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Don't do something.
Yeah, I don't want to take them too much. I know, no take it.
Shoty gonna get to work too.
You about to go to work, and so sixteen you kind of just threw me that, like the whole alley you because when you said defense, play defense, play defense, we only talk about things that we're doing, right, and so over here Algi like we're like, we got to play some defense in some.
Of these positions that we have. And so there was this great guy who talked about in.
Verse indexes on this episode I think like seventy or something like that, and so I don't think people really understand what that looks like. So I'm gonna share my screen and then we'll go through a little chartist play. It'll be quick, I try. All right, we're good, thumbs out, y'all can see the screen? Yes, perfect, perfect, perfect perfect.
Let me go over here.
Somebody was reading all my tabs. They were like, yo, what you're doing.
On that site?
But yeah, so obviously I know i'd love to use y'allhoo finance it can me oh oh, let me let me check the audio real quick. Yeah we're good. You can hear me good, I can hear you all right, Yeah, we don't have to do this, and.
So obviously we like I told you all from day one, I love using the y'all who finance charge just because it's easier visual for me to see, uh, and to break down. And so what it inverse index does, It's kind of like hedging. So you just laid it out perfectly right. You said, there's no point of having a well, having a two hundred percent gain is great, but if you lose one hundred and seventy five percent of it,
what's the point. And so when we heard Mark tell us that story, we're like, yo, maybe we should start figuring out some place to hedge some of these positions we got. And so uh, I had a conversation shout out to Tally uy Yo alum u Uio University Alum. She was like, Yo, I want you to look into these positions, and so ESDW let's see, it's one of these inverse indexes. And so I'm gonna show you exactly
what that means. And so as obviously right here it tracks the Dow thirty and so if we look at it, as the Dow goes up, this position goes down right, and as hold on, as the Dow goes down, this position goes rises right. So we can see here in March, obviously, when Corona happens, look at the price target here for sdal right hit a high eighty four. And as we've been managing with Corona and dealing with the pandemic and the economy has grown, we can see that this is
trailed down. Some people might be looking at us, like, why am I going to invest in anything that treads down? Well, here's why, right, it's the same reason Ian just said. If you're up to two hundred percent and there's a correction, you're going to lose some of that percentage. And so let's go back to the last couple of corrections that we had, right, We had one in September second and I know the date because I took the picture of my account and I was like, oh my gosh.
This is different. How am I going to manage?
Let me see? Can I see the over there? Let's go up a little.
Bit right, here we go, so you can see market's doing great. I think we'rehitting all time hides apples at all time high. There's a split, right, it hits a low here at sixteen, but then there's a correction and you can see the tart.
Rise, right. And so as this is rising, people are making money.
Right, So some people, when in the options game, this would be like a put. Right as the stock the option call goes down, the put price goes up.
So it's the same thing.
Can actually buy shares in this and so you can see it here, right, we got up to sixteen right at the end of October.
We saw it again. Why I took a picture because I was like, no, not again, not again.
And so at the end of October we can see it down here, it's hitting it's low and then boom, there's another correction at the end of October.
And so obviously s Dall's price goes up to almost nine. It opened that nineteen and it got up to twenty one to forty, right, and so ever since you can see as.
The economy grows and the dow grows, this has been going down. And everybody's keeps saying, when, wait, there's gonna be a correction.
There's gonna be a correction. When is everything gonna fall? That just can't be green all the time.
And so if that is your thought, then this is a position where you can take insurance.
Right.
Think of it as insurance.
Right, If I pay five hundred dollars to get into this position, and hey, the economy keeps growing, great, you have positions that are gonna hedge this right, that means you've gained more. But if there is a correction, right, you're gonna make money on the way down. And so I want people to keep that in mind. And there's plenty of them, right.
This is just one s That was one I wrote down. A few others.
SDS is one dog Dog, which is an ETF. You can buy positions in this and so this is like the insurance play. If you're getting nervous, if you're getting apprehensive, like wait, this can't be green with time. If you feel that way, great, make some insurance plays, hedge your bets and play a safe. Play a safe.
That was it. That's all I want. This is what we're actually doing.
Every time we're doing something and we're like, yo, let's show them what we're doing. This is what we're doing, and this is how we're trying to say, look, yeah, we can make the one hundred percent here, right, But if I if I just advocate a little bit of funds to hedge it maybe five hundred one thousand dollars to some of my plays.
