Episode 92 - $500,000 Portfolio Update

Welcome back, everybody. Thanks for joining. We have a lot to go over in this episode. I'm pretty excited. So first of all, this is my portfolio. It is not worth five hundred thousand dollars. This one is worth eighty eight thousand dollars. Now, there's another portfolio we're going to be looking at in this episode that is worth half a million dollars. It's right here. It has a balance of five hundred. Twenty four thousand. I have gone over this one once

and an episode. A couple months ago. I showed this one. It's somebody that I know personally they were good enough to show me this portfolio and how its performed over the past. Decade. It goes all the way back to 2006. So we get a chance to take a look at this. Now. I'll be showing how this performed during this downturn and how it's grown over time. It's somebody's 401K. So we'll be taking a look at

this. There's also a lot of things in the news, the jobs report for April were down, 20 million jobs, 20 and a half million jobs. Unemployment is up to, almost 15%. That's just the amount of people that have actively been applying for unemployment. So, the real unemployment is probably much higher people that just are unemployed, but not really. Into work right now, but out of the people looking to actively find a job. It's 15 percent which is pretty incredible with all that

unemployment. We have a lot of borrowing the treasury expects to borrow four point five trillion dollars this year, four and a half trillion dollars. Think about this before the pandemic. We were borrowing seven hundred billion dollars. That was the deficit. Now. It's up to four and a half trillion and that's not the end of it. We have bills like this where Congress is wanting to pass another 750 billion dollars.

In stimulus. So almost another trillion bucks, this brings in the question of how much money can we just give away four and a half trillion dollars, five and a half trillion. Why not 10 trillion? Why not 20? This is a real question that a lot of people have. We're giving away, seemingly endless amounts of money. The federal government is giving stimulus after stimulus passing as much money as they can.

And we have the FED at the same time doing quantitative easing, their balance sheet has completely exploded to almost seven trillion dollars. There's some people that are notable People that have commented on this like Charlie Munger. And they talked about this prior to this, pandemic going to be taking a look at some things that Charlie Munger has said on the subject. I think it's very interesting, but it paints a pretty Grim

picture. Now before getting into any of that. I want to take a look at my portfolio and do a little bit of damage assessment. See what has happened with the coronavirus with the pandemic and the shutdown and all of that stuff. See how it's affected my portfolio.

So, we can view the value over time and you can see we He had some trouble right here, my portfolio drop down from seventy nine thousand dollars to 60 thousand dollars and then it returned quite a bit and I've been adding money as well, but it's regained a lot of it. We're mostly flat right now. So I'm down for thousand dollars in market gains, but the earn dividends is up three thousand dollars. It Nets out to negative, twelve hundred bucks.

So, I've said this over and over again, for people that are new, you might not believe me, but I say all the time, I don't pay attention to much to the market gains and Not saying that because it's convenient because I'm in the red. If you go back to previous videos, I've said it dozens of times when I'm in the green by like twelve thousand dollars. I've said the exact same thing. That's great. I'm in the green right now by twelve thousand dollars, but

market gains are volatile. They can change any different day. So right now, I'm in the red with the market gains, but my Dividends are what I focus on. And that's what I want to look at with this assessment. Now, before jumping into the different sectors, I'll mention that there's a link in the description of this video. If you'd like to look at my portfolio. Folio, it's the link called my main portfolio.

So if you click on that, it'll allow you to click into any of these sectors and view any of my companies. So if you're interested in that, you can look at it. Now. I first want to look at some graphs. These are way I track the progress of me becoming financially independent just like passive income. Some people think it's a buzzword financial Independence, passive income, all that type of stuff. I don't consider it buzzwords. Having Financial Independence, means that you're less dependent

on your day job. That's something that everybody should be striving for. I view this graph right here. As kind of a graph to my financial Independence, its way to visually look at it and see how close I am to that goal. Now, I started off in 2018 earning nothing and passive income. So at that point, I was not financially independent at all. I relied 100% on my active income to pay for everything since then I have continued to do deposits, reinvest dividends and build up my portfolio.

