064 - What Happens When Interest Rates Are Cut Too Soon?

The Fed has officially announced that they’re going to lower interest rates in September. 

Yippee ki yay… right??!! Well, not to burst your bubble, but we’re not in the euphoric majority. 

The actual metric reports just don’t justify the upcoming cuts, but we aren’t the ones making the calls, so if it’s going to happen, we want to be prepared. 

The past can give us clues as to what might happen as a result. Strap in, because it’s not what most people think. 

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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 till retirement to live your passions. The Fed has officially announced that they're going to lower interest rates in September. Yippee-ki-yay, right? Well, not to burst your bubble, but we're not in the euphoric majority.
The actual metric reports don't justify the upcoming cuts, but we aren't the ones making the calls. So if it's going to happen, we want to be prepared. The past can give us clues as to what might happen as a result.
Strap in, because it's not what most people think, and you definitely want to set yourself up to profit. Hey guys, how exciting is this week? The Fed made their announcement. Yeah, so it appears that in September, there's going to be a rate cut.
So disregard the whole, what if there's no rate cut podcast from a couple weeks back. Hey, it never hurts to be prepared. So now we're going to prepare for... This isn't going to be like a discussion of should they or shouldn't they cut the rates, because... Let's face it, the numbers say probably not a good idea.
They shouldn't cut the rates, but whatever. This is basically going to be a podcast on what we know, what we think we know, and what we definitely don't know, but could happen. It's pretty interesting.
Around there. So when they cut the rate, it's probably going to be a 0.25. They're probably going to do a gradual 0.25 here, 0.25 there. They may do a 0.5. This is going to be a... You really think they'll do a 0.5? At some point, yeah.
It's going to be like a multi-year thing. If you look back historically, anytime the rate does an interest rate cut cycle, it generally is between three and six years. So this could take multiple years.
What we know will happen based on historical precedent, this has happened 20 or 22 times. I forget the exact number. I have it somewhere.
There are certain things that we know will happen. First will be that your borrowing costs are going to be lower. Interest rates on loans and mortgages will decrease, making it easier to get a personal loan or, not easier, but cheaper to get a personal loan or cheaper to get a mortgage.
Not just for you, but for businesses. That's why we've been beating the table for however long about getting in REITs and well-ran BDCs and stuff like that, because once businesses start borrowing money now, it's going to be cheaper than it is currently. Or if they're locked into a variable rate type deal, it'll automatically come down.
So generally what happens when there's lower interest rates on personal loans and mortgages is the consumer has more money and what they generally do is spend. That's kind of what they all do. But that's the second point.
The second thing that we know will happen is there's going to be higher consumer spending. Some people might wait for a while to take out loans for big ticket items such as a car or a house or a TV or whatever they put on their credit cards. A whole bunch of furniture, maybe.
So what has happened historically since, I mean, obviously not forever because credit cards haven't been around forever, but since credit cards were invented or added to consumer spending, people will use their credit cards more. And this boosts economic activity. The reason why interest rate cuts, they're generally the last thing that the Fed has whenever the shit hits the fan.
So it's only happened a handful of times where we're not in a recession or a world problem or whatever going on, where our economy's growing at 2% per year, maybe 6% depending on what numbers you look at. Unemployment's low. So generally, this doesn't happen whenever we have a good economy.
It's used to actually boost economic activity. That's why we said that the numbers don't necessarily add up for this being the right decision despite what the announcement has been. So that's why it'll boost some activity, but we're already kind of high, so I don't know how high it's actually going to boost it, right? No clue.
I guess we're all going to see together. But the third thing that we know will happen is because it's cheaper, businesses actually will invest in new projects, equipment, or expansion due to lower financing costs. This sometimes spurs economic growth and sometimes potentially creates new jobs.
Sometimes it doesn't, but in this case, I don't foresee a lot of new jobs being created because we already have a low unemployment number, so I think it's going to be more of a paper type thing. You'll get better returns on your dividends and your stocks because they can't really create new jobs because there's no one out there to work them. And since we have the boomers all retiring, the labor market's even going to be worse, so I don't foresee a lot of jobs being created, but I can see a lot of gains in your portfolio and I guess that's good because we're trying to live off our portfolio.
