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<v Speaker 1>Right now, let's talk about money, because I need to

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<v Speaker 1>learn a little bit more about how the money with

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<v Speaker 1>Joel Larsgard, friend, I haven't talked to you in such

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<v Speaker 1>a long time.

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<v Speaker 2>How you been, Joel?

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<v Speaker 3>It's been too long.

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<v Speaker 2>Bo I miss you. You complete me.

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<v Speaker 3>I feel the same brothers with you. I know.

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<v Speaker 1>I have been thinking about the economic uncertainty for quite

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<v Speaker 1>some time, and I wonder what's going to happen to

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<v Speaker 1>my four one K my pension. And there are people

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<v Speaker 1>out there with three fifty sevens all sorts of retirement accounts.

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<v Speaker 2>In me, I'm just speaking for me.

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<v Speaker 1>I was moving stuff around because I was concerned about

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<v Speaker 1>the stock volatility. We see what has happened in the

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<v Speaker 1>past couple of months. We've gone from about forty five

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<v Speaker 1>thousand Dow Jones down to forty one thousand.

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<v Speaker 2>I move stocks to bonds. Am I alone in the concern?

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<v Speaker 2>And also my.

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<v Speaker 3>Response, no, no, you're not at all.

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<v Speaker 4>And the Wall Street Journal had an article this week

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<v Speaker 4>is specifically highlighting people who are kind of changing up

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<v Speaker 4>their portfolio similar to what you're doing, in light of

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<v Speaker 4>kind of the economic uncertainty and the volatility in the

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<v Speaker 4>stock market. And it's interesting I think people are saying,

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<v Speaker 4>I feel like I'm a little too exposed to stocks

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<v Speaker 4>in particular, and so they're opting to, you know, instead,

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<v Speaker 4>sell a little bit of their stockholdings, migrate a little

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<v Speaker 4>bit towards gold and cash. And it just takes me

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<v Speaker 4>back though to two thousand and eight when I first

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<v Speaker 4>started working in radio, and I remember talking to a

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<v Speaker 4>co worker who was and I was like, literally just

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<v Speaker 4>in the beginning days of investing. I think it was

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<v Speaker 4>like my second year on the job, and one of

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<v Speaker 4>my cocores was saying, oh my gosh, the stock market

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<v Speaker 4>is in free fall, Like what what do I do?

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<v Speaker 4>And I basically my advice to him was stay the course,

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<v Speaker 4>Like if you sell, how will you know when to

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<v Speaker 4>buy back. Think even of the recent twenty twenty COVID

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<v Speaker 4>downturn of the stock market, there were predictions, dismal predictions

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<v Speaker 4>from really smart people that the stock market was going

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<v Speaker 4>to keep cratering. Think about how long it lasted ultimately

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<v Speaker 4>and how quick the recovery was. I'm worried that friend

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<v Speaker 4>that I talked to back in the day, he did

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<v Speaker 4>make significant changes, and it's just once you start selling,

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<v Speaker 4>once you start tinkering just because the emotions are running hot.

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<v Speaker 4>It's really hard to know when you go back in

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<v Speaker 4>and take on more stock exposure, if you ever do.

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<v Speaker 4>And I think for most people making those changes, it's

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<v Speaker 4>more emotion than it is science.

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<v Speaker 3>And I don't think that's a smart response.

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<v Speaker 2>You make a great point.

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<v Speaker 1>Emotion is inextricably linked to our money. And when you

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<v Speaker 1>mentioned two thousand and eight, that strikes a chord with me,

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<v Speaker 1>because in two thousand and eight was the beginning, obviously

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<v Speaker 1>of the Great Recession. I remember I had just purchased

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<v Speaker 1>a townhouse in two thousand and six for three hundred

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<v Speaker 1>and forty thousand.

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<v Speaker 2>By two thousand and.

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<v Speaker 1>Eight it was worth like one hundred and twelve thousand,

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<v Speaker 1>and I was going through foreclosure.

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<v Speaker 2>It was the worst economic time of my life.

