Our Two Dads: A Personal Look at How (Some) Boomers Use ETFs

our dads. Yeah. I mean the way you learn about a lot is through your parents. I've learned a lot from both my mom and my dad, and my dad in particular, uh, in the financial side. I definitely picked up some things from him, not all that I applied, which is a good thing, as we're about to find out. Yeah, but obviously, like we work at a media company and we're writing about, you know, how to invest stories about investment. But you know, a lot of stuff you get in

life is from your immediate family. And uh, sometimes I'll say something and I'm like, oh my god, that's my dad talking. It can be both good and more and more and more as you get absolutely, So what's interesting is that they are almost polar opposites. They're like yin into each other's yang. Yes, I think that's a good assessment, which is good for this because we get two different sort of perspectives from that generation speaking, which these guys

are baby boomers. Yeah, that's right. And there's a lot of E t F studies that come up from I Shares and Schwab and they break down E t F usage by generation. And I've always found it interesting that the Boomers are the generation least likely to use ets. So the latest SWAB survey has of them. I think ETFs are a good choice for the portfolio, whereas millennials that numbers about double. Then you go Gen X and then the Silvers are actually more users than the boomers.

So the boomers, that's another reason they're kind of fascinating is that they probably have a lot of their money in mutual funds and they've built up the wealth. Maybe they don't want the capital gains, but they're certainly the generation that uses them the least. They've also seen a lot, right, and this year has been an interesting one, you know, we've had we've been on this epic bowl market and

this year things changed. Yeah, that's right. And I mean I gotta say, look, the market as of right now is down four percent this year. It's not that big of a deal. It just look, if you're walking around Utopia for like eight years and you stub your toe, it seems like the worst thing on earth. So it's not that bad of a year. The market is still up around two since the Great Financial Crisis. But our dads have seen a lot. They saw interest rate spike

up to unguidly levels in the eighties. Uh, they saw the nineties they used go go back this so the oil crisis, and back in the seventies. They've seen the Internet bubble. So perspective, absolutely, perspective is really key, I think to investing and in life. This time on trillions are two dads. Okay, ken, I've never met you. Who are you. I'm a old, washed up highway paving contractor that worked in um about forty of the United States, believe it or not, paving rural highways in places like

North Carolina, Arkansas, Colorado, and um here. I'm at the opposite end of the world in uptown midtown Manhattan. Well welcome and thank you for keeping our highways in such good condition, some of them, some of them. Right, He's why I moved every two years. People say, are you a military brat? I know I'm a highway paving brat. So I have a personal question for you, which is when did um the letters E T F come out

of Eric's mouth for the first time? Um, I guess when he got involved with them, which in my memory like a drug only about ten years ago? Yeah, when did L first? It was before that he was just you know, hiding it under the pillow for him. It was the Sergeant Pepper's album, I'm sure, But no, when I mean, I know when, when was it? I'm curious about. To me, it seems like your involvement with him is the first time I ever heard of him, and that would be about ten years ago, even though I think

you've been with Bloomberg close to twenty. That's a great twelve. I got him in two thousand and six seven. So there you go, and it was like a drug gateway truck. Then look at you now, So did you know about et F before that? No? Can you describe sort of how you view yourself as an investor? Uh, with no discipline, pretty radical, like a gambler. And I started when I was thirteen. I got my first job and I saved six hundred dollars during the summer. At that's great. It's

fifty seven years ago. So my mother and father didn't know anything about money or investing or anything. So I, I don't know why, but I did from the newspaper. And I wanted to buy this little company called s O, which is that then became Exxon, and back then it was standard oil in New Jersey. And I had six

hundred bucks. So we went to see a I guess you call him a stockbroker and lo and behold if he didn't my mother knew nothing, and he convinced my mother to convince me to buy some stupid mutual fund. So I bought stupid mutual fund. Ten years later, at twenty three, I went to buy my first house. I sold the mutual fund for six hundred dollars. Right, the s O was now worth twenty seven thousand. The house I was buying was twenty nine. That right, there is why funds are in trouble. This is not a guy

that sounds like he helped create Eric baltunas well. The story is crazy though. That mutual fund obviously sucked. It took all you know, to have to make no money in a time when when a energy stock goes up that much. This is why people soured. That was a long time ago, so you can imagine how how in trouble mutual funds are if people have had those experiences.