Heck yeah! The fourth thing that we know for a fact will happen is you're going to get less money on your savings. Yeah, so everybody that totes the high yield savings accounts, those percents for their annual what is that called? Yields is going to go down. Lower interest rates means lower returns on savings accounts, CDs, and other fixed income investments.
Bonds. Bonds and dividend stocks sometimes. That's why we felt it was necessary to actually, because we weren't actually going to do this today, this podcast, but I think it's important that we all start planning for- Yeah, because September is literally right around the corner, so we snuck this in.
Start planning for your fixed income not being as generous as it has been. I'm going to assume the bullet shares are going to come down as well, right? I would imagine. Probably.
Yeah, so we'll have to see what happens with that. It's going to be what it's going to be. But I don't really think they ... See, what happens is whenever economically the shit hits the fan, they don't want the consumers to have any money in savings.
They want all that money pumped into the economy. They want them to spend. They want to turn the economic fire.
Yeah, pumped into the economy, and that's why I'm flummoxed that they're ... I flummoxed. Ooh. Ooh.
College word. I flummoxed that they're actually doing this because there's really no- There's really no incentive to do it. Yeah.
It contradicts with a lot of the data that's out there. Now, some people say, well, it's because it's an election year, but if you go back from 1980 to the current, they've raised or lowered the interest rates every presidential year except for one in 2012. So it's nothing different.
It's not about the politics, but I don't know what they're trying to do. I don't know what the end game is for doing this so early. Inflation's still not at 2%.
Unemployment's still pretty low at 4.3. The economy's still growing. The GDP just came in at 2.2 or 2.1 or something like that the last quarter, so I don't know. We're not in any economic shambles, so this doesn't make any sense.
So I don't- So I'm actually really curious to see what happens when they lower it and they do their next assessment to see if- That's why it's going to be a multi-year thing because they're going to lower it and they're going to probably take two or three months and be like, okay, what happened? What's going on? And then they'll go from there. Like I said, generally it does take anywhere between three and six years for the whole rate cut cycle to happen. So it is what it is.
The fifth thing that we do know- And this is a big whoo. We do know that happens when the interest rates are cut is the currency's weaker. Lower interest rates can lead to a depreciation of the national currency.
It makes exports cheaper and more competitive abroad. It can benefit domestic manufacturers and exporters, but I don't- Again, I don't really see it happening because- I think a weaker currency is not a good thing because of all the spaz that's like- I've heard so much doom and gloom with the whole currency weakening thing. That's why everybody's getting into crypto and gold and all that stuff.
So if this is literally leading or exacerbating that, unless that's intentional, I don't know. So- I think the currency could be a good play for the foreseeable future. I mean, unless this is another play to pump gold to milk the last value, whatever, out of it before it drops down again.
Honestly, I believe it's just that they think that the consumer has too much money and they're trying to get money out of them. I don't know. I don't know.
I'm as confused as everyone else that's trying to analyze this. So basically, this is a WTF episode. Okay.
So those are the five things that we know from historical data that will happen. Because of a rate cut. Now, here's some things that may happen or may not happen.
Sometimes they happen. Sometimes they don't happen. We don't know.
The stock market, the lower interest rates can make bonds and savings accounts less attractive compared to stocks. This would make more people dump money into the stock market as opposed to saving money. This will drive up the prices, which is kind of alarming because the PE is already elevated.
So you don't think this is a higher probability of happening even though it is possible? Is that what you're saying? Well, I'm not as bullish. If you read all the people that go, interest rates are going, what's next? There's a lot of bullish people. I'm not actually one of them.
I'm not bullish about the stock market now because I don't. And I'll get to my points in a couple minutes. But I think we're setting ourself up for a pretty decent sized pullback.
Okay. Oh, by the way, this one makes sense, though. If you go to your bank and they're willing to give you a 3% CD, well, hell, you might as well put your money into a dividend stock that yields like 5%.
It makes sense why they could actually make more investors get off the sidelines. There's trillions of dollars in money markets. That's going to go somewhere.
It's either going to be cryptocurrency or it's going to be stocks. Yeah. People are going to move to where they're making money.
And if it's not in savings accounts, it's going to be somewhere else. Now this one might happen, but I'm pretty confident that it will happen. And that's why I'm kind of confused.