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<v Speaker 1>I say all that to say, for a lot of people,

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<v Speaker 1>this is a time in which they don't want to

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<v Speaker 1>go through what they went through in two thousand and eight.

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<v Speaker 1>I don't have the time to start over eighty more.

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<v Speaker 1>I'm too old in that regard. What other types of

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<v Speaker 1>considerations do you think people are making right about now,

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<v Speaker 1>beyond just this particular moment.

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<v Speaker 3>I think it's important to note two things here.

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<v Speaker 4>One, you know, we've experienced what's called a correction in

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<v Speaker 4>the stock market, so where the S and P is

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<v Speaker 4>down ten percent essentially from its height, and there was

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<v Speaker 4>already a lot of talk about over valued stocks, and

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<v Speaker 4>so I think there was room for correction anyway. And

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<v Speaker 4>then when you talk about the tariffs, the kind of

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<v Speaker 4>whiplash the tariffs that were and then that weren't and

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<v Speaker 4>then that are going to be, that is causing a

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<v Speaker 4>lot of uncertainty for businesses, and so it makes sense

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<v Speaker 4>that we've seen a ten percent correction in stocks. Where

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<v Speaker 4>do things go from here? I don't have a crystal ball.

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<v Speaker 4>I don't know, but it doesn't feel like from everything

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<v Speaker 4>else that we're seeing when it comes to economic readings, unemployment,

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<v Speaker 4>kind of where things stand, consumer spending, that we're headed

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<v Speaker 4>for some sort of dramatic recession or anything like that.

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<v Speaker 3>We could be right, it's hard to predict.

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<v Speaker 4>I think the most important thing for people who are

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<v Speaker 4>out there investing right now and they're close to retirement,

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<v Speaker 4>you have to have a portfolio construction that allows you

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<v Speaker 4>to sleep at night. And if you are, if you're

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<v Speaker 4>freaking out over a ten percent drop in stocks, well

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<v Speaker 4>then you're probably too stock heavy. If you are, if

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<v Speaker 4>you're worried, right, if you're not sleeping a night, if

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<v Speaker 4>you're checking your portfolio constantly, well, one piece of advice

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<v Speaker 4>I have for folks is to check your portfolio less.

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<v Speaker 4>And that sounds maybe like sticking your head in the sand,

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<v Speaker 4>but I think it's I think it's the opposite. I

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<v Speaker 4>think when you're constantly paying attention, when you're vigilant to

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<v Speaker 4>every move you're over, you're more likely to freak out

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<v Speaker 4>over the little machinations that really have very little outcome

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<v Speaker 4>on your ultimate ability to live a good life. So,

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<v Speaker 4>if you have stayed the course and you've been a

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<v Speaker 4>good investor for a long time, just make sure that

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<v Speaker 4>your portfolio is aligned with your ability to sleep and

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<v Speaker 4>and so for some people that that might mean think

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<v Speaker 4>about in twenty twenty, think back what you did five

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<v Speaker 4>years ago. If you were making significant changes, then it means, yeah,

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<v Speaker 4>your portfolio wasn't constructed for potential significant losses. You need

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<v Speaker 4>to have a balance in your portfolio that allows you

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<v Speaker 4>to have some more diversification so that you're not over

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<v Speaker 4>indexed towards stocks, so that you're freaking out when the

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<v Speaker 4>stock market does see declined, because that's the great I

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<v Speaker 4>think people have gotten used to, except for with the

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<v Speaker 4>exception of that twenty twenty COVID dip in twenty twenty two,

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<v Speaker 4>the stock market essentially being kind of like a high

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<v Speaker 4>old savings account that.

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<v Speaker 3>Just returns a lot more.

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<v Speaker 4>And that feels good, right, It feels good to see

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<v Speaker 4>your networth shoot up.

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<v Speaker 3>But the truth is correction that the stock market are normal.

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<v Speaker 4>Something like this is like completely normal in a given year,

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<v Speaker 4>And so I do think that that the handwringing is

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<v Speaker 4>probably overwrought.

