PODCAST: “The Importance of Discipline in Long-Term Investing: Lessons from History” – Episode 39

COT 39 === [00:00:00] Jeff Kikel: Good morning, folks. Welcome to the sense of things. It’s Jeff and Ron here once again, and we are kicking off another week. This week was an interesting week, I

think, from an economic perspective and a lot of things going on there. We have a very unique Florida man story that I’d been holding over the last couple of weeks.

Jeff Kikel: So we will we will cover that a little bit. And then Ron’s got some stuff on really long term investing today. Ron, how you doing,

Ron Lang: bud? Good jeff. Yep. As we always say never a dull moment. Especially with tax season winding up, earnings Which has been interesting, good news is bad news.

Ron Lang: Bad news is good news and guidance but seems like there’s a lot of beats but

a lot of beats based on revised [00:01:00] down guidance from revised down guidance,

so we’ll have to see how things pan out q1 But perhaps we’ll see a little bit of moderation

at this Jeff Kikel: point. Yeah. Yeah. It was interesting. Jeff Kikel: I, cause I watch, I monitor briefing. com and I’ve got a workspace that I built

on there where it, it has like economic data and then it’s got an earnings. Just literally

it’s an earning sleeve that just watches earnings as it comes through. And it was interesting

over the last couple of weeks watching the earnings, the, I guess the thing that I will

say is beyond the big. Jeff Kikel: Household name companies. There is a lot of earnings revisions upward on some

of those, what I would consider that second tier of companies, where they’re reporting

and they’re, they had a beat and then they’re actually reporting, Hey, we’re probably going to have a better, 2024 than we had 2023

Ron Lang: and a lot of those have low debt. Ron Lang: Again, the ones that are [00:02:00] leveraged that are struggling with profitability

are going to be SOL in the next 6 to 12 months. Jeff Kikel: Yeah, no, totally agree. Let’s kick off. I have a I have a Florida man. Cannot

wait to to give this Florida man story. It was awesome. Let me just cue it up here.

Jeff Kikel: So we have our Florida man. Oh yeah. This is a, an imported Florida man on

top of it. So I think this was the good part. I was I was watching this on a TV show or

on a news show and they were talking about this guy and I had to go in and do a little

research. Apparently Florida now is importing Florida men and this gentleman is from New

York. Jeff Kikel: I believe he claimed asylum and and went into Florida, but apparently what

happened Was he they were having some high waves and [00:03:00] surf and all that. So

they had closed the beach. The big sign says no trespassing, do not come in. And he decided

that he was going to drive on the beach. Jeff Kikel: They ended up having to go in and rescue him and his, this is the greatest

thing ever. His response was. Not my fault. The truck don’t surf. So Ron Lang: it looks like he had a good night’s rest.

Jeff Kikel: Apparently of course he whacked his head pretty good, apparently in the process,

driving his truck out onto the beach, but I felt like, we we had to share this Florida

man import now, so they didn’t have enough Florida man stories. Jeff Kikel: They needed to import some folks from out of state to improve. The Florida

man stories for all of us. Unbelievable. Ron Lang: Look, it shouldn’t surprise either one of them, but the sad thing is this person

has been living among us for how many years, Jeff Kikel: he’s probably in his mid fifties or so. So it’s amazing that he hasn’t he hasn’t

been a Florida man story before this time. Jeff Kikel: Oh Ron Lang: [00:04:00] my goodness. All right. So I got a couple of fun things. We could

do one of these every week, but I like to look at this because when you’re running a business, are you making. The right decision, the wrong decision, just over time is just,

you want to make a hell of a lot more right decisions and wrong decisions. Ron Lang: So I chopped this down a little bit on some of the details, but 1962 Decker

records fails to see the talent and potential in a band. And why did they reject the band?

There were two main executives. One of the executives said, guard guitar groups are on the way out. Which band was that?

