
[00:13:38] OG: I, I just… I don’t even understand why it would matter to try to beat anything.
[00:13:42] OG: The, the S&P is Standard & Poor’s list of 500 stocks. The Russell is Russell Investments 1,800… list of 1,830-odd positions. Who gives a crap what it does? Like, the only thing that matters is whether or not you reach the goals that you need to reach to, you know, or get the returns that you need to reach your goals.
[00:14:04] OG: If you beat the S&P by 300%, but still don’t have enough money to reach your goals, awesome, you’re still dead broke. So the whole idea of, of trying to beat a mythical list by a group of people seems really stupid. In fact, if you wanted to do it, what I would do is put together a list that you could always beat.
[00:14:23] OG: Why not create a list of the crappiest stocks- … and then you could be like, “I beat the index.” And then you will have, like, a lot of emotional, like, lift with that because you’d be like, “This is awesome. I am beating this list, and I’ll just call it an index, and then I can tell my friends I beat the index.”
[00:14:41] OG: And- You’d be
[00:14:41] Joe: confident. You’d have
[00:14:42] OG: so much confidence … you can, like, flex on everybody. Yeah, your life would be way better. And, you know, like, women and men would be throwing themselves at you and be like, “Oh, my God, are you the guy that beats the index?” You’d be like, “Yeah, I do, every day.”
[00:14:54] Joe: Jesse, is this the problem, that we’re so obsessed-
[00:14:56] OG: It’s called sarcasm.
[00:14:57] Joe: What… Is this the-
[00:14:59] OG: And I’m laying it on pretty thick, Joe.
[00:15:01] Joe: I get it. I get it. And actually, my question was, agreeing with what you’re talking about, OG, which is, Jesse, d- is this a problem that we’re obsessed with beating something, right? We’re, we’re… Like, it’s some type of a race or a competition versus a competition between us and our goal
[00:15:18] Jesse: I, I think so.
[00:15:20] Jesse: And I think not only do I agree with everything OG just said, this idea of beating a benchmark is the wrong question. And that’s essentially what OG is saying, is we’re not really asking the right questions. But it even gets a little bit worse than that, ’cause, ’cause what OG said is most important. We’re, we’re asking the wrong question.
[00:15:37] Jesse: But then even when we go one layer deeper and we say, “Well, let’s look at that wrong question. Should you be trying to beat the S&P 500?” Then the, the analysis that people do is often wrong. Just, just meaning that, you know, why is it just the S&P 500 that we care about? Why is it just the Russell 2000 that we care about?
[00:15:53] Jesse: My, my point is that oftentimes, like, people don’t really understand the benchmark itself or why they’re picking that benchmark, or is it right for me to compare my 50/50 portfolio against the S&P 500? Well, of course not. Half your portfolio’s in bonds. I think that we are maybe a little bit benchmark obsessed a- and, and we shouldn’t be.
[00:16:11] Jesse: And then even when we are, we aren’t looking at benchmarks the right way.
[00:16:15] Doc G: I, I mean, I think we need to change the frame a little bit, because there is a time and a place for trying to beat… I’m not gonna say benchmarks, but there’s a time and a place for alpha versus beta, and I think we have to look at the framework.
[00:16:27] Doc G: Most of us are not trying to build wealth in the stock market, we’re trying to maintain wealth and beat inflation. But if you’re trying to build wealth, you don’t wanna diversify, you wanna concentrate. And so if you’re looking to concentrate wealth, and instead of doing it by being a doctor like I did, or being a financial advisor, doing whatever you do for a living, if you’re like, “I’m going to build wealth through the stock market,” then I think you do want alpha.
[00:16:53] Doc G: But the way you’re gonna get alpha and the way you’re gonna… You… Then you gotta hit a home run. But hitting a home run is probably an individual stock more likely, right? Is gonna make a big bet, hit it right, and build wealth. It’s concentrating your risk. So I think the bigger question is not whether we’re trying to beat a benchmark or even whether we want alpha or beta, the question is what is our goal here?
[00:17:13] Doc G: And for most of us listening to this, our goal is to concentrate wealth in our profession or however we make most of our money, and then we take that money that we concentrated with our profession and put it in the stock market to diversify. But then you’re not trying to hit the home run with diversification, you’re trying to beat- Right
[00:17:29] Doc G: inflation and then some a little bit. And I think that’s really the frame we should look at this.
[00:17:32] Joe: Well, I’m glad you brought that up, because like Brian Feroldi said when he was on a couple weeks ago, Jordan, he, he was talking about how if you’re wrong, if you concentrate, you’re gonna build wealth faster or you’re gonna lose it faster, right?
[00:17:46] Joe: And have you right-sized that investment so that you can accept the risk that the downside might happen. Let’s stick with you for question number two. Are you in and out on this one, Doc? One stock has made you wealthy and now represents 40% of your portfolio. So you had the concentration, it goes up, it’s now 40%.
[00:18:06] Joe: Selling enough to diversify would trigger a six-figure tax bill. I wanna keep the winner. In or out, and what’s the worst thing that would happen if you did keep the winner?
[00:18:19] Doc G: I mean, I’m in for selling and diversifying. Let’s talk about the worst on both sides. Okay, so
[00:18:26] Joe: you’re out on- If you keep the- … you’re out on keeping it.
[00:18:28] Doc G: Uh, yes. I’m, I’m selling- Okay … to diversify. Let’s talk about the worst part about both sides, right? The worst part about staying, right, so concentrated is you may lose the bet. Being concentrated always puts you at a risk, and once you have the wealth, you wanna protect it, not necessarily get the outsized returns or the home runs.