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<v Speaker 1>You said the R word as in recession. There have

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<v Speaker 1>been more and more discussions about whether we are on

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<v Speaker 1>the path to a recession or not. Definitionally, you already

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<v Speaker 1>know this recession means two quarters of consecutive quarters of

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<v Speaker 1>negative GDP growth. I'm asking you, Joel Larsgard, Obviously, if

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<v Speaker 1>we're in a recession, that means we've already been sliding

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<v Speaker 1>down that hill for a while to get those two

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<v Speaker 1>consecutive quarters of negative growth. So there are indicators prior

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<v Speaker 1>to that. What are you looking for to say, hey,

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<v Speaker 1>we are on our path to something economically disastrous.

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<v Speaker 4>Yeah, I think right now, all eyes are on policy

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<v Speaker 4>coming out of Washington, DC. And it's interesting. One economist

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<v Speaker 4>was recently quoted. He said something like this could be

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<v Speaker 4>the only recession that was completely avoidable and essential, like

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<v Speaker 4>it could have been changed at any moment in time.

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<v Speaker 4>And it feels like tariff policy and some of the

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<v Speaker 4>economic just decisions coming out of the White House, those

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<v Speaker 4>are the things that could kind of push us towards

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<v Speaker 4>a recession that wasn't likely in the first place. Man,

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<v Speaker 4>it makes me think just a couple of years ago,

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<v Speaker 4>though I think this is probably a year and a

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<v Speaker 4>half ago, Bloomberg had an article and they said all

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<v Speaker 4>signs point one hundred percent likelihood of recession coming. They

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<v Speaker 4>literally said, one hundred percent. Our indicators are lighting red,

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<v Speaker 4>a recession is on the way. And that recession didn't materialize.

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<v Speaker 4>So there's another saying that economists have predicted nine out

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<v Speaker 4>of the last four recessions. There's always talk of recession, right,

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<v Speaker 4>It's like this is something that's what else do economists

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<v Speaker 4>do except for talk about the recession that's coming that

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<v Speaker 4>doesn't end up materializing. There's always reason to be fearful,

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<v Speaker 4>But what we don't think about typically is the hope

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<v Speaker 4>and how resilient companies are even in the face of

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<v Speaker 4>uncertainty and new policy coming out of Washington, d C.

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<v Speaker 4>These are new hurdles to jump, but the American economy

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<v Speaker 4>is nothing if not resilient. And I think especially especially

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<v Speaker 4>for younger listeners out there who are tuning in and they're.

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<v Speaker 3>Like, I'm kind of worried.

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<v Speaker 4>Well, the cool thing about a drop in stock prices

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<v Speaker 4>is that you're able to buy stocks on sale. I'm

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<v Speaker 4>a big fan of dollar cost averaging, So if you're

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<v Speaker 4>in your twenties, thirties, forties, you should just just keep buying,

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<v Speaker 4>as my friend Nick says, and just kind of every

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<v Speaker 4>two weeks with your paycheck just keep scooping up more

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<v Speaker 4>and more. And if prices go down, that shouldn't worry you.

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<v Speaker 4>That should excite you that you're buying on sale.

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<v Speaker 2>That is great, great advice. And I guess right now

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<v Speaker 2>is Joel Larsgard.

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<v Speaker 1>He's the host of How to Money, which is airing

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<v Speaker 1>on here on CAFI Sundays from twelve to two pm. Joel,

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<v Speaker 1>the supposed possible connection between federal land and the housing market.

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<v Speaker 1>Is there a way in which we could use federal

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<v Speaker 1>land to make more housing type landscape available for just

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<v Speaker 1>housing in general. Is there a way that we can

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<v Speaker 1>combine the two.