Jeff Kikel: No clue. Come on, Ron Lang: figure it out. Ron Lang: How to be those, the Beatles. Because the guitar

Jeff Kikel: groups are on their way out. They’re on their way out. Yeah. Yeah. Because Cla Ron Lang: Clare Clarinets and big cellos are the way of the future . Now I also heard a

story too. I don’t know if you remember Jack Kent Cook. Okay. Jack Kent Cook, who was born

in Canada [00:05:00] loves hockey. Ron Lang: Advise the right to an expansion team in Los Angeles. This research had determined

that there were 300, 000 Canadians living within a three hour drive from the arena. They did have some initial problems. The team and ticket sales were very sluggish for many

years and couldn’t figure out why people Weren’t coming out to see the team Yeah, so he was

digging into it a little bit and this is what he figured out after further consideration He stated the reason why canadians weren’t showing up for his team.

Ron Lang: Now. I know why they left canada That is Jeff Kikel: awesome Yeah,

Ron Lang: they hate hockey. So you had to

Jeff Kikel: import Wayne Gretzky to actually make people excited about hockey and Ron Lang: He already sold the team by then, the funny thing, and he sold it to another

crook Bruce McNall. But rather ironically, there is a tie here with the Beatles. Ron Lang: There’s a story slash rumor, but I’ve seen it in a few different places that

when the Beatles were [00:06:00] getting popular. And they were starting to get we’re, more

global. They needed a distributor because it was Apple records in the UK. Yeah. They

needed a distributor in the U S Jack Kent was offered to do it.

Ron Lang: God, he didn’t like rock and roll music. So capital records took that contract

on. Yes. Yeah, bad decision. Jeff Kikel: Schmuck number two. Schmuck twice over. I believe he he liked the cello music

coming from Decca Records. Don’t forget the clarinet solos. Yeah, that’s true. Yeah, clarinet

solos. So Harry James is making a comeback. Jeff Kikel: Maybe a little bit of Dixieland jazz. 1920s Dixieland jazz, too, on top of

it. Of course. Those were the more enjoyable. Ron Lang: All right, I’ll let you get to your economic

Jeff Kikel: stuff. Let’s take a look here at economics, because it was an interesting week. I’ve been calling this the tale of two cities this week, we had earlier in the week

and I’ll go to that first[00:07:00] core CPI, it was interesting because it The the expectation

had been 0. Jeff Kikel: 2 and January CPI came in at 0. 3. And it was a real kind of a shock to the

market. It doesn’t seem like a big difference, but, in the case of CPI, it’s a really big difference and a dramatic difference. And this, it was funny because. Ron and I have

been talking for literally months on end about, everybody saying, Oh in March, they’re going

to, the Fed’s going to start lowering interest rates and all that. Jeff Kikel: And this was like the shock to the system that maybe not, it’s, there’s no

real reason. And in fact the core CPI is actually moving the opposite direction. It headed back

up to 3. 9 percent on the year over year basis. If it’s not moving in the direction that the

fed would want it to be able to say, Hey, we’re going to start putting, putting the brakes on a little bit.

Jeff Kikel: And, I think what it did [00:08:00] more than anything from my perspective is it just told the story of. How little control the Fed has on inflation right now, because

The government keeps plowing money into the markets and keeps spending and spending And

it’s you know, it’s counteracting any of these interest rate raises. Jeff Kikel: What’s your thought on that ron? Look,

Ron Lang: The key spending that they have been doing is in infrastructure and that’s not going away Over the next 10 years. I mean for the last administration current administration.

We all know And I see it around me. I don’t know about by you, a lot of paving of the roads and still some potholes we got to fix, but there’s still, even on the highways that

are, they’re resurfacing highways, so all that is going on. Ron Lang: Really what it comes down to in the spin from the current administration,

which is what they have to do is inflation is coming down. Okay, but specifically what

I don’t know about you and I think we may have brought this up Try and go for a lunch

at a restaurant a burger [00:09:00] or whatever and spend less than 15 or 20 bucks Breakfast

is eight to ten dollars. Ron Lang: No matter where you’re going if you’re lucky, dinner I, forget about a steak

dinner, lobster dinner, whatever, just even a spaghetti dinner will cost you 25, 30 bucks.

So I was going off before COVID. Yeah. Now it’s just gotten to the point where these

restaurants say food costs are just too darn high. Ron Lang: We can’t make any money unless we charge this, I saw somebody say, why do you

charge 16 for a bacon, lettuce, and tomato sandwich? It’s bread, it’s lettuce. It’s a

couple of slices of bacon and tomato. But do you understand what our costs are? My overhead

every month or my rent every month is 20, 000. Ron Lang: My response to him is if you’re selling bacon and lettuce and big BLT sandwiches.