[00:18:48] Doc G: So if you stay in the concentrated risk allocation, the likelihood you could lose it all or lose a big percentage of it is high. Let’s look at the other side. The other side is if you diversify and take the tax hit, the tax hit’s no joke, and God forbid you’re 63 years old when you do that. You may get all sorts of IRMAA charges at 65.
[00:19:07] Doc G: You may mess with your capital gains tax bracket. You may mess with your Social Security tax. I mean, the problem is income sucks, right? Taking more income always hurts. Income sucks.
[00:19:19] Joe: Is that, is that the quote of the day? Income su- I, I don’t want more income.
[00:19:23] Doc G: No, I mean, it really
[00:19:23] Joe: does. The reason I live in a tent is because-
[00:19:26] Doc G: Gross income really hurts in other ways.
[00:19:28] Doc G: Right. And that’s why you really do wanna work with your accountant. It’s the Dunning-Kruger effect. We think we know more than we do, and often we make a decision and only understand the immediate implications, and sometimes we don’t understand the other implications. So this is one of those times where really talking to your accountant or your financial advi-
[00:19:45] Joe: I just took- I c- these buttons are killing me I
[00:19:50] Doug: created a cliffhanger there.
[00:19:52] Doc G: You didn’t like what I was saying, did you?
[00:19:54] Joe: I did w- It’s just like when John Mulaney got censored at the end of that joke on the Emmys the other night. Uh, just, “Yep, he’s gone.”
[00:20:02] Doc G: He’s out.
[00:20:03] Joe: Yes. All right. Let’s go to, uh, let’s go to Mr. Kramer. You also out on keeping it when it’s f- now 40% of your portfolio?
[00:20:14] Jesse: Yes.
[00:20:15] Jesse: I am out on keeping it. You’ve won. You’ve won. Some- something that you invested in did really, really well, and it did so well that it went from being a, a normal position in your portfolio to now being half of your portfolio. So y- you’ve had a really big win, and unfortunately, part of having that really big win is that you have to pay some taxes.
[00:20:35] Jesse: And something that Jordan alluded to there that is exactly the right thing to keep in mind is that just because you should pay some taxes or have to pay some taxes, it doesn’t necessarily mean that you do it all at once, right? There can be some thoughtful tax planning that goes into it, uh, to, to understand either second order effects or maybe it’s just something as simple as, like, okay, you know, you know, doctors hate this one simple trick.
[00:21:00] Jesse: So one really simple trick is you sell half of it in December, and then you wait two weeks, and you sell the other half of it in January simply to spread it across two tax years. I mean, it’s a very simple thing. The point is that there are usually smarter and dumber ways of realizing these big tax bills, and, and it can help to try to, to do some of your research and figure out one of the smarter ways first.
[00:21:21] Joe: Well, even without the tax bill, OG, I mean, I’m, I’m just gonna assume that Doc G is out on keeping it. Jesse’s out on keeping it. You’re probably out, too, but assuming that you are out, how do you talk to a client about that? Because I’m thinking it’s the early 2000s, and this really happened in my practice.
[00:21:41] Joe: I had a client that owned a bunch of Apple stock. It went through the fricking roof. She had, to use Jesse’s phrase, she had won, Jesse. It was, the game was over. She’d made a ton of money. I’m like, “You know what? Y- you should sell it.” And then I said, “All this good…” The iPhone had just come out, so we know exactly when it was.
[00:21:59] Joe: It’s 2007, right? And, and I said the phrase, “What else good can happen after this?” Think about selling Apple in 2007. She did really well, but there was still a lot of winning to go. So OG, how do you talk to a client about giving up all this upside potential when it comes to the thing that got them where they are?
[00:22:30] OG: I would not sell the stock
[00:22:32] Joe: You would not sell the stock. You would keep it.
[00:22:36] OG: Yeah. It’s winning, man.
[00:22:38] Jesse: C- can we just let
[00:22:38] Doug: the
[00:22:38] OG: audience know
[00:22:39] Doug: about that prop? That was good prop
[00:22:41] OG: work. You like that? The audience d- Like a little, little Carnac. He
[00:22:44] Doug: just did a sight gag and nobody knew it.
[00:22:46] Joe: Yes, for those of you not with us on YouTube- I
[00:22:48] OG: do most of my gags for you guys, as you probably know, so
[00:22:52] Joe: it’s okay He just took a, uh, he took an envelope and opened it up, and inside was the answer to the question, which was different than I had assumed.
[00:23:00] OG: It’s Carnac from, from,
[00:23:02] Joe: uh- Johnny Carson …
[00:23:03] OG: Johnny Carson. Anyways.
[00:23:05] Joe: And, and, and he tells us we’re old, Doug. But anyway.
[00:23:08] OG: I think that, um, if you were in this position, I would want to find a more reasonable way to offset the tax liability as well as provide some diversification There’s a lot of really, really, really great investment plans, investment strategies out there.
[00:23:29] OG: None of them are free, so you gotta evaluate the cost structure. But even something as simple as saying, “Hey, let’s protect some of the downside of this large position.” I mean, if you’re gonna have a $100,000 tax bill, you know, the position’s probably 500,000 or a million or something, depending on your cost basis, right?
[00:23:48] OG: Maybe we should buy insurance on the stock, let it keep going up, in your Apple example, Joe. Because the biggest risk that you’re trying to solve for is, this is a large percentage of my portfolio. If it goes down, it totally changes the trajectory of my net worth. Like, if it goes down more than the market, right?