If I lose that one thousand, that's great.
That means that my other investments have gone up, right, if it goes down, like I said, then we can make some money on the way down with our thousand dollars investment.
So the only thing I want to time and say for everyone listening, and also for legal reasons, you shouldn't have more than ten percent of your account hedging. And then also you should not be in a position longer than ten days. If you do an equally wayed you're basically bettering against the market. And if you look even at that was a your one hundred or two hundred, that's red. Yeah, yeah, it's not broken above twenty one thirty nine in a long time.
Can you hit max chart for me real quick, sir, please?
I mean you can see this has been sloping down forever, right, but the Twelvey four to twenty max line for that two hundred has not been touched, so it's an inverse product. But maximum ten days, and I wouldn't have more than ten percent of your account hedging because if.
You do twenty five percent and fifty, you are going to get destroyed. And that's the key. Right.
Well, when I'm talking about investment, I'm not talking about your whole time even twenty five percent. We're talking small amounts, like I said, five hundred dollars, maybe one hundred dollars. If you're doing that just so it offset some of the losses that you have in the event of the pressure.
That's amazing, man, I appreciate that.
Yeah. Mark Cuban spoke about that on an.
Episode two that got me thinking, like, wait, he was.
Saying that, you know, if a lot of people he was like, right now, he's hedging a lot of it.
This story was like, you haven't watched that Mark Cuban episode. You got to check it out.
But you know, the story is legendary how he got five billion dollars in Yahoo stopped and Yahoo stock defined ninety three percent. But he actually made more money when it declined because he had put and he hedged his position. And he was saying when he went on CNBC. He was going on CNBC and everybody was saying, like, yo, do you feel stupid.
He was like nope. He was like insurance.
At end of the day, I can sleep at night knowing that, you know, if it falls, I'm protected. And when it did fall, not only was he protected, but he made a boatload of money. And after he told us that story. He was saying that right now he has hedges on all his stocks, and he was saying that he advises people to at the very least thing about hedging, because if it goes south, at least you know,
you can recoup some funds. But if it doesn't go south, like choice as an insurance policy, so you don't put too much on the hedge, whether it's a port, whether it's an inverted each yeah, index, you don't put too much on it. It's like insurance, right, like if you pay two hundred a month for your car insurance, hopefully you definitely get in a car accident, hopefully, but if you do get in a car accident, then you got the insurance. So it's the same thing. It's the same
thing with the with the investment. So something to think about. You know, everybody can do what they want. Our job is not to tell you what to do, just to give the information. But something that definitely marked you made a point of saying, and.
And he bought the market like crazy after two thousand and three, but he made money on Yahoo shorter and then rose the market back.
Up like h once he said that like all right, we gotta this is the reason why this is happening right now. We got to start looking at this a little different. Like I like what Shotty said, We're not telling anybody what to do. We're gonna tell you what we're actually doing, and if it can help somebody, great, If it can't, that's great too.
We're just gonna be transparent about what we're doing.
I had I hedge once again people saying what it's a hedge. A hedge is when you're hedging your position and whatever you have, you're investing opposite of it. So if I'm investing in the stock market right a hedge might be the inverted index, where I'm actually also investing that the stock market is going to go down. That's a hedge. Or you can put a put on a stock or a call. You can have If I have Apple stock and I think it's going to go down in the short term, I might put.
A put on Apple.
Or put is the opposite of a call, where you actually think that the stock is going to go down. That's what Mark Cuban did with his Yahoo stocks. So yeah, hedging is pretty much just uh security measure that you would take in case it goes opposite from the direction that you're invested in. That's pretty much ahead.
That was like, that was good.
You're not go a lot of time.
People only think that you're gonna invest one way. When you think about the investment, you think about investments going up. But you could also invest in investments going down. You can make a lot of money. To Big Short Wanted a great, great movie, great book. And during two thousand and eight, during the financial crisis, a few guys made billions of dollars because they bet on mortgages falling apart and it happened. And when it happened, they got paid out.
Crazy actually had to make products. Those products wasn't even actually out, They made those products just for them.
It's a very good movie. I encourage everybody to watch it.
Yeah, I'm gonna drop a link to where you guys can go and back test what allocation would be right for you.
So you're just not hearing it.
