Speaker 1: Sixty percent of stocks forty percent bonds. Well, you know
everything else has changed, including what the industry can do
in terms of limiting losses. So we're suggesting that real
estate and stocks may do what it's done before, be
off precipitously and take longer to recover. The areas that
we do like are outside of traditional investments, outside of cash,
outside of homes, outside of stocks. Okay, it might look
like infrastructure, it might look like manufacturing companies.
Speaker 2: You're listening to, Carrie. Let'sa's financial survival network where you
get valuable information you just can't find anywhere else to
thrive in today's trying times. You need the Financial Survival
Network now more than ever. Go to Financial Survivalnetwork dot
com and get your free newsletter and gift. Financial Survival
Network now more than ever.
Speaker 3: And welcome you are listening to and watching the Financial
val Network. I'm your host, Carrie Lutz. Well, we've had
two back to back years of twenty plus percent gains
in the stock market. Are the good times going to
roll in twenty twenty five or are we seeing now
perhaps the beginning of the January effect in January? So
it goes January, So goes the market. Well, our good
friend John Grace is with us now. John, it's great
to have you back on the show. And well, tell
us here for investors' advantage, corp your company? What's our advantage? Here?
Do we prepare for? In times of war, we prepare
for peace. In times of peace, we prepare for war.
But sometimes it's neither peace nor war.
Speaker 1: What do you do we prepare for both? As an
old boy scout working on my Eagle Scout badge which
I managed to obtain, Yes, it's all about prepared. That's
exactly what the advice is. And that works twenty four
to seven. And I appreciate being on again, Carrie, and
and I see so many people. We get complacent, we
get accustomed to well this is Quai. It's been so
it's just going to continue. I mean, And we've been
here before in the nineties, as you may recall, and
that was a very good run. And then it was
I believe it was Chairman Greenspan at the time who
talked in late nineteen ninety six about a phrase he
coin called irrational exuberance. And of course he took a
lot of black and people told him he was completely
out of step because the Dow and the S and
P at the last half of the nineties doubled in value.
You know, one hundred went to two hundred thousand dollars,
that's pretty good. The Nasdaq quadrupled, one hundred went to
four hundred thousand dollars. But then I think it was
about March twenty twenty two that suddenly what he had
suggested suddenly came into favor, and now he was welcomed
back to the dinner table. Right that's where we saw
the Financial Crier or the dot com crisis happened, and
NASDAK was off. Was it really over eighty percent? And
in my industry, I've only been at it since nineteen
seventy nine, Kerry. You know, we always say, well, it
always comes back, and it did. Nas Dak did come back.
It just took fifteen years, I believe, assuming you did
not sell a share, you didn't need any money for
fifteen years, and then it comes back. So the way
I look at it is, you know, let's be ridiculous
and suppose something like what happened in two thousand, two
thousand and two, two thousand and eight, it happens again,
only only this time, we've got more people than we've
ever had before. Was eleven thousand people a day, turning
sixty six this year, I believe, and a lot of
people reaching the age where they must take required minimum
distributions that only increase every year as a percentage, no
matter what your account does for you or to you. Well,
now it seemed to me that we'd want to really
look at what can savvy investors do to limit their
losses if you have to take the withdrawals and you
must pay the taxes as you do from tradition retireing accounts,
and those withdrawals rates go up a little bit every
single year no matter what. Now's the time I would
submit to look to see where the exit doors are.
Where are the strategies for limiting the losses, as opposed
to believing you have to live with the losses and
you know we may not have enough time to have
those losses offset by the gains, assuming the gains come.
So it's all about limiting those losses. No different than
what if you don't want the hell Mary passed at
the last two minutes of the game to get back
in the game, and then the game's over and you're Crimingmill.
Speaker 3: Yeah. Well, another popular quote out there is everyone has
a plan until they get punched in the face.
Speaker 1: Right, That's correct. And I love George Patten's I love
quoting George Patten, you know, because what he said, if
everybody's thinking you like, then somebody isn't thinking. I think
that's true. That's what I think. I think he got
something there.
Speaker 3: Yeah, so so do you run for the hills? Is
that what you do?
Speaker 1: Well? See, as I say, you know, when I would
take my family to the movies, oftentimes we go in
and you know, throw our clothes or jackets in the
seat and go back for popcorn. So that would give
my sons just enough time to do what I asked
them to do every time they go intough building, and
that's look for the exit doors, the emergency doors. When
we come back, I would stand. I would make sure
they could not see the exit doors. So then they
get to their seats and I would stand in their
way and say, now, tell me where the exit doors
are before we go back to our seats. And they
would because they knew the drill, and that's what it
took to be able to sit down and enjoy the
movie and that's my point. This is the time for
investors to determine how much loss can you live with?