[00:24:06] OG: If it’s different than what the market does. Alternatively, in your example, if your client would have actually held onto their Apple stock, they would have $100 million right now, which is also a different plan, you know what I mean? I love the comparisons. I think maybe Apple’s a little bit too far removed for a lot of people, ’cause it’s always pretty much gone up.
[00:24:25] OG: But if you’ve ever done the example of Bitcoin, you know, you’re like, “Dang it, if I’da bought, I knew Bitcoin, I knew this was, I should have put $10,000.” No, you wouldn’t have. You would have never done that, because it was stupid. And then secondly, even if you did, as soon as your 10 grand turned into 20 like eight days later, you’d have been like, “I’m the smartest investor in the history of mankind.
[00:24:45] OG: I’m taking my 20 grand and running.” You would’ve had to go through, how many has it been? Six times it’s got cut in half as it’s gone up to where it is today. I don’t think it’s fair to evaluate the sale decision post, or the, the, the sale decision postmortem, because- It’s a money
[00:24:59] Joe: burning quarterback it
[00:25:01] OG: Yeah, I mean, at the end of the day, you, you had no idea what Apple was gonna do.
[00:25:05] OG: But I think that there’s a better way to diversify your portfolio, and you should pay attention to some of those strategies. You gotta evaluate the cost structure, see if the juice is worth the squeeze there. But, um, but there’s some opportunities.
[00:25:17] Doc G: Hey, Joe, there is an actual academic answer to this if you’re just looking at returns, believe it or not, and it depends on how quickly a period the stock went up.
[00:25:27] Doc G: So there’s this thing called momentum, and there’s been great academic research that shows that momentum actually brings slightly higher returns. And there’s also academic studies of something called reversal, which shows that stocks that have been running high for a long time are likely to reverse.
[00:25:42] Doc G: And so the academic point is actually how long the stock has been going up. So in that scenario you just gave us, if you said, “Boy, it went up 30% in the last two or three months,” you could argue based on momentum to let it ride for another eight to nine months. But after you hit about a year to two period, you go from the momentum premium to pretty much the reversal premium.
[00:26:03] Doc G: One could argue in the short term you should hold onto a stock that’s rising like a star, but in the long term after it’s been about a year, year and a half, that you should get rid of it because the likelihood is it’s actually gonna reverse. Boy, but I just think, well- And there’s actually really, there’s really good academic research on both of those
[00:26:19] Doug: but what’s your definition of, of long term? Because years-
[00:26:22] Doc G: One to, a year to a year and a half
[00:26:24] Doug: Right. Well, that is incredibly short term. I mean, if you look at, I, I bet- Yeah … I’m wondering if any of you guys know what the single greatest return is in the American stock market history
[00:26:36] OG: Philip Morris
[00:26:37] Doug: Nope.
[00:26:38] OG: Mon- Monster Energy drink.
[00:26:41] Doug: Nope.
[00:26:43] Joe: Well, it was for OG after he drank it. It- He was like, “This is- Yeah … the best return ever.”
[00:26:47] Doug: It’s Home Depot, believe it or not. $1,000 invested in Home Depot i- at its IPO would be $34 million today. It beats Apple and it beats Nvidia. But that value wouldn’t have been realized, and you would’ve cratered so many times, but the value is in the holding of the stock.
[00:27:04] Doug: So I’m saying I would’ve been… I don’t know if I’m in or out. I probably would’ve gotten rid of the 40% of my portfolio as well and diversified. But if you really wanna roll the dice and see if you get the big return and be on OG’s team, y- I mean, there may be a reason to hold onto that because you could have a Home Depot on your hands and not…
[00:27:25] Doug: You won’t know it until you’ve held it for 40 years.
[00:27:28] Joe: It is interesting using, uh, what I assume, OG, was an option strategy to protect your downside, you know? Maybe I’m going to, maybe I’m gonna hold it, but I m- uh, I, I look at what it would cost me to cover that risk that it might go the wrong way.
[00:27:44] OG: Yeah, I mean, there’s options.
[00:27:45] OG: There’s a lot of different things, yeah. Yeah. That are beyond the scope of our discussion today, but just selling it because you’re scared of the tax guy, that’s crazy for all the reasons Doc G talked about in terms of, you know, the downstream effects of that. But also burying your head in the sand and saying, “You know, I can’t sell it because I don’t wanna pay the taxes,” ignores the other side of the equation which is all of the, you know, single stock exposure that you have.
[00:28:11] Joe: All right, guys, we all love, L-O-V-E, guaranteed income. What could go wrong with guaranteed income? I’m gonna ask you about guaranteed income streams and whether you’re in or out on that, and then we’re also gonna talk about retiring five years l- earlier. That’s something everybody wants, right? What if I give you a scenario about retiring five years earlier, and will you be in and out of that scenario?
[00:28:31] Joe: That and more coming up, but at the halfway point of every Friday Stacking Benjamins episode, we have this year-long competition between OG, Jesse, and Paula Pant. Doc G, you’re playing for Paula Pant today. I can’t believe what I’m about to say. I cannot believe what I’m about to say. You ready for this, Doc?
[00:28:50] Doc G: Mm-hmm.
[00:28:51] Joe: Doug, tell everybody the score.
[00:28:54] Doug: Doc, y- you are sitting in the worst time in history to be sitting in Paula’s seat, the worst time in recorded history because Paula is tied for the lead. The great news for our, for our Stackers is this is the best the trivia has ever been. This is the greatest season in Stacking Benjamins trivia history.
[00:29:16] Doug: We have Jesse with nine points, OG with 10 points, and Paula with 10 points. We got a chance to have a three-way tie today as we’re coming down the home stretch of the year. Man, this is what we play for, isn’t it, folks?