But but you also did talk about how you did use mutual funds for things like my college, and they did work right again, I created you, um when I was twenty five. So after after I lost all that money on what would have been Exxon, I got back into mutual funds as a matter of a conservative investment for your college. Well you were zero or one, so I thought mutual funds with to three percent compounded annually reinvest the dividend was a conservative and good way to go,

and and it was. It was through the Jimmy Carter years. They were absolutely fantastic, and I ended up sending you and to step siblings of yours to college, all paid for and by the time the third one graduated, I had no money left. But that was the plan of the mutual funds. So I have you know, ambivalent experience, And did you ever put you know, that money on the roulette again for trying to buy that single stock like you thought you messed with. Yeah, then I took

about I reckon a decade off. I don't know what I did, but in about two thousand and eight and early part of two thousand nine, my company went away and I got my initial investment in that company back, and my mother died and I got some inheritance from her. I took all the money because I quote unquote didn't need it. I was, you know, okay, And I bought uh straight stocks because it was the low bottom of the of the bowl man. It was I was telling Eric, CBS was five dollars, a T T was nine, all

kinds of money just to throw it. It was just so I bought everything, and in I don't know when the boom was, but five seven years later my money had more than doubled, and it was just wonderful. So then I became like a degenerate gambler and quickly lost,

quickly gave back all my gain. But but luckily, unlikely degenerate gambler, I stopped short of the you know, the breadline and took the exact amount of money that I came into an oh eight oh nine, which like I said, had doubled then halved, and said, the heck with this and this, by the way, it only happened two years ago. Two years ago, I was doing three to five trades a week. Now this year and I've done three trades this year, and I took all the that's the hard way,

but I had the brains to get out. And all I bought since then was British Petroleum Shell, some great company that I got lucky with Williams Partners. They doubled and they paid like eight percent yield and uh and a T and T. So I put all my money just to get yield because I didn't want to see that next day go away. And now I don't even have to watch the tickers saw on TV during the daytime because I'm pretty safe, although I try to watch

the Bloomberg Network every chance I get. And let's talk about this situation that happened a while ago where he you called me one time and you said, listen, I think the market's going to go to hell. What will give me the most return if I think that? So I said, and believe me. I had all late, all kind of warnings down and I said, if you think it's going to go to hell in a couple of days, you can use t vix. This is the double leveraged vix.

But you have to use a short term. Your opinion has to be it's going to go to hell in a couple of days or a week, and then you got to get out if it doesn't or does, so talk about your experience with this is a red light product. Oh that in our traffic light system. This is hard read. It's equivalent of an NC seventeen rating of a movie. And you use it. Talk about your actually, you know, technically played with power tools for a living, So that's true.

And I did. I gave him all the warning labels, you know, I sold him the chainsaw and stood there and told him everything that can go ken. What did you do? Um everything? I shouldn't have disobeyed all the good advice, disobeyed the warning sides and went in. But it was a little bit of mad money over the next stag money. So anyway, it's all gone. And uh, t vix just wiped me out three different times. That's

how stupid I am. Three and so. Talk about one of those times that you thought the market was going to tank and it didn't. What happened? Yeah, I had um some mad money and when the election of Hillary Clinton against um Mr Trump occurred, I was positive that Hillary Clinton would win and in my view, the stock market would tank with her victory. And anyway, that was my view, So I loaded up on t VIX. The rest is history. Next monthly, what we need to do is have him on TV telling you what to do

and then do the exact option. We need an inverse, Kenny, So we did okay with the energy stocks. I don't that could be a ticker, can I have? I have a friend who gives me recommendations on college football and I bet the opposite I win. Someone could this could be a lucrative product, And you know you bring up college football and gambling like talk a little bit about that aspect of do you find similarities between betting on

sports and the market. Absolutely, to me, it's all a gamble, except for like I said recently, a conservative and went with these oil and m A T and T. But any time you've been on a football game, where baseball game, or go to Vegas in my view, you have to be prepared to lose your budget, you know, and when you lose your budget, you go home, you quit gambling. Well that's what I did with a lot of stocks, and UM lost most of the time. That's an untraditional

way of thinking about investing. How do you feel about E T F? I think, from my limited knowledge, which is through Eric, it's a great product because they, as he always says, the expense ratio is good and low.