Is it possible you might be able to limit your
losses within your parameters. For example, if let's say two
thousand and eight, the market's off thirty seven percent and
the more traditionally managed mutual funds, the equity funds are
off over forty percent, is it possible that your account
might have been off less than fifty percent? Okay, so
you ont a million dollars, you don't make it simple.
Instead of being off three hundred and seventy overall market
over four hundred thousand in most of stock mutual funds,
so many of them, if your account was off less
than twenty percent, would that be a good thing? That
would that be following the adage, if you find yourself
in a ditch, stop digging. I think so, you know,
if you're down two hundred thousand, that's that's not good news,
but that's better than being down four hundred thousand. And
that's my point. What can we learn from the past
and see what we could do to limit our losses
if indeed they happen to be baked into the cake.
If the real estate market drops precipitously. If the stock
market drops dramatically, the question becomes in advance, how are
you keeping your assets from being burned up? Like we
looked at the fires going on in southern California right now,
where nobody imagined thousands of homes would be burned up,
and your elster completely unprepared.
Speaker 3: But you know, in every everything that happens in life,
there are winners and losers. Even in California. The contractors
who are going to be retained to rebuild these properties hopefully.
You know, the governor has said he's suspending well building
regulations and permits and everything, maybe not regulations but permitting,
so the Queen be accelerated. Jason, deregulating California is like
something I never thought i'd live to see, but quite
being quite being like you know, it's it's something you
have to think.
Speaker 1: About well and look in advance for it. There's a
great story of a gentleman in the Pacific Calisades who
who forethought what might happen and he put sprinklers on
this rou if he used several large hoses to draw
water from his pool to a sprinkler around the house
and then he had to exit stage left at the
at the last minute, and he was convinced that he
would come home as he's seeing all these homes that
are just destroyed. His was still standing and he was
able to help other people. And of course that's the point.
The question becomes, how can you play the game where
it might be heads You in tells you in, you
want to be able to be able to tell your
story as he can, as opposed to the folks crying
their hearts out, and you know, our heart goes out
to them who lost everything. It's completely unimaginable. But that's
why it's so important to be prepared.
Speaker 3: So off topic a little bit, but really on topic.
Natural disasters unavoidable, but it's the reaction to them, and
to the extent that you can prevent or mitigate them
shows leadership of rest. Maybe California will learn something from
what's happened here that their leadership is totally not up
to the.
Speaker 1: Task of well, and maybe we should learn we don't
keep building on the edge of canyons. We don't keep
getting closer and closer to the ocean. For the view.
That's fine when everything's working well, not so fine when
the fires come rushing down the canyons in reverse. To Row,
it was a hurricane. Now I happened to come across
the UCLA study. This was just about the time we
were discovering we're drinking the same water, breathing the same air,
flying the same airplanes, and here comes COVID. Apparently never
saw that one coming, right. But what the UCLA study
showed is one the state, when we developed the aqueducts,
our leadership happened to choose the most wettest one hundred
years to study. Was that by intentional? Was that a mistake?
Maybe we should have studied the one hundred years that
were the driest. Well, we made a decision based on
the wedding is And what the study went on to
reveal is if you look at the pattern long before
most of us were on the planet, including our parents
and maybe their grandparents. They history in California. They said,
you want to learn from the long term history, Californians
get ready for more floods, get ready for more fires.
It's the way California is built. And then they had
a picture of Governor Leland Stanford being road in Sacramento
to his inauguration. Hard to believe, you know, that kind
of thing could happen, but it has. And I would say, Carrie,
I think part of the problem that we have is
we don't learn from history, my friend, because too many
of us are so busy repeating it.
Speaker 3: Yeah. Yeah, well there's an old saying the only thing
we learned from history is that we don't learn from history.
Speaker 1: I wish that wasn't funny, because it's True's sometimes you
got to laugh at the truth.
Speaker 3: Hey, well, I told you I'm a quote collector, so hey,
I love doing these interviews with you. If there's three
sectors for the coming year that you think are going
to outperform the market, or at least to keep up
with it, Yeah, what are they going to be?
Speaker 1: Great question? The model for the securities industry from day one,
for the last idle or at least the forty four
years I've been in the business sixty percent stocks, forty
percent bonds. Well, you know, everything else has changed, including
what the industry can do in terms of limiting losses.
So we're suggesting that real estate and stocks may do
what it's done before, be off precipitously and take longer
to recover the areas that we do like are outside
of traditional investments, outside of cash, outside of homes, outside
of stocks. Okay, it might look like infrastructure, it might
look like manufacturing companies. Okay, owning the warehouses. All this
stuff has to be distributed. How about owning the land
under those warehouses, that's probably going to be a constant.