If the economy is already operating in their full capacity, increased spending and investments can lead to a higher demand for goods and services, potentially pushing up prices and causing inflation. This is the big one. I have the issue.
We're already having issues with inflation. Inflation has been the huge problem for the last couple of years. It's on everyone's... And Joe Schmo, us in day in, day out on grocery stores, we're feeling the impact in the middle class more than I think most people are.
So lowering rates is actually going to exacerbate this. I have some data on this in a few minutes, just bear with me. That makes me think that this could be a huge problem and that will lead to a rate increase at some point in the next probably three years because they're going to be like, oh, fuck, we messed up.
I actually think I'm on your boat with that one, with this. Okay. The third thing that might happen is with rate cuts, it encourages borrowing and risk-taking.
Lower rates can encourage more borrowing and risk-taking by investors and businesses, which can be positive for growth, but it also might lead to asset bubbles. Think AI, think .com, think financials, and it can also lead to financial instability if not managed carefully. Well, I mean, even just consumer debt.
If you're putting stuff on credit cards because the interest rates are lower, you're still going into debt. And then if you're putting it on a credit card and then the rates either go up or you can't afford it, it causes problems. So what I can see happening, I don't know, I don't have a percentage or a probability of it happening, but I can see people saying, oh, the interest rate's at 4.5%, I'm going to refinance or I'm going to take out a personal loan and then the Fed's going to say, oh, shit, we messed up and they're going to raise rates and then people aren't going to be able to afford that loan and they're going to default.
I think the default rate could actually increase a lot in the next couple of years because I think it's going to be, we're going to lower the rate in September, we're going to wait and see. There's some people thinking they're going to lower in September, lower in November and lower in December. If they do that, that's insane because that will lead to a lot of default.
That is going to lead, yeah. Because again, the point is we have a pretty full workforce, there's a low unemployment, people have pretty decent wages, wage growth has been good the last couple of years. So they have a pretty good amount of money already, it could be problems.
The fourth thing that could happen is debt accumulation. Easier borrowing conditions can lead to higher levels of debt for both consumers and businesses. Excessive debt, as you've known, one of the metrics I look at for a company is if their debt's increasing, that's no good.
Excessive debt can be problematic if interest rates rise in the future or if the economic conditions worsen, making it harder to service the debt, to pay the debt. I think there's more than a 50-50 chance of that happening. The economic conditions will worsen in the near future and then the Fed's going to, the only thing they can do is either raise their interest rate or lower the interest rate.
And if they raise it, we're going to have defaults up to a wazoo. So just something to keep in mind, not from an investing standpoint, just stay the course, get your good valuations, your metrics, get into good companies that don't have a lot of debt, that have decent yields, and then just bank your shares. But from a personal consumption side of the coin, don't really take on any debt for the foreseeable future because we don't know exactly what is going to happen with the economy and unemployment and we don't know what's going to happen in November with the election and the taxes could be different.
So it's a bad juju to take on debt with all the unknown variables. Just from a personal side, don't take on debt just because interest rates are lowered. Yeah, definitely don't fall into the herd mentality on this one because this one doesn't really make sense.
So stick to the course, stick to what we're talking about because we think the other shoe is going to drop at some point. The fifth thing, I don't even know what it means, but I found it in my readings, is distorted investment signals. Low interest rates might lead investors to overlook fundamental risks in favor of higher returns.
So I don't know why they didn't say that. They put that weird thing. So basically people are going to be taking more risk because they're going to be in the YOLO.
They're going to be looking at the same data and they're going to be interpreting it through a lens or disregarding or... What this will do is it'll be a misallocation of resources. You'll probably have a portfolio that's not diversified enough. It's too concentrated in a flyer, for lack of a better term, a flyer that you think you can get a higher return in.
So it could have a negative impact on your portfolio if you don't stick to the diversification and allocation thing that we've mentioned previously. So don't fall into the, oh, everything is roses. Sunshine and rainbow.
So I can take a risk and get into something that I think will give me a higher return. If you do that, make sure you offset that with your safe things, your dividend stocks. Yeah, you do really have to look at those fundamental metrics and stuff and not the surface level like, oh, this looks great.
Or everybody else thinks this is great. You got to dig deeper. The sixth thing that's happened previously that could happen again is bank profitability is always a concern when the interest rates are lower because banks, they earn their money, as we've mentioned before, from the difference between the interest rates they pay on the deposits and the rates they charge on loans.