[00:29:31] Doc G: I will never pass up the opportunity to lose for anyone, including Paula.
[00:29:37] Doug: But there’s actual pressure now.
[00:29:39] Joe: For those of you that think that Paula’s been bad at trivia, they forget that Doug G… But you’ve pulled a couple out of the hat, man. There’s been a couple times where I’m like, “Man, where did that come from?” Is today the day that Doug G does that again and propels, even weirder than today, Paula into first place?
[00:29:56] Joe: What would that be like? That’d be so strange. Or is OG going to reclaim the lead this year, or is Jesse gonna make it a three-way tie while he is, uh, trying to defend his crown from last year? Well, only Doug knows the answer. But first, Doug, you gotta give everybody the question, man.
[00:30:19] Doug: Hey there, Stackers. I’m Joe’s mom’s neighbor, Doug. Here’s something you’ll be in on. Comics. October 2nd marks the anniversary of one of the most successful comic strips in history. On this day, way back in 1950, Charles Schulz’s Peanuts made its debut, introducing America to Charlie Brown and his friends.
[00:30:40] Doug: Although, apparently, Schulz was holding out on the good stuff because Snoopy didn’t show up until the third strip two days later, which I respect. I mean, you can’t just give people the dog on day one. You make them earn the dog. The strip started small, just seven newspapers, but eventually Charlie Brown, Snoopy, Lucy, Linus, and the rest of the gang became some of the most recognizable characters in the entire world.
[00:31:05] Doug: And, you know, Charlie Brown and I actually have a lot in common. Every year, Lucy charges Charlie five cents for psychiatric advice, and every year she convinces him she’s gonna hold that football so he can kick it, and every year Charlie Brown believes her, which is basically the same relationship Joe and I have down here in the basement.
[00:31:23] Doug: Every week, he hands me another trivia question and says, “Doug, please, just read what’s on the page. I’m begging you.” And every week I come running towards that football. You’d think I’d learn, but no, I’m far too dimwitted to catch any of that. Hey, wait a minute. I see what you did there. Anyway, Schulz eventually did very well for himself, but back then he was a 27-year-old cartoonist whose brand new comic strip had just been picked up by a handful of newspapers.
[00:31:51] Doug: So here’s today’s question: How much money was Charles Schulz paid for his entire first month of Peanuts comic strips? I’ll be back right after I see if Joe can actually write me trivia without something evil in it. You see the look in his eye saying, “Trust me, buddy, definitely going straight forward with it this time.”
[00:32:12] Joe: Our trivia’s always so straightforward. It’s so, so straightforward. Nothing going on there. We got, uh, OG going first, as is often the case. So, uh, Charles Schulz and Peanuts, how much did he get paid for his first month?
[00:32:30] OG: So how much did he get paid for the month? Seven newspapers in the first month in 1950, and he was drawing a little, little comic strip.
[00:32:42] OG: 25 bucks
[00:32:43] Joe: $25 for the entire month. Doc, what are you gonna do with that?
[00:32:47] Doc G: I think it’s higher than 25 bucks, but not a lot. Um I’m gonna say 75. Let’s give some space so Jesse has to choose.
[00:32:59] Joe: $75 played like a veteran. Je- Jesse, you’re in this weird position of going third. What is going on?
[00:33:07] Jesse: I feel like Paula.
[00:33:09] Jesse: What can I say? Um, it’s a good feeling, Paula. It’s a good feeling. Don’t you worry. So I was writing down in my little red book here, and the number I came up with before anyone said anything was $250. And so I think I’m going to say 76 to one-up Doc G and take the high side.
[00:33:31] Joe: All right, does $76 or above, is that enough to make this a three-way tie?
[00:33:37] Joe: Doc G with that number between 25 and 75, is he gonna help Paula take the lead? Or is OG right and maybe, maybe he did it for free? Who knows? Doug knows. We’re gonna find out when we get back. Be right back. All right, OG. You started at $25. The other two went significantly north of you. How are you feeling?
[00:33:59] OG: Um, as my good friend, uh, Sabrina said, “My give a F’s are on vacation for this right now,” so- … I don’t know.
[00:34:08] Joe: You feeling good, Doc G, about the numbers between 50 and 75?
[00:34:13] Doc G: Uh, I probably should’ve gone a little bit higher ’cause I think then Jesse inched me out. But yeah, who knows? You never
[00:34:20] Joe: know. Well, it sounds like with this number being 250, Jesse, if it was 239, you would’ve taken the, the upside.
[00:34:25] Jesse: Yeah, just, you know, going for a, the three-way. Who doesn’t like a three-way? 10. Perfect 10,
[00:34:32] Joe: you
[00:34:32] Jesse: know?
[00:34:33] Joe: Here we, here we go. Doug, give us the answer, man. Who’s taking home the win?
[00:34:41] Doug: Hey there, Stackers. I’m certified football holder and guy whose drawing of Snoopy looks like a baked potato, Joe’s mom’s neighbor, Doug. When Peanuts debuted in 1950, Schulz’s strip was appearing in just seven newspapers. He wasn’t exactly getting rich, but things changed pretty quickly, which proves something I’ve been telling Joe’s mom for years, you gotta spend money to make money.
[00:35:02] Doug: Admittedly, mostly I’ve been saying that while I was ordering appetizers, but, you know, the principle is sound. Peanuts went on to become one of the most successful comic strips ever, eventually appearing in thousands of newspapers around the world. So before the break, I asked you how much Charles Schulz was paid for his entire first month of Peanuts.
