057 - What Do You Do If Interest Rates Don't Get Cut?

Everyone including the FED has been optimistic about interest rates getting cut in 2024, but the data that's come out shows a different sentiment. 

I know we're all missing the low rates, but as good investors, we have to prepare for reality. 

The numbers indicate a high probability of a rate hold. There's also a better chance of there being a rate hike over a rate cut.   

This is actually good for a lot of investments, but not so great for those carrying debt. 

So today we have a strategy for you to navigate the current interest rates in life and in your investments. 

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**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

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Transcript

Welcome to Roaming Returns, a podcast about generating a passive income through investing so that you don't have to wait to retirement to live your passions. I know we said at the beginning of the year that interest rates would probably go down. Everyone's missing the low rates and wants to believe the Fed's earlier prediction of rate cuts.
The things change as data comes out and the numbers. Well, they indicate a rate hold and maybe even A rate hike. Don't panic.
Remember, a good investor adapts to market changes. And we're here to share our investing strategy if the interest rates don't get cut. All right, so by about this time... Tim is in New Mexico.
Yeah, so about this time, by the time you guys listen to this, Tim will be in New Mexico hanging out with... A bunch of Mormons. His Mormon family clan for their family reunion. Yeah, so we're recording this early so that you guys still get your weekly podcast.
But it's a pertinent topic that doesn't have any time sensitivity to it. Okay, so like... We thought we were due to talk about interest rates again. Interest rates, if I recall correctly, I may be wrong.
Correct me if I'm wrong. But I said the interest rates would go down this year. Well, based on everything that we saw coming out, Powell's announcements, whenever they come out, everything was pointing to them going down.
Although Tim did tell me in confidence, his own opinion said that the numbers that he was seeing didn't quite line up with that because he understood the delay factor and what we were seeing in real time where we live. The real-time data didn't... It doesn't, it didn't, and I'm assuming it will not illustrate what they're talking about. Real-time data shows you that everyone that wants a job can get a job.
And it also shows you that everything you buy is still going up in price, except for eggs. I don't know. Some of the stuff, too, like it might not be going up in price, but the size of the container is going down, so... Oh, and gas.
Gas went down, but that was a... What did they call it? Shrinkflation. So you got shrinkflation, which to me is the same exact thing. So like I thought... I was thinking about it.
I said, well, what if... And I gasped internally. I was like, oh my God. What if they don't go down? What if interest rates don't go down in 2024? Like the market's priced in different number of rate cuts numerous times throughout the year.
That's why you have like weeks whenever they come out and say, well, we're not... The inflation data is still bad, so we're not sure about interest rates. The market will tank. It'll go down 3% or 4%.
And then other weeks, whenever like say the inflation numbers that are released from the government come in, the inflation is not as bad as they think it is. But the volatility is because the market is trying to predict the pricing for the future with rate cuts. And so what if the interest rates aren't cut? What do you do? And so I would approach the topic from that.
And I came up with a list of stuff that literally has nothing to do with investing. Seriously? Do you have any that actually relate to investing? A little bit. For the most part.
That's funny how you just said that. Inflation is still persistent, obviously. It's still going up.
GDP just came out recently. The economy is still growing. Unemployment numbers came out and unemployment's ticked up to 4%, but it's still historically low.
People who are making more wage growth is still going up. So like everything that's coming out suggests that the rates are going to be held to where they are. If not... Raised? Raised.
I think they're going to try to avoid that, though, through the election component. I think that would be unwise on their part. In my opinion, with all the data, I think we have a higher probability of an interest rate increase before we have an interest rate cut with the current data.
Do you still think that even with the presidential election thing going down? Yes. Even with? Yes. Interesting.
Okay. Right now, the probability... If I had to do a probability chart, it would be like... Because if they don't cut it or if they don't raise it and they really need to, they're setting the economy up for not good things. I would do 50% that it'll be where it's at the rest of the year.
Okay. 25%, if not more, that they're going to raise it. And 25%, or if not less, they're going to cut it.
Okay. So you think 50% even keel and then the same probability, which is less, half of that, that it's either going to go up or down. Mm-hmm.
So what do you do? Well, the first thing you would do in a high interest rate environment is... Don't take on debt. Don't borrow money. I didn't even have to look at your notes to know that.
Don't take on debt. Higher interest rates mean it costs a shit ton more to borrow money. Currently, the average loan rate is between 13% and 30%.
What? Yeah, 13% to 30%. If you take out a personal loan, it's between 13% and 30% interest rate. Holy... I mean, the house ones are seven, which is still high, but... You're getting ahead of the data.
Oh, sorry. So 13% to 30% is the current... Personal loan. Personal loan.
