The Wealth Equation Podcast by Maurice l Wilson reveals how to accelerate your wealth and secure more money, time and freedom by leveraging the investment powers of real estate. Entrepreneurship, the stock market and more. Tune in as host Maurice l Wilson, an engineer turn financial advisor offers you a step-by-step formula to solve your wealth equation once and for all. Here's Maurice. Hello and welcome back to the Wealth Equation podcast. I'm your host, Maurice l Wilson.
Kicking off a first ever live broadcast for the wealth equation. So, uh, please excuse any, uh, amateur hour on my part as I enter a bold new world of, um, social media content. Uh, just want to thank you again for joining me, uh, clients and, uh, friends and family alike. Uh, we're going to kind of get this started with some questions that I'm getting from clients and then hopefully bring in some guests, uh, to talk about. You know, the world of personal finance and investing.
Um, you know, as an advisor, I've been in the business for 20 years now, so you're always getting a lot of different questions, but you tend to get, um, you know, certain types of question around big events, uh, that touch both Main Street and Wall Street. Uh, and so as we all know, we're in a, a bold new world with a, uh, new administration.
So I'm getting a lot of questions now about what should I do with my money that are centered around the fear of just everything, uh, you know, blowing up you, you're having, uh, a challenging of institutional norms and things of that nature. Uh, one thing that always helps me, uh, really going back to my first financial crisis as an advisor is to be a student of history.
Um, so if you go to my personal first financial crisis, which was the, uh, 2008, um, great recession, um, you want to look at past crises to give you some, uh, some, uh, you know, kind of a lighthouse going forward. So. In that particular crisis, uh, I, I turned towards the.com bubble of the early two thousands, and then of course, the Great Depression and what I was looking for, there was a way to. Have a way to put a gauge on the magnitude of the potential decline.
So the Great Depression, the market fell 80% roughly from peak to trough and took a crash in 1929 and took all the way to the late, really the early forties for the market to fully recover. Um, the lesson there, of course, is if the market's going down, don't write it all the way down. Um, and then I took a look at the com bubble. And that one fell about 52% from peak to trough.
Um, and the lesson there was is that markets don't always fall 80% and you want to be in there to take advantage of the eventual bottom. Um, the lesson from both of those crises is that the prices at the bottom of those declines were way in the distant past, and the prices that we were at were demonstrably high. So the lesson is that the market is going to recover. So what we want to do first in this environment is understand that you're not gonna lose all of your money, right?
The second thing is you want to be nimble, right? And so there are ways that you can manage your money to do that. Uh, and really you want to have your eye on basic things in the market that deal with. Numbers, right? So the market has a way of going below and above certain averages that can say, Hey, you know, even though you're scared, I'm above average. Hey, you're scared, I'm below average. Take action. And so you want to use those things.
So what you wanna know is first you're not gonna lose all your money. Second, you can gauge the market based on where it is. So there's literally a c. Average line for the market. Now, I'm, I'm oversimplifying this. Give me a call, uh, gimme an email, uh, mauricea wilson wealth.dot com or 7 0 4 3 2 7 3 1 8 9. And I can give you the actual names behind these numbers, but I'm doing a very simplistic explanation. So at any given time, the market is above or below this C level line.
Um, what that does is that brings objectivity. So right now people are worried about, uh. Their money in the banks. 'cause certain people are in the treasury payment systems, they're worried about tariffs knocking their, their investment portfolios down. There's a lot of hysteria. But if you go and look at the market, it's like, oh, the market's still above average, right? So what does that mean?
That means there's a lot of headline news, but in terms of the impacts of the market, it's been very minimal In fact. For all of the hysteria this year, the market is still up roughly 2%, so, so you want to know where you are in the market based on that historical average. The third thing is you want to play the market for the opportunities it's going to give you.
So everywhere I've ever gone to school and I went to several historically black colleges, those areas in which that surrounded the schools I went to eventually became gentrification zone. Uh, most notably the area around Tennessee State University. Any, any of my TSU alums? You know what I'm talking about? Every area that we would walk through, the dangerous neighborhoods, the, uh, shady parts of town are now high rent district.