And your rent is 20, 000 a month. I think it’s time for you to move. Jeff Kikel: Yeah, no kidding. You need to find a, you need to find another building

at that point. And the challenge is, [00:10:00] rents are through the roof. Jeff Kikel: And I think, that was the big part of the CPI number. If you really dug

into it a lot, it was food costs. It was housing cost is through the roof. It is continued

to, just go up and up and that’s. Not only the physical cost of housing, but all the

related pieces of it, insurance costs are going through the roof. Jeff Kikel: All the other components of that are going through the roof, I and I don’t

see that coming down anytime soon. We certainly are in a more volatile time as far as weather

goes whether or not that’s global, whatever you call it, cooling, warming change. I don’t

care. Whatever you call that, we’re in a more volatile weather period right now.

Jeff Kikel: It’s, I don’t think that’s a surprise to anybody. And that’s having a pronounced

effect on, the insurance costs and everything else, and that ain’t going to come down anytime

soon. [00:11:00] The fact that we have wildly underbuilt, especially in the lower end of

the market. I went through a, I went to a due diligence meeting with a real estate fund

that I, I work with clients and, they were talking about just how wildly we’ve underbuilt.

Jeff Kikel: And the, what would be considered the starter home area of the market, for the last multitude of years, people, these homebuilders have been building, five, six, 700, 000 houses

when they should be building, couple hundred thousand dollar houses, they just don’t want to build money on them.

Jeff Kikel: Yeah, they don’t make as much money. There’s, in, in a lot of cases in towns like mine, there’s limited amount of. Of land so they’re gonna put the most expensive thing

on the land that they can get their hands off. Yeah Ron Lang: Look the greatest input cost you typically in a business is what labor?

Ron Lang: Yeah, so to just see what’s going on with labor [00:12:00] costs and wages and everything else I think I saw some stat in the last week that wage costs or wages Wage

increases have finally surpassed in inflation Meaning that wages are now trending ahead

of inflation But even so what it’s going to come down to at this pace We’re going to pay 10 to 15 dollars for a big mac in the next few years

Jeff Kikel: And then I saw some person running for Congress, I think out in california that

was recommending that we go to a 50 Minimum wage and yeah, Ron Lang: that’s I heard that yesterday.

Ron Lang: That’s not going Jeff Kikel: to happen. It’s just okay, so the Ron Lang: case go off the grid, do what you need to do in your town. Yeah,

Jeff Kikel: because it’s just Ron Lang: actually, I think it was San Francisco or northern California.

Jeff Kikel: Yeah that’s you. You need to have a 45 dollar Big Mac. In those areas, so

Ron Lang: if Jeff Kikel: you got it. Yeah. Tale of two cities, today, core retail sales.

Jeff Kikel: And this is a, [00:13:00] this is a chart through December of core retail sales. They’ve been holding up throughout that time period. And today retail sales negative

0. 8%. The estimate had been negative one or 0. 1%. So a big change. Better than expected.

Worse than expected at this point. Dramatically Ron Lang: worse. Ron Lang: It’s negative. It’s not as bad. It’s 0. 2 percent better than the estimate.

Not that’s saying a lot. Jeff Kikel: No, actually, it was negative 0. 7 or yeah, negative 0. 7 difference. Versus

the estimate. So yeah, it was way worse than was expected. So it’s interesting to see that

dramatic change now, that can be a volatile number and it can change and it’s, it, you

really want to look at it more on a quarterly basis, it was interesting to say, wow, a big

difference, I think the last thing that. Jeff Kikel: This one didn’t get a lot of press today. I haven’t, I, I always monitor the

press and [00:14:00] hear the, what the talking heads are talking about. This one really didn’t catch the newswire as much. It typically is considered a low market factor by briefing.

com. But it was interesting to see industrial production came in at negative 0.

