Speaker 1: Welcome to another edition of the Chicks on the Right podcast.
We are talking to Zach Abraham and he is the
chief investment officer of Bulwark Capital Management. Is Zach, how
you doing today?
Speaker 2: I'm doing great. Thanks for having me.
Speaker 1: Yeah. Well, listen. We're going to talk about frugality today,
which is something I have not always been good at,
but I'm learning as I get older. There's a recent
article that just came out from the Wall Street Journal
and it framed homemade lunches as some kind of an
economic problem, which I find very interesting. There's a question
wrapped up in all this to just bear with me,
but apparently office workers are bringing brown bags and touugh
aware instead of spending, like, you know, twenty twenty five
bucks on a salad that somebody else makes. And somehow
this frugal, grown up adulting decision is like a threat
to the economy. Now, I can't believe this is even
a thing, but it is. But like casual places that
serve this kind of food are struggling because this is
what they're saying that they're struggling. But I should we
be worried that that budgeting bed behavior is getting framed?
Is like a bad thing just because it's not fueling
their profit margins, because I feel like we should be
celebrating this kind of frugality.
Speaker 3: Yeah, well, yeah, one hundred percent. I mean it's I mean,
it's absolutely ridiculous. First of all, you know, uh, you know,
quick grab you know, lunch bowls or salad places aren't
exactly the you know, the heart of innovation of the
US economy first of all.
Speaker 1: Right, and maybe the healthiest not only the healthiest either, right.
Speaker 3: Yeah, no, And I think it's one of the easiest,
it's one of the easiest ways to sit there and
save Like I mean, you know, let's let's say you've
got somebody that spends you know, fifty bucks a week
on coffee and lunch, which we all know that's not.
Speaker 2: Hard to do.
Speaker 1: Oh my gosh, that's like so low.
Speaker 2: Yeah yeah, that's that's super check low.
Speaker 1: For a lot of people. Yeah huh.
Speaker 3: But but you cut that out, Okay, we're talking about
that's two hundred bucks a month. Yes, that's twenty five
hundred dollars a year, and you start applying some interest
to that, and you see what a big difference it makes, Like,
and I will confess, so I am somebody. I haven't
brought a lot unless something was really good from home
that I wanted to eat. Again, I order lunch every
single day. Right, I am not frugal when it comes
to that. I used to be, and I got tired
of it, and so now I it's it's kind of
a gift I give myself, right, Yeah, but you know,
I'm I'm also not, you know, struggling to fund my
four to one k and all, you know, all these
other things. You've got to put it in context. But yeah,
cutting out I think it's a wonderful thing to do.
And and but it points to something that we've got,
something we've got going on in this country culturally, and
it's not new, but it's just the way that we
look at things, right. Like, So you hear that saving
money and being frugal is bad for the economy, right,
and you hear people talk about the same thing regarding
government spending. Guys, there are things in an economy that
may be beneficial in the short run for GDP gross
domestic product that are not necessarily beneficial for the economy
in the long run. And anybody that tries to make
an argument that whether on a personal level or on
a government level, that saving money by not buying superfluous,
unneeded stuff is a bad idea.
Speaker 2: Those people are idiots, right, And if that is what.
Speaker 3: Is going to keep you from going in recession, you're
in a recession anyway, right.
Speaker 2: It's not that's not going to be the deciding factor.
Speaker 3: Now, what I will say is I do think a
lot of people and it's too early. I'm not at
all calling for a recession. I don't see that right now.
But you are seeing a lot of signs. So, for instance,
I think that they're looking at that wrong. We're hearing
from a lot of different places that restaurant traffic is
down sharply the beginning.
Speaker 2: Of this year.
Speaker 3: Yeah, so, believe it or not, one of the biggest
or I think it actually is.
Speaker 2: The biggest restaurant day of the year. Is Mother's Day?
Speaker 1: Okay, yep, that makes sense because we do not want
to cook.
Speaker 2: Yep, yep.
Speaker 3: And I've got a client that works for a fairly
large restaurant supply business, right and they have felt pressure
and less business coming out of the restaurant side of
the economy for about the last four months, and they
really saw Mother's Day this year as being kind of
their rebound, right, like they bounce back strong. And he
was telling me that Mother's Day numbers significantly missed what
they were expecting and were significantly down from last.