When you start off most of the building of it is going to be with your deposits. There's no easy way around it. Your money is not going to compound. And to hundreds of thousands of dollars overnight. So most of it is you depositing money figuring out your budgeting putting money in every single week over and over again, and the dividend start to roll in. They start to become a bigger Factor as time goes on, so you can see this play out with my portfolio when I started off.

I was earning 15 to 20 bucks a month. Now, I'm earning three hundred fifty, three dollars in one month. 163 last month. I earned $229. So it's built up over time. In fact, if I go and throw a Line on this. This is from Google to like this isn't a line that I draw. If you can see this, it's this gray trend line going through it. Look at the projection. If I continue on the same path, I am by the end of 2020. I'll be making over three hundred dollars a month in dividends.

My goal is to be making around 400 bucks a month. So that's the goal. We'll see if I can do it but even earning over $300, a month in dividends is pretty cool. That's thousands of dollars a year in passive income that I was earning before. So I'm at the start of this journey. I'm a young guy. III have a long time to be able to build up this portfolio, but you can see the progress over time.

I could focus on this right here, the capital gains and get worried about every single daily change. I just don't think it's that helpful or that motivating. This is the type of thing. I focus on. Now, the monthly graph, this is just one way to visualize it, but there's other ways as well. We could go down and look at a quarterly graph. I have one here. It's really just the same data. The amount of dividends that I've earned instead of on a monthly basis on a quarterly

basis. So it's not so sporadic. I look at Q 1. I earned eight dollars and 76 cents in dividends over 90 day period. Then if we get into a queue for 2019, I earned $705 in dividends. That's quite a bit of money in three months. Quarter, one of 2020. It went down a little bit $617. But if I compare that to quarter one of 2019, it's three times as much and then 2019 to 2018, not even comparable. So you see the growth year over year. I'm earning a lot more money in dividends. Again.

The majority of this is building up your portfolio through having Appling in your budgeting and putting some of the money in your portfolio, every single week continually doing that over and over again. You start to build this stream of passive income. Another graph that I can look at is the total portfolio value. This is a pretty basic one. It's literally my portfolio value month by month.

So it starts off pretty small. I put in some money to begin with stuck around 4,000 bucks for the first few months. And then I continue to add money to overtime. I've been depositing about at a rate of two thousand a month. Typically on average. I have some months where I A lot more, some months where I put lesson and then during this downturn, I tried to put in as much money as I safely, could.

So that's where I am right now. This whole thing with M1 Finance, this portfolio is just a vehicle to be able to create that income stream. So that's the way that I view it. I buy these companies with that in mind that I want companies that can continue to pay dividends despite different market conditions. Now, what the pandemic this is brought some very unique circumstances that has challenged my portfolio and pretty unique ways. One of them by far is real

estate. This is Where I've lost the most value. I had about 30% allocated the real estate, and it really got hurt. I mean, having companies have to literally close their doors and people told not to go outside. That's not a good thing for Real Estate. So you can see the red right here down 42% four thousand dollars in the red. This is money weighted return. So it's a little bit different but regardless, it's a lot of money in the red.

Not only am I on the red on most of these companies, but I was well within the green on every one of them. I mean I was up quite a bit. Fifty percent on all these companies, everything was going good. And then you're told that retail is pretty much shut down. So let's go ahead and look at the damage here, realty income, Corp somehow. I'm in the green on this company. I was in the green a lot more. I was up like two thousand dollars in the green now.

I'm in the green by 200 bucks, but regardless, this is the best of breed. It kind of has a cult following because people like this company so much. It's a very boring real estate company. It owns triple net lease Standalone buildings. The type that like Walmart rents from Ins those type of buildings. So, it has a pretty simple business model. They own about five thousand properties. This company has done so good over the past 10 years. It has blown away the S&P 500.

So the tech-heavy S&P 500 Realty and come Corp, has crushed it over the past ten and fifteen year period. I mean, even with the downturn over the past month, it's still in the lead by a long shot. So it's done really good so far. And I think the future outlook of it is good as well. But there's a lot of unknown right now. Store Capital runs a very similar business model. It has a diversified tenants. It collected, less rent in April. So it's in a little bit worse of

a position. I could see store Capital, cutting its dividend sometime soon, but I plan on holding it, even if it does now. LTC properties and well Tower. Again, those are both similar companies. They're both senior, Assisted Living type of facilities. Nursing facilities. The reason that I bought these companies was because first of all, I didn't think we're going to have a pandemic with a virus. That targets elderly people. So that wasn't part of my thesis.