[00:35:22] Doug: Well, the correct answer was $65 higher than OG’s guess, $15 higher than Paula’s guess, and just $14 higher than Jesse’s guess, which means Jesse is today’s winner because Charles Schulz earned just $90 for his month, first month of comic strips, and we have a three-way tie. Batten down your patio furniture, folks.
[00:35:45] Doug: It’s about to get stormy up here.
[00:35:47] Joe: Unbelievable. Going into the fourth quarter, we have a three-way tie. How about that? Congratulations, Mr. Kramer.
[00:35:54] Jesse: This is purely the benefit of going last.
[00:35:58] Joe: While Paula doesn’t make it work the entire — Yeah … entire time. Not everybody
[00:36:02] Doug: can make hay in that position.
[00:36:03] Joe: So close, Doc G.
[00:36:04] Joe: You were close.
[00:36:05] Doc G: I know. I always give myself the credit that I was actually the closest with my guess.
[00:36:10] Joe: Until somebody got closer.
[00:36:12] Doc G: Yeah. Well- Right … I, you know, I’ve heard it whispered that Jesse’s never been in a three-way before, so gotta give the guy a chance.
[00:36:19] Joe: More
[00:36:19] Doc G: than a
[00:36:19] Joe: whisper.
[00:36:20] OG: So if I’ve been in the lead the entire year, so I’ve always gone first, is next week the first week that I get to go last?
[00:36:27] Joe: You go s-
[00:36:28] OG: Or do I have to go f- f- first again because- No … I’m still in the
[00:36:31] Joe: lead tie? No. You go second because it’s based on now on last year’s final, the way we finished last year. Ah. So Jesse- I see … will go first now, and then you will go second. Paula goes third.
[00:36:43] OG: I see.
[00:36:44] Jesse: OG, if you’re looking to throw a wrench into something, just make it a margin call next week.
[00:36:47] Jesse: Just blow this whole thing up.
[00:36:49] OG: Well, the last time I tried that, I got yelled at, so- … you know.
[00:36:54] Joe: Well, we’re gonna get yelled at if we don’t go back into our discussion for today, which we’re gonna start doing right now. Let’s, uh, start with the gentleman who won this week’s trivia contest. Jesse, here we go.
[00:37:06] Joe: You ready?
[00:37:06] Jesse: Ready.
[00:37:07] Joe: Let’s do this one. Everybody loves guaranteed income. I mean, what could possibly go wrong there? So here is the question I can create enough guaranteed monthly income to cover every essential expense for the rest of my retirement. In or out, and what’s the worst credible invoice you could get?
[00:37:29] Joe: What’s the worst f- fine print?
[00:37:31] Jesse: In, as far as it’s, it’s doable. And in, uh, I think, I think some people can, can reasonably convince themselves that it’s the right approach. But yes, a, a really big invoice comes with it, which is simply that, you know, the… I, I really enjoy this concept, which is the, you know, the prospect of guaranteed income means that it’s riskless, right?
[00:37:52] Jesse: Guaranteed and riskless are, are synonymous. And whenever you have a riskless investment, naturally risk and reward are tied at the hip. So if there’s no risk, you should not be e- expecting any sort of commensurate reward. And, and essentially means that you are going to have to build up a larger than necessary nest egg because you are going to be taking no risk to create this guaranteed income stream.
[00:38:13] Joe: Are you saying the insurance company, the cost to provide that is gonna be, they’re gonna want 15 bags of money to give you that, that option?
[00:38:21] Jesse: Yeah. I mean, and, and that’s even going potentially, a, a bridge further than, than I was thinking. I mean, if you’re going the insurance route, it’s, it’s not even really an investment, right?
[00:38:31] Jesse: It’s an insurance product. And like me- me- meaning like an annuity.
[00:38:34] Joe: Yeah.
[00:38:34] Jesse: Something like that. And, and yeah, in that case, it’s… A very typical retiree could probably give a bag of money to an insurance company, and you won’t even get your own bag of money back for 12 to 15, maybe even 18 years. They’re just paying you your own money back before they actually start paying you any sort of quote unquote “return” on your investment.
[00:38:54] Jesse: If we’re talking annuities, I, I’m not sure I’m in anymore.
[00:38:57] Joe: Oh, that’s interesting. I’m just thinking like
[00:38:59] Jesse: bond ladders.
[00:38:59] Joe: Yes.
[00:39:00] Jesse: Tips ladders, something like that.
[00:39:01] Joe: Just a locked ladder with guaranteed products. And I see what you mean. It’s gonna take a ton of money to make that happen. Yeah. Yeah. Doc, you in or out?
[00:39:12] Doc G: I’m out. I’m not a big fan of buckets, and this just is… I mean, all of these are bucketing strategies, and I would say why bother with buckets if you can either go safe withdrawal or you can do guardrails? In other words, I don’t feel the need or the fear. I think retirement is a leap of faith, and you never know what’s gonna happen, so trying to get 100% security is impossible.
[00:39:32] Doc G: But we have a pretty good idea that good investing means a premium on your return higher than inflation, and ultimately I’m willing to let it fly. I’m willing to go with the safe withdrawal rate or some version of guardrails. I’m not a buckets guy.
[00:39:45] Joe: This is why I love collaborating with Doc G, ’cause I love buckets.
[00:39:48] Joe: Yeah.
[00:39:50] Doc G: Boring. ‘
[00:39:51] Joe: Cause you are wrong. Uh, OG, you in or out on this idea? Guaranteed income for life.
[00:39:58] OG: I’m with, uh, Doc G. Uh, guaranteed income is, it’s like my good friend Tommy Boy said, “If you want me to take a dump in a box and mark it guaranteed, I can do it. I got time. But all you’re getting is a guaranteed piece of crap.”