Speaker 1: Year, disappointing for them. Yeah.
Speaker 3: Yeah, And look, what I think is clear is that
the consumer is pulling back right for now.
Speaker 1: And why do you think that is? Because you know,
you got Trump in office. Do you think people would
be like, Okay, it's like Daddy's got this, We're all
going to be okay, you know what I mean. I
think it's very interesting. I just think it would be
the opposite. I would think it would be the opposite, right.
Speaker 3: Well, yeah, but you got to remember, I mean you've
got to look at where prices are, right, So, I mean,
after a while, people get fatigued, and the further you know,
you start getting priced inflation fatigue.
Speaker 2: The other thing is the further and further we.
Speaker 3: Get away from COVID, right, the residual effects and just
the money itself that was handed out right, just thrown
out the window.
Speaker 2: That money. We're getting further and further away from that.
Speaker 3: Impulse, right, And like it's one of the things that
we've said is that and we would have expected it
to happen already. I think there are reasons that it
hasn't that we could dig that are pretty vast and
expansive to discuss. But bottom line is, at some point,
when you have a fiscal impulse that large and it
stops and a government starts to exert any level of
financial responsibility, you'd expect to have some type of economic
slow down or recession in the not too distant future.
Not necessarily because are going bad, but it's like trying
to maintain a sugar high for like six hours.
Speaker 2: You know what I'm saying.
Speaker 3: It just doesn't You're not going to hold that altitude.
And you know, in normal cruising altitude for the economy
is not that, so you kind of said. And then
you're seeing default rates on used cars picking up to
rates that we haven't really seen since eight oh nine.
Speaker 2: There's just a lot of signs of weakness.
Speaker 3: And I think for whatever reason, and and like I said,
it shouldn't be a shock when you look at prices,
when you look at home sales, when you look at
all these things. To me, it's really remarkable that you
haven't gone into recession already. But but yeah, to make
the argument that being frugal and saving some money is
it good for the economy. I'll take the other side
of that, and I'll encourage everybody man sock it away,
save money on lunch, especially the younger you are.
Speaker 2: Yeah, man, pack lunch.
Speaker 1: I love it. It's like what you said about the
coffee thing. Like, I don't know anything about sus Ormon
except for the one thing that she said, and I
think she's kind of famous for that. She's like, if
you waste money on coffee, it's like peeing one million
dollars down the drain. Because she said, I wouldn't buy
my cup. I wouldn't buy a cup of coffee anywhere
ever if I can afford it, because I would not
insult myself by wasting money that way. It literally is
what you're saying, because it's like it's a want, not
a need. And she said, say you spend, like you said,
one hundred bucks on coffee each month. You can put
that one hundred bucks to a roth ira and after
forty years it would have grown to one million dollars
to twelve percent. At a twelve percent rate, It's exactly
what you're saying.
Speaker 2: Yeah, I don't.
Speaker 1: But but there's but I think a lot of it's cultural, Zach,
because like people like there's Starbe's, they've got a home,
there's Starvey's and a lot of and they walk around
with their little cups and it's like it's a it's
a cultural thing, right, So retraining people or people retraining
themselves to say I don't need that daily cup of coffee,
you know I or just just saying themselves, I can
do it at home. Coffee is coffee.
Speaker 2: I can make this.
Speaker 1: At home, I can take it to work. I can
make my lunch at home, I can take it to work.
Retraining and that, to me, that's smart. It's just smart.
Speaker 2: Yeah.
Speaker 3: Well or the flip side, like you were saying, is it?
I think it's a more interesting cultural observation to talk
about that person that is, well, I just can't live
without my Starbucks, right. And I try to tell this
to young people all the time, and I'm not I am.
I'll be the first person to tell you that I
behind every good success story, there is luck. There are
things that bounced your way. It's not all you're doing.
It's blessing.
Speaker 2: It's luck, you know.
Speaker 3: I think a lot of those other factors play into it.