When I bought these companies, I bought it because the group of people that are going to be living in nursing facilities is supposed to increase drastically over the upcoming years. We have a whole generation of Baby Boomers and all the surrounding gears. We're over the next 10, to 20 years. There's going to be more people that need a live in nursing facilities.

So that's the thesis that I bought it and That Remains the Same even with this pandemic, even with the added cost of them fighting the coronavirus and all their tenants struggling to do that. Don't think there's more moving towards our advantage. They have a lot of tail winds. They have more people going to be moving into these homes occupancy. Rates are expected to go up as people age. So, I plan on holding both these companies regardless of the short-term troubles.

They face. Now, the next one is a tough one Simon Property. This is the mall company. They own hundreds of miles. This is one where there was a lot of risk, you're taking a bet on this one before coronavirus if you can believe that. So there was a whole debate of whether malls are going to be a relevant thing in the future. ER anyway, that was something that you were kind of gambling on my thought process was. I do think they're going to be a

thing of the future. I think they need to adapt and be more of like a lifestyle experience place where there's lots of restaurants and events and a few High scale shopping places, but even then we have a lot of risk there and then the pandemic came along and it puts into question going out and shopping in places like malls to begin with in the future. So this is caused a tremendous amount of uncertainty investors. Do not like uncertainty. I'm down, 60 Hundred dollars in

this one. Holding down quite a bit on this one. So this one is really hurt the gains of the portfolio. I'm down quite a bit. I will continue to hold this company. I just think that they're the best chance with malls. Simon Property owns the highest quality places. These aren't cheap strip malls and random corners of bad parts of town. These are the high quality City plazas in the middle of Highly dense high-income areas.

So if there's a chance that malls are going to be successful and they're going to be a thing of the future Simon. Property is the group to bet on. They also bought Kalman, which is a another smaller Mall read that has really high quality places. So I just think they're the best bet with malls. They have a good balance sheet. They can make it through a long time period. So this is a company that has been irresponsible. They have a lot of cash on balance.

They can float for a long time until things recover. So I'm going to continue to hold this company. I think there's a lot of potential upside with them. A lot of this is dependent on how quickly things return to normal and they're not being a new Colonel where people only shop online. If we have a new normal where people don't go outside. They don't go to malls. They don't shop that way. Then this is going to be a Bad Bet. So that's obviously something I

don't think is going to happen. I think malls, will still be a thing in the future. Now, there's a couple other sectors that have been pretty beat up during the downturn. We got Finance, industrial, and energy. So, first, look on to finance, this is another one that I had a lot of money and I'm down 1500 bucks right now. I think it will recover. None of these companies have cut their dividend, all of them. I think are doing pretty well.

They're doing okay. The reason that people sell out of banks during recessions is because Banks make money lending out money to businesses and during a recession. It's more likely those businesses can't pay them back. So that's the main factor there. People don't like owning Banks during recessions. Another reason that they go down in value is because they're less profitable. They make money with higher interest rates. Interest rates are at zero and it's likely to remain that way

for a while. So those are the main reasons again, none of these companies have cut their dividend. So they're all paying the one that is probably most It has some kind of dividend reduction is main. This is the highest yielding one. They take on the riskiest loans of companies that normal Banks. Don't lend to this company has the highest risk. It hasn't cut its dividend yet and it's one that I intend to hold so we'll see what happens with that one.

Then we have the energy sector. This has been an area that I've mostly lost money in ever since starting to invest in it. If I go and it's only 1% of my portfolio. This is not a lot there but I'm down nearly 40% 500 bucks. So let's go take a look at this. I used to own a bunch of smaller oil companies, but months ago. I sold out of them into these two really big oil companies Chevron and ExxonMobil. The reason that I selected them is because they're really big.

That's the reason why the Saudis and the Russians have been producing a lot of oil. That's driven down the price of it, because we have overproduction of oil at a time that we have under-consumption. So we have too much oil. The prices have dropped down and all the smaller oil companies are really struggling right now. So I plan on holding these two companies will see if they cut their Didn't right now they haven't. It depends on how low oil prices

stay for. How long but I have these two companies not too much invested in them thousand bucks right now, but I continue to hold them. So that's it. That's the damage so far. I'll keep you updated on it as companies continue to try to make their way through this recession, whatever you want to call it through this really unique downturn.

