Welcome to How to Money. I'm Joel, I'm Matt and today we're talking practical and beautiful investing advice with Callie Cox.
Yeah, so it is time to dive in deep on investing during turbulent times. Joel, and we are fortunate to be speaking with Callie Cox, who is a part of the Ritholtz Wealth management team. Before that, we met her back in the day when she was with Ally invest E Toro. After that, and now she's also the author of Optimistic Cali, her newsletter where she seeks to deliver sane and rational advice to every day investors just like us, just like you and me.
Man.
She works tirelessly day and day out to make investors feel confident and informed about their money. And we've got a lot to talk about when it comes to investing. Folks don't realize that investing like it seems like all we talk about, but not to the level at which we're going to talk about it today. We're gonna, I don't know, We're really gonna get into it with you. And I'm excited for this conversation.
Yeah, I'm psyched too. Thanks for having me.
Of course. Yeah, you you eat breathe and sleep it. We I don't know, we think about a lot more than just investing, but so were you're curious to pick your brain because we're in interesting times right now. First though, we have to ask you what your craft beer equivalent is. What do you explore John, even though obviously you're investing solidly for your future.
Well, I told y'all, and so the audience knows. I've thought a lot about this, But I my husband and I spent a lot of money on food and wine, which is a pretty typical answer. I feel like you get a lot of foodies. But you know, with us, we became obsessed with wine after we went to NAPA in twenty twenty one. Of course, during the pandemic, a lot of us had nothing better to do than drink us So as y'all probably leaned more into bore that out. Yeah, yeah, yeah,
it's true. It's true. As you guys lean more into beer, we leaned more into wine, and after NAPA we were hooked. So we're not we're not serious wine collectors, but we do like exploring different wines and we love just you know, eating out and you know, exploring all the different restaurants in Charlotte, and I love to cook. I really like getting quality product and you know, cooking at home too, So I feel like that's our niche. You know, where we lean in when we're leaning out on other things
like cars. I drive a nine year old camera. It's not there are areas that we lean into, areas we lean out music.
I love it. I will say the wine habit too. While it can be very expensive similar to graft beer, it's not as bad if you're drinking it at home and you're making your own food, right, I mean, if you're going out, the markup on bottles when you visit a nice restaurant is significant. So yeah, drinking that bottle at home is going to save you money.
Yeah, that's absolutely true. There even and I know this differs from state to state, but they're even bring your own beverage restaurants, bring your own wine restaurants. And we have a few good shops in Charlotte where you can go and buy wine at retail and they'll serve it with you, serve it to you with your dinner.
But then but then you charge that corkage fee, and that just to me feels like a total slap in the face. They're like, sure, you can bring your fancy stuff from home, but we're going to charge you to open it.
You gotta find a place that doesn't have a corkage fee.
I know those exist. This is why Calli brings her own corkscrew keeps and just pulls it out as neat. She's got a little spout.
They're like, ma'am, what that spout coming out of the bottom of your of your bag there, crickler, she's filling her glass up under the table. Callie, what is one winery next time I happen to go to Napa or Sonoma that we got to check out.
You're a fan of.
Okay, so Chapole very good. They are a national distributors, so I can find a few of Chapoli's bottles in Charlotte. So that's that's an accessible one that also has a really good tour, really good wine. We also went to one called Barnett. It's in the mountains of Napa, and Mountain wine has a more like smoky, almost like I don't even know how scotchy, kind of scotchy like earthyy taste to it because the soil is a little different.
I think the grapes have to struggle more. But Barnett has an incredible wine called the Rattlesnake, and it's a little more expensive. It's definitely a splurge for us. But the gosh, the mouth feel, I hate saying that. The mouth feel and the experience of it is just really really complex.
Okay, I'm speaking about language a winery up in the mountains. That sounds incredible.
So struggling great.
Yeah, and the views literally wrote that down for some time or the future when we might head out there. But you know, I didn't mention your title there at Red Holts. You are the chief market strategist. What is like, what do you actually do? And uh, I've also got to think that regardless of what you do, that your job might be a little more difficult in times like these.
Yeah. So I get a lot of questions about that, and I totally understand them because they are strategists in every industry, and you know, a strategists, we do strategy. What does that even mean? I try to describe my role as a resident market NERD type role, and of course, you know I think about markets a lot, I eat, sleep, breathe investing. I know our portfolio is inside and out. I talk to clients all the time about how their money is invested and how how market moves are affecting
their money. But in a way, it's also a strategic comms role. I'm telling a story, for lack of a better phrase, about what's happening in markets, and you know why that matters to everyday investors like you and me, and thinking about how to tell that story to a wide range of audiences.
At one point recently, so you write a blog, which is part of where you do some of the storytelling, and you wrote practical advice is a good foundation, but everybody needs a bit of beauty. And that's just interesting to think that, Oh I need beauty inside of my investment portfolio. So I'm curious, why what do you mean by that? And what does beautiful investing look like?
Well I got thinking of this because I read a blog from Morgan Housel. So I can't take credit for this. I can't take credit for all of this, but Morgan wrote a really great blog about magazine architects or architects that create these beautiful buildings, ones that you see in magazines and architects digest, you know, ones that we all drool over because we don't have to live in them,
but they're really not functional. You know, they don't have they don't have the size of the garage that you need to like actually you know, keep your car there, or you don't. You don't have the right functionality to actually live there. And I think the concept of that is true for a lot of different areas of our lives. And one area that people never talk about that for is investing, because all we get is stay invested, stay the course, put your money in an index fund, and
hold it, hold it until you die type advice. And you know, I agree with that. I think it's hard to make the argument against it. But I also think that there's just an ocean of nuancewe queen staying invested and you know, you know, kind of being haphazard with your money, and that's really important. That's something we talk about a lot with our clients here, the fact that
you know, you have to stay invested. You're investing for decades, but we want to make sure that you stay invested, and there are things like you can do that kind of go against that traditional logic. But I also think about it in my own world because like, yes, I talk about the benefits of index funds, but even I
have targets in my portfolio. I sell according to those targets, and you know, I am a little bit more active active, even though I'd consider myself a long term investor looking at retirement.