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<v Speaker 4>Yeah, there is, And there's been this proposal from the

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<v Speaker 4>Interior Department and HUD to basically say, hey, we as

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<v Speaker 4>the federal government, we have hundreds of millions of acres

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<v Speaker 4>of federal land and we're kind of sitting on it,

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<v Speaker 4>and some of it really could be built on to

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<v Speaker 4>ease the housing crisis. And if you've been following what's

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<v Speaker 4>going on with kind of the lack of construction, of

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<v Speaker 4>the lack of new units being built, that has created

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<v Speaker 4>a real problem in this country of affordability. Yeah, it's

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<v Speaker 4>higher interest rates, but it's also just a lack of supply,

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<v Speaker 4>and some estimates say that we're three or four million

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<v Speaker 4>home shy of what we need to kind of fix

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<v Speaker 4>the problem. And so this is one of the things

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<v Speaker 4>I've kind of been harsh on the Trump administration when

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<v Speaker 4>it comes to some of their economic policies. This is

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<v Speaker 4>one of those things, though, that I can get behind

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<v Speaker 4>to say, hey, we're going to open up some of

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<v Speaker 4>these some of these acres of federal land. We're going

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<v Speaker 4>to streamline the process and make it easier for affordable

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<v Speaker 4>units to be built to be built, and I think

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<v Speaker 4>that could over time. This is one of those things

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<v Speaker 4>you don't write the ship in mere weeks or months.

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<v Speaker 4>This is going to take time because the housing market,

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<v Speaker 4>it doesn't turn on a dime. But I think it's

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<v Speaker 4>just great news, and I think it's kind of where

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<v Speaker 4>we need to be headed, at least at least it's

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<v Speaker 4>part of the solution.

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<v Speaker 1>Just to be clear, it's federal land, but would it

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<v Speaker 1>be loaned or made available to private developers or with

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<v Speaker 1>the federal government still be in charge of creating these

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<v Speaker 1>housing developments or units.

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<v Speaker 4>They've talked about like transferring or leasing the land to

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<v Speaker 4>public housing authorities, different nonprofits and local governments. So it's

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<v Speaker 4>it's not going to be the federal government itself building

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<v Speaker 4>these units. They're going to find partners who are kind

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<v Speaker 4>of closer to the ground, who are who they're going

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<v Speaker 4>to vet in order to build these units. Interesting thing too,

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<v Speaker 4>is like how close are these units to the most

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<v Speaker 4>expensive places?

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<v Speaker 2>Where?

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<v Speaker 4>Where are you know which lands are going to get

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<v Speaker 4>built on? And it seems like some of this land

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<v Speaker 4>is going to be more rural right in nature, So

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<v Speaker 4>I guess in places like California in southern California. That

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<v Speaker 4>might not be a you might not see a relief

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<v Speaker 4>in home prices really soon because of this, but it

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<v Speaker 4>does make me think like they're if you've been following

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<v Speaker 4>kind of what's happening in Austin. Austin has rolled back

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<v Speaker 4>the red tape when it comes to the how much,

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<v Speaker 4>you know, how much it takes to get done, to

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<v Speaker 4>get some things built. They've basically made it easier to

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<v Speaker 4>build multi family units on single family residential lots that

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<v Speaker 4>were formally formally sowed for single family and it's been amazing.

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<v Speaker 3>Austin's been a boom town.

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<v Speaker 4>I was just their last week and they're putting up

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<v Speaker 4>apartments right and left, and already rents have declined twenty

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<v Speaker 4>two percent from like what I'm calling peak Austin just

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<v Speaker 4>over a year ago.

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<v Speaker 3>So this boom and building when we really do.

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<v Speaker 4>Kind of cut back and roll back some of this

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<v Speaker 4>red tape, when we increase supply, it's amazing how incredibly

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<v Speaker 4>expensive Austin was becoming. But when we just make it

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<v Speaker 4>easier for people to build units, which is far from

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<v Speaker 4>the case here in the state of California. When we

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<v Speaker 4>make it easier for people to build for builders to

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<v Speaker 4>get in there. They you know, it might be the

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<v Speaker 4>person in the single family home next door might say,

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<v Speaker 4>I don't really want a quadplex next door to me,

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<v Speaker 4>because that's that's the NIMBI movement, right not in my backyard.

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<v Speaker 4>I don't want that thing next door. But ultimately it's

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<v Speaker 4>it's best for all of us, and it might not

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<v Speaker 4>be as productionary to your home price, but it's going

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<v Speaker 4>to be better for young people who are trying to

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<v Speaker 4>their first home.