Jeff Kikel: 1. And the estimate had been positive 0. 3. So another one, and this is in the,

this is in the manufacturing production sector a big tail off, and it’s been on the decline

for the last several months, it spiked up during 2021. And it’s just been on a, gradual

decline, and this just puts it back, another in the negative at this point, and it’s, I

believe. Jeff Kikel: It went negative and then pop back up and it’s heading back to the negative

side again, and this is something that we’ve seen not only in the, in this big picture

number industrial production, but we’ve seen this from the various feds, their manufacturing

indexes [00:15:00] have been negative pretty much for the last. Jeff Kikel: Year, year Ron Lang: and a half. I will tell you, we’re not going to, obviously we’re not going to

get into it, but I thought it was interesting. We’ve talked about the PMI number, which is the manufacturing number. And anything above 50 is positive. Anything below 50 is negative.

It was negative. The last three months went above 50 this past month. Ron Lang: So think about it. Production and capacity. Most of that is in manufacturing.

So how did PMI go up and production go down? Jeff Kikel: Yeah, it’s one of those things. It’s just it’s that initial thing where I

start to go. It’s interesting. We still need to continue to look at it, but I, once again,

we’ve seen it on a pretty much a consistent decline after that big spike up, we had that

spike down during 2020 with. Jeff Kikel: Covid and then the huge spike up, but it’s just been wandering its way down

into the negative. And the last thing I wanted to [00:16:00] cover this actually just came off literally an hour ago off of the news wires and this, I caught this off a NASDAQ.

From a Zacks investment article total Q4 earnings for the, for 369 of the S and P 500 that have

reported are up 5 percent or 5. Jeff Kikel: 8 percent from the same period last year and 3% higher, so earnings were

up 0. 5 percent or 5. 8%. Revenues up 3. 6%. With seven or 79. 1 percent beating earnings

per share estimates, 64. 8 percent beating revenue estimates. And, I think to Ron’s point

before off of, I think a lot of these companies had been pulling those numbers down, pulling

the estimates down so that they could blow out and have a, a blow out numbers.

Ron Lang: Yeah. I look. The one thing that this [00:17:00] doesn’t have and I’ve seen

different numbers is what is the specific number of those earnings and revenue top and

bottom line What percentage of that is the tech sector responsible? Yeah, I’ve heard

As high as 50 to Jeff Kikel: 70%. It’s that one last sentence.

Jeff Kikel: Yeah. The last sentence, the tech sector is solely responsible for keeping the Q4 earnings growth base in positive territory.

Ron Lang: I would just look at what percentage of that, obviously this is the majority. So more than 50, obviously, look, we always say, how long can this continue? The nice thing

about the tech, right? Ron Lang: What’s their biggest input cost? We all know it’s labor because it’s not manufacturing,

right? They got a lot of remote work and whatever, whatever. Maybe I know there is some manufacturing there with the hardware components and routers and whatever, but even they still have the

highest. Ron Lang: Revenue per employee and earnings per employee and there’s a reason for That’s

where the grudge where the growth is. It’s not in [00:18:00] fintech financial technology. It’s not in, Healthcare necessarily because they keep raising healthcare costs, but they’re

getting the same amount of people that they’re serving So, you know we can keep going we can keep digging down to that but you know again the tech sector How you know, is it

FOMO? Ron Lang: You get people going to keep putting money into the tech sector to keep it rolling or is it passive investing where? Set it forget it blindly just let it go should be interesting

to see some of these charts are looking a little ridiculous to say the Jeff Kikel: least Yeah it is. And you’re also seeing, I think the biggest thing I saw on

Monday, right now it’s the tech sector, but it’s also the tech sector that is putting

anything into AI, so they’ve got to start talking. Jeff Kikel: They have to talk about AI on every call. Otherwise they just get no bump.

As far as anything that’s going on and, the other part that I’ve seen, though, the biggest

ones that got hit hard on Monday [00:19:00] or on Tuesday, when the CPI name number came

out, or some of the high flyers in the AI space, so I think that’s starting to get frothier and frothier because people are just assuming that because they’re doing things with AI,

these stocks are going to go up like rocket chips and, some of them are just very unprofitable.

Jeff Kikel: Yeah at this point they’re not earning anything from it. Ron Lang: No, I agree All right. Let’s get in a little bit of long term investing. This

is always good fodder Unfortunately, we only have about less than 10 minutes to go through

some of this but you know what? Every chart we always say this every chart tells a story.