What that does it just allows room for humanity and like kind of going back to the Morgan househole analogy, like, yeah, the reason those look spaces look cool is because they don't. Actually they couldn't actually house somebody in real life, or the practical needs of a family with a toddler running
around with sharp edges everywhere, whatever it might be. And I think what you're speaking to is the abilit to maybe be a bit flexible when it comes to our portfolios, as opposed to completely grinning it, bearing it, never checking it, because it's really hard to ignore all the news that's popping up on our phones that we hear people talk about. On that note, can you speak to the current state of things? I guess all the volatility that we've felt. It feels like we lived a couple of years just
in the past few months. Can you catch us up to speed on let's say, the Trump the initial Trump bump, but then the subsequent deflation. Why all this has happened?
Yeah, well, how much time do we have here? Where do I start?
Seriously, this is a podcast, so many hours?
Yeah, yeah, we can go as long as it takes, right, So, I guess where we'd have to start is in the middle of last year. And I think it's important to understand where the economy was before we headed into this year and had to digest all these policy changes. But actually you'd probably have to back up to COVID, but I'm not going to do that. Interest rates are actually
quite high right now. They've come down a little bit since the middle of last year, and we've been in before this year, we were in this spot with the economy where you know, the job market was incredibly resilient. We had a year or two where, you know, if you're an employee, you had employers begging for you to join their companies because demand was way too high. You know, if you weren't switching your jobs, then you probably had
a lot of negotiation leverage at the table. And you know that that leverage, that employee power fell more and more and more, but at a gradual pace because the FED put the brakes on the economy. Interest rates were super high, mortgage rates were super high. We were all
thinking about saving instead of investing and borrowing. And that really put us in a place in the middle of last year where the FED and when I say the FED, I'm talking about the interest rate nerds up in DC that you know, basically pull the levers on interest rates. The FED looked at the economy and they said, Okay, we think there's a risk to going too far here. Interest rates are putting a lot of pressure on the economy, and we're seeing that pressure bleed into the job market.
So the FED started bringing rates down. The job market got a little bit better at the end of the year, but the economy was in a bit of a fragile state. And then we moved into this year, and you know, we've all seen the headline since then, right. A lot of tariff policy that's been put out there, speculated, put into place, walked back, put back into place, a lot of snip snap decision making. And businesses, both businesses and Americans are watching this happen and they're like, I have
no idea what the future holds. So instead of investing, instead of spending my money on big ticket items like cars and houses, which by the way, still costs a lot of money because interest rates are still high. They've decided to stop, and I think that I think the pivot point, the big pivot point was April second Liberation Day, where we got the list of pretty wide ranging tariffs for a lot of different countries and there was a lot of back and forth there, but that's really when
the stock market started dropping like a stone. It was down about ten percent up to that point, but in the week after that, we saw historical swings, like biggest swings that we've seen since the COVID crisis in the financial crisis, as people really tried to process what huge reciprocal tariffs could mean for their lives, their portfolios, their businesses. And that's kind of where we are. We're still processing it.
Yeah, the reciprocal tariffs that weren't really reciprocal and that have been pulled back but not fully rolled back. I guess I'm curious too, do you think this new political approach and new policy priorities do you think that is mostly what we're seeing or it feels like there was a lot of talk about an overinflated stock market even before Trump took office. Do you think part of what's happening to the stock market is a natural pullback that occurs when stocks are overvalued.
I think it's a little bit of both. And I hesitate to say that stocks are overvalue because I think it's really hard to judge that. So when you're talking about valuation, I'm going to make an assumption, but you're probably talking about the price to earnings ratio, or where earnings are expected to be over the next year and where a stock or an index is trading relative to those earnings. Right, Yeah, Okay, so pe price to earnings ratio is a really it's a good way to judge
how stocks are valued, but it's hard to say. I'm trying to think of the right way to say this. It's hard to it's hard to say where they should be valued because that price to earnings ratio can price in a lot of hope, you know, a lot of dreams about AI, a lot of optimism about.
The future, and values in the eye of the beholder.
A little bit value is in the eye of the beholder. You know, there are designer shirts, there are shirts that you get off the rack at Walmart. They're made with the same fabrics, but you're paying different prices, right, same thing with the price to earnings ratio, And in most environments, a higher PE is actually okay. It's okay, tod, it's okay to think about where tech stocks could be going in the future. Just because the PE is high doesn't
mean the market's about to crash. The problem is when you start to see economic cracks, right, and that's when the optimism starts to fade. That's when you should probably expect the PE to start falling because because again, you know, expectations for the future start to fall, and then actual earnings, if it gets bad enough, will start to fall as well.
And that's the moment that we're in right now, where yeah, you're probably looking back and saying, Okay, the stock market is probably richly valued or too high for what could be coming. But yeah, what you brought up is actually really important too. You know, the stock market sells off in healthy economies. This in a way is kind of part of the process. And we're coming off two incredible years in the stock market. I mean twenty percent back to back gains in the S and P five hundred.
That's true, we're not going to talk about teriffs the entire time.
But ken if you want.