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<v Speaker 1>Let's go back to what we were talking about last segment,

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<v Speaker 1>about this idea of an approaching recession. How much of

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<v Speaker 1>the pie is the housing market in the assessment in

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<v Speaker 1>the health of our economy.

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<v Speaker 4>Yeah, I mean the housing market matters a lot. And

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<v Speaker 4>what happens with the housing market is also anybody's guess.

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<v Speaker 4>It's because we have that lack of supply just overall,

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<v Speaker 4>but then a lack of people putting their homes on

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<v Speaker 4>the market because when you have a two point eight

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<v Speaker 4>to seventy five percent mortgage, even if you want to move,

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<v Speaker 4>you don't because you don't want to buy something else

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<v Speaker 4>with a seven percent rate. And so the real estate

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<v Speaker 4>market's kind of been on lockdown in some ways, and

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<v Speaker 4>it's kind of kept prices high. But at some point

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<v Speaker 4>people are going to get used to these seven percent

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<v Speaker 4>rates because I think the I think the three percent

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<v Speaker 4>rates were essentially a vanishing thing, Like I don't think

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<v Speaker 4>we're going back to that era. A lot of real

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<v Speaker 4>estate agents have been telling people buy the house, date

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<v Speaker 4>the rate, that kind of thing, and it's like, well.

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<v Speaker 3>I don't know.

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<v Speaker 4>You don't want to land on or bank on the

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<v Speaker 4>fact that you're going to be able to refinance next

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<v Speaker 4>year at a five percent rate, because that hasn't materialized,

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<v Speaker 4>And I'm worried about people planning in that way and

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<v Speaker 4>not being able to and being stuck with a higher

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<v Speaker 4>than the mortgage than they can actually afford.

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<v Speaker 3>So be careful on that front.

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<v Speaker 4>But yeah, what happens with the housing market, I could

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<v Speaker 4>see a slide in prices, especially the longer we're in

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<v Speaker 4>this era of seven percent rates, the stickier that is.

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<v Speaker 4>At some point people just say, I have to move,

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<v Speaker 4>I've got to go somewhere. More people are listing their

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<v Speaker 4>homes and we could see I think the predictions for

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<v Speaker 4>housing price increases this year are essentially non existent. And

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<v Speaker 4>if you think just a few years ago, when how

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<v Speaker 4>home prices were rising like wildfire like that era is.

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<v Speaker 1>Over last question, Joel, and I think you kind of

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<v Speaker 1>tipped off where I was going with this. I wonder,

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<v Speaker 1>given that interest rates for real estate purchasing real estate

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<v Speaker 1>will probably never go back to the three percent as

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<v Speaker 1>you see, I thought it was artificially deflated because of

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<v Speaker 1>COVID and other issues.

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<v Speaker 2>Those days are gone.

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<v Speaker 1>When I bought my first place back in I don't know,

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<v Speaker 1>two thousand and three was like a seven percent interest rate,

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<v Speaker 1>so that.

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<v Speaker 2>Is normal for me.

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<v Speaker 1>But having said that, have we also changed in the

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<v Speaker 1>sense that the idea of the American dream and using

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<v Speaker 1>homes purchase of real estate as a way of generating

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<v Speaker 1>wealth in a generational sense?

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<v Speaker 2>Is that time also gone?

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<v Speaker 3>I kind of hope so.

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<v Speaker 4>And it's not that I'm against people having value creation

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<v Speaker 4>in their home. It's kind of a force method of savings.

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<v Speaker 4>And you know, when you think about the average Americans networth,

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<v Speaker 4>the substantial amount of it is tied up if they're

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<v Speaker 4>a homeowner in the value of that home.

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<v Speaker 3>Especially if they bought a decade ago.

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<v Speaker 4>But I think, especially now, when you look at the

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<v Speaker 4>discrepancy between what you're going to pay taking out a

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<v Speaker 4>mortgage on that new house versus the rent you would

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<v Speaker 4>pay for something similar. The GAP's never been wider. And

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<v Speaker 4>so I get the desire to own your own place.