Ron Lang: So this is from our friends at first trust They always put together some good things And I thought was interesting if you look at it Over history, there’s always been a

recession every six to eight years. Just a typical economic cycle, the binge and purge

of credit. So if you wanna think about it, why after 1981 did [00:20:00] the recession

spread out more so than prior to 1980? Ron Lang: So I got a theory, I want to hear yours. Remember, prior to 1981, right? It

was only pensions for retirement. After 19 because it was originally initiated 78 the

401k section It didn’t become didn’t gain a little bit of traction, but it was only

a large corporations In the 80s. Yeah, so this is really where it started to gain traction.

Ron Lang: What happened in the early 90s? ETFs were introduced so between 401ks And

between ETFs which now ETFs if they’re not as big they’re bigger than mutual funds right

now Oh, yeah, it’s been much more passive investing So people are like, oh I got all

you know, where’s the majority of a lot of people’s wealth. Ron Lang: It’s in their house Or it’s in their retirement plan if they’re not over 59 and

a half, they can’t take their money out at an in service [00:21:00] distribution So it’s passive set it and forget it let it stay in there. So they’re not selling Obviously individual

stocks in their 401ks And if they roll their money over Yes, they could pick individual

stocks, but a lot of people are just invested And a lot of ETFs spread out the risk.

Ron Lang: So all this passive investing, yes, we got the the computerized investing, which

is 72%, 72 percent of the volume in the market, but overall the average investor is just in

funds, passive investing. So with a lot of what we’ve seen going on, despite all the crappy economic numbers and which way they’re trending, people can’t get in and out of stocks

like they did before. Ron Lang: If they’re in funds and ETFs, what are your thoughts on this kind of boom and

bust and bull and bear market? I think, Jeff Kikel: I think you’re absolutely right on that. It’s where you’ve got, and I wouldn’t

say just, passive investing. I would just say institutional investing more and more [00:22:00] people are just.

Jeff Kikel: Saying, okay, I’m going to follow the institutions and I’m going to buy index, or, I’m going to buy ETFs, which, a vast majority of ETFs are somewhat index based. It’s going

to follow whatever index it’s following the costs are extraordinarily low. I think both

of us. Jeff Kikel: Use ETFs as a core of most of our portfolios. I do some individual securities

and I do some individual credit securities inside of inside of my portfolios. But, the

core is mostly ETFs because I don’t, I want to be able, I want to be able to spread the

risk out. Without me having to go in there and pick, what stocks are going to be the

best ones out of a big index or something like that. Jeff Kikel: It’s just very difficult to do. There are, like I said, there are a few things

that I use to enhance a portfolio with individual securities. Ron Lang: So we got the, so this is a bit of a, recent history, 80 [00:23:00] years

or so. But, here’s the other thing too, talking about long term investing. Ron Lang: If you missed, certain amount of best days. So if you missed all the days,

no, I’m sorry. If you were invested all the days, if you invested 10, 000 in 79, so in

the last 44 years, essentially. You would be, if that 10, 000 would have grown the 1.

366 million, if you would have missed the best five days you would have been over 500,

000 less missing the best 10 days, 700, 000 and so on and so forth.

Ron Lang: So yes, we’ve seen some major escalator up elevator down, but if you just kept consistent

contributions and never got out of your high quality positions. Over the long term, it’s

going to work out for you. Jeff Kikel: Yeah. I, and it’s funny. I just I just got a copy of the Dalbar report, the

2023 Dalbar report which for those [00:24:00] of you that don’t know what that is Dalbar

since 1993 has done this study of individual investors.

Jeff Kikel: So basically the, the, Okay. Individual investor, the average return that an individual

investor saw. And it’s, it was very interesting. This, it actually was better than the previous

report, but but, it’s still ridiculous that the average investor, the S and P 500 over

that time period is up, close to 10 percent of the average investor. Jeff Kikel: 6. 2%. Yeah. And people would say that doesn’t seem like that much. When

you start to think of that over time, that’s 4 percent or, just a little under 4 percent

little 3 percent less when you start expanding that out over 10 2030 years, that is a dramatic

difference in wealth by not staying invested in the markets [00:25:00] by, not trying to

time. Jeff Kikel: What’s going on in the markets and everything else or making really dumb

decisions of I’m going to buy a, the things that did extraordinarily well this last year versus. Okay, what makes more sense, during that current market cycle?

