What is the Buffett Indicator Telling Us About Stocks?

00:00:00.000 | [music]

00:00:18.160 | Welcome back to Portfolio Rescue after a short holiday hiatus. We're back. I'm joined, as

00:00:23.440 | always, by Duncan Hill. Duncan, do you subscribe to the Larry David theory that you can only

00:00:28.080 | say "Happy New Year" three days after the New Year, or are you still saying it?

00:00:30.960 | Hill: I'm a little more weeny. I think you can say it for a week.

00:00:33.760 | Lewis: Okay. Alright. Remember, this is our show where we take questions straight from

00:00:39.320 | the viewers. So, if you have a question for us, email us, askthecompoundshow@gmail.com.

00:00:44.760 | We're also getting some good feedback. You might have missed it over the holidays. I

00:00:47.400 | think two days before Christmas, we had a show with Jonathan Novy talking about annuities

00:00:52.000 | and got some good feedback on this. I think it goes to the psychology of investing. We

00:00:58.400 | were talking about annuities. Jonathan made the point that when you put your money with

00:01:03.000 | an annuity, the majority of the time, you're getting your money back for the first 15,

00:01:08.560 | 20, 25 years. Looking at it that way, a lot of people emailed in and said, "I've never

00:01:13.120 | thought about it that way." You could say, "That's a terrible deal. I don't get returns

00:01:16.980 | until after my whole money is paid back." But a lot of it is just psychology. I think

00:01:20.880 | that's the whole thing about investing as it is. It's just so much depends on tricking

00:01:25.320 | yourself into sticking with a plan. It's not that annuities are good or bad. It's just

00:01:29.840 | it depends how much you need that psychological component to help you stay on course. It doesn't

00:01:34.760 | have to be all or nothing, but I just wanted to touch on that because we had a lot of comments

00:01:37.520 | on that, surprisingly. Annuities, hot topic. Who knew? Anyway. Alright, Duncan, let's go.

00:01:42.280 | What do we got?

00:01:44.040 | Okay. So, first up, we have a short and sweet one, but a very interesting one. Can you help

00:01:48.680 | me understand where we are with total market cap over GDP, the Buffett Indicator, and what

00:01:53.720 | this could mean for the market going forward?

00:01:55.480 | Alright, let's start with a definition here. Good question. In 2001, in an interview with

00:02:01.000 | Carol Loomis, Warren Buffett laid out the Buffett Indicator. It was just comparing the

00:02:05.240 | market cap of the U.S. stock market to U.S. GDP. He said at the time, I found this old

00:02:11.640 | piece, and he said, "The ratio of certain limitations and telling you what you need

00:02:15.520 | to know still is probably the single best measure of where valuations stand at any given

00:02:19.360 | moment." And as you can see, nearly two years ago, the ratio rose to an unprecedented level.

00:02:24.040 | That should have been a very strong warning signal. Now, that level was 150%. So, stocks

00:02:29.520 | were worth 150% more than GDP at the time. This is 1999, late '99, early 2000. The tech

00:02:35.320 | bubble had blown to epic proportions, and then it burst. And so, Buffett was looking

00:02:38.880 | back at it after the fact, saying, "Look, if we would have just looked at this level,

00:02:42.840 | everyone should have known. Stocks were wildly overvalued." Now, John, let's do a chart

00:02:46.200 | on it and see where we stand today. So, this is the Buffett Indicator today. You can see,

00:02:51.440 | today's value just dwarfed '99. '99 is 150%. We're now well over 200%, something like 220%,

00:02:58.280 | I think, on the Buffett Indicator. So, a lot of people think, "Well, wait. Buffett said

00:03:01.480 | this is the single best indicator of stock valuations, and now it's way, way higher."

00:03:06.240 | You can see, they drew like this, where I found this, they drew a historical trend line

00:03:11.040 | here, showing that it's just way off-trend. So, what is this telling us? Basically, the

00:03:15.880 | stock market is around $50 trillion right now. $23 trillion GDP. Stocks are worth way

00:03:21.200 | more than the economy. I do want to preface this with the fact that Buffett was asked

00:03:25.640 | about this again in 2017, saying, "Hey, you said this in 2001. What do you think about

00:03:29.640 | it today?" Here's what he said, and I quote this. "Every number has some degree of meaning.