At the same time, don't use credit cards, or if you do use credit cards, use them responsibly and pay off the balances each month. Pay off your balance, so you're not having that carry balance. So you can get your point.
Because credit card interest rates are on average, if I just did a nationwide average of credit cards, it's 23%. I think that's a little bit low. That is really, really low, although I will tell you, I have been looking at some of my rates.
I think mine are right around the 29.99 thing, but I did just get one letter in the mail from, I think it was Amex, and it said that you're eligible for an 11.99% promo, do-hickey thing. So I think they're trying to incentivize people to spend more money. So this goes contrary to what you're seeing in the data.
The data is showing that everybody that is spending is now using credit cards, because credit card debt is the highest it's ever been. And so people, rather than, I don't know, alter their lifestyles, are just putting the money on credit cards, hoping that the interest rates are cut, or whatever. Hope is not a strategy.
So if you use credit cards, for the cash back that we mentioned a few episodes ago, make sure you pay them off every month. Yeah, but like we're saying, the whole point of this is if the interest rates are going to stay the same or go up, it is more important now than ever to not take on debt, or to get your debt paid down. The third thing is put off buying a house, obviously, and keep renting, or rent if possible.
The average mortgage rate is currently 7%. When the interest rates go down, obviously, the mortgage rates will go down as well. So if you can put off buying a house for a year or two, I would recommend that, because in a year or two, the interest rates are going to be 4%.
Probably lower than the other house. 3.5%. So if you wait a couple years, you'll be able to pay half less than be half off. I was going to say, people, I think, who are buying right now don't want to wait, and they'd rather just refinance.
The next one, for the love of God, do not refinance. If you're refinancing, you're an idiot. You're going from a low interest rate to a 7% interest rate, plus closing costs.
If your interest rate is a lot higher, I don't know why it would be. Like if you have a balloon interest or something, I don't know. Maybe, but 99% of people probably have a low interest rate and don't refinance.
I'm telling you, if I was a loan person, there would be no variable interest. There would be no arm interest. My whole purpose would be to sell a 7% fixed interest for refinance, because 98 out of 100 are going to have a lower interest rate than 7%, so you're going to be making money.
So don't refinance. I don't know, work a second job. Or just sell and rent.
If you had to choose between a personal loan and refinance, I guess refinance at that point, but hopefully by now you have an emergency fund set up with the stuff that we've laid out for the duration of a year now. Well, back when you were talking about personal loans, those are people doing key locks and stuff, right? Like home renovations, those people that take out money to put in a pool. My freaking ex-co-worker did that, and I was like, what the hell is wrong with you? The next point would be if you need to buy a car, buy used with cash.
Don't buy a new one. Don't do the lease thing, because when you leased the car three years ago, the interest rate was a lot less than it is now, so don't renew the lease. Just buy a used car.
I started looking into that, and I might have to actually recant that statement saying leasing is better. Leasing might be better if you're not buying brand new, but that's harder to find. So basically the first part of this that I came up with, just looking at the average data, is don't take on debt.
Don't take on any debt. Don't buy anything new. Just be happy with what you have.
Get a gratitude practice. Go play in nature. Do you need new clothes? Go to the community aid.
Do what we did as kids. We literally acted. Do you remember doing plays and stuff with your friends? I don't know if you had any friends being a podunk kid out in the middle of a farm whose parents hated everyone but your friends.
If you've ever watched Scrubs before, there was one thing that, when I was in foster care, what we did is we had an air band. Okay. Like fake instruments? Okay, you had an air band.
Nice. Yeah, and I was the drummer. We used to roll around and make pet rock collections.
We used to take a wagon around the development. We used to just rollerblade, crusade around. We used to take these big boxes from people's refrigerators and build these little tent fort things.
We used to do all sorts of stuff, and we'd come up with these crazy stories. When the Hollywood video, which is like a blockbuster, came off, it had this light shoot up in the air. We had this whole thing that a prisoner escaped from jail, so we were crusading around the neighborhood to bring them back.
It was this whole thing we used to do. Just use your imagination like we did as kids, man. Yeah, it's don't take on debt.
That's the moral of the first half of my list. Okay, so now we're down here to where if interest rates stay the same or they go up, save, save, save. Take advantage of that with investments because if that goes up, investment investing.
But not only that, if you're going to put your savings into something, not your checking account because the checking account is only paying 0.2%, you can get more with a high interest savings, which is the current rate for a high interest savings is between four and five. You can do CDs, but they're gross. CDs are between five and six percent, but your money's tied up.
You can even put it in Worthy and earn seven percent, or you can put it into a brokerage account and put it into bullet shares and earn seven percent. Just save, save, save, save, save, save. Use compounding to your advantage when interest rates are high.