So when interest rates are low, their margins actually narrow, this can actually impact their profitability and their willingness to lend, which is kind of an oxymoron because all these people are going to be, oh, the interest rates are low. This is kind of what happened in 2008 with the housing bubble. I thought they actually got more lenient with loans in the 2008.
They were pretty lenient, but I'm saying what happened is ... They're trying to make up the difference by issuing more loans? Yeah, because their margins were narrowing and they were trying to make up. So they did the same thing we just talked about with distorting signals in the last objective, right? They weren't looking at the fundamental risk factors of putting that much leverage out, right? They were just like, oh, we're looking at our margins. Yeah, and then ... And they overextended themselves, and then ... Then all hell broke loose.
It was not a good time to be ... I mean, it would have been a good time had I had a portfolio at that point. Oh, my God. That would have been amazing.
It would have been like everything's on sale. So I could have picked up anything at dirt cheap. Great wealth would have been made had you got in then.
And the seventh thing ... What the hell, this cat's in my face. The seventh thing that's happened previously that could happen again is the potential for financial instability. Lower rates can lead to excessive risk taking in the financial sector, which might create vulnerability ... Vulnerabilities, I can't say that word.
Vulnerabilities. Vulnerabilities, and contribute to financial instability if market conditions change abruptly. So what that's saying is if they have ... The financial sector, the banking sector, they're going to be like, okay, well we have to take risks now to actually make our margins what they used to be.
So we're going to make some crappy loan, or we're going to put too many loans, or we're going to make risky loans. And what happened in 2008 is exactly what this is. Because they had too much money out, and people couldn't pay it back, because the conditions changed abruptly, they were fucked.
And then all hell broke loose. And if you guys remember 2008, it was like banks on the verge of collapse. People jumping out of windows, I mean, it was insane.
The government basically rescuing all the banks because ... Well, not all the banks, but the lenders that were lending for mortgages. So this was like in 2008, it was kind of sector specific to mortgage, but it actually bled over into other financial institutions. So those are seven things that possibly could happen.
What does history show us? This was the part that I found super interesting, but it was super hard to find. I had to go through numerous articles to get these things. Okay, during past rate cut cycles, data from the Federal Reserve shows that on average, the inflation rate continued to decline throughout the cut cycle.
Inflation went down 3.4%, largely due to lagged effects of a slower economy, blah, blah, blah, blah, blah. However, inflation played catch up and rose by 1.9%, 2% one year after the final rate cut. With lower interest rates, consumers were incentivized to spend more and save less, which led to an uptick in the price of goods and services in six of the past seven rate cut cycles.
So six of seven cycles. So what that's saying is in six of the last seven cycles, inflation went up 2% after the final cut, but it went down 3.4% during the cut process. So we're currently at 3%, so that would be at negative 0.4. So it would be at 1.5 if the history repeats itself.
But I don't think we're at 3%. That's just the government number. I think it actually is a little bit higher than 3%.
We have no idea when the final rate cut will be. And I couldn't find any data like what happens if they cut the rates and they say, oh, we made a mistake. We have to raise interest rates.
Does that count as a cycle? I couldn't find data on that. I would think they have to go based on the data. So I am really curious to see even though you couldn't find any like historical precedent.
John, what I'm saying is be very aware that inflation will go up 2% at some point in the next few years. So if you're paying, say, for insurance, insurance was up 18% last year. So we're going to get hit again with these increases? Oh my God.
So if your insurance was up 18% last year, so I don't even know what the final number is, but we'll just go 18% last year. So during the cut process, inflation fell 3.4%, so insurance would have been at we'll say 14% up compared to where it was in 2022. Once the final rate cut happened, then it went up 2%.
So all your goods and services are going to go up 2%. So it didn't tell me, it said one year after the final rate cut, but it didn't go into detail about that. So what I would do is if I had a bunch of things I needed to get, I would get them as soon as the Fed said, we're done cutting rates because you know you have 12 months before inflation actually goes up 2% at that point.
But I think they're vastly ignoring this point here. I think somebody messed up or they're looking at the wrong pieces of the data that they have. We'll lead to problems.