I feel like our listeners have had enough. I feel like I've had enough, to be honest, because I feel like so much if they haven't had enough with us, I feel like a lot of it is overblown, And at least at the time of this recording, we haven't yet feel like businesses are looking ahead because they're looking at quarters at a time, and especially small businesses and how they're impacted by terras and the foreign availability of goods that they need as inputs to run their businesses right.
But as consumers, a lot of folks haven't seen significant increases when it comes to when it comes to prices, and that was one of the biggest things that the market was reacting to. Do you feel that the whole terrorist thing is overblown or is it just it's more complex and it's just going to take longer for it to trickle through the system before we start seeing the headlines, before we start seeing the lines of folks lining up at stores, that kind of thing.
I think it's happening. So Liberation Day was April second, so there's been about four weeks between that initial announcement Trump with the poster and know us recording today. That's about the time it takes from a ship to move to go from China to the port of Los Angeles, for those goods to be unloaded and finally make it to their final destination. That stuff takes time. That's a long journey. So what we're seeing right now is that
port volumes are coming down, which is concerning. That means that there actually is some There are inventory changes that are happening on the back of these dramatic tariffs, especially coming from China. And look, once that's happening, it's gonna roll through the system and you're gonna see it in some way or another, empty shelves, higher prices, mix of the two. That is anybody's guess. What worries me is that we're starting to see indications through company earnings reports
and through more bird's eye view. Macro reports that a lot of companies feel comfortable passing along those prices, which means you and I when we go to the store, we're going to pay higher prices for those goods. The companies aren't just going to eat that cost.
Yeah, yeah, I'm curious too, how much of an impact like foreign backlash against tariffs, Like what could the ramifications be there? We've already seen Canadians saying I'm not vacationing in the United States anymore, and just far fewer people from just north are are coming down, and it's you know, hurting our tourism industry. And you wrote something about I think foreign consumers can essentially cause a lot of pain
for Corporate America. Do you think those boycotts from other countries because of the way we're acting could have other ramifications too.
You know, I worry a lot about this because I think it's hard to quantify the eventual impact, but we know the impact could be big. And that's actually why I wrote the Boycott American newsletter. I wasn't saying boycott America, but what I was trying to do is put some numbers behind how interwoven foreign consumers, foreign tourists, foreign investors
are in our markets and the travel. The travel part is interesting because we've already started to see data and really interesting color from travel companies on how foreign bookings are down. So we heard it from Delta, I believe we heard it from American in the past few weeks they've seen bookings come down, especially international bookings foreign tourists
coming into the US. And I saw a report from a Canadian travel consulting company and like, look, this is this is one report, but it's backed up by a lot of color that we're seeing or that we're hearing. But this one report from the Canadian travel consulting company said that Canadian bookings of travel into the US are down seventy percent year every year, which is a huge number. It's a scary number. And I don't take one piece of data and you know, un run down a rabbit
hole with that. I don't think that's smart for anybody to do, but it should, at the very least make you think a little bit about, you know, the second order consequences or the second order effects of what could be going on here and in markets. I don't know if a lot of people know this. I certainly wouldn't know if I didn't work in finance, but foreign investors have been major buyers of stocks and bonds over the past several years, primarily because we have the biggest and best,
most innovative companies in the world. I mean, everybody wants to invest in Apple, right, but on the bond side, we also have an incredibly deep and incredibly rich and volume heavy marketing government det it's called the treasury market, and foreign investors have been turning more and more to treasuries to hedge their portfolios and to get a nice stable source of yield. So we have to step back and consider that some of that, maybe all of that could be at risk here.
Yeah, and so much of that.
It's a slow burn. I think that's what I'm coming to terms with. When it's between the news the headlines Trump making changes to tear us or to following through or pulling back in the stock market, it's incredibly reactionary. And we see day and now I mean not even day to day changes like minutes a minute, hour by
hour sort of changes. But when it comes to some of these higher prices, and what you said is totally true, right, We've seen the reports of the empty cargo ships showing up at port because they're like, all right, we got to keep moving. And at some point, if there are no goods, we might be bound to see higher prices
less availability of goods on the shelves. But from an investing standpoint, what should we do, Like how should folks respond to the different pieces of news that they come across, because kind of going back to the beginning of our conversation, you're talking about having beauty, you're investing being beautiful.
I feel like a part of what you're.
Saying there is to take into account the fact that there are going to be things that you're going to want to want to react to and to allow for some of that humanity to play out in our investing. Would you recommend that?
Yeah, I think that's a good place to start, and I just want to add something else on that practicality versus beauty comment. You know, a lot of client conversations we have, and a lot of conversations I'm having with friends and family right now are what to do. And usually the options that they see in front of them are to sell everything and run for the hills, or buy everything and stay invested, because that's what the spreadsheet
is telling me to do. Right and measures extreme measures, But in a way, people don't realize that they're extreme because I see, because I see different flavors of this every day, I can say that it's extreme. And by the way, if you feel that way, it's okay. You're
human your brain is working as it should. It's supposed to alert you of risks, but as an investor, you have to take that in and you know understand how you should react in this moment based on how you feel in your gut, but also based on what you're going to do with your money and how much time you have in front of you. And it's this, it's this really tough, tangled mix of reality and feeling, and
that's why finance is really hard. But to go back to your question, I mean, I think a lot of people have that middle lane and they don't realize they
have it. So if it means, you know, looking at your portfolio saying that you're investing for a retirement and that means that you have a few decades ahead of you, then you know, maybe it means raising a little bit of cash, filling up your emergency fund, making sure you feel comfortable with where you are in case you will lose your job, because unfortunately, job loss is the reality
of economic crises. That's one of the hallmarks of you know, why growth slows down and people stop spending money, and you know, trying to put yourself in a place where you're comfortable but you don't abandon your future self at the same time, because, like again, if you go back to the math, it makes a lot of sense to buy when the stock market is down ten or fifteen percent from highs if you have decades ahead of you.