But one of the reasons I can buy lunch every
single day is because the amount of money that I
spend on lunch is immaterial to my overall income. Okay, right,
And but I didn't get there by drinking my Starbucks
every day. I still don't go get coffee at a
Starbucks because for the same reason I just I can't
square it. And it's this lesson that you want to
teach people that used to be common sense in this
in this culture that has just gone away, which is
we should have it now right.
Speaker 2: It's yes to feel it should feel good right now,
you know, And you're just like, guys, that's not the
way it works. That's not the way it works. If
you want to be able to do that, you usually have.
Speaker 3: To go through a period of time where you don't, right,
And that's just that's reality.
Speaker 2: Embrace it.
Speaker 3: Quit trying to pretend you're you know, you're somewhere in
a different financial place than you are. Accept it and
try to you know, that's accepting those realities and adopting
and and and adapting those practices that we're that we're
discussing here. That's how you get into a different stratosphere economically, right,
instant gratification No, no, And it's just and and and
there's another interesting I don't want to go too far
off the off the.
Speaker 2: Path on this one, but it kind of goes back
to you know.
Speaker 3: Like if you think, well, I just can't give up
my Starbucks, like think think about a vapid thing that
is to say, when you're having financial problems, and yet
people but people aren't embarrassed to say it, you know
what I mean, Like, at some point, at some point
if like, let's say you're strapped, you've got credit cards
that are in collections, you owe money to the irs,
And it used to be a well, I just you know,
you got walking out with your ten dollars Venti frappuccino
or whatever it is, you know, and you'd be embarrassed
for people to know because you'd be like, oh, they
think I'm an idiot, right, But nowadays you've kind of
like taken the guardrails of shame off of culture.
Speaker 2: And I don't I.
Speaker 3: Don't think it's I don't think it's been a very
good idea.
Speaker 1: Yeah. To me, it's the same thing as saying, if
I really need that pack of cigarettes, every day. Yeah, yeah,
how we really need it. It's not any different, really.
Speaker 3: No, no, how is it any different? And then also
with the young people too, like getting that through their heads, like, hey,
the quicker, you will embrace the hard, right. First of all,
you will realize it wasn't nearly as hard as you
thought it was.
Speaker 2: Yeah. And second of all, the quicker, you embrace the hard,
the quicker, you're done with it.
Speaker 1: Right, And time passes really quickly.
Speaker 2: So fast, right, so fast and yeah, and everybody says it.
Speaker 3: And and if you're like me out there, it'll catch
you off guard, you know, because you have these moments
I know, you know, you know, you have these moments
where you go, oh my gosh, but you start having
kids in life, just go and you hear yourself say it,
and you're like, oh my gosh, I sounds just like
my parents.
Speaker 2: I don't know, I know, but but it really does.
Speaker 3: And if you'll embrace the hard early on in life,
like I said, you'll, you'll you know, whether it's the budgeting,
whether it's the packing your lunch, whether it's setting extra
money aside.
Speaker 2: That time goes by so fast.
Speaker 3: And I can promise you this at that once you're
sitting there saying, boy, that time went so fast.
Speaker 2: You will be absolutely thrilled that you took that route.
Total right, totally always worth it.
Speaker 3: I've never once met somebody who said, you know, the
biggest regret in my life is that I was too
responsible and work too well.
Speaker 2: True.
Speaker 3: Haven't heard that regret now now now maybe, And I'm
not talking about like, oh I wished I would have
worked more rather than spending time with my family, and
I'm not talking about that, but but yeah, just it's.
Speaker 1: No, that's totally different. Frugality is totally different than time
spent with loved ones and stuff like that. I think
that's we're talking about a completely different thing. But I
absolutely agree. Absolutely So Okay, so if people want more
lessons and they want to be able to go to
fancy dinners when they retire, because that is a perfect
time to do it, how can they reach you, how
can they see you, how can they do all the
things bullwork?
Speaker 2: Yes?
Speaker 3: So yeah, easiest way to find us you just go
Borcapitalmanagement dot com.
Speaker 2: Uh.
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Speaker 3: So I got a confession. I don't know and I've
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Speaker 1: Okay, well that's something I will have to talk to
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They're not like super long.
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