Okay. Point number two. Over the past nine interest rate cut cycles, more than half, five out of nine of the Fed's first cuts were followed by declines in S&P ranging from 22.6% to 55.5%. That's huge, guys.
I don't know if you understood what he just said. The S&P went down 22% to 55% five out of nine times. That's more than half.
After the first rate cut. After the first rate cut. So AKA rate cuts lead to recession in stocks.
Sometimes. But like generally we're in a recession before the rate cuts happen, so like the stocks are actually playing catch up to the recession that we're in. But that's why I think this actually probably is going to be more probability wise of happening because we weren't really in a recession before they did the rate cut.
So I think it might actually- Well, we were in a manufacturing recession because that was like the data we brought up last week was whenever we did the earnings thing was that last week, I don't even remember. The manufacturing sector has been in a recession for a contraction recession for a while. You mean they can't keep up with demand? No.
Their output has decreased significantly like the last two or three years. Well then it actually kind of makes sense that they want more people to buy. Maybe.
But then they're going to have to like churn out more stuff. That lag is disturbing though. Okay.
And then what happened the other four times? Because we said five out of nine, the S&P went down a lot. The other four times it had minimal weakness, it had a minimal decline, and then it achieved strong six-month returns. So on balance over the past nine rate cut cycles, the S&P index had an average decline of 20% and then a six-month return of 3.4. So like that's 17%.
On average, the last nine times, the S&P went down 17% if you take the decline plus the six-month return. So you think it's probable based on historical numbers? I think historical precedent shows me that the S&P is going to go down and everybody's all bullish. They're like, oh, bull, bull, bull, bull, bull, bull.
No, that's not what happens and it hasn't happened because the next point we'll get to is like the most startling one of all of them. Generally, when the market has a decline of at least 20% after the first cut, the average S&P price-to-earnings ratio, P-E ratio was 18. When it had a decline of less than 10%, the average P-E ratio was 11.4. Our current P-E ratio is 27.45. So if you use the data, what happened is when the market is overvalued, the S&P went down 20%.
And that's exactly the current situation based on the numbers. So it could be more than 20% because that was just a P-E ratio of 18. We're at 27.45. We're almost astronomically overvalued.
And so I think it wouldn't be too far-fetched and it wouldn't be like a conspiracy theory to say that we could actually have a 20% decline in S&P. I'm kind of excited for that. I hope we have free cash.
I'm just saying that the probability is more than 50. It's not a coin flip that we're going to be in a bull market. I actually think it's probably 75% that we're going to have a decline.
And the decline is going to be bad. What time frame do you have for that? It's not going to drop 20% overnight. Within a year of the first cut.
Within a year of the first cut, okay. So between this September and next September. Well, a 20% decline.
So how do you as an investor tackle that? You leave your money in bullet shares and then when we have a huge drop, think of what happened a couple weeks ago on Monday, or I guess it was two weeks ago on Monday, when the market went down like 10% in three days. Think that, but like double that. What happens once it falls 10% is all hell breaks loose and people are just so scared that it actually contributes to the decline because everyone's selling because they're being irrational.
So I would need to see like a week, probably, probably, yeah, probably a whole trading week of declines like one to 3% per day before I would feel comfortable taking my bullet shares and putting it into my watch list that actually has a good valuation that I really want to hold, whether it be like Hercules or EPD, whatever, whatever's on your shopping list. Okay. Now here's another interesting thing that the Fed has consistently done since 1969.
They have consistently underestimated the increased unemployment during recessions by an average of 2.5%. Currently we have an unemployment of 4.3. According to the Fed's dot plot, which was some stupid thing they have where they just have a chart like a cardboard thing where it just shows here's where our data is showing us, the Fed is anticipating unemployment only be 4.5 during this period of economic slowing, which is not going to happen. It's going to be closer to 6, but we'll say 4.5. So if their underestimation holds like it historically has been, that would mean we have an unemployment rate of 7, but I think it's going to be closer to 10% by when everything's all said and done in this current slowdown or the slowdown that they're actually initiating by this crap that they're doing. That does not bode well.
So unemployment of 10%, that actually might be the way that they actually ... That point we made previously about businesses creating new jobs, it might take a couple years for businesses to do that because they're going to wait until there's a high unemployment rate so they can actually get worker monkeys in that will do the crap work. Get demand for jobs in place, that makes a lot of sense. Because I've noticed with my dad's business that until the market goes into a recession, it's hard to get people to work.