But that's not so easy in practice. And I certainly don't want to assume that it is easy with anybody I'm talking to, because I'm a human too, I understand how it feels.
So you say you're a human, which I fully believe you when you say that. What you and actually you've alluded to this in some of your recent blocks. So you said you admitted to being a little scared, and you also have said like, hey, I'm kind of a
type A person means I want more control. I'm curious how that mixture of being a little fearful because especially given the how much you've been around markets and how much history you've read about, you know, stock market gyrations like hey, you're pretty young, Kelly, Like why are you fearful? And how is your type A self responding to what's going on? Like what are you doing?
You just painted me so well Type A and anxious about everything. Both of those comments are absolutely true, and I'm not. Look, I don't hide that, and I think Wall Street sometimes falls into this trap of, you know, hiding the fact that they're humans, because, Okay, I get part of it. Like you, you're managing a lot of money, and you don't want to lead on that you you might have an ounce of uncertainty, of feeling an ounce
of uncertainty in yourself. I get why people move that way, but I try to approach these situations from a moment of empathy and if we're being honest here, like I don't know what the future holds. I down the rabbit hole sometimes a lot these days, not so much on the investing side, but you know, on the policy side, on the you know, living life as a human side, where could this go? Especially you know, the with the extremism of the headlines and policy that we all hear about.
But I'm lucky that I have the investing background. I know how markets work, and I know how important a process is. So I'm not your listeners. So I want to be clear when I say this. I'm not making a recommendation. But I know that I am investing for retirement and I'm in my thirties, so I have decades ahead of me. And even if you're in retirement and you're living off your portfolio, yes, this moment feels scarier, but you're probably investing for decades too. God forbid, you're
dying the day that you retire. I hope that doesn't happen to you. So I think you know, as somebody who leans back on numbers, I really try to sit back on the fact that I have a lot of time ahead of me, that if I do feel anxious, then I need to make sure sure my financial house is in order, so that can cull a little bit of my feeling there. And look, I leave it up to the numbers. I have targets for stocks, bonds, and crypto in my portfolio, and if my allocations move out
of the target, I adjust. I also have pulled forward a few like monthly investing investing deposits that I was going to make, because I know that when stocks are down ten, fifteen to twenty percent, then that's often a good buying opportunity, even if it doesn't feel good at
the moment. So there are little changes you can make on the margins, and yes, raising cash is okay on the margins if you don't go too far, but there are little changes you can make to tailor your portfolio to you and how you feel that don't necessarily doom you, you know, years down the road.
That's that type a Cali stupat right there, overcoming anxiety calli oh and going back to market house numbers. Not to make this all about him, but like that's like the beatle full architectural home, but also there's a little bit of mess in there, you know, like there's a little bit or there's a random piece of art that doesn't quite fit the rest.
Of the of the house.
Because like that's the kind of thing that allows for there to be more of that sort of messy day to day living. It doesn't doesn't have to be all stoic and perfect and personal and yeah, emotionless, but you've got more sane and rational investing advice to get to. With Cali Cox in particular, we're going to talk about some of the things that some younger investors should keep in mind. We'll get to that and more right after this.
Our we're back still talking with Calie Cox, talking about markets and Cally and just kind of what's happening right now from an economic perspective and the impact that's having on personal finance decisions. Kelly, I'm curious too, like, how do you think the current climate conditions and economic uncertainty
should impact the personal finance decisions were made. I'm thinking about, in particular, something as big as buying a house, and I know that like Zillow has said, hey, we think that home prices are actually going to decline this year, and that might be welcome news from someone who's been trying to buy a home that it has been unable to But then they're like, well, but wait a second, my portfolio is down ten percent. I feel like I have less buying power now, so maybe it's not a
win win. I don't know, how are you thinking or how are you advising people think about some of those bigger buying decisions right now.
Yeah, that's a really good question, And of course it all boils down to your own situation, your own goals. I know you're going to hear that everywhere, but I just want to emphasize that that's really important. I don't know how much money you have in your bank account, I don't know why you're investing your money. Those facts are really important when you're making these decisions. The first thing I'll say there is that interest rates sit at
the heart of a lot of these decisions. And that's why a few minutes ago I was talking about the Federal Reserve and where they're setting their policy rate. It's not the Fed's policy rate doesn't directly impact the mortgage rate that you're going to be paying on a new house, but it has a pretty heavy hand and those mortgage rates that you're seeing, So to a certain extent, you have to know where interest rates are and where they're going.
And right now, interest rates are still quite high, which means that you're getting really nice savings rates on your savings account. And if you're not, please switch banks. I know you can. I know you can get a good rate there. But at the same time, what you're giving up is the fact that you borrowing has become more expensive, and we have these seven percent mortgage rates and ten percent auto loan rates that you have to contend with.
So know that in this moment, from the financial side, it may not be the best moment to step out and buy a house. But then again, that's a personal decision, so you just have to know the risks that you're taking on when you're you know, making these huge life altering decisions, and unfortunately the FED isn't on your side.
They might be down the road, but the problem is the FED will probably is that the FED will probably cut interest rates because we start to see some weakness in the economy and that weakness could affect you in
one way or the other. So I would just take a step back, you know, understand what you want to do in the next one year, two years, three years, write it down on a piece of paper, keep yourself honest there, and prepare for an environment where it does cost a little bit more and you can't, you know, rely on a steady income. I mean, I hate to be I hate to paint the worst case scenario here, but I think it's important to make these decisions with all options in mind.