This is where you make more money. Because inflation will save at four percent, but that's not true. So if you leave it in your checking account, you're losing four percent of your value.
Like if you have cash under your mattress, you're literally, that money is losing four percent of your value. Like her mom has like a bunch of cash in the closet somewhere. Dude, seriously, what did she tell me, two grand? She said like six grand.
Oh, excuse me, six, my mom has six grand chilling in her closet. Because she's like, I don't trust banks, I don't trust banks. And I'm like, oop.
So she's losing at the bare minimum, which I don't, again, I don't think four percent is the inflation rate. She's losing four percent of her purchasing power with that money in the closet. But I did talk her into putting five grand in the Worthy.
So we're going to be moving her over here. Actually, tomorrow is her first day. She gets to do her little micro-deposits because her stupid credit union isn't available on the Worthy plaid network.
And our cat says, yeah, dumb asses. Don't put money in the checking account. That's what she said.
That's right. Tell them. Tell them.
Checking accounts are stupid. There you go. Tell them.
There you go. You can do better. You should do better.
Now we'll get into the investment portion here. If you have money set aside or you have cash in your brokerage or you have bullet shares, invest defensively. By investing defensively, I'm saying utilities, energy, consumer staples, and dividend growth stocks that are undervalued.
Utilities, I understand, have shot up a lot this year, but we went over why they shot up a lot. And so they're going to keep going up because AI needs more electric. So the electric's going to be pumped out.
That's going to keep going. That's going to keep going. So your bills are going to go up for electrical so that they can be like, well, AI needs it.
AI is more important. Blah, blah. So when you're looking for stocks, you have to have your metrics situated.
I've went over metrics before, whether you use the price-to-earnings PE or you use the PEG or some other metric that you use. Make sure that what you're investing in fits the criteria and is undervalued. That's super important.
Yeah, that is like literally key. Don't buy unless you do that valuation check. We're in a weird market where it's technically a bull market, but the bull market has actually been created by 10% of the stocks going up and the other 90% are either down or trading sideways.
So there's ample opportunity to find undervalued investments, even in a bull market, because of how it's been situated so top-heavy. So you should be able to find a lot of investment plays if you just do the research or use the research that I provide. Yep.
Either or. Either or. What's next? Okay, you also want to invest like a contrarian and pick up investments in REITs and close them to funds as they are down a lot.
And you can accumulate a lot of shares at a steep discount with a very lucrative yield because the more they go down, the higher the yield is when you initially get in. So whenever they go back up, your yield is going to be higher than the people who get into it. Like the people that are sitting on the sidelines waiting for the interest rate before they get into REITs, their yield is going to be a lot less than yours if you just pick up shares.
Well, I'm back when we did our episode on the portfolio. And that's why like I basically use contrarian value to get like NEP and to get Trinity (TRIN) like I saw that these things are vastly undervalued based on the PE that they have. I don't even do like a historical PE like I know some people will actually go a step further than what I do. They'll actually look at the PE of a current investment compared to what its PE is historically.
I just use the PE versus its peers. You only really use that with like closing in funds, right? I use it for everything. I use the historical like one of the historical things.
I use that for something. It's for closing in funds. That's what it was, closing in funds.
When I go through, we have an episode coming up shortly where I do like I'll pick five closing in funds out of the blue and I'll go through and like I actually look at the historical discount or premium price of a closing in fund to its current discount or premium and that's the whole like. And the reason he does that is because you can't evaluate them to their peers. You have to find another way to figure out if they're undervalued.
But like you should be putting, if you were, if you're investing, you should be investing like a criterion and putting it into stuff that you know that interest rates are actually going to benefit, which would be closing into funds. Some bonds, some bond funds, I'm sorry, REITs, some consumer staples, things of that nature like the financial sector and the BDCs, once the rates are cut are going to go down so you can accumulate shares or you can just turn the drip off and accumulate cash with your current investments in those. But at some point you're going to have to make the hard decision, which I have to do.
If you listen to the portfolio, you see that we have a lot of exposure to BDCs. I'll have to do at some point like, okay, which BDCs am I going to cut? How much am I going to cut and buy? Am I going to turn the drip off like Hercules Capital? Like at some point I'm going to have to make the decision even though it's like my favorite BDC, I'm going to make the decision, do I sell or do I just turn the drip off? What do I do with that one? It's going to be a tough call that, but that's a completely different topic than this. I just got sidetracked.
My bad. It's all good. What's next? What's next? Okay.
If you have BDCs, financial investments, bonds or bond funds, hold on to them tight in the current environment because they should thrive with the current interest rate being where it's at and if it goes up. I understand what I just said, but it's a continuation of that. If you have them, hold on to them now because they're going to keep going up like PDI, YYY, DSU, the ones that we had in our portfolio that we mentioned.