And then when we're in recession, everybody wants to work, but the job numbers go down. So that's just something to keep in mind that the Fed is horrible when it comes to making predictions. Shocker.
No. So those are like ... Historically, that's all I found. There's probably more data out there, but I was brain dead after reading through like 15 different things.
I appreciate the summary of what you found to begin with because, yeah, I wouldn't want to do that reading myself. But I think those are some interesting tidbits, especially the negative 20% or the 20% decline in the market. I think we're going to have the exact opposite of what everybody thinks is going to occur.
Like probably- And that's because you've been reading the jobs reports, you've been reading all the data that's coming out, and you look to the historical stuff, right? I want my emails to come in and probably 80%, 8 out of 10 are like, oh, it's the bull season because the Feds are going to cut the rate. And like that's, to me, they're probably just trying to push prices up so they can sell and make a buttload of money because nothing that I've seen- You get the general public hyped up. Suggests that we're going to actually have a bull market.
We've been in a bull market to the point where everything's overvalued, and historically when it's overvalued, the shit hits the fan and it goes down to like a normal valuation. Yeah. And the stock market is a zero-sum game.
So basically, if you can manipulate the people through news and whatever, you can- Now the part that's interesting is if you think about, okay, what is the par value of the S&P PE? It's about 15 or 16. And we're at 27? We're almost at 27 and a half. So if you think from that way, we're looking at a drop of 35%-ish, 35, 40% before we're actually back to par value.
That's kind of scary. So it could be bad times. I hate to be all doom and gloom, but it's not doom and gloom if you actually stick to the metrics and you have your watch list and you have money in your bullet shares so that you can go shopping when it happens.
I don't intend this to be a doom and gloom. It's not a doom and gloom. And in all honesty, it is don't get swept up into the hype, sit on the sidelines, stay in the cash dry powder type stuff, unless you find something that really truly is undervalued in that sector.
And if prices go down, you get a bigger sale. Just know that you don't have to buy on the first drop because there's gonna be another one That's I think the lesson to be learned like so we have like what happened The first of all like the first week of August where it went down like 10% Well 10% it's not 30 or 40 percent. So, you know, it's gonna go down again So you don't have to buy the say you're say you were looking at EPD You don't have to buy it the first time it drops like 5% You can actually hold off and wait for it to drop 12% 15% so yeah, they always say don't try to time the market But when you have the data You can just trade smarter or buy smart that suggests that we're going to have at least a 20% drop because we always do In these situations, you're not trying to time the market You're just using historical precedent to set like you can put a buy in at 20% So like take EPD the current price, whatever it is 29 take that times 20% and make that your buy point Yeah and then just put a limit order and and when it drops and people panic and it does that real big dip you might very Very be able to pick it up at the bottom without even putting any effort on So that's what I was sometimes when I know something's gonna drop I will do that Even if I get it like say I get something for 15 and it dropped to 14 I'm not too butthurt about missing out in that whole especially if it was it 18 or 20 before that That whole dollar the dollar more that I could have got on sale It's real hard to hit bottom like it's really hard to pick it up at the very bottom. So I think that's a win Especially like that if you're doing like growth stocks, I could see why people get butthurt about it But if you're doing like dividend stocks and you're like what we what we typically Yeah, you just get a lower cost basis what we what we typically talk about our stuff.
They're yielding like 8 12 15 percent So if you get something that for that has a 14% yield and you get it for a dollar more than the slowest point Oh, who cares? Well, and even then again, you know in the dividend reinvesting if it goes down, you know in the next year You're gonna make it 14 percent. So yeah, and you buy more shares if you do the drip turn on at the lower price So it's like you kind of average down like that's the beauty of dividend stocks You kind of have like a margin of safety if the market goes down and you have your drip on Like I love that about dividend stocks so that is all the information I could find I mean I'm sure I could probably will get more and then in the upcoming weeks and we might actually have another podcast that I think I'm in your page where I think pal is gonna do a 0.25. Will we revisit this? Just because the numbers meantime what we what we were we were talking and I think what we're gonna try to do here Within the next couple of months is have one of our podcasts per month. Just be like a portfolio discussion like earnings reports News bad news good news on any of the stocks that we're holding in the van life not the retirement one But the one that the van life because that's the one that's actually gonna be funding our travels.