Yeah, I think that's wise. Yeah, we can't. I thought you were going to say this, but we can't bank on those rate cuts for you to go ahead and buy now while balances are a little bit higher, assuming that those rate cuts will come and you have the ability to refinance.
Sure, he had dropping interests. It feels like had been promised by people, especially in the real estate industry for the last couple of years, and they haven't meant to.
Like they're common.
It's like, well, actually we haven't not yet by the home you can always refin.
Well, let's get back to investing, Kelly, because I want to talk about the younger generation. There are there have been a lot of folks who have become more accustomed to being on their phones where they're trading regularly on apps like Robinhood. Do you think that this is a positive trend overall or are you worried that they're going to get the wrong idea about investing and they're going
to get burned because of the availability. Like, on one hand, the availability availability is obviously good the democratization of investing, but on the other hand, talk to us about maybe the false pretenses in which a lot of younger folks are investing.
Yes, unequivocally this is a good thing, and I believe pretty strongly in this, And of course I have a brikerage background, so I am a little biased here. But when look the history of our country is built, what has been built on walls around capital markets, you know, investing. You and I, of course we didn't have cell phones before the two thousands or so. But you and I investing without having to call up a broker wasn't possible
until the late nineteen nineties. There was that natural moat where it was incredibly hard to invest and some people didn't have the ability to invest because you know, a lot of this talk was happening behind closed doors. We couldn't be further from that environment these days. I mean, gosh, you said it, but you can get on your phone swipes are swipe you buy a stock. I think that's
a good thing. I think investing should be accessible to everybody, and I think every American should have the power to build wealth the way that they want. It's your money. I'm not going to tell you what to do with it. You know, if you bring it to red Holes, I can help advise you on it. But you know, ultimately, you do what you want to do, and you should have the power to be able to do what you want with your money. And we're there. We are at a point where I think a lot of investors are
learning hard lessons, which is okay. Sometimes that's the best way to grow and learn. But I'm glad that investors are jumping into the sandbox and you know, trying out different markets, especially when they're younger, when they can afford to take on this risk, and you know, when they can, you know, start to feel better about about, you know, investing larger sums of money. I always said this at Ally and E Toro, and I firmly believe this too. Sometimes the best way to learn how to invest is
to invest. It's dipping your toe on the water. It's opening that breakerage account, getting over that initial hump, you know, maybe throwing ten dollars in, putting it in a stock, putting it in a fund, and seeing where it goes. I really think learning is an experience that people underestimate, and a lot of Americans, especially younger investors, are getting that experience right now.
Doing the thing, even if it's done imperfectly. I think you're right. I think that is overwhelmingly good. And we're seeing more. I've seen more evidence that investors, young investors seem to be understanding investing a little bit more, especially when you see the market drop, and I feel like what I'm seeing in Respet is less panic selling and more buying the dip. How do you think about that? What's your take on that?
Approach.
Is it are they taking the war and Buffett being fearful when others are greedy, being greedy when others are fearful sort of adage? Or or are these yeah, are young individual investors becoming a little more sophisticated.
They're definitely becoming more sophisticated. This goes back to the learning by experience, right, you know, maybe selling into us into a stock market drop and then realizing that price rebounded on you, maybe feeling that pain more acutely through options. I think investors have learned a bit of a reflex over the past decade or so, which I think can get a little tricky because I don't think that same
reflex will work in this moment. But I mean I think investors are aware of, you know, what can happen, especially with the FED being as powerful as it is in markets these days. And I don't necessarily think that's a bad thing. I mean, we talk about staying invested in how hard it is to stay invested all the time, and you know, younger investors are out here saying by the dip and then going into markets, going into markets
without a second thought. Honestly, if you are if you have decades ahead of you as a twenty something year old, then you're doing the right thing. I just think you have to be a little careful about that. And again, it's your money, you do whatever you want with it. But you know, I don't think in a high interest rate environment, when inflation is a problem, and when unemployment is a real risk too, I don't think by the dep works as works as well as people think it will.
I feel that I feel like Kelly might be like a closet libertarian jewel.
I hear a lot of her saying.
You be you, you do you, it's.
Your money, don't reveal her political affiliations. Man, No, Obviously, personal responsibility fastly important. We're talking about taking risks though, and like when you are investing, that is inevitable. But what are some of the bad, risky moves that you are seeing folks make. Especially we're kind of focusing on younger investors here. I don't even want to say younger cohorts.
It's just online folks because sometimes they're older folks, yeah, who obviously spend way too much online. But it seems like that there tends to be a following of different trends, which can lead to poor outcomes. So maybe that's the question. What are some of the negative, risky trends that you see more folks jumping on these days.
Well, I want to talk about the social aspect first, because I don't think the social aspect is that bad either. We do lots of different things for many different reasons. I think it's okay to invest because your friends are investing and you want a sense of community. Again, that's my brokerage background speaking. I used to work for a social investing platform. But I truly don't think that's a problem. If you want to learn and build community through your money,
it's your money. You do whatever you want with it. I think the trouble comes when younger investors or investors of any age come in and they learn a hard lesson and then they just don't trust cop markets ever again. And I see that happening for investors of all ages. I mean, gosh, we have brikerige customers that I talk to that really wrestled with this, And what I hate about that is, you know, piles of data have shown us that capital markets are the way to build wealth
in America. That is a fact that you can't argue against and sometimes you just have to, you know, lean in and kind of ride the coattails of America's best companies. You know, sometimes that's the easiest and most accessible path for you. So I think education is really important here. I think it's smart to remind people that stocks go up and down. You have different layers of risk when it comes to single stocks, and you're magnifying those risks
sometimes with options. You know, people need to be equipped with how they're investing. But ultimately, I think it's a trust thing. If people start to lose trust in capital markets, then you're going to have a lot of problems in society. And I worry that we're moving toward that point.