How about being in student housing. Good clients who own
proper USC. He's an engineer, rocket scientist, she's a broker.
They have real estate that they own as rentals near USSE.
They tell me USC reports they have eight thousand rental
units with forty thousand people on the waiting list. I
bet that waiting list just went up. My point is,
if we own those kinds of real estate investments, you've
got a lot of demand for it, and you can
manage the market with all of that demand. And I
would suggest being outside of southern California, out of California altogether.
The other area that I really am found carry that
I think has a lot of promise and a couple
of vehicles have been around for over seven years now,
is owning data center infrastructure, all the real estate necessary
for all the artificial intelligence that we're getting accustomed to
embracing and using well, it requires three hundred thousand square
foot buildings again outside of California, solid deal, solid returns
net to the investor. A star the last sets. That's
one of the things that I think will hold up
well no matter what happens in the economy, what happens
in Washington, what happens in Sacramyl.
Speaker 3: All right, well, I don't know. The data center thing
looks like could be a modern day gold rush. We know,
we know what happens to gold rushes.
Speaker 1: John to your point, Levi Strauss is still a name
we know, right, and he got famous doing what he
wasn't going after the gold. He didn't do picks and shovels.
He did close and I think they've been around for
what eighteen twenty five something like that. I think you
made a nice parallel there. Look for the where the
knee is not going away has nothing to do with
demographics so much we're going to be using all this technology,
we may as well own the real estate that has
to be in place to provide all this technology.
Speaker 3: How about electric utilities, looks like we're heading for shortages
and key markets, and one in Virginia or probably the
biggest data centers in the world that you never heard
of in the Langley of Vicinity. You can't build a
data center there without a two year reservation, right. And
what does it mean for alternative energy sources? Are we
going to see a boom in solar and wind? Certainly
we're seeing a boom in battery storage.
Speaker 1: Yes, sir, that's going to continue, no doubt about it.
A lot of opportunities. Just as I say, I think
we have to expand our thinking. If we look at
Yale endowment, was it like forty point seven billion dollars?
What's astonishing to me, Carrie, is there exposure to US
docs is last time I looked, and I tend to
look once a year, it was around three percent. I
didn't say thirty. I didn't say forty. I didn't say sixty.
I said three. And what I find is they have
maybe six or seven different assets legs if you will
under that portfolio stool for more stability. And if you
spend some time on their site, they explained what they
used to do back in the eighties, what they're not
doing anymore, which is very different from the securities industry.
They also represent. This is their report, not by that
they didn't lose money in two thousand and eight, So
I'm submitting that, you know, we can learn from the
best in the brightest. We can't replicate what the endowments
and the institutions do, but they have been in private
credit and private companies in private equity long before retail investors.
Those are some of the areas we want to follow
the best in the brightest to see how we might
put some more legs under our portfolio stool so that
it's less wobbling a little bit.
Speaker 3: I also remember reading an article that Harvard had gone
all in on payday lenders too, so you know, through
their homework. Yeah, but I guess it was good. Well,
I guess it was good until it wasn't. Like so
many other things, John, tell us how we connect with you,
how we find you on the web, and what you
can do.
Speaker 1: For us investors advantage. You know, to your listeners, Carrie,
I'd be delighted if they have some questions they'd like
to talk about what we're discussing. Will give you allow
fifteen minutes right to see if there's something we can
do a way that you might be better prepared to
see how you might limit the losses. Maybe there's something,
maybe not, but that's without any cost or obligation. And
then if that makes sense, we can help prepare up
an actual plan to help people see what it takes
to get from here to there and arrive on time
safely to make work optional. But right now we really
are on a mission to show investors as we were
in two thousand and seven. By the way, sometimes it's
better to be lucky than good to limit losses. That's
what I think is so crucial. The industry simply says
you have to live with your losses. The good news
is that is not true. But too many of our
my peers haven't really been advocates or been, you know,
being about the business showing investors what might you do
to limit your losses? Happy to spend fifteen minutes with
your audist.
Speaker 3: Y X spouses say the same thing. But we got
a link in the show notes to this interview on
Financial Survival Network. Just click it, take your right to
John's site and if you've got a question for John myself,
shoot me an email. While you're on the site. We
just ask you to please sign up for free newsletter
like sixty five thousand other FSN community members have done. John,
appreciate you coming on the show. Best of you, Best
of twenty twenty five for you and yours. We'll talk
to you again real soon.
Speaker 1: Look forward to surviving and thriving in twenty twenty five.
Speaker 3: All.
Speaker 1: It is good to be with you.
Speaker 2: Carry thanks for listening to Carrie Letz's Financial Survival Network,
your solution to today's trying times. For the latest, go
to Financial Survivalnetwork dot com. Financial Survival Network now more
than ever, CRUs