Welcome to another edition of the Chicks on the Right podcast. We are talking to Zach Abraham and he is the chief investment officer of Bulwark Capital Management. Is Zach, how you doing today?
I'm doing great. Thanks for having me.
Yeah. Well, listen. We're going to talk about frugality today, which is something I have not always been good at, but I'm learning as I get older. There's a recent article that just came out from the Wall Street Journal and it framed homemade lunches as some kind of an
economic problem, which I find very interesting. There's a question wrapped up in all this to just bear with me, but apparently office workers are bringing brown bags and touugh aware instead of spending, like, you know, twenty twenty five bucks on a salad that somebody else makes. And somehow this frugal, grown up adulting decision is like a threat to the economy. Now, I can't believe this is even
a thing, but it is. But like casual places that serve this kind of food are struggling because this is what they're saying that they're struggling. But I should we be worried that that budgeting bed behavior is getting framed? Is like a bad thing just because it's not fueling their profit margins, because I feel like we should be celebrating this kind of frugality.
Yeah, well, yeah, one hundred percent. I mean it's I mean, it's absolutely ridiculous. First of all, you know, uh, you know, quick grab you know, lunch bowls or salad places aren't exactly the you know, the heart of innovation of the US economy first of all.
Right, and maybe the healthiest not only the healthiest either, right.
Yeah, no, And I think it's one of the easiest, it's one of the easiest ways to sit there and save Like I mean, you know, let's let's say you've got somebody that spends you know, fifty bucks a week on coffee and lunch, which we all know that's not.
Hard to do.
Oh my gosh, that's like so low.
Yeah yeah, that's that's super check low.
For a lot of people. Yeah huh.
But but you cut that out, Okay, we're talking about that's two hundred bucks a month. Yes, that's twenty five hundred dollars a year, and you start applying some interest to that, and you see what a big difference it makes, Like, and I will confess, so I am somebody. I haven't brought a lot unless something was really good from home that I wanted to eat. Again, I order lunch every single day. Right, I am not frugal when it comes
to that. I used to be, and I got tired of it, and so now I it's it's kind of a gift I give myself, right, Yeah, but you know, I'm I'm also not, you know, struggling to fund my four to one k and all, you know, all these other things. You've got to put it in context. But yeah, cutting out I think it's a wonderful thing to do. And and but it points to something that we've got, something we've got going on in this country culturally, and it's not new, but it's just the way that we
look at things, right. Like, So you hear that saving money and being frugal is bad for the economy, right, and you hear people talk about the same thing regarding government spending. Guys, there are things in an economy that may be beneficial in the short run for GDP gross domestic product that are not necessarily beneficial for the economy
in the long run. And anybody that tries to make an argument that whether on a personal level or on a government level, that saving money by not buying superfluous, unneeded stuff is a bad idea.
Those people are idiots, right, And if that is what.
Is going to keep you from going in recession, you're in a recession anyway, right.
It's not that's not going to be the deciding factor.
Now, what I will say is I do think a lot of people and it's too early. I'm not at all calling for a recession. I don't see that right now. But you are seeing a lot of signs. So, for instance, I think that they're looking at that wrong. We're hearing from a lot of different places that restaurant traffic is down sharply the beginning.
Of this year.
Yeah, so, believe it or not, one of the biggest or I think it actually is.
The biggest restaurant day of the year. Is Mother's Day?
Okay, yep, that makes sense because we do not want to cook.
Yep, yep.
And I've got a client that works for a fairly large restaurant supply business, right and they have felt pressure and less business coming out of the restaurant side of the economy for about the last four months, and they really saw Mother's Day this year as being kind of their rebound, right, like they bounce back strong. And he was telling me that Mother's Day numbers significantly missed what they were expecting and were significantly down from last.
Year, disappointing for them. Yeah.
Yeah, And look, what I think is clear is that the consumer is pulling back right for now.
And why do you think that is? Because you know, you got Trump in office. Do you think people would be like, Okay, it's like Daddy's got this, We're all going to be okay, you know what I mean. I think it's very interesting. I just think it would be the opposite. I would think it would be the opposite, right.
Well, yeah, but you got to remember, I mean you've got to look at where prices are, right, So, I mean, after a while, people get fatigued, and the further you know, you start getting priced inflation fatigue.
The other thing is the further and further we.
Get away from COVID, right, the residual effects and just the money itself that was handed out right, just thrown out the window.
That money. We're getting further and further away from that.
Impulse, right, And like it's one of the things that we've said is that and we would have expected it to happen already. I think there are reasons that it hasn't that we could dig that are pretty vast and expansive to discuss. But bottom line is, at some point, when you have a fiscal impulse that large and it stops and a government starts to exert any level of financial responsibility, you'd expect to have some type of economic slow down or recession in the not too distant future.
Not necessarily because are going bad, but it's like trying to maintain a sugar high for like six hours.
You know what I'm saying.
It just doesn't You're not going to hold that altitude. And you know, in normal cruising altitude for the economy is not that, so you kind of said. And then you're seeing default rates on used cars picking up to rates that we haven't really seen since eight oh nine.
There's just a lot of signs of weakness.
And I think for whatever reason, and and like I said, it shouldn't be a shock when you look at prices, when you look at home sales, when you look at all these things. To me, it's really remarkable that you haven't gone into recession already. But but yeah, to make the argument that being frugal and saving some money is it good for the economy. I'll take the other side of that, and I'll encourage everybody man sock it away, save money on lunch, especially the younger you are.