So you just said people need to be reminded stocks go up and down. Do you think in one sense, we as a population investor population got used to kind of, hey, markets go up. Hey, this is just guaranteed returns that far exceed what I'm going to get inside my high yield savings account. It's it's kind of like a high
old savings account, but on steroids. So I just need more and more stock exposure and that maybe those people and when you look at like the last fifteen years, returns have been better than average, and we have had fewer downturns like an extended bowle market. Did we just get used to something that isn't the norm.
I don't think we necessarily got used to it, because we had the Great Financial Crisis, we had the COVID crisis, we had a painful, painful twenty twenty two where it felt like no market was going up, and in reality a lot of tangible investment investments were going up with inflation, but stocks and bonds weren't working and people felt that. So I wouldn't necessarily think that's the case. I think what it comes down to, at least over the past
decade or so, has been a lack of options. Looking at a bank account, seeing that I'm talking about pre twenty two here, looking at your bank account, seeing that you're getting paid nothing on your savings account, you know, looking at the fixed income market, seeing that you're getting paid two percent to lend money for ten years down the road, and you know, wondering how you build wealth.
Oh and I'll add too, looking outside of markets into a corporate world where you know, wage gains were pithy, were awful because the incentives were all off after the Great Financial Crisis, and a lot of companies were they felt like they were in survival mode. They weren't necessarily investing back in their employees, they were, they were paying more attention to their shareholders, especially as that worked over time.
So I mean, picture a millennial investor, Picture you and me sitting here wondering what our options are to build our wealth and seeing the stock market and basically nothing else.
Then yeah, it feels like the only game in town.
Yeah, exactly. And that's that's to a t what Wall Street was saying back in the mid twenty tens. Stocks are the only game in town, and they were right. I think we're seeing the other side of that. And again, like I said, not necessarily a bad thing. I think it led to some skewed incentives. But yeah, we had to lean on the stock market. That's you know, that's really what we grew up with in our teens and twenties.
And to a certain extent, that's good because you know, like I said, it's been it's been really hard to invest for way too long. But on the other hand, I think now we have some options. Wage growth is finally healthy, especially especially for you know, lower level jobs. We have bonds that are actually paying out yield. We have savings account rates that you know, hover between three and four percent above inflation, and you know, we're like, Wow,
this is a whole new world. I don't I don't really know what to do with it, but I do know the stock market works, so maybe let me lean into that. And that's not always that's not always a quick immediate source of dopamine or help or gains.
Yeah, yeah, no, I get that. What do you have an opinion on the fire movement? This is kind of a somewhat weird pivot, but I mean, I guess you mentioned the twenty tens as well, and I'm just like something else that kind of was birthed in the twenty tens. That makes me think of all the folks who are like, oh, the fire movement, financial independence, retiring early. Do you have
an opinion there? Do you think that most folks who ascribe to the fire movement are equipped to handle prolonged downturns You mentioned twenty twenty two when basically like no market was doing well in twenty twenty two. The view towards work and being productive in society, i'd love to get your thoughts on fire.
So I think the fire movement is interesting. It's not a path that I'm going down. I love what I do. I actually find a lot of value in my work. It lights me up. I have a passion around it, and I'm really lucky to feel that way. I think there.
I think that there has been a little bit of a boost to that movement just because markets have done so well, and I'm not sure enough people realize the reality of living on your portfolio and how painful it can be when stocks are selling off and bonds are selling off, which unfortunately is the scenario that some of us are in right now. I generally advise against looking to extremes. I feel like fire is a bit of an extreme decision, and if it's if it's a decision
that works for you, that's great. I'm not sure it works for a bunch of different people. Even though we can all I think at times we can all agree that it would be fun to retire and travel forever and you know, live off of your portfolio.
It also might get old. Let's be honest.
I worry about that.
Who can travel forever?
I mean, like you said, I'm type and anxious. I was in Costa Rica for a week and I had a great time, but towards the end, I was like, Man, I really miss my normal life. I miss the routine. And I think a lot of people realize once they retire at any age, that that routine and that sense of purpose is really important. I actually think Coast Fire
is really interesting. I learned about Coast Fire about a year ago, and it's the movement where you don't retire immediately, but what you know is that you could live off your portfolio if you have to, if you didn't contribute any more to your portfolio, and you have like a retirement age ahead of you that you're aiming for. I think that's a really cool psychological hack, and I think it's more realistic for the majority of people who do learn about the Fire movement.
Do you think do you think some of the people in the Fire movement maybe made rosy projections of future stock market increases based on historical realities, based on recency bias, and that maybe especially when you look at predictions from places like Vanguard and they're saying over the next decade,
returns are going to be pretty tepid. Do you think some of those folks might find that the ways they assumed their portfolio would perform, well, maybe it doesn't perform in that way, and they're left in a much more tenuous situation.