So Unless there's something that Happens Catastrophically in the retirement when we're out. There's a good bar so far so far I don't think that that's but I think we I was I was thinking I will actually want to have more What we actually have instead of theoretical Discussions about what could happen like what we actually have because once we're on the road We're actually gonna have one podcast a month devoted to our budget and our dividend pay out with our dividends Like her what our budget here's what we spent. Here's what our dividends pay That won't be like a whole podcast.
It'll be a part of one like one of our podcast world We we had budgeted 1,500 and our dividends paid us out 1,700. So what do we do with the extra 200? So I want to go I want to go. I want to get more extensive into Portfolio updates.
I do Have a tidbit every week in the email where it says like what exactly I did that week when it came to the the portfolio But I actually want to incorporate that into the podcast So that if you don't get the email or you have no desire to have an email, which I understand because holy hell I get so much email From a podcast perspective. Well, I want to actually say well, here's what happened I sold this this this month and I picked this up or we turn the drip off on this particular stock and we use the cash we got to pick up more shares of this just to give you an idea of The the movements that we made the movements. I want to do that I still want to do once of probably four times a year every quarter.
I want to do a portfolio Assessment like here's what our portfolio is doing. Here's where it stands. I act basically.
So what I'm saying is it's coming real soon We're gonna have more more portfolio Oriented stuff in the podcast at least once a month Yeah, so try to make it more practical that way if you're following along with us and you're making these actions You're gonna get like helpful feedback tangible actions. You can take and then I want to actually at some point I want to Start discussions with the people like I don't know how to do that But I want like do we have to put like a like a pole on the I would actually start getting guests people on Like I'll probably will do that. Once we're on the road I go like what happens like we we are spreading ourselves really thin with Fixing the condo up working for her dad and then after that we have to fix the van up so it's gonna be like a month or two where we're just like We'd like today we worked eight hours out in 90 degrees walking 20-some miles like I'm exhausted But we had to record a podcast and I'm gonna edit it and then I'm gonna probably work on the condo a little bit and Then Tim's gonna do more research But it's like what we're trying to do and the reason we're working is Because we're trying to float our holding costs for the condo so that we can let our dividend Investment portfolio compound because we hit our first target of the $1,500 a month in dividends That's what we expect to the last five months.
We've actually with our portfolio. We've been brought around $1,600 a month So we hit our first target so then I actually have an interesting idea that I'd like to put out like I want I Think that we will have a podcast coming up some point I think if you don't mind risk you could actually hit 1,500 to 2,000 on $50,000 in a portfolio and I'd like to actually discuss that and bring it Well, do you want to discuss or do you want to wait until we actually pull the trigger on that and then show our results? Maybe we could do the initial I think we'll have a podcast discussing like what I plan on doing and then we'll actually have a Like a month or two or three down the road Here's what actually happened with what we're gonna do is we're gonna take a chunk of the proceeds or the sweat equity from the condo Sale and like would you say $50,000? We're gonna dump that into a yield max strategy or a high dividend strategy basically, yeah, there's gonna be 10,000 into different yield maxes and Exchange-traded notes and a couple other high yielders and then we're gonna actually show you the results of that because what we're trying to do is we're Taking on a little extra risk to see if we can not touch our actual core portfolio to allow that to continue to compound so it's like extra money that we're Gonna see if we could potentially help people who follow us get started and compounding faster But we're gonna be the guinea pigs first so that you guys don't have to Eat money because I can figure out how to do that where you can actually retire on $50,000. That is going to be Contrary to everything I've ever read about retiring early.
So if I can figure out how to do that to tweak it so it actually works Yeah You guys would be the first to hear something that nobody else actually discussed I mean, I watch YouTube I try to like I watch investing YouTubes and like people do a high the high yield investing But they don't actually don't do it for the retiring early and traveling and doing what I don't how you want They're just trying to make as much money as possible So I can jump it into other stuff and I still watch a lot of like retirement videos and like most of retirement videos don't even Address Dividends. Yeah, so it's it's it's it's weird. It's very weird to me.