We'll see what happens. Now, moving on. Let's take a look at a much bigger portfolio. This is a five hundred thousand dollar portfolio. Let me go to the ending balance there. Right there. Five hundred and twenty four thousand dollars is a current balance of it. I've shared this portfolio before. This is somebody's that they I know them personally and they've been good enough to allow me to share this with you. So this is a 401k, you can see that the employer contributes as

well as the employee. This is why you should max out your 401 K's if your employer saying that they're going to give you a match, you should always try to Max that out before putting your money into other things, but regardless you can see how this has grown over time back in 2007, before the financial crisis. He had a hundred and thirty four thousand dollars in this portfolio. Then it had a severe downturn dropped a 92,000 and it continued to go back up a little bit.

And then, it dropped down, more and more all the way to 77 thousand dollars. So he nearly cut in half his portfolio. 134,000, two years later. That's a long time. Put yourself in that situation, two years of seeing your money. Go down over and over again while you're contributing to it. So his portfolio got cut in half and he's probably doing contributions all throughout. This time now, keep in mind that right hair. When it's portfolio, value was 73,000.

It's been wiped out by half. It used to be 134,000 but two years later. It's half as much money 73 thousand bucks. This was February of 2009. This was the very bottom of the market, right here. Was the very bottom this wasn't some magical time when everybody got together and the News was very positive and people said, hey guys, this is the bottom of the recession is over. Things are going to go up now. Things are looking up. That is not Happened. These news stories, still

exists. You can go look at them. It was unbelievably - when the market decided to turn around and February of 2009. The news was largely overwhelmingly negative. So this is something that in hindsight. It looks like, oh, I could just invest, that would be the best time to buy. Think about what you've gone through though. It'd be very difficult to do that.

The news was overwhelmingly negative and you had to stay invested during that time not knowing that this was the bottom of the market, but that's what he did. He continue to invest and you can See the results of that five hundred and seventy seven thousand dollars. This is the highest point that this portfolio hit. Let's take a look at how much money he lost in like two months. It goes down to four hundred and

seventy thousand dollars. So from 577 2470, he lost a hundred and seven thousand dollars in the course of two months, 107 thousand dollars. That's a lot of money, especially if your portfolio is just over half a million. So that's a pretty big drop. But then of course it's recovered quite a bit. It went from 472 524. So he's down maybe fifty thousand dollars from his

all-time high. So, you know, I look at my portfolio and I lost a couple thousand bucks here mind of down I think into the red by - 15,000 I compared to portfolios like this a hundred and seven thousand dollars lost in the course of two months and you put it all in context. If you're worried about losing the couple thousand dollars because the market went down a little bit, realize that there's people that have hundreds of thousands of dollars. They have a lot of money in their portfolios.

There's have gone down a lot more, you know, the same. Um, so don't stress about it too much. Look at it through the context of the long-term view. He looks at this and he says, well I'm going to be working for at least the next 10 years. So I'm going to continue doing exactly what I've been doing. Just continue to invest, have your employer contribute, if you're in a 401 k, so if you're looking at it through that lens, through the long-term view, you

can see what happens. But when you're in these type of areas, 2009, lot of people sold out. That's why the market went down. This is something where I think it's really difficult when you're in these times, but eventually will come out on top. My feeling with it and I feel the same way with the coronavirus. There's a lot of things going on, a lot of scary news, but eventually we'll move on from it. Now, speaking of a scary news. This is something that I think

is actually scary news. So a lot of things in politics, I don't really concern myself with too much. A lot of the social issues people. Argue about things, back and forth. Everybody has their different sides. I think we're always going to have that different opinions on things. But one thing I think should be scary to everyone, everybody should be concerned about it is Massive amounts of debt that a country can get in. We have the US Treasury, this is from The Wall Street Journal.