I'm sure there's a little bit of that, because you know, we all make different assumptions. I don't love the forecasts that come out of the Vanguards and Goldman Sachs's of the world where they say, you know, we think stocks will make X over the next ten years. Like that's as good of a guess as me licking my finger and sticking it in the air and trying to tell
you where the wimbile blow. It's not. It is based on some math, but it's it's ultimately marketing, right, It's ultimately getting an interesting opinion out there for an audience that you're trying to reach. That's all it is. It's
not a great assumption to go off of. I don't know if you remember, but Goldman actually put out a report six months ago or so where they said that they think and I'm I'm not sure which stock index they targeted, but they said stock they think stocks will return an average of three percent over the next ten years. And I had so many friends and family ask me about that report. I think because there was a tangible number in it and it was Goldman, it got a lot of news pick up. But I was like, are
you kidding me? Like what makes you think that even Goldman has a crystal ball and can see into the future and where markets are going. I think the twenty tens are the perfect example of you know, why forecasts
are forecasts are ultimately bunk. You know, they they're good at teaching you how to think differently, Like, sure, they're good at spurring discussion, but I think you can, you know, fall on the wrong side of forecasts that are too high and forecasts that are too low, and generally it makes sense to be a little more conservative in your own portfolio, Like you can't assume, you can't assume twenty percent returns forever more and more. I hope that happens,
but I don't think that's very likely. But at the same time, I don't think it serves you to go to conservative or to listen to the more pessimistic forecasts around that, because nobody really knows.
Don't listen to the pestimist, listen to optimistic. Cali I like that. You have just a few more questions to get to with you, Cali, including with let's talk about stagflation, a term we're hearing more and more about. We'll get to that right after this.
We're back from the break with Callie Cox.
Cali.
Something you said before the break, you said it can be painful to live off of your portfolio. And I think one of the things you're speaking to there is like the reality of knowing that the numbers point to of fairly rosy future even with conservative estimates, right like not even the most aggressive expecting the most aggressive returns.
There's a difference between knowing that, but then the lived reality of seeing, you know, maybe objectively dumb decisions being made on a pop when it comes to policy and
how that impacts our government. Is there some sort of I don't know, like rule of thumb or some sort of test that folks can put on themselves to help them to analyze whether the decisions that they're making in regards to their portfolio is more of an emotional knee jerk reaction versus them trying to reevaluate the new basically the new.
Rules of the game.
Right, Like, there's a difference between just like without even looking anything, just completely reacting, versus saying, Okay, well, actually maybe I can't handle this type of risk and what I need to do here is rebalance my portfolio or lean a little bit more in a conservative direction.
Is there a way to know whether.
Or not somebody is making the moves that they're making for the right reason.
I feel like I could talk about this specific question for an hour plus, but I'll try to boil it down because this is actually giving me an idea for a newsletter.
All right.
I think it depends. It depends the worst answer ever, it depends on who you are, and I think the test is different for everybody. But some general guidance I would give around that is how quickly you make a decision. So let's say a bad headline crosses the tape, another tariff headline, and you know it feels painful, and you say, ah, I feel like I should sell stocks. If you feel
that reaction immediately, you probably can't trust it. And I know that's a hard thing to say, because I want I want people to feel like they can trust themselves. But there's a difference between between a reaction and a sound decision and when when both of them are overlapping, or when the sound decision comes quickly, I think you need to question it at the very least. Again, I like to lean on numbers, So when I have a nicky type of anxious reaction, I always go back to
my numbers. I remind myself that, Okay, my portfolio is this size. X percent is in stocks, and this is why X percent is in bonds, and this is why X percent is in crypto. This is why, and that usually writes my path. But I know that I eat, sleep, breathe this stuff, so it's a little it's a little little bit easier for me. I think about this a lot.
The other thing I'd throw out there is, you know, there are certain processes that work for different people, but the process is the important part when you have those feelings. Knowing how to center yourself, So even if it's like touching the table in front of you, or sipping a cup of hot tea or touching grass or something, knowing how to get back into yourself and then calmly evaluating what's going on is really smart. And knowing what that
process is for you is very important. So you can get to a point that you can think through this sound decision that you're about to make. And again it's not easy. But everybody talks about having an investing plan. This is when an investing plan is really important. I invest when I get my paycheck and maybe not outside of it, although I think you could be a little
fluid with that. And I will put X percent of my money into stocks, ex percent of my money into bonds, ex percent of my money into crypto if that's suitable for you, and knowing when you'll eventually need that money so you can make a plan to take it out.
So we're hearing the term stagflation thrown around a lot these days, which is a throwback to the nineteen seventies when none of us were born.
Are you saying you know how old I am.
Well, you referred to us as millennials, that we are barely millennials, Cali, So that tells me that you are younger than that's true.
I did tap my hand there.
So stackflation is the thing that only our parents remember. But is that something you're truly worried about? Is that something we can or should be preparing for? How would we react?
I'm worrying about it more. I wouldn't say that I'm certain it will happen. I'm certain nothing will happen. Nobody knows what the future holds, but I worry. So I'll explain what stackplation is first, and then I'll talk about where we are now. So stackflation is this economic phenomenon where unemployment is going higher, people are losing their jobs. Prices are also going higher, so inflation and economic growth is stagnant. And those three conditions together are really hard
to reach, especially these days. But when you do get there, like in the nineteen seventies, it can be incredibly painful because when we think about the economy, we think about it in terms of affordability. How much money am I making? What can I afford? In a period of sagflation. You fall behind so quickly when it comes to affordability, especially if you lose your job and if prices are moving higher, you can't afford things and you're not making money. That's
the worst trench to be in. We're not broadly, we're not there yet right now, and I think the bar is really high to get there for a few really nerdy reasons, but mainly because the FED exists and it has this dual mandate this two part job where it has to watch inflation and it has to watch the job market. And I think the Fed's hands are tied right now. They're not sure what side to focus on more.