But the other thing about him that makes them logical to me, even though I don't have any except for the dreaded t VIX, which, by the way, keeps flitting it one to ten, not ten to one, one to ten, then it does it again, So I think I'm down to like one to five hundred, So I think I have five shares of I'm gonna get fill aid for being the E t F analyst who recommended his dad used t vix. It's probably it's the worst possible thing that I could be known for. However, you can redeem

yourself with kidnex. Well, no, at least this is good for posterity. Now everybody knows that this guy learned the hard way. Happens to my dad but again, I want to make it clear. I did give over all of the warnings and I said hold it for a week. When when you buy t VX by a shop through Charles Schwab, they say in the beginning, this is a this is a scary thing you're buying, Mr. Are you sure? You honestly and you're like yes, yes, yes. Three times you have to say I want to commit suicide. I

really want to commit suicide. Yes, I'm gonna jump off this bridge. So but they warn you that's how crazy you do is. So let's uh forget t VIX and just talk E t F It seems like a great concept, the way they combine, like a country, you know, Vietnam et f UM, I mean all of like diversification, we

get all thirty stocks at once. Do you step back everyone, look at your portfolio and say, you know, I mean this much in equities and this much in bonds or are you just playing it based on on feel the ladder? And you don't have an advisor? Do you? No? Any time I ever had an advisor, I got killed, including that first time. Yeah, the first time. Yeah, I've had bad taste, I've had two or three and then my my only son told me to buy t VIX just kidding.

Uh yeah, that's for letting me go sledding backwards downhill. And when I hit the tree and almost died, I remember even to get rid of the kids. One other question I had, and because when I see my dad, I sometimes recount my childhood in the eighties, and I remember how much fun I had. And also, you know, obviously we have a lot of eighty references. We have a fond memories of that decade. When I work with our rate strategist, Ira, you know, he'll show me a

chart of the ten year yield. I know where you're going with this, Like it was. You know, it's a different world right in the eighties, and we don't remember we were kids running around watching yeah, playing outside. Uh what was that like? Did you know how abnormal it was? Because if you go back a hundred years, it was abnormal.

And what do you think of versus today? Is it crazy you can't get more than say two or three percent from a treasury bond by comparison you of course, but back in that era, remember that was a double edged sword. Everything was yielding and going up through the roof. But so was interest rates. So if you had to buy a house, you were commonly paying twelve percent for

your loan, even fourteen. And I had I've always worked for companies owned by foreigners for some reason, and Arabs, Germans and Englishmen, and they always said when that era came, they said, Oh, America's finally catching up to the rest of the world. That's reality. So where they were from borrowing money was more than ten percent for a long time, which you know, as Americans, we we we didn't know that.

I didn't know that. Some people call this bull market the most hated bull market ever because the Fed got in. People think it's a little bit set up from like the Fed providing sugar to the market. Does this one feel you know, stocks are up at two roughly? Does this one feel less legitimate than say the eighties or the two thousand or the you know nineties, to you know, to me, yes, but only because I'm older, less optimistic, been through some crashes, you know what I mean. It

just feels like this can't go on. So I'm curious, now, how old are you can uh? Next birthday seventy So when you look out over the next you know, a couple of decades of your life, we hope. How are you preparing for that? Financially? Just hoping to um break even. And I don't care if I use up nest egg money, you know, it's that's what it's for. Um. So I feel like, as they say, where I come from, I'm in tall cotton, tall cotton, all right, tall cotton with

the Kennecks creator. Well that was fun. Yeah, he is, my dad is he is an amazing shirt collection because that one that he has had on. So he's gone full Floridian. Yeah, he likes his shirt. He's got quite the life. He's retired, lives right at the beach on the on the Panhandle, the Gulf Shore's White Sands, goes fishing, watches football, bets on football plays. Yeah, he's got you know, dabbles in the market with some power tools. Uh, you know,

he could be doing worse. It's a good little life. Yeah. Okay, So from Florida's Panhandle, we're going to transition to West coast Oregon, where my dad's visiting from. So you know they call that the panhandle l A, Lower Alabama. So from from l A to Oregon to the woods. Yeah, what a swing. Yeah, so this is and it speaks to Yin and yang like these guys really couldn't be more different from an investing standpoint. Yeah, absolutely, Um, and I was you know, when I think of someone from Oregon,

I guess I just picture fed Armison from Portland. You did not get that? Yeah, I did not get that. Your dad very professional, carries himself very well as a doctor, really um retired doctor, right, and uh you know, has a really nice disposition. It's kind of like you in a way. Well, thank you. Erica brought my dad and I got a chance to talk to him before we started, uh of taving here, and it seems like a nice guy. Welcome from Portland wherever I'm from, right outside of Portland.