[00:40:14] OG: The reality is, is that the… It’s funnier if I don’t laugh. But you guys are laughing, so it makes me giggle. Listen, the number one risk to people in retirement is not guarantees. It’s the fact that their money doesn’t outpace inflation. It’s because some idiot in the 1950s wrote something really stupid that sounded like, “When you’re 50, you should have 50% of your money in bonds, and when you’re 60, you should have 60% of your money in bonds.”
[00:40:42] OG: That stupidity has transcended, you know, a few generations, and now we’re trying to beat it out of people. You know, when Grandma and Grandpa died in their frigging late 60s, okay, fine. But now people live to their 90s and 100. You have to outpace inflation. So if all you have is a guaranteed tips ladder, or, I mean, there’s some inflation protection there allegedly, but, but if you’ve got, you know, a bond ladder or, God forbid, a stupid annuity, it’s like this, this stream of income is gonna be flat as your costs blow past it and double over a quarter century, and now what are you gonna do?
[00:41:18] OG: There’s just… You’re gonna start eating into the corpus of your safety, and that’s gonna drive down the safety numbers, which causes you to eat into the corpus of it faster, which drives down the safety number faster, and you die destitute. You’ve spent your entire life accumulating money and saving and investing and have seen the results.
[00:41:36] OG: You get to 65, you’re like, “Hallelujah. I have $3 million in my account. I did everything all the people told me to do. I saved, I invested, I managed my taxes. I didn’t touch it. I didn’t, I didn’t stress out when the market took a crap.” Here’s what I’m gonna do.
[00:41:50] Jesse: In a box.
[00:41:51] OG: Yeah. Here’s what I’m gonna do. I’m just gonna take all that stuff that made me successful the last 60 years of my life and throw it in the trash and go do something different.
[00:42:00] OG: W- w- what kind of sorcery is this? You already had success. Just do the thing again. So yeah, guaranteed income is dumb. I’d replace Social Security with market-based income if they would let me. Like, give me a Trump account with my Social Security. I’ll start right now. They can keep all of my Social Security contributions up to 49 and a half years old, and I will go from here until I stop working, put my money in a Trump account, and I will kick your you know what.
[00:42:31] OG: Come at me, bro
[00:42:32] Doug: That’s where you applied the filter- … was on ass? You didn’t wanna say that word, but all of the rest of that came out out loud.
[00:42:39] Joe: Welcome to the Stacking Benjamins show where I can start with, with you’ve done a great job and you’ve now guaranteed income for life. Isn’t it great? And OG has you destitute in a ditch by the end of his answer to the question.
[00:42:52] Joe: You
[00:42:52] OG: will.
[00:42:53] Jesse: Yeah.
[00:42:53] OG: You will be. I’ve seen it happen.
[00:42:56] Jesse: OG’s like, “You know that four-letter word that starts with F? FICA.” Yeah.
[00:43:03] Joe: That’s it. All right, Doc, let’s, uh, let’s go to you for the next one. Ooh, Saul. Ooh, Saul. Let’s talk about early retirement. How about this? I can retire five years earlier than I originally planned, but my financial plan succeeds in only 8 out of 10 of these simulations.
[00:43:20] Joe: They call it Monte Carlo simulation, right? I can reduce spending or return to work if necessary. Are you in or out? And either way, what’s the worst thing that could happen?
[00:43:31] Doc G: I am out, meaning I would not retire on a 20% failure rate only because I don’t feel like living a good life and being happy is synonymous with retirement.
[00:43:43] Doc G: Like, by the time you hit my age, you should be able to find a way to do some type of work you like enough to make your averages better than 80/20. What is the risk? Well, the risk of not retiring is that you die earlier, don’t get to do the things you wanna do because you have less time than you think.
[00:44:00] Doc G: Uh, but the risk of taking the leap is that you run out of money. And so 20% risk is a pretty significant risk, and I don’t… Me personally, as I go farther and farther in life, I realize that retirement really isn’t the goal. It’s having more control of how you spend your time and doing things you really like to do, and I’ve just realized that you don’t really have to retire to do that most of the time.
[00:44:21] Doc G: Uh, so why not build the life you wanna live, and then you can figure in retirement once you’re living that life you wanna live.
[00:44:29] Joe: So the risk is, is that your chance of being unhappy goes up.
[00:44:34] Doc G: Risk of what? Of continuing to work?
[00:44:36] Joe: Uh, n- no, no, no. Risk of, it isn’t just the fact that it fails 20% of the time. It’s that you’re retiring five years- Yeah
[00:44:43] Joe: earlier, and you’re saying, “For what?”
[00:44:44] Doc G: I think we make the mistake of thinking that retirement and happiness are synonymous. I’d like to help people build a happy life, and then we just figure retirement into it when it makes sense. But I don’t think they’re the same thing, and so it’s hard to correlate both of those, right?
[00:45:00] Doc G: They’re just totally different things.
[00:45:03] Joe: Well, let’s see, OG. 80%, 8 out of 10, you in or out? Retire five years early or not?
[00:45:10] OG: Absolutely. 1,000% out of 1,000%. The big thing that people don’t understand, and Doc, I’m not throwing shade, bro, ’cause you’re a smart guy. Correct sounds really strong. I wanna say something differently on the, on the Monte Carlo thing.
[00:45:27] OG: A lot of people assume that when you look at a Monte Carlo simulation, whether you do it on a website or, you know, however you get it, and it says 80/20, the 20 is a risk of failure. And, and we think of failure as being we’re at 0%. The reality is what the Monte Carlo is saying by saying th- there’s a 80/20, is it’s saying in 20% of the time we have to make a change to the assumptions
[00:45:52] Doc G: Which, which is fair enough.