The US Treasury expects to borrow four and a half trillion dollars this year. And this is from spending in a couple months, like two months were borrowing four and a half trillion dollars. This is astronomical. If you look at our total debt, the amount of debt that the u.s. Government has it's like twenty five trillion dollars. So we added on a big chunk of that in a couple months. All this money comes from somewhere.

The government has to Raise this money, by raising more debt that debt goes on to our federal budget. And we have to pay for that interest every single year. So the interest makes up a growing portion of the pie of our income out of our whole budget and makes up like seven percent plus. So that will continue to grow. We'll be paying more and more in interest every single year just to maintain the debt. Not even to pay it down.

On top of that. We have more to come another 750 billion dollars in Aid to State and local governments to help them pay for unemployment. So, So this again, is an enormous amount of money 750 billion just to put that in reference just this additional stimulus going to State and local governments. 750 billion is worth more than every company in the u.s. Aside for four companies. There's four that have a market cap bigger than this amount, and it's Apple, Amazon, Google, and Microsoft.

This is worth more than Facebook. So, this amount of money is astronomical the government's giving it away. We're paying for unemployment all this time. Stimulus. It's helping get the economy by, but it also causes a lot of problems. Anytime, the government gives away trillions of dollars like this. There's going to be a lot of winners and losers, everybody knows about groups and entities that have received money. That really have no business needing or receiving money.

There's lots of colleges that have billions of dollars in Investments That received millions of dollars in government Aid and they receive that money while they're paying their president, millions of dollars to run the college. So, their situations like that. There's lots of big businesses. Like Delta Airlines and others that have received, billions of dollars that they've done stock BuyBacks over the past years.

There's individuals that have received money that probably don't need it. There's people that haven't received money that do need it. This is the type of thing that happens. When you give away this amount of money, the government cannot be expected to give away trillions of dollars and have it be done in a way that is Equitable to everybody. That's fair and even everybody, it's never going to happen. So this creates a lot of winners

and losers. Now, another issue that this stimulus has caused is what's called perverse. Tips, pretty much in economics. It's the study of incentive. That's really all you're studying with economics. People make decisions based off of incentives. The reason they go to work is a want to earn money. The reason that they spend money is because they want to have things and enjoy them. Everybody runs on incentives.

It's normal, human behavior. Anytime that you do something like this, where you give away trillions of dollars. You give away money, you pay people to stay home that creates what's called perverse incentives, normal. You want to try to avoid doing that as much as possible. If we look at this article. Kle. It highlights. What's going on here? It says, business is looking for a quick return. To normal are running into a big hitch.

Workers on unemployment benefits are reluctant to give them up. That's complicating, plans to reopen States. As the u.s. Gets the economy. Back on track. I Lana who was laid off from her job as a bartender. At New York said she hopes her boss doesn't call her back soon. Let me read that again. She hopes her boss, doesn't call her back soon. I was crying at work to leave but then as time went on, I did receive benefits. It was like, wow. Getting more than I was when I worked there.

She's getting paid more than she was at her bartender job in this airport in New York city. So she doesn't want her boss to call her. She's getting paid more to stay home right now. We continue on with this Congress passed a coronavirus stimulus package in March that boosted unemployment benefits by six hundred a week. So Most states already pay you unemployment coverage. They pay out about 400 bucks a week.

It's not a whole lot. But then the federal government a this up by adding an channel, six hundred dollars a week that leads to about 1,000 bucks a week. That's a lot of money for thousand dollars. A month is a lot of money for most people. Now, we look at this about half of us. Workers stand earn more if laid off than they did at the job. Before the pandemic, half of people that have been laid off

are earning more staying home. And it says that this is going to go on at least until July. So they have a very long time to reap the benefits of this. This amped up, stimulus package unemployment until they need to get a job. Again, all the way to the end of July. So you can see the issue here. This isn't a judgment on Alana. She's not dumb. She's doing the same thing that I would be doing or any normal person. She's working a job at an airport as a bartender.

I'm guessing that's not her dream job. That's not something. She wakes up in the morning, really looking forward to going to. So it would be nice if she could just make more money, staying home. And that's what the government has provided her with. She has absolutely no incentive to go back to work. She can risk getting a virus. Iris and go back to work and earn less money than if she stays home. Why would any normal person do that? So this is a judgment on her or

anybody else in the situation. They're normal. They're working off of normal incentives. If you're paid more to stay home and watch Netflix. Most people are going to choose that option and I don't blame them. But this does create a lot of problems. It creates things that weren't intended and that's exactly what this is doing. Half. The people that are being laid off, are making more money, staying home, and this is causing issues for employers. Unquote here.