Ron Lang: Yep. That’s why look as smart as we are And we’re students of the market can’t

pick the tops or the bottoms we can see when it’s over Extended yeah to one side or the

other but you know picking the top or the bottom is a fool’s effort Yeah, and then just looking over time, right of all the ups and the downs.

Ron Lang: You know since 1926 97 years, there’s been 72 positive years, 26 negative years.

So this just tells you if you stay invested, you’re good. And obviously if things are truly

overextended to one side, you could always trim. Yeah, you don’t have to get out. You could always trim. Last week we talked about using trailing [00:26:00] stops.

Ron Lang: Just another way to stay invested Yeah, don’t be a pig right bulls and bears

make money pigs get slaughtered you could take some off the top and always put it in

somewhere else All right at another time, but this is just another way of just showing facts. Don’t lie people can’t you know? This is actually what happened So if you just take

a look at history, right history may not repeat itself, but it does rhyme So, it’s important

to stay invested and it’s important to be smart about when you may want to take profits

and add more money to the market, but consistent contributions Jeff Kikel: over time.

Jeff Kikel: Yeah. And I would say the other two is making sure that you’re being disciplined about your asset allocation. Don’t let, it’s easy to let things run. It was interesting.

I, one of the positions that I’ve had is this, stock that was in that. That space of, artificial

intelligence and all [00:27:00] that. Jeff Kikel: And I had an option position in it and it was, the discipline that I have,

I, the stock got to, I think 96 percent or the option got to 96 percent and still look

like it had some run. And I just, I felt okay it’s run a lot. I’m not going to be a pig

about this. I sold it a couple of weeks back and earnings came out yesterday and it just

got pummeled, so it’s being sitting there and saying, okay I’ve let the S and P 500

run immensely, 2021, the top one on that right side of the chart, 28%.

Jeff Kikel: In 2022, you should be rebalancing your portfolio to rebalance out of, or take

some profit off the table at those points. It’s extremely important to be very disciplined

about your investing because you are going to have time periods where it will go the

opposite direction on you. Ron Lang: And if you notice where [00:28:00] the positive and the negative are, if you

just look at the two thousands, 23 years, only six were negative.

Jeff Kikel: But you also had some pretty, you look at 2021 up 28. 48%, 2022 down negative

18%, and so if you had left. If you left here, just this is the problem.

Jeff Kikel: I think, people think, okay it’s, I should stay invested. Yes. But you also need to make sure that you rebalance your asset allocation because. You can see, and

we’ve seen it, I think, in recent years. More and more where we can see a dramatic reversal

and you’ve got to balance that thing out. Jeff Kikel: You’ve got to pull some of that money off the table and put it into things

that haven’t done as well during that time period. And it’s interesting, 2022, I think

is a great example of it was hard to rebalance anything because you rebalanced into bonds

and bonds got whack that year [00:29:00] too, because, we saw interest rates go up.

Jeff Kikel: So it’s interesting. Ron Lang: Yep. Not only that, but just with the allocation, yes, you need money in the

top 10 stocks in the S and P, but how far weighted are you on that side of the boat? Yeah. Look, you’ve done well in the last couple of years. Things don’t go up forever. In 2020,

I’m sorry, 2019, 2020, 21, we were up double digits three years in a row.

Ron Lang: What made you think 2022 we were going to be up again? Yeah, just, it just doesn’t happen like that. But again, people got FOMO, they don’t want to be left out.

And they get greedy. It’s just the way it is. Jeff Kikel: Like I said, I think the biggest thing too is you’ve got that institutional

investor because people are just pouring money into 401k. Jeff Kikel: So that money has got to go someplace. People have been

Ron Lang: so spoiled, Jeff. Yes. A 5 percent pullback. They think is a [00:30:00] crash

today, a 10 percent pullback. They think it’s Armageddon, Jeff Kikel: but these are normal. Typically we have multiple times per year. Yeah.

Ron Lang: So I thought this was interesting because I was curious. Ron Lang: And when I read it, I’m like, Hey, we got to share it. Yeah. 5 percent typically

happens three times a year. How many times did we hear 10 percent is normal? Once, twice

a year, it happens, 10%. My point, and 15 percent is about every three years. But you

would think it happens more often than not with the volatility. Ron Lang: Yeah. So I just think that this is interesting. Markets got 3%. What’s wrong?

What’s wrong with the market? And did something happen? More banks go under what happened?