00:03:34.120 | It means more sometimes than others. They can be important, meaning this valuation.

00:03:38.960 | Sometimes they can be almost unimportant. It's just not quite as simple as having one

00:03:43.440 | or two formulas and then saying the market is undervalued or overvalued." I think there's

00:03:47.080 | a reason Buffett kind of changed his tune on this one, because things have changed.

00:03:52.140 | The question is, you could be one of those people saying, "Every time I see a valuation

00:03:55.200 | higher than the past, I think bubble, bubble, bubble. Get out, get out, get out." Other

00:03:59.120 | people say, "Well, context is more important than anything." And I'm a context guy. But

00:04:04.240 | you still have to wonder, why is this happening? So, John, put this other chart on. This one

00:04:07.040 | is from J.P. Morgan, actually. And this shows the ratio of total U.S. financial assets,

00:04:12.120 | so this includes bonds and other assets, to GDP. And you can see, throughout the '50s,

00:04:17.080 | '60s, and '70s, and even '80s, it was kind of just staying in this band two to three

00:04:22.000 | times. Now it's shot up to 5.6 times GDP. So even if you say, "Okay, maybe this doesn't

00:04:27.040 | mean we're in an epic bubble like '99," what is going on here? How is this happening? I

00:04:32.600 | think there's some reasons, if people are worried about the Buffett indicator, to kind

00:04:35.760 | of put it into context. So the first one is easy. The stock market is not the economy.

00:04:40.480 | I think that's probably more true now than ever. I mean, just think about how powerful

00:04:44.000 | corporations are, especially now than they were in the past. Think about how important

00:04:47.520 | some of these companies were during the pandemic to keeping your life going, how big some of

00:04:50.880 | these companies are. Apple, and Amazon, and Google, and Microsoft are basically their

00:04:54.800 | own economies these days. And they're not just based in the U.S. anymore, like they

00:04:57.640 | were back in the '50s and '60s. These are global companies. So we're dealing with global

00:05:01.960 | earnings now. It's not just the U.S. John, let's do the next chart here. This shows the

00:05:07.200 | asset allocation by household to U.S. stocks. This is from an old post by the pseudonymous

00:05:11.480 | Jesse Livermore on philosophical economics. I come back to this often. This shows household

00:05:16.640 | allocation to equities. Now, you can see here where I circled. This is in the '70s and '80s,

00:05:21.760 | and the allocation to equities by households was like 25 to 30%. Very, very low. Then in

00:05:26.960 | the '90s, it finally shot up, and now we're back to those levels, but still like 50, 55%.

00:05:31.860 | So still relatively low. So the thing is, a lot of people just didn't own that many

00:05:35.480 | stocks in the past. And there was reasons for this. There was higher rates back then,

00:05:38.840 | and higher inflation. It was harder to invest. And then in 1978, we had the 401(k) plan was

00:05:43.140 | born. So pretty much before 1980, there was no such thing as a 401(k) plan. Target date

00:05:47.800 | funds are only 10 years old. Interest rates have fallen a ton. So it's easy to never be

00:05:51.520 | invested in stocks. So it makes sense. People are pouring money in all the time. Now we

00:05:55.440 | have 50 to 60% of the country that's invested in stocks, where back in the '80s, it was

00:05:59.200 | like closer to 20%. I put this out to some of my finance people to understand, what is

00:06:04.720 | going on here? A few of the reasons people gave were that we had this huge IPO boom in

00:06:08.560 | the '90s. And you think back to the '80s and '70s, you had all these private companies

00:06:12.400 | where all the wealth was tied up for rich people. Now all that wealth is in public companies.

00:06:16.560 | The richest people in the world all own public companies that they started, and they IPO'd,

00:06:20.880 | and they've seen all their spoils from that. Think of how many mom-and-pop shops used to

00:06:25.440 | be around that are now just Walmarts and Targets and Starbucks. And also, it would be hard

00:06:29.980 | not to mention globalization here. It's so much easier for foreigners to buy U.S. assets

00:06:33.760 | as well. So, it's more of a global world. I think you'd be foolish to say that stocks

00:06:39.240 | aren't way above previous valuation levels at any valuation metric you're looking at

00:06:44.960 | now. But I think trying to compare that number to '99 and say it's exactly the same thing

00:06:50.440 | is tough. And even Buffett himself has said he's not quite as worried about it. And maybe

00:06:54.040 | you need some context with these things, especially as the markets and environment change. Duncan,

00:06:57.680 | have you heard of this one before? Buffett Indicator?