You can go to portfolio visualize it though, and go to back test portfolio and see if you had ten percent of your portfolio versus what you have now, how well it we'll do. And then also bonds like bonds is a good way to hedge as well. But play with that and see what allocation is right for you based on where you are financially, so you're not just running out and doing something incredibly risky.
And gold to old used to be a hedge too, but now gold is kind of moving in the same perfection.
Yeah, I don't know if that's a hedge anymore, but that's also so you can also have different allocation. Yeah, we can do a whole Euil University class about heges because it's actually a lot more now that I'm thinking about it. There's a lot of different ways how you can hedge.
Also insurance, but people don't talk about assurance or.
Act I was just about to say that's crazy.
I was just about to literally, I was just about to say that, like a whole life insurance definitely is a hedge.
I know everybody's gonna jump in the comment it's like my whole life. You're not here to tell you what to do.
But it definitely can be used as a hedge because it's not depending on the stock market. It's guaranteed and it's through dividends, so when the stock market goes down, whole life pole the cash value can still go up. So yeah, fixed interest investments definitely could be a hedge, not only against inflation, so you can hedge against inflation as well. This is an ongoing conversation. We can have a whole about this, but yeah, there's more than one
way to skin a cat. So Ian was saying, you know, as far as me, I'm still practicing as an advisor. People might not know that, but I still have my financial planning business. So he thought it would be a good idea if I kind of give like an example of what somebody would do if they came into, you know, a windfall of money, because you are talking about like a portfolio and to diversify.
But it's like, what does that mean? Like what I mean? So it's like, all right, this is like a sample of what I would you recommend a client to do.
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An illegal alien from Guatemala charged with raping a child in Massachusetts. An MS thirteen gang member from Al Salvador accused of murdering a Texas man of Venezuelan charged with filming and selling child pornography in Michigan. These are just some of the heinous migrant criminals caught because of President Donald J. Trump's leadership. I'm Christy nom the United States
Secretary of Homeland Security. Under President Trump, attempted illegal border crossings are at the lowest levels ever recorded, and over one hundred thousand illegal aliens have been arrested. If you are here illegally, your next you will be fined nearly one thousand dollars a day, imprisoned, and deported. You will never return. But if you register using our CBP home app and leave now, you could be allowed to return legally.
Do what's right. Leave now. Under President Trump, America's laws, border and families will be protected.
Sponsored by the United States Department of Homeland Security.
Then once again, everybody's situation is different. This is just the general idea framework. And somebody like came into my office and I had a conversation. But I just wanted to kind of give some give you kind of framework of like a financial plan, because we haven't really talked about like that too much. So like a financial plan. So we picked the magical number one million dollars. So and picked the thirty five year old, right, thirty five
year old to one million dollars. So if you have one million dollars, say in a life insurance policy, that was you know, you got the reason why I say, the life insurance doesn't tax free, so you'll get one million dollars as no taxes that you have to pay. So out of that one million, the first thing I would suggest somebody to do his payoff debt the first day. So you know, the average American household has fifty seven hundred dollars a credit card debt, and depending on where
you live in the country, that that's even low. Like what I mean like a lot of people have a lot higher than that. But I would take at least ten thousand dollars to pay off credit, especially credit card debt. That would be like the first thing that I would do. Then I would put money in savings online savings account. So you know, thirty five hundred dollars is the average
American savings thirty five hundred. So we talk about stocks, and we talk about you know, long term investing, but me personally, I don't feel like anybody should invest before they have their credit card debt paid off. If it's reasonable, and savings, you gotta learn to save. Cash is trash, very true, but but you have to have some money in savings because what happens is that if you don't
have money in savings, your investments become your saving. So when your tire blows, or you get sick, or your dog needs to go to the veterinarian, all of these things, you got to have an emergency fund.
You got to.