They're going to keep doing well in this environment, but once interest rates are cut, it's not going to happen like that's the beauty of interest rates. If they say they came out December 1st and said we're cutting rates by 0.25, you will have time to make the decision of how you're going to reallocate your portfolio at that point. It's not like it's an instantaneous thing.
It does take like three months. You have a quarter to figure out what the hell you're going to do. Yep.
That's real nice. The next thing, and this is probably the most important thing, is to shelve the emotions when looking at your brokerage account. They're going to be bad days, like days where they say, oh, we're going to have to raise interest rates, or we're thinking about raising interest rates, or the inflation numbers came in super, super high, so interest rates are going to be on hold for a while.
You're going to have days when the market goes down 3%, 4%, 5%, but you're also going to have days when the market goes up 1%, 2%, 3%, 4%, 5%, so your portfolio is going to be bouncing around with the volatility. You have to shelve the emotions. You cannot do the emotional trading because you'll just lose money.
You lose. You'll lose on the up. You'll lose on the down.
We've discussed that. You'll forget to get in. You'll want to stay on the sidelines.
We've discussed that previously. That's why I've been a proponent of, if you have extra money, to put it into bullet shares because in the days when the market goes down 4% or 5%, that's a perfect time to- Pick up stuff. ... tap into your bullet shares for stuff that you have on your watch list that had a very, very bad day or a very bad week.
You can actually get shares on the dip. Just like you would at a store. You wait for your favorite dress to go on sale.
You wait for that computer to go on sale. You wait for- Wow. Those of you savvy, thrifty shoppers, you wait for stuff to go on sale.
Stocks do the exact same thing. My last point coupled with my previous point is tune out the noise, so you have to shelve the emotion, then you have to tune out the noise because the experts make money from getting you to buy into bad decisions. The experts make money off your emotional reactivity.
We've heard so much in 2024 from the, quote, experts saying that the rate cuts are coming or that a recession is coming or that precious metal is the only way that you can survive the current market or the financial market is going to collapse. We've heard all the doom and gloom. We've heard all the, oh, this is the best thing.
The utilities are awesome. This is the best thing you can invest in now, so you have to tune out the experts. The purpose of the experts' horseshit is to prey on your emotions and get you to make an emotional decision so that they're- They're literally trying to evoke herd mentality.
I actually did some research on herd mentality for a different thing I was working on. Herd mentality has its perks. If you're a leader and you're trying to get the herd to heavily or fastly adopt something that's good for them, it is a positive attribute, but when it comes to something that might harm it as an individual, herd mentality is actually a good thing for collective prosperity.
Following the experts when they do these stock things, that is not the applicable, like, the best application of that. It says that individual results suffer the most with herd mentality, and when it comes to stock investing, it is a zero-sum game, which means do not give in to herd mentality impulses. Do not give in to fear.
Do not listen to those experts. You'll hear 10 experts saying one thing, 10 experts saying another thing. Which one do you choose? You have to come back down to your own system, your own thing, make your own decisions based on something that's sound, that makes sense to you, not just listening to some rando.
I don't care if they say they have credentials or not. I think the biggest thing that people need to think about is if you're older, like me, I'm 47. You're 38.
I'm 10 years younger than you, so. Yeah, you just turned 38. Okay.
I'll be 48 soon. She's 38. For people that are, say, above, we'll say 27, 28 years old, what we're in currently is what, like, it's, like, the average interest rate, like, this is how interest rates have always been.
What we experienced, like, the last 10 years was an anomaly, like, with the low interest rates. So if you're younger, all you know is prosperity. You don't know.
You don't understand, like, the people that have gone through the Great Depression, the people that have gone through the 2000, whatever, 2008 crisis, the 99 crisis, bubble burst, like, that stuff, that's pertinent, too, but I'm saying interest rates as a collective at 5% or 5.5%, that's still historically low. So it's not like we're, like, oh, my God, interest rates are so high. This is unacceptable.
Like, it's... Dude. What were the interest rates on mortgages? Weren't somebody saying, like, 13%, 16%? Yeah. Back in the 80s and 90s, it was, like, 13%.
Yeah. So, like, when they... We were talking about 2%, 3% interest rates for houses, I was, like, holy hell, that's low. I mean, so, like... So 7% isn't... Short historical, obviously, it's high compared to where it's been since 2007 or 2008, 2009, whenever they just dropped the interest rate, but overall, interest rates aren't that bad and the companies are doing just fine.
They're making revenue. They, like... Like, the companies are good companies. The bad companies obviously got used to the glute... Glute? Glute.
Of cash. Gluttony? Glutton? Yeah, where there was just free cash available everywhere because they were printing money out. The freebie cash.