But if we do get further into this and there is some economic damage, I think the side to focus on will become abundantly clear and they'll be able to do something about it. Something that a lot of people don't know is that the Fed's dual mandate actually came out of the nineteen seventies and the stagflation that we saw in the seventies that was ultimately that ultimately went into the eighties and was kind of smothered out by Paul Volker. Congress actually passed an act after that that
set the Fed's dual mandate. So we have this like natural stabilizer there that wasn't there in the nineteen seventies. So I say all this to say, stagflation I think is still far away. You might feel inklings of it here and there, but the true conditions of awful stagflation that affects that affects a large swath of the population, are still far away. And I think that there are some counterbalances.
Nice, awesome, Well, CALLI, thank you so much for taking the time to speak with us, everything from trading on your phone to stagflation, retirement finding, calm touch. I like how you're just even touching the table in front of you.
I like sipping hot tea. That's actually why I brought it up. When I feel anxious, I get a cup of tea and I just sip it and I meditate. And I think sounds corny, but that's what I do.
No, I think it like what you pointed to earlier, you need out of that is knitting.
Now you're saying I'm old.
Okay, then you're my grandma.
You will be ready for a retirement at that point, Calli. But that's how we know. Yeah, No, seriously, we really appreciate taking the time, and of course we'll point folks over to your substack optimistic CALLI. But yeah, thank you for hanging out with us today.
Yeah, thanks for having me. This was a lot of fun and hopefully the next conversation we have will be a little cheerier.
Awesome, Thanks Cally. All Right, Matt, good convo with Calli, and uh yeah, a lot of good information and hopefully just all about investing, I know, and hopefully just some a calming effect for the people out there who are worried about the future. And let's be honest, it's hard. It's hard not to be at least somewhat worried about the future, a.
Little bit anxious. Yeah, and wonder how much hot tea Cali drinking these days. She's like, oh, I've noticed my my hot tea intake spiked significantly over the past three months exactly.
But still there's a lot of reasons to be calm and to be excited about the future too. So what was your big takeaway from this combo?
Well, I guess speaking to that, it's all about And something she said was to find comfort with whatever plan it is that you as an individual have come up with. And you know, she said, write it down, she said, she said, having hot tea that's a part of her plan. Like, I would love to see that written down somewhere as part of her you know, her twelfth step process to talk herself down from the ledge if she's feeling a little bit anxious about the markets, and you know how
her investments are doing. But you find that comfort, but simultaneously, you don't abandon the overall plan that you know is
going to lead to your financial future. Like it's a it's like our own personal forget the FED, this is our own personal dual mandate that we have to somehow find a way to navigate, to find comfort, to not freak out at every headline or tweet or truth that gets pushed out there, to be able to stay the course and maybe be able to respond thoughtfully, but at the same time knowing that over the long haul, this is this is what we gotta do.
Yeah. Yeah, I like that a lot, and that that involves having a plan, right, So yeah, it's a good idea if you don't have one, to have one and to write it out so that you know what to do first, that you're not just like knee jerk making bad decisions because you're emotional. And I get it. It's it's hard not to be emotional sometimes, so you need
the plan to help you avoid the worst impulses. I think my big takeaway was when she was like, I don't really pay attention to those predictions to the pessimist, and it's really hard when there's like a name like Vanguard or Golden Sacks attached to it, and.
You're like JP Morgan, right, Jamie Diamond again, here he goes all.
Right, yeah, And all I can think sometimes when I read those is like, there's a pool of highly paid people who wear much nicer suits than I do, because I literally have one suit that I don't wear very frequently. And my assumption is like, they know more than I do. I'm an idiot by comparison to the hive mind that they've got going on in these fancy New York office buildings. But that's not even true, that's not actually true. It
feels like that's true, but it's not. And so those predictions pessimism also sells like it's easier to trust somebody who has a dour prediction than someone who's like, I think things are going to be great. You just sound like an idiot when you say I think things are going to be great. But the truth is so much of the time, especially when it comes to markets, things are pretty good. So maybe we should listen to the optimists like Callie a little bit more less to the pessimists.
It's not that bad things can't happen, and we should be prepared for those things, but it's also hey, maybe maybe don't assume that only bad things are in our future, because there's a lot of good stuff coming around the bend too.
That's right, man, all right. The beer that you and I got to enjoy during this episode was called Pineapple Vanilla Milkshake IPA by whistle Hoop Brewing Company. What did you think of this one, buddy, I'm gonna say this one was okay.
It was okay.
Yeah, I'm with you. Yeah, and those one was not my favorite.
I picked this one up at the Physical Brewery in in Ashville. The Physical Brewery really cool, A great place to take kids. I've into this place. Yeah, they got little soccer nets and a little mini miniature golf course.
So it's called whistle Hop in the whole places train theme. Yeah, so there's literally a train car that you can get up in and we actually had the most fun sitting up what's it. I'm sure there's some train nerds out there where you like climb up the little ladder and you're kind of sitting on the second floors looking out the window.
Love that did you get to sit out there? I don't know what that's called, but yeah, they loved it.
It's a it's a cool feature of a mode of transportation that we no longer take advantage of. But the hackers also go to Europe with the actual beer. Beer was left something to be desired. Yeah, and I had a good sour beer when I was there that I enjoyed.
This one I just didn't enjoy as much. And I guess the pineapple maybe felt a little fake to.
Me, a little heavy handed. And the milkshake I pas is a style that I've never been the biggest fan of personally. Yeah, I was trying to go into it with an optimistic forecast, but I was mo even wrong.
It happens. It happens. You can't win them all. And still cool brewery, definitely worth visiting, absolutely worth checking out, and good beers that I enjoyed my other beers, but this one not my favorite. All Right, that's gonna do it. For this episode. We'll link to Calli's blog and some of the other resources we mentioned on this episode up in the show notes at how to money dot com.
You know it, buddy, So until next time, best Friends Out, Best Friends Out.