So I've been up close and personal with Larry for a really long time and know a little bit about how are you? It sounds really weird. That's a little too professional for I've I've interviewed Larry several times before. It's true. Um, okay, so Dad, you've been a d I Y investor for decades now, sinstmid eighties. Excellent. What was that impetus for that? How did you get into it? Um? Well,

actually it had to do with your grandfather. He had a bunch of investing books that were at the time put out by US News and UH and World reports at the time, and he himself was a little bit of a play investor. He was basically a fairly successful businessman in auto My mom's dad right, right. And so when I went to medical school in Portland's uh there I was. He had this little funky library that UH and he'd supply the drinks and we'd go over Friday night and we'd get the book that I would read.

And so that led to some accumulation of money that then what do you do with it? And that was a time when the money markets were just hitting and so that was pretty good. High interest was ruling the day at that point in time, so you could actually make some money with just cash put away. One thing led to another, and then I began taking newsletters and buying what some guru was telling me to buy, and that ended up being a mixed bag, which is funny.

I remember value line was always around, which value line is a UH subscription h newsletter in print and it has all kinds. At the time, it was just stock stock stock stock stock, Well, it's it still goes. And actually that's what I ended up taking because I felt

like you could rely upon it. It's basically they take sevent companies that are big companies, well diversified portfolio of it, and then once a week, so thirteen weeks, they just kind of rotate through different industries talking about these sevent hundred countries companies. But I took a couple of newsletters before that that sort of led me to realize that advice was advice and not necessarily successful. So me, my friend Eric, that's a good second. Well, it's funny you

say value line. There's actually a couple of value line ets at least one, and they do exactly that, and you just buy and you own all value line picks. I'm curious, though, in any of these listic to value lines. When you said some worked out mixed bag um, how long did you typically hold the stocks before you gave up on them? How is that like uh period? As you well know, following stocks and stuff like that can

it's just consumptive and the market is very unforgiving. And so I realized that the more I could distance myself from the market and the activity in the market and go with the so called blue chips and stuff that have a mixed bag of success if you look at them over decades and stuff like that. They were sort of long term buy and holds for the most part. So there's been years where I've had like turnover most

years it's about five to ten twelve percent turnover. And were you buying because in the eighties is when mutual funds became popular. Were you buying those in addition to this sort of like because you it's was like you were running your ow mutual fund in a way. Were you also owning mutual funds like in a retirement account as well or just doing this? No, Actually, it's interesting because I uh started buying mutual funds, and believe me, I didn't know the difference between a stock and a

bond for the most part. I began buying individual stocks and putting money into Dodging Cox Stock Fund and a couple of other mutual funds and just letting them grow just to see how's it gonna go. Because this was really my way of gambling. I'm not much of a gambler. When I go to Vegas, areno you know, I would give myself two hundred bucks and when I ran out of two hundred bucks, you know, that was the end

of the night. And that's my gambling history. And the one thing I had learned in medicine never confused luck with skill. It's a good, good lesson in medicine especially. I guess, well, it's a good lessons and investing too. What about is it better to be lucky than good? Yeah? Absolutely absolutely. You have to understand that luck is luck and skill is skill, um, and that's been always the challenge to balance those. So you were effectively a stock

picker right for a long time. And then the mutual fund phenomenon caught on, and you know that, I think is a lot of what you taught me growing up. So I'm really interested in how you use E T s. How did that start to enter your investing flash I was, I was probably fifty fifty on mutual funds versus individual stocks. And then when I had two kids, Joel being one, I would put some money away for college growth into mutual funds and I used that as everything because et

f s had not come along. And then fast forward to all this kind of stuff, and the work coming out of Vanguard was pretty impressive, not dramatically, so but you know you're picking up one or two percent just because the overhead is less with E t f s. And so I I sort of sit back on the sidelines for two or three years looking about it, scratching my head because Wall Street comes up with all kinds

of new ways to make money. And this is when like in the utts, Yeah, yeah, so this is eighteen probably I just sit there and watched, and then of course, oh eight came along and everything went like, you know, you just didn't even want to look at your portfolio. It was sort of like, just have a cup of coffee and enjoy the day and smile, because it's not what you want to do is look up how bad

things were going. And then coming out of that, I began to diversify into E t f s just because of their low overhead, uh, their sector emphasis, and it seemed like another way to basically diversify what I had. So you have an E t F portfolio right now, what's interesting about it? I looked at the tickers. I sent Eric the tickers. There's a dozen or so, right, and I'm curious, a what platform you're using? And then be like, do you even know what these tickers are.