[00:45:53] Doc G: I assume
[00:45:53] OG: that you have to stick to the
[00:45:54] Doc G: assumptions, yeah.
[00:45:54] OG: Which could be– Yeah, yeah, I know you know that, Jordan. Which could be, “Hey, we’re just gonna spend a little less this year,” or it could be something very dramatic like you are totally effed and, you know, you’re going back to work at 85. So it doesn’t dictate the type of change or the veracity of the change, just that there requires a change to be successful in this scenario.
[00:46:12] OG: And the way that I explain Monte Carlo, I think it kinda helps people understand what’s going on, is there’s two ways to do financial plans, right? You can think about it this way. You can like put it in Excel, I got this amount of money, I’m gonna grow it at this rate of return, I’m gonna add this much every year, and dah, dah, dah, dah, dah, dah, dah, dah.
[00:46:27] OG: It goes up, and then I start taking money out, and dah, dah, dah, dah, dah, dah. It goes down, right? But the reality is that it doesn’t work very linear like that. It’s random. What Monte Carlo does is it takes your existing asset base, your existing savings, your existing spending projection, you know, as you say, “I think I’m gonna spend 80 grand a year,” and then instead of taking a straight line of return, think about the last 100 years of returns on a deck of cards, where one side of the card has the year and the backside has the rate of return for your portfolio, if you’re a 70/30, if you’re 50/50, whatever.
[00:47:01] OG: This has happened already in the last 100 years, right? Your allocation has r- returned a result in the last 100 years. Monte Carlo says, “Let’s shuffle the deck, play the game in a different way.” Shuffle the deck, play the game a different way. Shuffle the deck, play the game a different way. So you’re getting real life returns, things that have actually happened, just in a different order.
[00:47:19] OG: And so just like in cards, sometimes you get some really crappy cards in a row, and Monte Carlo’s trying to simulate the probability of having all of these crappy cards in a row when, when it matters, right? Talk about sequence of returns risk or whatever. Or what happens if you have really good cards?
[00:47:35] OG: ‘Cause it’s unlikely that the next 100 are exactly like the last 100. So if you’re 80%, ship it
[00:47:43] Joe: Jesse, instead of a me too, I’ve got one more topic. But you know what? These guys have kids that are much older. You have a young family, so I just wanna ask you this one last one I had. You can fully fund your children’s college education, but doing it probably means working two additional years before you retire.
[00:48:04] Joe: Are you in or out, and what’s the downside?
[00:48:08] Jesse: I think I’m in for that one. Two years, right, I mean, whether it’s, is it one year, is it two year, is it three years? The idea is I’m at a point now where I, I enjoy what I do for work a lot. I think that helps. When I was an engineer and I first learned about the fire movement, and I first learned about investing and all these cool things that we talk about, I was very much in a place where if I could pull my retirement in a year or two or five or 10, I was on board.
[00:48:34] Jesse: Like, the idea of ending work to pursue other passions was really high on my priority list. I like what I do now, so I’m not that, you know, motivated to stop working early What am I motivated by? Well, I like the idea of, of earning a nice paycheck so I can go do fun things with my family and I can support my family.
[00:48:53] Jesse: So for me, my priorities have shifted, and I think for anyone listening, your priorities are your priorities. One of the fun things about what OG and I get to do is we get to help you figure out what your priorities are and help you achieve those priorities as you’ve stated them to us. So I would trade a couple years of working, ’cause I find them fun, in order to help out my kids that way.
[00:49:14] Jesse: Also, I just wanted to state, I think, uh, it just shows how passionate OG is about Monte Carlo. ‘Cause Monte Carlo, this very numerical thing, it’s, you know, zero to 100, and, and he’s so passionate about it that 1,000% out of 1,000% is how strongly he felt- … uh, in his Monte Carlo answer. I, I like that.
[00:49:32] Joe: Going 1,000 for 1,000.
[00:49:34] Joe: That’s a pretty big number. It’s like a bajillion to a bajillion. I don’t know. 10
[00:49:37] Doug: times confident.
[00:49:39] OG: Dun, dun, dun, dun, dun, dun, dun, dun, dun. Dun, dun, dun, dun, dun, dun, dun, dun, dun.
[00:49:47] Joe: I wonder which finger’s coming for Jesse.
[00:49:48] OG: Dun, dun, dun. Whoa, whoa, whoa, whoa. I hate it when it
[00:49:50] Doug: does
[00:49:50] OG: that. I hate it when it does that.
[00:49:51] Doug: Another, another sight gag from OG.
[00:49:53] Joe: Who knew? Yeah, but I think the audio only audience understood what was going on there. Yeah, they might have. I think
[00:49:59] OG: we got that squared away.
[00:50:00] Joe: And I’ll tell you what’s going on, I think we did a great job of these. And I think the real lesson, obviously, for our Stackers is all this stuff sounds good, but each of you poked holes in each of these concepts.
[00:50:11] Joe: And until you know what the hole is in the concept that you’re contemplating, like, if it sounds great and you can’t find something wrong with it, you haven’t searched hard enough. You just have not searched hard enough. Yeah. ‘Cause you guys are all great at poking holes in these things that we hear about every day.
[00:50:26] Joe: “Hey, guaranteed income for life. Uh, f- retire five years early,” all the different things. All right, let’s find out, speaking of all the different things, what’s happening where you live. OG, it is October. First weekend in October. What are you doing this fine weekend?
[00:50:42] OG: PSLs, baby. Uh, what am I doing this weekend?