So, like, the bad companies got used to that and they don't know how to actually... They got entitled. And they don't... Clearly, they don't have a good understanding of debt and money management, which means they're a bad company, which means they should, you know, evolutionary extinction type deal. But the companies that have been through it all, that's why, like I say, the defensive investing makes sense, like Triple M, like MO, like ExxonMobil, like Coke and things of that nature, because they've been through the different market swings in interest rate valuation, so they know what to do in an interest rate environment like this, how to cut costs, how to maximize profits without, like, turning off customers and things of that nature.
So, like, this is a prime example. This is, I actually think, a good time to actually go through your watch list and identify what companies are, like, what companies' profits are doing really well, what their profit margins are really well, like, their customer base is really high, like Verizon and AT&T. Like, AT&T and Verizon were just shit on last year because of lead and because the wireless customers weren't coming, what is it, signing the contract that they were previously.
But both companies have been through the shit and they know what to do to navigate this. Yeah, they know how to pivot. They know how to navigate.
So, like, that's why they're both doing really well this year. So it's a prime chance for you to go through your watch list and to determine, OK, well, maybe I shouldn't be looking at that company because they have no idea how to navigate anything other than free money. Yes.
And actually, I want to do a tree analogy. Like, we, in the landscaping realm, like, when you plant a new tree, it needs a lot more tender care. It needs a lot more watering.
If you leave it in a drought, it's going to struggle and die more likely than an already established tree that knows how to actually go through seasons and go through droughts and famines and feasts and all these other things. Like, that's why it's harder to kill an established tree than it is a new one. It hasn't, like, earned its hardiness.
It hasn't become resilient yet. These companies are exactly the same. The same token.
It's a good chance to know yourself as an investor and your investor profile and, like, what you're comfortable, like, your appetite for things because you're going to have a lot of volatility. You're going to have a lot of possible losses. So, it's good to have a clear picture of yourself.
So, it's a good time to take a step back and look at yourself as an individual investor and be like, okay, well, maybe I'm not as happy with risk as I thought I was. Because on paper, you're like, oh, yeah, I can stomach 30% losses, but then when you see it in your account, it's not as easy once your emotions start creeping in and it does take practice. Again, these all come with seasons and with experience.
It's why we say most people start out as more conservative and then as you understand, as you go through, as you see your accounts rebound, you then actually slowly become more and more risk prone or you gravitate that direction because you understand that risk is a timing issue and a behavior thing for the most part. There's like outliers here and there, black swan events, this and that. But for the most part, it really, like, you are your highest risk factor.
Because you look at what's the best case situation scenario of 2024. Currently, if you listen to the Fed people talk, it's a 0.25 cut at some point in this year. Whoop-de-doo, Basil.
So, that's like the best case scenario of 2024. The highest probability is that the current 5.0 to 5.5 rate is going to be into 2025. It's going to stay the same.
For a good portion of 2025. So, if you prepare like it's going to be interest rates like they are now through like a year from now, you'll be just fine. You'll be able to like, it won't matter what's going on because you'll be in good companies at good valuations and you'll be getting good dividend payouts.
I mean, that's why the income investing is so popular. If you Google, what do I do investing-wise with interest rates, like everything that you read right now is dividend growers, dividend paying companies, financial companies, BDCs. If you just go through like all of the emails, you get the emails or if you just do Yahoo Finance or Bloomberg Finance or whatever news site you use, you can make basically an educated decision based on all the news that you don't hear shit about REITs, you don't hear shit about closed-ended funds.
So like those right there tell me, okay, well, no one's invested in those, so it's a good time to load up on those. Even if you're going to have price depreciation between now and when they cut the rates, your share accumulation is going to more than offset that because when they cut the rates, you're going to have so many more shares that when the price goes up because of the interest rate cuts, you're in a very good position. That's what I mean by it's like a magic trick.
It's like fourth dimensional thinking with risk mitigation. But it's kind of also like the sleight of hand thing that's happening. Like if you think about it, I just watched an episode that was talking about magic tricks and the sleight of hand thing.
Everybody else is looking over here, so you can do all this stuff on the other side of things and then you're like, you get away with it. And like energy would be a good – like energy and utilities is another good example like they're talked about, but they're not talked about for the right reasons. Energy because – Facts.
We're going to have at the best case scenario, we're going to have a – I mean not the best case, but like probability-wise, it's probably again, it's going to be like a 50%. We're going to have a split government. We're not – nothing is going to get done.
So oil is not going anywhere. We'll probably have like a 30% to 40% chance of a republican controlled portion of either the house or the senate, which means they like to use energy. So oil stocks and energy stocks would be a good decision because the probability is that you're going to have at least one branch of the government that's all about oil and that if they're not in complete control of everything, they can hold everything up.