Jeff Kikel: Crazy. I think the other challenge is it’s on every single channel. It always

makes me laugh. But one of my factors is. Jeff Kikel: Of course, I watch financial news every single day. Of course, there and you

have, it’s so funny to [00:31:00] listen for, let’s say, about 4 hours straight and you’ll have 20 different opinions of these market experts. During that time period, I’m sitting

there this morning when when I was. Jeff Kikel: Picking up food for breakfast. I’m sitting and listening to the financial

news and there’s this guy on who he’s talking about the best investment over time is dividend

paying stocks and everything and. And I’m listening to him and then they’ve talked about,

what about the top seven, the nifty five, nifty seven, or, the magnificent seven or

whatever I haven’t been invested in any of them. Jeff Kikel: And I’m like so your performance has royally sucked for the last three.

Ron Lang: It’s essentially been flatline. Jeff Kikel: Yeah. Flatline. And one of the guys was like. Yeah, he has, the dividend

aristocrats have been, up about 1 percent for the last two years. Yeah, we’re about

risk management and all that. Jeff Kikel: Okay, risk management is one thing. You got to participate, dude. You can’t just

not be involved in [00:32:00] the tech sector because it’s risky. It’s risky not to be in

it. Inflation is going up 3 percent and you’re turning in a 1 percent return. That’s not good.

Ron Lang: No. If you’re conservative, hey, have at it. Yeah. The other thing too, people don’t realize prior to 1980, but definitely 1970 , on average, a profitable company would

pay back five to 10% dividend. Yeah. Yeah. Typically five to 10% annually prior to that

point. But with the advent of technology and growth stocks and biotech at, post 1980 with

hedge funds and and private equity. A two point half to 3% dividend is considered good.

Yeah. Jeff Kikel: It’s the s and p average is one point I think 1.72% right now for the s and

p 500, the top 500 stocks in the country, and the average dividend is 1.7%, which is.

Ron Lang: And they, and I understood look back in the day, they’re like look, we don’t want to pay a dividend or pay as much of a [00:33:00] dividend.

Ron Lang: Cause we’re still growing. Yeah. I get all that. But at the end of the day, they have, they have cash war chest that are unbelievable. And I think one of the, and

I think this is ironic and we can wrap it up. The number one, the greatest investor of all time, Warren Buffett. Loves profitable companies.

Ron Lang: And loves companies that pay dividends. Yes. Yes. He loves that. But guess what? His

company doesn’t, his stock doesn’t pay a dividend. Yeah. I’ve always loved he, I heard numbers

between 150 and 200 billion sitting in cash. Yep. Why? Why hasn’t anybody gone to him and

said, why aren’t you returning some of this to your shareholders? . But he looks at his performance for the last 60 years, which you can’t deny. But at

the end of the day, he would be returning dividends back to himself. I don’t under,

I’ve never understood that. I never heard him truly questioned and squeezed on that

question. I’m not really sure why.[00:34:00] Jeff Kikel: Yeah, it’s interesting. And then he’ll build up, it’s interesting. I heard

this statistic and it’s, it was interesting to me, Mr, hedge fund or, Mr I want dividends

and all that his largest positions outside of the companies that he owns is he does uncovered

puts. Jeff Kikel: Every single week, right? That’s what he does. That’s where he generates income

and he generates return off of that so that’s one of the one of the areas that he uses to

return better from that perspective Ron Lang: And another big investors will do deep in the money calls. Yeah, that’s the

other thing that they do. Ron Lang: Yep. That’s interesting, but that’s a good one for another Jeff Kikel: podcast. Absolutely. So next week on the show we’ll do our normal market roundup,

but we’ll also I’m going to do a segment like Ron did a couple of weeks ago on covered calls

and option strategies. That’s, my background for 30 years.[00:35:00] Jeff Kikel: I figured I would share some of those. Strategies with you guys that that

I use and Ron uses in his client portfolios but also I think it’s, interesting if you’re

managing your own portfolio we’ll look to do that next week. Thank y’all for being here.

As always, we appreciate it. Jeff Kikel: Give us a thumbs up if you like this type of stuff and certainly make sure

that you share your, your comments with us because we’d love to have a conversation with

you. So thanks a lot. And we’ll see you guys back here the very next time. ​