So I'm a big proponent and having at least six months at least six months of living expenses in the emergency funds. So I would put fifty thousand dollars into an online savings account. The reason why I say online savings account has a higher interest rates slightly higher than brick and mortar, and I like to separate. I don't want to have all my eggs in one basket. So like me, I bank with Chase, but I have my
online savings with Capital One. So for a couple of different reasons, A, I just don't want to have all your eggs in one basket, and then be psychologically for me, it's a lot less tempting to transfer money from It's because you got to go to a whole different app and it takes like three days to take the money out. So it's like the whole point of the online savings is just out of sight, out of mind. You don't
really want to even think about it. With Chase app, I go in there every day and I would see that on my Chase app if I had to on my own line savings that Chase, So that's just something to think about. I would put seventy five thousand into a five to twenty nine plan. The reason why I say seventy five thousand if I person had kids, because now you can frontload the five twenty nine five years, so that allows you to put a maximum amount. And whenever you get a lump sum like that, you know
you always want to compound the entrest. So the more money you can put it up front, the better. So I would frontload it for five years. Now front loader, you can't put more money in for five years, but at least you have that seventy five thousand right away that's working. And you know, depending on the state that you live, and you get a state tax deduction for five to twenty nine plans as well, So we talked about that. I would put seventy five thousand into an
ut month. The reason why the UTMA not the five to twenty nine is that you once to gain, you want to diversify. Five twenty nine is great for college and education, but what if the kid doesn't want to go to college, or what if you know what I'm saying, like the ain't thinking happened. So the utmaches provides more flexibility, and you know, I would invest in something that we've talked about before, like a.
You know ETF that is broad range.
Get broad range exposure to the stock market to a lot of the top ten companies, so you don't have to like risk it with penny stocks or something like that. It's your kids future. You don't want to take too much risk with that. Life insurance is something that you definitely need to have. It's an important part of the financial planning process. So no matter how you go about it, whether you get term insurance, if you're thirty five, you can probably get a million dollar term insurance p six
hundred dollars a year. Healthy, if you're in good shape, you get like six hundred dollars a year. Now, granted, you're not gonna make any money off that because it's term and it only lasts like, let's say twenty years, But twenty years is still a long time, you know
what I mean. So it's like, I personally think that a million dollars is something that at the very least most people in today's society should try to aim for when it comes to life insurance size, because if you're thinking about it, you're taking care of your family or at least one child. A million dollars not really that much money in the grand scheme of things, because it's like that has to last their whole life. That's replacing
your your earning potential. So if you make one hundred thousand dollars a year, a million dollars cover is ten years of your of your salary. Yeah, you know, you look at it from that standpoint. So the life insurance is something I definitely would encourage. Like I said, you can do term, you can do whole life. That's a whole conversation within itself. I would probably put one hundred
thousand dollars into idea. Idea A lot of people might not be familiar with that is that is called the deferred income of So either the ideas are great plays, especially for retirement or long term. Like this is why when you see a lot of athletes can get contract, some of them they get DEAs. One of the probably the most famous DEA in our recent time is Alan Iverson.
So a lot of people are very familiar with that Rebot contract where I think it pays him like one point five million, like starting like in two years, he gets like one point five million for the rest of his life. What they did with that was that it was part of his contract that a portion of the money that was paid to him went into a.
DA which is a referred income annuity.
So it sits in an annuity contract and it could be set up a fifteen thirty high a loan you want, but like let's says you put ten million dollars into a deal and then in fifteen years now that ten million will pay a lifetime income of one million dollars. Right, So it's it's similar to like how like the lottery. You can do the same thing with lottery. So that's great because now you defer, you defer. So it's like if you blow everything and at least you know you
got that coming to you every single year. So especially for some people that have some amounts of money, the DA is definitely a great idea.
After that, I would.
Invest four hundred thousand dollars into the market, a split between ETF and tech stocks, even some mutual funds, so like FK, D and X We talked about that, XLK, XI, SMH, you know regulars tech stocks, the obvious Apple, Microsoft, Tesla, Amazon, things in that nature. Because it's like you don't really necessarily have to try to hit home runs when you guarantee doubles, Like you know what I'm saying. You guarantee the double, you're guaranteed to have twenty points every every game.
You don't need to try to score fifty. So in my brain, those all make sense. They all have strong track records, they all want to be here for a long time. The next one hundred and fifty thousand, I would take more risk with it. If that's what you
want to do. You can allocate that to stock options, you can allocate that to cryptocurrency, to future trading, to a little bit more like risky ETFs not risky, but like you know, like a TAN or IV be if you want to look at like biotech or renewable energy, where I don't want to say it that's risky because I believe in biotech and renewable energy, but it's a lot that goes into play with that, right, It's a lot of variable to the political standpoint, whether it's you know,
the drugs work, but biotech industry is still it's still more volatile. In the next ten years, then you know, a QQQ would be or a Franklin Diamond tech point. And then the next one hundred and forty thousand dollars I would have as alternative cash money. So you might want to you know, start a business, or you might want to invest in real estate, or you know, you might want to do a variety of different things outside
of just regular investment. That standpoint, I would allocate that so that's my breakdown, that's my million dollar breakdown.