So oil is going to be just fine. That's actually an interesting way to look at it and this is something I have absolutely no knowledge in. So I'm going to be loving to hear – actually, you should do an episode on that at some point.
I would love to hear that episode. Okay. We can.
The political election potential impact on stock sector shifts. That would be phenomenal. But at the same time, like when you hear about utilities, you don't hear about utilities because of – They're not sexy.
The right reason that you hear about utilities as a whole have went up but they're not – they don't dig into the numbers and like the experts don't say, oh, the reason utilities are going up is because electrical consumption has gone up because of AI. They're like – they just broad stroke it that utilities are a good sector to be in. Well, there's a reason.
Like water utilities suck right now. Well, and when you know your why, then it gives you better insight on why you make your own decisions or why you should make a decision that's going to benefit your investing strategy, your like intentions, what you're trying to do. Like if you have no idea.
If you're like me and you're able to see the future five years or 10 years into the future, you should be loading up on like farmland dividend payers because at some point, those are going to be like gold because we're running out of space and the population keeps increasing. So we're going to need more food. So the farmlands, they're going to take off.
It's a perfect – like it's a good chance because everything's trading sideways to practice this type of thinking and then we'll see how it plays out because shit's not like it's going to go sideways. Like your portfolio is going to be in a band between like 10,000 less than where you are now and 10,000 higher than you are now. It's going to be in a $20,000 band for the most part.
And the only way to really learn is to get your feet wet. So while it's trading in that band, you can accumulate shares and you can practice your fourth dimensional thinking with like farmland and AI and like cell towers and medical – like CCI, dude. Like I mean – AI crap.
Good God. I just read an article on that one and they were talking shit about CCI. I'm like, you guys are fucking idiots.
What are they saying? They're saying, well, it's – like there's no reason to – like why would you invest in CCI? It's overpriced, which it's not. It's dividends not high enough. It's dividends fine.
It's like 6%. It's losing customers, which isn't true. If you've driven – like we drove to Philadelphia last week and I was just looking at the cell towers and I can't get over.
They're like every couple of miles and there is like at least 40 or 50 things on these cell towers. So CCI and AMT and REITs that deal with like the cell tower thing, perfect opportunity to like to think fourth dimensionally. Like they're not going anywhere.
So like – Yeah, and phone usage is going up. Like people are using their phones for everything. They're not getting desktops or like everything is done with people's phones.
That's why they have the timeframes where they de-whatever the bandwidth so people can share it because they're high congested. It's like – It's a perfect opportunity to practice your yield max thing. Like we – Oh, absolutely.
If stuff is going sideways, that is a great time to practice the yield max thing. And get – like you can accumulate a bunch of shares in yield max and then you can get out your initial – Investments. Initial investment in yield max.
Take your risk off the table. Take your risk completely off the table and then you have just – Potentially completely come up with your month to month needs and then grow your investment portfolio with the proceeds. Like you said in the yield max episode.
In the yield max episode, I did discuss it and I think it's worth mentioning. Like yield max to me is a perfect – like it's a perfect vehicle to actually grow your portfolio because you get such a high percentage back that it might suck because like say you invest in Tesla, like the Tesla one. Tesla one went down like 60%.
So you lost 60% of your – Original principal, right? Original principal. But it was still paying per share for a while, right? But the dividends that you acquired with that initial investment should have more than made up for the 60% loss where you have 60% of your money in – or whatever the – whatever the – 100 some percent. I didn't – I don't know the numbers off the top of my head.
Yeah, we pulled out so we didn't really do the math for that. But – But I know that like if you bought Tesla at 20 and it went down to 12 and you sold it, you lost – so $8, eight times – so you lost 40% of your principal. But you've made more than $8 in your dividends obviously because they were given like the $1.70 at the very beginning like the first four or five months.
You're like $1.70, $1.60, $1.40. So you more than made up for the $8 you lost in your principal and you used that $8 in dividends to fund something else and that's what yield max to me ultimately is. It's either a way to just have cash in your account every month that you can then spend on your normal expenditure. Lifestyle or – Or you can then – Build your portfolio.
You can fund other better – Build your good portfolio. Better investments with it. Well, you know, it's kind of like if you buy a house with a loan and you rent it out.
Even if you're – or your rent isn't quite covering your mortgage, it's going towards your principal and the interest. So you're actually accumulating an asset while you're making money from something else. I feel like the yield maxes are very similar to that strategy.
Now, granted that asset is kind of the same thing when it comes to renting. But what we're talking about with the whole investing and buying like – you say you use like the NVIDIA yield max and then you want to buy some actual triple M stock. You would literally just take those monthly payouts and then pick up shares of the triple M stock.