It says it just puts Employers in an awful position said, mr. Dinelli whose employees earn between 14 and 19 dollars an hour. There's a big resentment there. They're missing out on a lot of money. So this guy employees people and they're working for him, knowing that if he fired them, they would be earning more money than he's paying them. That's the situation he's put in. So what does he have to do? Does he have to artificially increase the amount that he's

paying them? So that he can beat out the competitor unemployment? Now, unemployment is a competitor in the amount of Say that they're getting. That's the type of situation that employers are being put in there competing with unemployment. Not a good thing to have happened.

So we're printing a lot of money. We're taking out a lot of debt. The fed's balance sheet is up to almost seven trillion dollars, which it's never been that high before. So there's a lot of Uncharted Territory, we're entering and we're creating a lot of bad incentives for people. Now, it's better to stay home than it is to go to work. You get paid more to stay home. So this is causing a lot of issues. There's some people that have talked about these type of

events happening. Charlie Munger is one of them. This was back in 2019 before the coronavirus. So keep in mind, the context of when he said this, this was before this recent event with all this money printing. I am. So afraid of all democracy, getting the idea that you can just print money to solve all problems. And eventually I know that will

fail. He's so afraid of an economy that gets the crazy idea that you can print endless amounts of money to solve all problems and he knows that that eventually will fail. This stands in stark contrast to Jerome Powell. So they're on the other ends of this drone pal, seems to have the idea that you literally can print endless amounts of money to solve all problems.

He said that he's going to support the economy and all the markets by offering liquidity printing, as much money, buying as many assets until this blows over. That's pretty much his strategy right now and Charlie Munger doesn't think that's a good idea. But he goes on to explain this further where he thinks this leads Singapore, which has a marvelous economy as Zero debt, if I were running the world, I would like the United States to be in that position. That is not the typical.

That's that's nobody's position. All these politicians in Europe and America have learned to print money. Who knows? When money Browning runs out of control. And we at the end if you print too much, you end up in something like benzoyl. Keep in mind. Again. This is before the recent downturn. This is before the four and a half trillion dollars in debt. The FED balance sheet going to seven trillion dollars and the amount of money printing we've done over the past couple

months. So he's saying this before and he says, it's going to lead to something like Venezuela, which obviously they had a great economy. Their GDP was growing. They printed a lot of money. They devalued their currency. It got to a point where they had hyperinflation. So that's his opinion on the subject. Not such a positive outlook on it. He Really updated this so far. Other than Warren Buffett. And Charlie Munger really haven't bought anything during this downturn.

They said that they're there waiting this out pretty much, so that's not something. They typically do usually during downturns. We see them buying a lot of assets, but I'll keep you updated. If Charlie Munger has any opinion on the recent money printing, I'll go ahead and show that as well.

Now, on a related note, Elon Musk has a lot to say about the same thing and he mimics some of the same things that Charlie Munger just said, so we'll be looking at that. He's been in the news a lot. Lately for like five different reasons. So, we have the whole drama with California. He doesn't like the lockdowns, the way that it's being handled, his kid's name. That's another thing. What does the name X? And then these weird symbols, it mean Ash.

And then 8:12, I think is the name that he's giving his kid, California is not going to let him name his kid that name. That's what the news is that, they're not going to allow it. I think they should for one reason. It's Elon Musk, you know, it's not an exception for billionaires to be able to name their It's weird things. I think there should be a general exception. You can name your kid, whatever you want. If you sent a rocket ship out to space.

If you've done that. I think we just make a broad exception. Now. You can name your kid. Whatever you'd like, X Ash, a 12, go for it. So I think they should allow him to name. This kid that, you know, it's Elon Musk. Who cares? Well, let's go ahead and jump into this portion of the interview where Elon Musk talks about the same thing that Charlie Munger was just talking about.