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<v Speaker 4>And I don't want to tell people who want to

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<v Speaker 4>do that that it's a bad idea, because I don't

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<v Speaker 4>think it's a bad idea. I just think you have

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<v Speaker 4>to be aware. You've been taught for so long, we've

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<v Speaker 4>kind of been brainwashed that buying the home that's the

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<v Speaker 4>next step to adulthood, that's the next step to wealth building.

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<v Speaker 4>And I think for a lot of people, renting can

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<v Speaker 4>be a great step to wealth building because you're really

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<v Speaker 4>minimizing your monthly outflow and renting for longer can make

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<v Speaker 4>a whole lot of sense, especially if it allows you

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<v Speaker 4>to invest more of those dollars. Think about what you

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<v Speaker 4>would have spent on the mortgage. Just price it out.

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<v Speaker 4>I was looking at a house in this price range

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<v Speaker 4>at this interest rate, what would I be working over?

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<v Speaker 4>And think about what you're working over in rent right now.

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<v Speaker 4>See what the gap is. If you can invest that money,

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<v Speaker 4>you're going to come out ahead over time. And so

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<v Speaker 4>I do think, yeah, renting is kind of undervalued. It's

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<v Speaker 4>and I hope that kind of the discussion around renting

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<v Speaker 4>versus home buying is changing, because I think it's not

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<v Speaker 4>only possible, but it might be easier to build wealth

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<v Speaker 4>as a renter these days.

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<v Speaker 1>Real quickly, we didn't have time to get to it,

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<v Speaker 1>but we also had the opportunity to possibly talk about

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<v Speaker 1>how Harvard had just announced that tuition will be free

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<v Speaker 1>for families making less than two hundred thousand dollars a year.

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<v Speaker 1>I only bring that up because that's usually a consideration

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<v Speaker 1>for families usually taking out a second mortgage or pulling

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<v Speaker 1>out equity of their house to send.

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<v Speaker 2>People to college. What about that? Then you lose that

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<v Speaker 2>option as a renter, don't you.

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<v Speaker 3>Well that's yeah, you lose that.

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<v Speaker 4>But you got to then funnel some of those money,

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<v Speaker 4>those investment dollars into like a five to twenty nine.

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<v Speaker 3>Account plan ahead for your kids' school.

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<v Speaker 4>But the thing is, I think five to twenty nine

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<v Speaker 4>accounts can be great, but I think they also might

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<v Speaker 4>be They might be over considered too if you're not

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<v Speaker 4>saving enough and investing enough for your own retirement. The

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<v Speaker 4>five twenty nine is a great plan. It's gotten more flexible.

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<v Speaker 4>Just don't prioritize that above your own saving for your

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<v Speaker 4>own future because they're scholarships available. And look at what

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<v Speaker 4>Harvard just did, and look what other schools are doing.

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<v Speaker 4>It's actually the sticker price of college has gone up,

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<v Speaker 4>the actual price people are paying has gone down. That's

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<v Speaker 4>something that hasn't been talked about very much. There's kind

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<v Speaker 4>of data about the post discount rate, and so it's

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<v Speaker 4>actually getting less expensive to go to college these days.

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<v Speaker 4>So the first time in a long time. Part of

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<v Speaker 4>that's the COVID factor, right, that people are just not

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<v Speaker 4>going to college in the same numbers as they were,

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<v Speaker 4>and so it is putting downward price pressure on a

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<v Speaker 4>higher education. I think that's a good thing, and I

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<v Speaker 4>think it's good that people these colleges are prioritizing free

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<v Speaker 4>education for people who don't make ridiculous sums of money.

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<v Speaker 1>How to Money with Joel Larsguard airs every Sunday from

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<v Speaker 1>twelve to two pm. You can find Joel Larsguard at

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<v Speaker 1>how to Money Joel. Joel has been way too long.

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<v Speaker 1>Hopefully we get to do it again sometime soon.

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<v Speaker 3>For sure, let's do it mo