Yeah, man, pack lunch.
I love it. It's like what you said about the coffee thing. Like, I don't know anything about sus Ormon except for the one thing that she said, and I think she's kind of famous for that. She's like, if you waste money on coffee, it's like peeing one million dollars down the drain. Because she said, I wouldn't buy my cup. I wouldn't buy a cup of coffee anywhere ever if I can afford it, because I would not
insult myself by wasting money that way. It literally is what you're saying, because it's like it's a want, not a need. And she said, say you spend, like you said, one hundred bucks on coffee each month. You can put that one hundred bucks to a roth ira and after forty years it would have grown to one million dollars to twelve percent. At a twelve percent rate, It's exactly what you're saying.
Yeah, I don't.
But but there's but I think a lot of it's cultural, Zach, because like people like there's Starbe's, they've got a home, there's Starvey's and a lot of and they walk around with their little cups and it's like it's a it's a cultural thing, right, So retraining people or people retraining themselves to say I don't need that daily cup of coffee, you know I or just just saying themselves, I can do it at home. Coffee is coffee.
I can make this.
At home, I can take it to work. I can make my lunch at home, I can take it to work. Retraining and that, to me, that's smart. It's just smart.
Yeah.
Well or the flip side, like you were saying, is it? I think it's a more interesting cultural observation to talk about that person that is, well, I just can't live without my Starbucks, right. And I try to tell this to young people all the time, and I'm not I am. I'll be the first person to tell you that I behind every good success story, there is luck. There are things that bounced your way. It's not all you're doing. It's blessing.
It's luck, you know.
I think a lot of those other factors play into it. But one of the reasons I can buy lunch every single day is because the amount of money that I spend on lunch is immaterial to my overall income. Okay, right, And but I didn't get there by drinking my Starbucks every day. I still don't go get coffee at a Starbucks because for the same reason I just I can't
square it. And it's this lesson that you want to teach people that used to be common sense in this in this culture that has just gone away, which is we should have it now right.
It's yes to feel it should feel good right now, you know, And you're just like, guys, that's not the way it works. That's not the way it works. If you want to be able to do that, you usually have.
To go through a period of time where you don't, right, And that's just that's reality.
Embrace it.
Quit trying to pretend you're you know, you're somewhere in a different financial place than you are. Accept it and try to you know, that's accepting those realities and adopting and and and adapting those practices that we're that we're discussing here. That's how you get into a different stratosphere economically, right, instant gratification No, no, And it's just and and and there's another interesting I don't want to go too far off the off the.
Path on this one, but it kind of goes back to you know.
Like if you think, well, I just can't give up my Starbucks, like think think about a vapid thing that is to say, when you're having financial problems, and yet people but people aren't embarrassed to say it, you know what I mean, Like, at some point, at some point if like, let's say you're strapped, you've got credit cards that are in collections, you owe money to the irs, And it used to be a well, I just you know, you got walking out with your ten dollars Venti frappuccino
or whatever it is, you know, and you'd be embarrassed for people to know because you'd be like, oh, they think I'm an idiot, right, But nowadays you've kind of like taken the guardrails of shame off of culture.
And I don't I.
Don't think it's I don't think it's been a very good idea.
Yeah. To me, it's the same thing as saying, if I really need that pack of cigarettes, every day. Yeah, yeah, how we really need it. It's not any different, really.
No, no, how is it any different? And then also with the young people too, like getting that through their heads, like, hey, the quicker, you will embrace the hard, right. First of all, you will realize it wasn't nearly as hard as you thought it was.
Yeah. And second of all, the quicker, you embrace the hard, the quicker, you're done with it.
Right, And time passes really quickly.
So fast, right, so fast and yeah, and everybody says it.
And and if you're like me out there, it'll catch you off guard, you know, because you have these moments I know, you know, you know, you have these moments where you go, oh my gosh, but you start having kids in life, just go and you hear yourself say it, and you're like, oh my gosh, I sounds just like my parents.
I don't know, I know, but but it really does.
And if you'll embrace the hard early on in life, like I said, you'll, you'll you know, whether it's the budgeting, whether it's the packing your lunch, whether it's setting extra money aside.
That time goes by so fast.
And I can promise you this at that once you're sitting there saying, boy, that time went so fast.
You will be absolutely thrilled that you took that route. Total right, totally always worth it.
I've never once met somebody who said, you know, the biggest regret in my life is that I was too responsible and work too well.
True.
Haven't heard that regret now now now maybe, And I'm not talking about like, oh I wished I would have worked more rather than spending time with my family, and I'm not talking about that, but but yeah, just it's.
No, that's totally different. Frugality is totally different than time spent with loved ones and stuff like that. I think that's we're talking about a completely different thing. But I absolutely agree. Absolutely So Okay, so if people want more lessons and they want to be able to go to fancy dinners when they retire, because that is a perfect time to do it, how can they reach you, how can they see you, how can they do all the things bullwork?
Yes?
So yeah, easiest way to find us you just go Borcapitalmanagement dot com.
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You know?
So I got a confession. I don't know and I've never been to the Instagram page.
Okay, well that's something I will have to talk to your people about that, because yeh'd be great because you said the Daily Dots are like nice more souls, like chunks. They're not like super long.
Yeah yeah, yeah. Twenty five to forty minutes.
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