And so every year we go back to homecoming and people are like, Hey, I wish I would've bought the house when I was here in the nineties. Right. Well, the market gives you that type of opportunity during all of these crises. So the last time we had. Trade war related market. Selloffs, the market fell about 19%. Um, people who had cash on the sidelines could take advantage of that decline, and that gave them some really good returns.
So you want to be able to position your portfolio to take advantage of those market declines. So while everybody's running around and getting scared, you wanna make sure that you are positioning your portfolio, uh, for doing that. So. To do that, you need to have certain, um, skill sets or a, a shepherd, if you will, a guy to show you how to position your portfolio. There's about three different tools you can use.
I'm not gonna get into that, uh, in this particular, uh, podcast, but if you give me a call, um, or shoot me an email, I'm happy to show them to you, uh, and show you how it applies to your portfolio. Um. So where does our, where are we going with all that, Maurice? Well, I'm typically getting Maurice, should I take my money out of the stock market? The answer is going to be no. Right? The market's up roughly 2%. Um, there are different areas of the market that are up. Even more overseas.
Markets are up even more. And so, uh, no, if you've got long-term goals, you can't make short-term moves. You gotta be smart with your money. But part of being smart with your money is being able to, one, take a look at history, see what's happened before. In market declines even with this particular administration. Look at the last time this administration was in office and how the market responded to various administrative policies and just use that as a framework.
History's not going to repeat itself identically, but you can kind of look for the rhythms. So one looks to the past two, take a look at the actual market. Don't the, the, the, the news is always built to. Get you in a, not a panic, and I, and I'm pro media, but it's built to entice you. So let me give you an example. If the financial media just said, Hey, the market's up today, and then when it's down, hey, the market's down today.
Well, that's not going to get anybody in tune back in the next day. So the media's job, just for anybody that watches sports. You've got a guy calling the game and a guy doing color commentary. The financial media has to do both at all times. Otherwise nobody's watching. 'cause they can be very dry to say the market's up 1%, down 1%. So they're going to give you a story. And the story typically is they're trying to explain to you why the market's up and why the market's down.
Nobody really knows why the market goes up and why it goes down on any given day. So for example, tariffs are still in play. But they are not impacting the market like they did on Monday. Right? And so why is that? Is because they're, they're still 25 days into the future, nothing's really been resolved, but for some reason the market's moved on. Now a lot of that is because the market has a way of looking past. What's happening on the front line and look into the next story.
They call that discounting. Don't worry about what that means. Just know that the market is rarely looking at the same thing you're looking at. It's typically looking further into the future. The problem is we don't know what the market sees. Um, so when you're looking at the financial media. Don't let it sway you. You wanna look at the actual charts you wanna look at to see if the market's above that C line or below that C line, and then let that inform your decision.
Um, and then thirdly, hey, no matter who is in office, no matter um, what's going on, no matter what anybody tells you, the market goes in a cycle, okay? The market's gonna go up and eventually it's going to go down and that there's a bull and bear market. There are. Uh, recessions and expansions in the economic cycle. So knowing that you want to be able to position your portfolio, that, hey, when the market goes down, I want to take advantage of those low prices.
Um, so you shouldn't take your money out of the market. You need to be keep an eye on the future, watch where the market's going, and be ready to take advantage of opportunities. Um, another question I'm getting now is, should I put my money in foreign currency? There's nothing wrong with foreign currency, I will say. Foreign exchange trading, or what they call forex, can be very complex, um, and can get you in a state of whiplash if you don't know what you're doing.
But putting that aside, keep in mind you rarely hear somebody say, I retired off Forex trading. You rarely hear somebody say, I built my wealth off of Forex trading. Um, and what I'm getting at is Forex trading and foreign exchanges and foreign currencies. Are nice for Wall Street because they make money and they sound sexy, but it takes you away from core investments, right? So I don't like to do a lot of things that take me away from my core investments. What are core investments?
Core investments are investments where, Hey, um, 10 years from now, if you wish you would've bought this particular stock. That's a core investment. So what do I, what do you mean, Maurice? What I typically tell clients and I have clients in my neighborhood, um, we're gonna have a conversation today. You're gonna come by my house. We're gonna talk about your portfolio, what have you. Now, when we break from this meeting, we may go get something to eat.