There's no shame though. That, you know, you can just sort of send checks out everybody and and things will be fine is not true. Obviously the there's some people have this absurd like view that the economy is like some magic Horn of Plenty. Like it just makes stuff stuff. You know, what? If it just there's a magic water plenty and the goods and services. They just come from this magic Horn of Plenty.

And then if like, if somebody has more stuff than somebody else's because they More from this magic Horn of Plenty. Now. Let me just break it to the fools out there if you don't make stuff, there's no stuff. Now, of course, Elon Musk is 100% Correct there. I agree with them 100%. A lot of people do seem to view the US economy, the way that he's describing that can provide infinite amounts of money to everybody.

And I don't think the government really helps with that perception by giving away trillions of dollars of stimulus in a couple months. It certainly does give you the impression that we can just give away infinite amounts of money. This is something where a lot of people I think have the wrong perception of the US economy. You can't have only consumption without production, the consumption.

Arms after the production. And I think Elon Musk has a better understanding of this, because he sees a front row view in depth of the relationship between creating something and consuming it. He's designing, and creating these vehicles. He's producing them in these factories assembling them, and then they're being consumed, they're being enjoyed by people. So he sees both sides of it.

He knows that you can't have just the the Tesla without all the stuff that goes into, engineering it creating it manufacturing it and selling it. So he knows that all this work behind the scenes goes Into creating it. A lot of people seem to have the perception that you can just have the consumption side that things will work like that.

Obviously, that's not the case. Now the last part I'll share of this interview is how quickly Elon Musk thinks the economy is going to be opening back up how quick. He thinks businesses are going to be here is what he has to say about it. Well, I think we're rapidly moving towards opening up the country. It's going to happen extremely fast over the next few weeks. So he thinks it will happen. Extremely fast over the upcoming weeks. I agree with them, I think.

It businesses want to get packed a business. They want to open back up. We're seeing a lot of States already open up a lot of businesses that have been shut down, theaters, and Barbers, and restaurants with lower capacity, all this type of stuff. So there's going to be some politics at play. Some governor's, want to keep things certain businesses, shut down longer than others. That's going to happen. But generally speaking, I think things are going to open back up soon.

Now the big thing people are going to watch is a Resurgence of cases. So we're going to be looking at the new The cases and I'll show you if we have a spike in new daily cases if we see that go back up, that's going to be the big thing people look at when we have the reopening of the

economy. Okay, let's get to some emails. Joseph at Joseph Carlson show.com., That's Joseph at Joseph Carlson show.com. If you'd like to email in a question, you can also comment on the YouTube videos. You can message me on Twitter or Instagram. I check those as well. The first one is from Maverick. He says, hi Joseph. I am a young investor. Only 20 years old. I have just gotten started and Money into the market. At the beginning of the year.

I saw some gains briefly only 5 to 10% and then this pandemic happen. I am told time and time again, that I shouldn't worry too much because I'm young and I'll recoup the losses. However, it's difficult for me to continue to keep dollar cost averaging when all I've ever known right now is being in the red. Should I continue on the path of dollar-cost averaging every month or so into Blue Chip companies, or should I hold cash

right now? Well, this is a good question Maverick. It's the age-old question. Ian should you be holding cash? Should you be dollar cost averaging again? I think you know what I'm going to say before I even answer this question. I think you know the answer because I don't have a strategy of holding a lot of cash and waiting around until a downturn happens. The reason why is I don't know if a downturn is going to happen and even if I do know what's

going to happen. I don't know when it's going to happen. So I might be waiting a very long time with cash for a downturn so not a strategy that I take to hold cash. I do think that there's some space. In between going to cash and having a full portfolio of equities. I think there's there's room in between those two options. A couple things that you might consider.

One of them is to have a portfolio allocation where it doesn't matter to you if the stock market Falls because you have the correct risk tolerance and portfolio. Allocation may be a mixture of stocks and bonds like my portfolio before going into this downturn, a couple months ago. I had 20% of my portfolio in bonds.

That turned out to be really helpful because when everything else was going down bonds, they actually went up quite a bit and I was able to sell out a lot of those bonds to buy companies that I think were undervalued. So that's something that I did. I still hold ten percent bonds just in case, we have another downturn, if we do have another big dip. I have ten percent of my portfolio in these treasury

bonds that work as a hedge. So if a lot of people are selling out of companies, they got to put that money somewhere, a lot of times that goes into us. Treasuries. So that's the reason. Have 10% in bonds. So there's a couple different options you can do there. I think it's fine to have some money in cash. You could make a portfolio allocation, that's little bit more conservative.