Yeah. Like you're accumulating the dividend champions, the dividend achievers, the dividend aristocrats, whatever. You're accumulating those really good companies because you never know where the yield maxes are going to be in a couple of years.
But in the meantime, you can profit and build your portfolio so much faster. You have a good idea where these dividend aristocrats and achievers and all those are going to be in five years. The probability of them being around is pretty high.
So like that's why that episode is so important. If you haven't listened to it, you should listen to it. Another opportunity – like this is another opportunity to like tinker with the SLVOs and the GLDIs and the USOI ETNs because precious metals are going to – while there's all this volatility going on, gold and silver are going to do what they're going to do.
Yeah, people are going to run to those kind of things. And because oil is going to do what it's going to do, that one's going to – and they pay out 20%. So you like – in theory, in less than four years, you can basically get back all of your initial investment into those ETNs.
And in the meantime, you're using that 20% to fund something else. That's all these are basically for. If you reinvest into these speculative or – well, I hate to say risky.
Yeah, the higher risk. The risky investments, you're investing in those to actually fund to put seed money into other stuff. If you're reinvesting into the same ones, that makes it super risky.
That's how you increase your risk. Yeah. That's super risky.
Yeah, that's how you – Like so you can – That's when you get greedy. So you can use the sideways market or the semi-volatile. It's not super volatile.
It's not like when the bubble bursting in 99 or the 08 financial crisis or the 20 or the COVID shit that happened. But if you don't have to take on the risk, why would you? If they're learning. Oh, yeah.
I mean if you have money to lose. The only way to perfect what you – Yes. You definitely need practice.
You have to practice. Practice, practice, practice. I've done it.
I've lost money, thousands of dollars in different things that I've like – I think at this point, over $100,000 in whoopsie daisies. Like oops, I shouldn't have put money into that. Oops, I should have covered my risk.
Oops, I should have done this. Other things that I – We're trying to make sure you guys don't have those same gut wrenches. Put money into – I was like five or six years ahead of time.
I was in AMBA and Skyworks long before like the smartphone and the AI stuff that propelled those stocks super high. Fuck, we were in Lululemon when it was like $60 and I was like, well, this is stupid and I got out of it and then went up to like $200. I was in Chipotle when it was $283.
She was in Chipotle and said, ah, and she sold it and it's up at like what? $2,000, $3,000? Yeah. So like it's a chance to perfect your craft. Like this – I hate to say it.
Like I understand most people want their investing thing. If you've – like if you read the email that I've sent out about the time thing, only 1.8 minutes a week are spent on your financial management. Oh my God.
That is just insane. In an average week, you're only spending 15 minutes a week in your financial management. So that's – but this is a craft.
If you want to live off of your income from your investments, it's a craft that you have to continue. You have to practice. You have to practice.
So the best time to practice is when you know it's going to happen. If the interest rates stay where they're going to stay, you know it's going to be a band trade with the potential for upside from the AI bull market. But that AI bull market is only like 10% of the stocks.
Because you only – supposedly only retain 5% of something you're listening to and taking in. But you learn a heck of a lot more when you practice it and then you earn a heck of a lot more when you contribute back to somebody else or teach somebody else that skill set. So it's like failing and learning is part of the process and you get better and better.
We've actually gotten exponentially better teaching this. It's weird how it works that way. It really is weird how it works that way.
But now that we're teaching people – I can teach average layman – I hate to use the term layman. I'm proud of being a layman. Thank you.
People who have never invested before, I can actually teach them how to do this. And like you'll see in the – Yeah, you don't need to be smart. You just need to do the work.
How to evaluate the – where I just take five investments and I evaluate them. Like it's simple. It's quick.
It's pretty damn simple actually. And honestly, most of the investing realm makes this way harder than it needs to be. They make it complex so they can justify their job.
Exactly. And justify overwhelming you so that you pay them a percent of your money holdings. But in our – Regardless of their performance.
It's pretty – it's fairly simple to evaluate something. It's super easy to find stuff because I've given you the screener. You use the screener.
You can find all the different things I'm talking about like in 30 seconds. The hard part is the sell part. But we've taken the sell part away from it.
With the dividends. Because if you get the dividends coming back, you don't have to worry. If you get dividend growers and dividend payers that have a history of any point.
Like obviously, if it's only been paying a dividend for a year, you don't know if that's going to continue. But like a historical dividend payer, you don't have to worry about selling. Only thing you have to worry about is, is it too high to leave the drip on? But some people just leave the drip on.
Yeah, they want to make it easy. They just leave it on indefinitely. And that's absolutely fine too.
If you leave it on during a bull market, you're getting fewer shares. But then if you leave it on during a bull market, you most likely are leaving it on during a bear market, which means you're getting more shares. It evens out.