Now, I'm no longer eating a lot of fast food anymore, even though it may not look like it. But if we decided to go get a quick, uh, burger. We might consider McDonald's, right? Um, we may not eat there, but we might consider it. Now, here's the thing with McDonald's, we could have had that meeting in 20 25, 19 85 and 2055, and we all know McDonald's will still be in existence. That is a core investment, right?
So no matter who's in office, no matter what's going on, I want some of my money in that core investment. Particularly in an environment where people are eating out more and more, regardless of the price of eggs and things of that nature, right? Uh, we know that these kids aren't cooking, right? We know that people typically don't have time to cook, and so McDonald's is a great place to go in and McDonald's has this great ability to alter their menu to whatever's going on in the public.
Um, uh, arena, right? They do salads. Sometimes they'll throw that mc rib out. They got the value meal. They can hop on these movies and do promos. McDonald's is a, is a juggernaut, right? That's a core investment. Um, Amazon, right? Walmart, things that deliver discounted goods to people, no matter what you want call it that discount provider is always going to be in play. That's a poor investment. Now, look. Don't go out and buy these stocks without talking to your advisor.
But these are core investments. So when people come to me and say, Hey, should I put my money in in foreign exchange because I'm worried about the current administration? The answer is, yeah, you can take a look at Forex, you can look, take a look at foreign exchange, and there are ways to do it. But make sure you keep your money in your core investments because 10, 20, 30 years from now, that is going to be what you're gonna be glad that you did.
I have some clients through different circumstances, we're able to buy Apple stock, Nvidia stock. When it was in the low single digits and low double digits, right? And they've just held on no matter what the cycle was, no matter what the news was, they've held on and they've done quite well. Um, so core investments work. Um, another question I got, and this is really, uh, for most Americans, the 401k is the primary savings vehicle.
Uh, so one question I got when I was working with one of my advisors and his clients, uh, yesterday was okay with everything that's going on, one of my friends asked, you know, should I stop doing my 401k? Now here's the answer's gonna be no right. I, I have no problem telling you to not. Discontinue putting money in your 401k and it's for one primary reason.
See, the thing with the 401k, that gives you an advantage over every other investment account you own, is that for most people, the 401k gives you the biggest contribution amount. So the way humans work, if you give us kind of a range, we'll typically go right up to that range. What do I mean? Most folks, if you have a good job, your employer's gonna match 6%. 10% of what you put in or match up to six or 10%, right? So it's kind of like they dare you to put that money in.
So for most people, if they're trying to really save for retirement, they are going to get up to that range, okay? So for most people, that's the most money they're putting away for retirement. What happens every two weeks? You get paid, you're putting new money to work in the market. Well, in that scenario, you actually want to be investing in. Poor performing markets because that means you're getting the better prices, right?
When you're buying near the top of the market all the time, you're just setting yourself up for this big decline. But if you're putting money in, sowing those seeds in turbulent times, well guess what? When the times turn back to positive. Those seeds are going to give you a, a bigger bang for your buck. So when you are doing the 401k, you want to think, oh, the market's down. I'm getting a two for one. A three for one.
Anybody that was buying after the.com, uh, uh, bubble bursts were getting two for one people buying during the pandemic, getting two for one. If you could have bought during the Great Depression, you were getting three for one. Um, so that's what you want when you're buying, when the market's doing good. Anybody that was buying, uh, towards the end of 2024. They were getting the high prices. You want the low prices.
So, uh, you know, at the risk of being out of compliance, you definitely wanna keep that money flowing into the 401k. You don't want to discontinue that. Uh, so definitely keep the 4 0 1 ks flowing. It's your best bet, uh, in the war to build your wealth. Um, speaking of that, 401k, um. If you like them, my advice, oh, I shouldn't say that. My, uh, observation is that the government, and this isn't to be alarmist, anybody, email me, I can bring you, uh, very mainstream public outlets.
They're definitely floating. The idea of taking the 4 0 1 KA, um, the reason they're looking to do that is. They're worried about the hit on taxes. They're thinking, Hey, this is what was a good deal when we introduced the 401k in the, in the late, uh, seventies, early eighties. Um, because back then the government didn't have this deficit, uh, the way the world was structured, the way the economy was structured, um, it wasn't a big deal. And there, there wasn't.