You could have some of your money and treasuries and corporate bonds, maybe but I do think the main issue here is not really what you're asking saying. Should you dollar cost average or hold cash? I think the issue is is that you're becoming less confident in your Investments because you're seeing red. I think that's the main issue here and That's something really tough to deal with. Like Mike Tyson says, I think the phrase is everybody has a plan until they're punched in

the face. That is kind of the same with the stock market. You have your plan. You're excited. You start investing dollar cost, averaging you buy all these companies that you want to buy. And then the stock market goes down. You see yourself entering the red, you're losing money every day, all of a sudden, the plan that you had doesn't seem so great. You're just looking at yourself

losing money. So this is something I think that stuff to deal with, you have to change your mentality and realize that you're in this for the long term. ERM. You're 20 years old. You're really young guy. You're going to be investing for at least 10 to 20 more years at a minimum. So you're at the very beginning of your investment Journey. This isn't something that you should be concerned about at all. If the stock market goes down a

little bit. In fact, you should be taking the opposite approach and celebrating the decline in prices. Even if you previously bought a higher price, even if you've been investing and you have a some companies go down in value. The stock market going down is a good thing in your phase of Investments. It's going down. Now, that's a good thing.

So, I think the mentality that you have to have is one where you really figure out a portfolio, allocation that fits with what you're wanting to do and you need to celebrate when the stock market goes down. As long as you're in the buying face, what you clearly are. So a change in mentality, I think so needed thing. And to answer your question. I don't really have the approach of holding too much cash. I don't have anything against it.

I just don't really like the strategy that much myself. I'd rather just build a portfolio that I think can go through. Different environments and continue with that plan. Carter says hi Joseph. I've been watching lots of your investing episodes lately on YouTube channel and have a quick question. How would you recommend someone new to investing? He's into the stock market? I don't have much capital, and I don't want to put that little amount.

I have all in right away. However, I'm afraid only of putting a small amount in will never return any results that are really worth noting. Can you help me with the situation to give some background? I just recently invested twenty five hundred dollars into an index fund. It's similar to the S&P 500 to hopefully have my money grow rather than sit in a savings account. However, this is over 50 percent

of my total cash. I'm just unsure of the path to follow and I realize, I have to play it long term, but it's hard to do that without being able to really dive into start. If you could help guide me and possibly others through this, that would be great Carter. I think you're overthinking this a little bit. You put twenty five hundred dollars into the S&P 500. You said that's over 50 percent of your total cash. You're not sure what path to follow. Investing is a very long-term

thing. You're not going to build up a big portfolio that you can rely on for passive income or to tap into later on in life. If you don't build it up on a consistent basis, so you're right that 2500 dollars in and of itself if you did nothing invested no more money. That's not going to do a whole lot over the course of your life. It might double or triple or quadruple. But even then it's you know, it's not going to turn into a fortune that you can rely on.

The way that you build up Investments is through consistent effort, every single paycheck that you have, some of that money that you earn needs to go to savings and Investments. That's the way that you build it up whether it's $50 every paycheck or 100, you know, it's different amounts for different people that earn different

amounts of money. You need to figure out how much money you can put into Investments and be really consistent with it. So, depending on your situation, I don't know how much money you make, but if you don't make a lot of money, try putting a little bit into Investments every single Week. It might not feel like a lot, but it adds up over time, and then situations do change. If you end up making more money, but your life is adjusted to

making less money. Now, you're able to invest at a much higher rate because you've already figured out how to invest, how to be consistent with it. But now you're making more money and you're budgeting for a lower budget. So, you know, circumstances change, if you end up making more money, you can invest at a higher rate, but consistency is the key, every study that I've read, all the stuff that I've read on the subject people.

That consistently put money into their portfolio and they buy Quality Companies. They come out on top. So don't worry about the absolute dollar amount. How much money you can put in right now. Worry about being consistent? Okay. Well, thank you for the emails. I'm going to go ahead and end this episode there. I will talk to you guys soon.