That's what percentage of the deal does that give per year, Like what's the average return?
Yeah, so it really depends because there's a few different factors on like how long you leave it in. It really depends on really how long you leave it in and the interest rate that that the insurance company pays. So we really have to run what's called like an illustration to actually give like a real spot on answer to that question. But you know, usually it usually will grow in a fixed capacity in around like three to four to five percent annually rate of return on the
type of on that type of product. So you can kind of compound that over the course of ten years, thirty years, something like that, and then that's that's what you'll get.
And as you guys come into these lumpsums, you want safety, like you think that you will just throw it off to the wind and be like, hey, let me just put it all in one company. But if you lose it and people don't think that financial room can hurt you. But like every recession, people die, commit suicide, people make bad investments, get hurt, like lose your career. So the more money you accumulate the safer that you want to be.
I know some of you are in a growth.
Phase and you're looking to grow, but even with that, you still need to go look at what the drawdown of those companies are. Because if a company is drawn down twenty eight percent thirty percent every two years, it's not a place that you want to Because what if you hit it hard twenty twenty, twenty twenty one, and next year you put your money into the risky asset set, and now you give up two years of your life
and all this hard work and study. The more money you actimulate, please like go to safer vehicles that are available to you.
And you know what an another thing too, is that so you can really use that type of formula for any amount of money. Right, if you have a thousand, if you have fifty thousand, right, Like, so what you do is you just you just lower the amount of money relative and how much money you have. So if you have a one hundred thousand, if you have fifty thousand dollars, right, obviously you're not gonna be able to invest four hundred thousand dollars if you have two thousand dollars.
But would you would do the same thing.
So if you had one hundred thousand, I wouldn't really recommend more than like fifteen percent of that into the more riskier type of investments. So that would mean fifteen thousand dollars will go into your crypto futures options bucket. You might put you know, ten thousand or thirty thousand dollars into your kids college fund, you know. So it's like, if you got ten thousand dollars, you might invest fifteen hundred dollars into bitcoin, and then you might invest three
thousand dollars into your kids college fund. So the numbers really aren't the most important thing. Just wanting to use a million dollars because that's a nice round number, and that's something that a lot of people are fired to become millionaires. So it's like, all right, you always head these stories about this athletes entertainers and everybody you know criticizes them. But it's like, all right, when you get there,
cause you know you can get there too. It's not like it's impossible to get a million dollars, So yeah, you gotta be paid. Like the worst thing that could happen is that you get there and you're not.
Prepared, and then you have no plan. Oh my god, yeah, yeah, what happens from here? You don't have to plan. You're I mean, you're either gonna either gonna two things a gonna happen.
You're gonna end up bowing it, or you're gonna be so scared that you're just gonna have it in your savings or frightened, scared out your mind. The worst thing is to be scared with money. And it's like, you have money. You waited your whole life to get money, You've got it, and now you're scared to death because you don't want to lose it.
Hold on, yep, there's another game on a side of the fence once you acquire it. I'd rather you guys learned this now than when it's too late and it's it's almost okay now if you have it in cash. But what about what if they bump interest rates to two point eight or three percent? Like inflation is going to eat you alive?
My graduates from my school being forced back drop bag drop, Mike drop backdrop drop.
An illegal alien from Guatemala charged with raping a child in Massachusetts. An MS thirteen gang member from El Salvador accused of murdering a Texas man of Venezuelan charged with filming and selling child pornography in Michigan. These are just some of the heinous migrant criminals caught because of President Donald J. Trump's leadership. I'm Christy Noman, the United States
Secretary of Homeland Security. Under President Trump, attempted illegal border crossings are at the lowest levels ever recorded, and over one hundred thousand illegal aliens have been arrested. If you are here illegally, your next you will be fine nearly one thousand dollars a day, imprisoned, and deported. You will never return. But if you register using our CBP home app and leave now, you could be allowed to return legally.
Do what's right. Leave now. Under President Trump, America's laws, border and families will be protected.
Sponsored by the United States Department of Homeland Security.