People are leaving a What do they say a lot of a lot of fat in the bone or something like that meat on the bone meat on the bone? Money on the table Something because you if I can figure out how to do it $50,000, I think anyone can do $50,000 Yeah, so stay tuned for that one That's not really interesting and that's gonna happen in the next month or two because Hell or high water this condo is getting finished and then I want to actually have like a live Like a live stream probably once a quarter maybe once a month. I think we should do once a month And ask me any things or Q&A session. Yeah, I'd like to actually interact with the Folks more and if they have any questions, I mean, obviously it's gonna take me a couple minutes to look up Whatever your questions are about so I'll be babbling and to fill the space But I think it'll be it actually benefit You the listener much more if it was actually real time as opposed to listen to this on your drive to work and then like Oh, I had a question about that.
And then if you send an email I don't get the email for a couple days or whatever So like I think it actually just benefit everybody if we'd one Yeah And it can help other people that might have the same question to at the same time Or spark somebody else's question because she asked me what do I want from this? This adventure we're on and basically I want to teach y'all Everything that you need so that you can teach other people and you guys can be the experts and teach other people We want to provide a means for you guys to get out there and be digital nomads or just nomads in general faster and not have to work a nine-to-five even if it is a remote job that you still hate or and we see a lot of people to going into like Being YouTube influencers or producers and you can tell in the videos like that. They're not loving it They're doing it for the money and if you don't want to do that We want to provide an alternative so that you don't have to do that. Yeah, she asked me and I don't want to I find YouTube The bad I don't like it and we're not doing YouTube from the same thing.
We're trying to help people learn this process We're not just trying to enter I would love ideally I would love everybody that listens to be able to like talk to their family or talk to their two or three or five closest friends and teach Them everything that they need that they've learned Teach them so then they are on their path to doing this So I'm gonna create a points award system where we're gonna start handing out money to people for down the road probably in the next like 12 to 24 months, we're actually going to be using money as a way to help people pay a pay down debt on credit cards or Some of that yield max money to see their portfolio like a couple hundred dollars a month so they can actually We're gonna help people see the portfolio. We're gonna help people pay off debt We're gonna help people Potentially get an emergency fund set up and then I want to figure out a way to like gamify a situation where like if you achieve certain things you get either more entries to win for a giveaway or We'll do like a voting system. I haven't worked out the details yet but like we definitely want to make this fun because money can be super freaking boring and Stressful and it doesn't have to be like we want to make it fun we want to make it engaging and we definitely want to bring more people up because Like it does not have to be like a slave inventory Don't have to work 40 years for 10.
Yeah, you definitely do not Anybody that's doing that is an idiot Well, I would just say that they're ignorant and I will tell you it does take a lot of effort to find the right answer So we've spent a lot of time researching it and we're bringing you The gold out of all the forest That's what we kind of have on the horizon for this We'll still do like probably once or twice a month just like whatever topic pops into my pretty head But so yeah, we are gonna overhaul things here in a couple months I know we talked about that before and I know this project condor rehab is taking longer than expected But again, and ideally I love love love in 2025 to just say, okay everybody that's listening. We're going to meet in Arizona Pack up your band. Let's roll And I'm also hoping at some point to be able to actually like give people money to travel to said locations to actually do in-person meetup because I think Podcast is probably the least productive or efficient way to actually learn this.
The first would be the first would be in person That's why I want to do in-person things who we can sit down. Everyone has a computer. We like, okay Here's what your portfolio should look like.
Here's what you have This is why you have that or you have that you shouldn't have it or you could have it And I think the second one it would be a live stream So we actually have to start incorporating live streams and actual meetups to make everybody better. So that's the horizon That's one to two year plan. All right guys Hopefully that makes a lot of sense to you If you guys have any ideas you want to share or things you might be interested in Let us know and the drop a comment in the show notes Yeah interact man, and we will see you guys next week next week Don't panic about the interest rate or don't get overly zealous about you don't zealous It's work.
Don't get a fork that they're cutting the race. Use your head a fork. You mean you for you for Your head and actually look at like if you want to actually just type in historically what happens when interest rates are cuts There's a lot of different.
Yeah, they skeptical stick to the metrics and sit in dry powder and like wait to see what happens And then buy when ships on sale Bye-bye-bye-bye-bye-bye-bye as Kramer says, but by the right stuff not what he suggests. Alright guys, see you next time.