This huge adoption of 4 0 1 Ks across so many different providers. Uh, now that it is this juggernaut, well, the IRS and Treasury, they're saying, Hey, can we afford to give people, um, you know, tax free contributions up to 60 something thousand, which is what it is for business owners and about 30,000. 30,000, uh, 500 for, uh, just regular, uh, employees. Uh, and the answer, at least from what I'm reading, is that that answer is no. Right?
So now you could still put money away for retirement, but they're gonna reduce or probably take away that tax incentive. Well, again, knowing how humans work, if you remove that nugget, people are going to make trade offs, right? So keep putting money in their 401k while you can, because more than likely they're gonna start pulling that away. Uh, in the future and only the best of us, and I mean that in terms of habits. If you are a, a driven person, are going to keep putting money in.
A lot of us are gonna find that we're not gonna put money in. And people who, who think that's a negative comment. Remember one of the main reasons getting a house. Is so helpful in wealth building is that it forces you to put money in something that you can sell and get money out of later. For most people, the house and the 401k are the only places they're saving money of any material amount. Most of the money in the bank is already spoken for.
So when you think about it, how much wealth do you have outside of your 401k and your house? For most people, the answer is little to none. So the 401k is definitely in the cross hairs. Um, you can definitely write to your congressman for what it's worth to kind of keep it, but I, I, I do think in about a decade the 401k is gone. Um, so, uh, you know, take it for what it's worth. Um, but speaking of 401k and savings and things of that nature.
One thing I I, I would definitely, um, if you go to my site, it's, it's there. So it's not like I haven't said this before, but there are other ways to build wealth that aren't as tax intensive as the 401k. Uh, so I'm a big proponent of the Roth 401k. Um, because you're looking to build this large amount of wealth on the back end, right? So you're putting a little money in and taking out a lot of money on the back end. Well, where would you wanna pay your taxes?
On the front end, on the back end, right? So if I'm putting, if I'm put, if I'm putting in 10,000. A year over 10 years, right? A hundred thousand in. And I'm trying to take out half a million. Well, I wanna pay my taxes on the front end. I don't, I don't wanna pay taxes on the back end. And that's what 401k set you up for? The Roth 401k works in reverse. You pay the taxes on the, on the front end and no taxes on the back end.
So for those reasons, um, I'm a proponent of the Roth 401k, and if you talk to any, uh, CPA tax professional, they will tell you like, look, even though it doesn't feel like it. Taxes are lower today than what they may be in the future. Um, so consider looking at that Roth 401k as we go through this great realignment, um, here with the economy and new administration and things of that nature.
Uh, now if you don't have either, either, if you don't have a Roth, you don't have a traditional 401k, uh, don't, uh, be discouraged. There is something called a regular investment account, an individual investment account. Or if you wanna open one up with your, uh, spouse or partner, uh, joint investment account. Now, the advantage there is people don't know this, but your money is still gonna grow tax deferred. That's kind of the secret sauce or secret of regular investment accounts.
And what do I mean? If you put $10,000 into your favorite stock, as long as you don't sell it, there are no taxes while it's growing. So if you put 10,000. Into, I'm just gonna use, let's go with Nvidia. That's everybody's favorite stock. You put 10,000 into Nvidia today, it grows to a hundred thousand. You don't pay any taxes on that growth. You will pay taxes if they pay out dividends. But typically high growing stocks don't pay out a lot of dividends.
Uh, those are typically for utility companies and companies that are kind, that aren't growing as fast anymore. 'cause dividends are earnings. So you don't want to, uh. You know, you aren't worried about that with growth stocks. So that 10 thousand's grown at a hundred thousand and, and it hasn't been a dime tax on it yet. Right now, when you do sell it, the taxes are gonna be at the capital gains rate.
The capital gains rate is way lower than the regular rate, which is what you pay in your 401k, which is the income tax rate. Most people, when they complain about taxes, they're not complaining about. Capital gains taxes, they're complaining about income taxes, right? So capital gains taxes typically range from 15 to 20, 25%. Um, you know, depending on what your bracket is and things of that nature.