[00:50:45] OG: Same as every weekend. I’m gonna do a little fun, uh, outdoor work tomorrow, and then, uh, undoubtedly softball Sunday morning, so.
[00:50:53] Joe: Softball Sunday,
[00:50:55] OG: Sunday, Sunday. Care Bear is, like, raking 10-year-olds. It’s pretty awesome to watch. Wha-
[00:51:00] Joe: what?
[00:51:01] Jesse: You might wanna expand
[00:51:02] Joe: on that Does that mean striking them out or?
[00:51:04] OG: Yeah, she’s doing that. She’s hitting on them. She’s stealing bases. She’s tagging people out. Oh. She’s, she’s like a one-man wrecking crew-
[00:51:11] Joe: She’s incredible …
[00:51:12] OG: out on the diamond. Yes,
[00:51:12] Joe: she’s very good. We got a future, uh, NIL situation going on- God, I pray not … at the Bannerman household?
[00:51:16] OG: I didn’t wanna jinx it, but since you already did, I will, um-
[00:51:20] OG: I will say we are… We stopped saving for her college. Let me just put it that way. We’re, we’re just, we’re, we’re kind of all in on this at this point.
[00:51:27] Joe: Oh, that is so painful. Doc G, what’s going on at the Earn and Invest podcast, man?
[00:51:33] Doc G: So if I’m correct, today is October 2nd. October 3rd, the Earn and Invest podcast is having a meetup in Chicago.
[00:51:41] Doc G: We are doing our annual Wealth with Purpose, that’s my mastermind. We’re doing our in-person get-together and we always open it up for a night at the bar. So it’s gonna be at 7:00 PM Central Time. If you are in Chicago, it is at the Duke of Perth Restaurant. Oh. That’s 2827 North Broadway Street. They have wonderful fish and chips.
[00:52:01] Doc G: Come hang out with us, earn and invest.
[00:52:03] Doug: I have had some ugly nights at the Duke of Perth.
[00:52:06] Doc G: Yeah, yeah. They’ve got great fish and chips, and lots of- Well, it’s the scotch … and, uh, quite a, quite a selection of alcohol, yes.
[00:52:11] Doug: It’s the scotch that really got me, not the fish and chips. Mm-hmm.
[00:52:15] Joe: And Doug, by ugly, let’s be clear, you met great night.
[00:52:18] Doug: Oh, they were, uh, mostly memorable. Yeah. Oh, God.
[00:52:25] Joe: Jesse, we saved the best for last, man. What’s happening at the Personal Finance for Long-Term Investors show here rounding out the year into the fourth quarter?
[00:52:35] Jesse: Last week, an episode came out inspired by former Stacking Benjamins guest, Dr. Daniel Crosby. Oh, what a great guy.
[00:52:43] Jesse: Uh, reading… It was… Awesome guy. And, and it was something he said on this very podcast about the three demons of overconfidence that inspired an episode. So that was last week, and then next week I think I’m gonna publish a, uh, my favorite Charlie Munger quotes episode.
[00:52:58] Joe: Oh, that’s gonna be great. I can’t wait to hear that.
[00:53:01] Joe: ‘Cause you- th- the, the way you dive into those things, really, really fun. I can’t wait. And that’s it. Personal finance for long-term investors, and Jordan at Earn and Invest, and Stackers and, uh, Earners. Is that what we call them, Earners? E and I’s.
[00:53:16] Doc G: Earners. E and I’s. Uh, Earn and Investors.
[00:53:19] Joe: Earn and Investors, yeah.
[00:53:21] Joe: Come, uh, hang out with Doc G in Chicago. It’s always a good time. Or go over to, uh, get OG’s daughter’s autograph ’cause, uh, you can get it… That’s like buying high. Buy low- Mm-hmm … and then sell high, right? Yeah. It’ll be
[00:53:35] OG: worth it.
[00:53:35] Joe: Good stuff. You know what else is sometimes worth it? Finding out what Doug thought of today’s episode.
[00:53:42] Joe: Every once in a while it’s worth it. Doug, what should we have learned on today’s show?
[00:53:46] Doug: Well, Joe, first take some advice from Jesse and Doc. If you have a great investment that’s become an oversized portion of your portfolio, you won. Time to strongly consider rebalancing. Second, take some advice from the always effervescent OG.
[00:54:01] Doug: Guaranteed income is a fool’s errand and a giant waste of time. But the b- I think I actually undersold that. But the big lesson- Joe thinks I’ll read anything. Yeah, right. Take this, Joe. You didn’t even write this, and I’m making it up as I go along. See? You don’t control me. Oh, wait, that says, “Control me,” not “control me.”
[00:54:27] Doug: My bad.
[00:54:28] Joe: God, got me
[00:54:30] Doug: again. Thanks to the Jesse Cramer for joining us today. You’ll find Jesse’s personal finance for long-term investors podcast wherever you find podcasts like this one. Trust me, it’s out there. You’ll love it. We’ll also include links in our show notes at stackingbenjamins.com. Thanks to Doc G for hanging out with us today.
[00:54:51] Doug: You’ll find his fabulous podcast, Earn and Invest, wherever you listen to finer podcasts. And finally, thanks to OG for joining us. Looking for good financial planning help? Head to stackingbenjamins.com/og for his calendar. This show is the property of SB Podcast LLC, copyright 2026, and is created by Joe Saul-Sehy.
[00:55:14] Doug: You’ll find out about our awesome team at stackingbenjamins.com, along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. And oh yeah, before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know.
[00:55:33] Doug: This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s mom’s neighbor, Doug, and we’ll see you next time back here at The Stacking Benjamins Show
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