Do you know what you're holding? Yeah? Yeah, I have them down on it a spreadsheet, and um I ended up currently with E t F platform in both Fidelity, Schwab and more recently Vanguard. So it's interesting because those are the three three of the biggest E t F trading platforms. And Fidelity has ey shares trading for free, Vanguards now all for free, and Schwab is I have to look at the numbers, it's probably one of the most popular. And I'm looking here at your tickers. I

can see some Schwab ETFs on here. And honestly, if your goal is low overhead, you pick the right ones because I mean s c H A, s c H P, s c H these are all the cheapest or within a basis point of the cheapest in the category. And if you're the cheapest in E t F to, you're the cheapest overall. So I mean, and you even have fn d E and f n d X, which are Schwab's fundamental so it's cheap active. I mean, it's it's like basically, but it's you know, the rebalance has happened.

It's more systematic than a discretionary active manager. But this is low overhead is what you're looking for. You got it, And a lot of people would argue that is a good idea because if costs are the biggest predictor of performance, um, you know, you've eliminated almost all the costs and if you're buying them on Schwab, you're not really paying much to trade them. But I mean, these look like products you're not going to trade. These look much more like

a portfolio. Yeah, absolutely, Like I don't really I don't see anything like um, I don't know, like the internet et F. Definitely no t vix on here. Uh yeah every night and I yeah, and I don't think about it.

This is the peace of mind portfolio right here. So, because you've always been such a long term investor, I'm curious how you dealt with there's been a lot, there's been a route lately, right, So how much were you looking at that route while it was happening, and how did you prepare for it and how have you reacted to it? Since it's funny that you brought up the fundamental um E t F that I've gotten into. Those

came about a little bit early here. Just if you look at the makeup of everybody can buy mitual fund, everybody can buy an e t F but really what matters about those is there their investments and what are they investing in. And the nastac is, you know it's pretty tech oriented, Uh, pretty high p s, lots of growth. Everybody loves that. You've got to be aware of what a PE means. I mean if they cut, if the market cuts your pe and half, you just lost half.

Period being in e t f s, you are the market. There's no body advising and no, you've just bought into some index that's just gonna go where the market goes. So you are the market. So whatever happens in the market, you're gonna get it right smack dab in your face. And there's not going to be an exit plan as as two thousand and eight showed. You know so, Um,

it's long term buy and hold. And although the fundamental um there, those are ones that will let's say there's a big sell off and um, a certain sector like tech looks cheaper, they may add a little tech in the next rebalance. Um, you know so, but at the time the sell off, whatever is in there is just gonna happen. There's not somebody trading around the sell off

that day. Right now, when I think of baby boomers and your your generation, I think of them wanting income, you know, right right, Rachel, what do you do for that? Have you worked to try to get that steady income or you're you're not really You just look at the market, your portfolio going up as all the income you need? Well, uh, no, not at all. Actually, Uh what I've done is I worked as a physician up until about a year and a half ago. But up to that time, you know,

I just lived off of my income and invested. But since that time, I've had to realize that retirements coming, the paycheck went away. What do you do? And so I have a big cash kettle that is going to take care of me. I have on an Excel sheet figured out exactly how much I spanned every month. It all gets categorized, so I have, you know, twenty different categories and know where the money goes. And it's typically Larry Webber. It's a very calculated, mathematical approach to it. Yeah,

that's impressive. I'm I'm not good at that. Oh I was forced to it. I was forced into it. I didn't do it during my life. It was like, I don't even know where my money goes. My wife is more she I think she actually enjoys keeping those tabs, and I guess I've I've been lazy because she sort of takes all that up. But it's really good to

do that. A lot of people who do invest thing on Twitter, they will remind you that it's really how much you save and your budget that ultimately is way more important than the market returns and Whatnotloever, thank you so much for joining us. Great to meet you. We just had too totally different perspective. What did you learn? Um? I learned which is something I hear more and more about, which is, you know, investment has to be right for you.

It's there's not one size fits all. And what your personality maybe one that wants to take more chances, and there's and their personality maybe one that wants to take less chances. So you have to find the right shoe that fits. And I think they both did that. They've worn some different shoes, yeah, every time. But that's the other thing. Over time, they learned by doing. Obviously they read, but they also just learned by doing and that to me is the best teacher in life is experience. The

best teacher in life is experience. If you heard it from Marrick Baltuna, you like that. It's it's been Franklin asked for somebody from Philly. He probably said it. He said everything, but I didn't think of that, so he came out channel. Thanks for listening to jog Until next time. You can find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, and whatever else you want to listen. We'd love to hear from you. We're on Twitter, well some of us, Cannon, Larry are, but Eric and I are.

I'm at Joel Webber Shows, He's at Eric Baltunas. Trillions is produced by Magnus Hendrickson for Jessica Leedy is the head of Bloomberg podcast. Bye