Uh, so even if you don't have the 401k or the, or the Roth 401k, there's still investments out there for you. Um, so this kind of, to put a summary on some of what we talked about, um, definitely stay invested. Um. Definitely take a look back on what's happened in past market cycles when we've had fear. Um, definitely use a way to look at the markets that quiets out the noise, right? Um, you know, the headlines are there to make you feel a way to, they're click bait, right?
I mean, it's, it's not nefarious, you know, they gotta make you click. People forget. You know, there's all this talk about mainstream media, conservative media. Liberal media. Look, media is media. I can guarantee you whether it's liberal, conservative, central, mainstream, farthest far that I. There's something at the top called a headline, and they had headlines back in the 16 hundreds, and they have 'em today. That headline is designed to get you to click, right, to open.
That headline has always been there, right? Um, so because that headline's there, they're appealing to your emotions. People make, make decisions based on emotions, right? So you need a way to quiet those emotions down. The way you do that is by looking at charts. And charts don't have to be overly complicated, complicated, but on those charts, there's literally a average line for your, for the, for the market. If it's above that line, good to go below that line.
Time to make some moves, time to talk to somebody, right? Use that to gauge where we are in the market. And then finally, uh, well, not finally, one other thing we talked about is. Make sure you're investing in a way that has money in the sidelines ready to take advantage of market declines. Um, you know, money buy low, sell high is the way you make money in the market.
Sometimes you don't even have to pick the right stock, you just gotta get the right price and the right prices are always when these markets are falling off a cliff. Um, one I think about all the time is, uh, cheesecake Factory. Cheesecake Factory and the oh eight decline, uh, got just blown away. Blown away. I think it dropped to like $4 a share. Um, I know that because I sat there and watched it and so, um, I didn't take advantage of it.
You check on Cheesecake Factory today, it's way above for, it's probably split three or four different times and, uh, we're off to the races, but let's use a recent example. I think last year, uh, CrowdStrike, remember CrowdStrike shut down. Uh, there was a, something with CrowdStrike and Microsoft and the Air Airline shut down, and it was a big outage in the first part of the day. Um, now we went in and bought it for everybody at the, at the, uh, you know, you know, in our client base.
Um, and I had clients saying, Hey, I would've waited for it to go lower or whatnot. You don't know if it's gonna go lower. So we knew based on just history about how far stock would normally fall before it, you know, goes up. It doesn't always go down 50%. So we felt confident. And today, CrowdStrike is trading around 400. I think it dropped to like two 50 that day, um, from maybe three 50. And it's been a good investment. Here's the thing.
We've never took a look at CrowdStrike before that, but it was the right price, right? So right prices typically are when they fall off a cliff. Now, that's not a a recommendation to go out and just pick anything that falls off a cliff because there are some doozies that have not recovered. But if you find something that's just artificially depressed, like right now, it happened to Nvidia, Nvidia.
With this China AI model just got knocked off his perch and everybody was piling on and hey, is this it for Nvidia? And ever since that day, NVIDIA's higher, right? You know, Nvidia dropped down to one 13, I think it's trading at 1 26 now, right? And hit it on back up. So, you know, you get these moments where you can, uh, get invested. Now there's so many ways to position your portfolio. To take advantage of that.
Um, and that's where you wanna bring in a, you know, a professional to help you with that. And you can do it in your retirement account and outside of your retirement account. Um, and then again, uh, switching over to 401k, um, make sure that you are staying invested in that, that that's gonna give you the ability to buy consistently in the market.
If you're worried about the market, that's the best time to be invested in a 401k because all your money's coming in new and take advantage of, of those lower prices. Um, so those are some of the things that, that we've talked about to this point. And, uh, definitely thank you for sticking around and, and listening to this. Um, we try not to overtalk you, but I feel like sometimes people get a lot of the, um, soundbite information when it comes to the markets, and sometimes you need a deep dive.
To really, uh, be effective. It is a pleasure to have you join us for this episode of The Wealth Equation. Be sure to visit wilson wealth.com for more information about building wealth. We look forward to helping you next time on the Wealth Equation.