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