It'll even out in the wash. Yeah, dollar cost averaging. The selling doesn't matter.
So you've got the buy point. You've got the research components. So like we've simplified this to the point where it's – everybody should be doing this because it's simple.
Yep. Everybody can be doing this because it's simple. And that's the objective and the hope.
But like taking it back to interest rates, if you take that on, you are compromising your financial future a lot in an interest rate environment such as this where you are hoping for interest rate reduction. Yeah, like don't ever wait for the perfect moment to invest, like hoping these investments are going to come down or the interest rates are going to come down because it's never the perfect time to invest. And if you take on debt, you take away the hope of – so if you're an optimistic person, if you take on debt, you take away the optimism because if you take on debt, you're paying that interest rate no matter what the interest rates do.
Yep. So there's – if you take on a 25% personal loan, you have to pay 25% regardless if interest rates fall to zero. And if you're putting on credit cards, that interest rate changes like I think every month.
So the biggest takeaway from the current climate with all the economic data is if you take on debt, you're doing it, jeopardizing your future. Two biggest takeaways. Don't take on debt and use this as a training wheel.
Use this time to learn. Invest defensively because it's going to be all volatile. So make sure you have your metrics in place and that you follow your metrics.
Don't do like, oh, well, it's a momentum stock, so the metrics don't matter. That's stupid. Just if it's a momentum stock at some point, it will become over – Well, if it's a momentum stock, you shouldn't be following us because momentum trading is its own specific niche.
We don't do that. Don't like, if that's your jam, go find somebody else to follow and use their proven strategy. That is not what we are preaching.
You're in the wrong place. Well, I'm just saying, but like, if it's a moment like Nvidia, for example, if Nvidia is – YieldMax. Like that's not a stock we would recommend getting into.
I got into it just for giggles. Yes, but that's again, that's an extenuating circumstance because of the stock split. Just for sags.
Because Tim can't not sags. I just – All right, guys. Something about it says, get into Nvidia right after this.
He's like, it is taunting me. And I'm like, well, just freaking pull the trigger if you have like five things lining up. And Chipotle has a similar situation lining up, but I'm not as confident in Chipotle as I am in Nvidia.
After eating them today? Yeah, their food was terrible. I feel like their food is going downhill. It was terrible.
Like Moe's and Neato Burrito are way better or just making your own burritos better. Yeah, for sure. All right, guys.
Hopefully you got some helpful stuff out of this. Hopefully we – That's what happens if the interest rates, oh my God, I can't believe I'm saying it, don't go down. Oh my God, it's the end of the world.
Or if they actually go up, that'll be fucking hilarious if they go up. You know what? Nothing would surprise me at this point. That would be like implosion moment.
Freaking hilarious. But I do think that they are actually trying to – they're trying to do, what'd you say, a soft landing? They're not trying to jar everybody. And I think since everybody's been so hopeful about downs, they're going to really, really, really, really, really make sure they have to raise it if they decide to raise it.
What happened? They're going to try not to. If you want my professional opinion, there's so many boomers in the world. They stopped so early.
That they didn't let the normal – the normal pattern in the situations like this is they put us into a recession. But because there's so many boomers and so many old people, they couldn't risk a recession. They're trying to protect too many people? Yes, they're trying to protect all the old farts.
So they're trying to do this soft landing crap. Whereas had they just said after inflation went up to like 10 or 12 percent, let's just put it into recession. I would have been happy with that.
This would have all been over by now had they just done that. Right. I'm sorry.
But flatten the curve makes the curve longer. Like I'd rather literally have the freaking electric shock and move the hell on. Yeah, they should have raised the interest rates instead of doing this 0.25, 0.5 bullshit.
They should have said, OK, the interest rates are 10 percent. Had they done that, this would have been over. Yeah.
Had they raised the rates where they – like the historical interest rate. And guess what? That would have really weeded out the bad businesses. The historical interest rate, if you go back throughout the history of America, is like 10 or 12 percent.
Had they just raised it to the average rate, it would have fucked everyone's shit up, but it would have caused all this to go away. We would have all come back stronger, though, like the ones that flourished through it. They didn't.
They did this hooptie hoop crap with the soft landing thing that they're still – Flatten the curve. They're still trying to perfect. Soft landing, whatever you want to call it.
Same concept. Next episode is – I don't know what the next episode is. Yeah, we're not really sure.
We're recording this because Tim is technically on the road right now. I have the house to myself with the three shittons and trying to run on my face off. Closing his fund valuation or I don't know.
It doesn't matter. So tune in for next week's episode. It's going to be something good.
All right, see you guys. Back to riding my bike. That is the Wicked Witch of the West song. Yeah, she's riding a bike, though. Oh my god! Stop. Stop.