00:07:00.000 | Duncan: No. This was a new one to me. That's why I was asking the chat if everyone had

00:07:03.480 | heard of it before. So, yeah. Interesting stuff. I didn't realize that Target date funds

00:07:08.680 | were that new. I thought that you were investing in them as a kid. I thought that was the jerk.

00:07:11.880 | Lewis: Well, they've been around, but it's probably only been eight to ten years ago

00:07:14.720 | that they were set as a default option for 401(k) plans. So now there's $1.5-$2 trillion

00:07:19.720 | in these things, and they're automatically being invested and then rebalancing. I just

00:07:24.560 | think this wave of money that is so just on autopilot now didn't exist in the past.

00:07:30.000 | Buffett Indicator? Yeah. No, that makes sense.

00:07:32.160 | Lewis: Alright, let's do the next one.

00:07:33.840 | Buffett Indicator? Cool. The next one is one that everyone's talking about right now, which

00:07:37.600 | is buying a car right now. I'm a first-time car buyer, and I've noticed that the prices

00:07:43.080 | in New York City are insane. A Toyota RAV4 costs as much to lease as a BMW with the markup

00:07:49.240 | on these vehicles. I feel like it's almost impossible to justify purchasing right now.

00:07:53.040 | Any thoughts on what to do in this environment and what figures one should calculate to ensure

00:07:56.520 | a fair deal? Leasing terms are confusing, and I would appreciate any guidance you could

00:08:00.440 | share.

00:08:01.440 | Lewis: Alright, and this is not just new cars. I think used cars are probably even crazier.

00:08:05.840 | So, John, let's do a chart on used cars. This is the CPI index for used cars and trucks.

00:08:10.920 | Look at that jump. It's insane. I recently had to turn in a lease at the end of last

00:08:16.560 | year, and the value they put on our used car that was three years old was more than we

00:08:21.680 | paid for it. So, brand new. The used car value was more. Three years later, after all three

00:08:26.160 | of my kids demolished the car, they still gave us more than we paid. That's because

00:08:31.200 | new car prices have gone up. I want to get into the lease versus buy deal first, because

00:08:37.240 | personal finance people are going to hate me, but I've been leasing my car for the past

00:08:40.600 | six years or so. This would have been sacrilege to 25-year-old Ben.

00:08:43.920 | O'Reilly: People get really worked up about this.

00:08:45.640 | Lewis: Yes, people do. I want to give my reasons why I lease first. One of them, I just mentioned

00:08:50.640 | I have kids. They destroy my car. Cheerios and goldfish in every crevice of my car. I

00:08:56.960 | like car companies taking that risk instead of me. I'm not a huge car person. I don't

00:09:01.040 | get a high-end model, but I do like to drive a newish car every few years. I think new

00:09:04.960 | car smell is one of the top five smells in the world. I mean, easily. Duncan, right?

00:09:09.440 | I think technology is improving so fast in these cars that it's almost like averaging

00:09:13.780 | up in bonds with rising rates. You're getting better technology every time you get a new

00:09:17.400 | car. The other thing is, I don't put a ton of miles on my car. My office is like five

00:09:21.340 | minutes from my house, so I'm not driving it a ton. It's a lower payment than if I bought.

00:09:25.420 | I know this is factored into it, but I'm not going to own the car and drive it past the

00:09:29.320 | date of the loan, which makes sense for a lot of people in terms of owning a car.

00:09:33.520 | I've driven a ton of used cars in the past. They all cost way more money for upkeep and

00:09:38.060 | maintenance and repairs. I've gone through alternators and transmissions and new tires

00:09:41.880 | and radiators and new brakes and all this stuff. You name it, I've probably replaced

00:09:45.920 | it and spent way more money than I ever would have thought. So that's one of the reasons

00:09:49.920 | I lease. I understand why people buy and own a car for the long term. If you don't have

00:09:53.280 | a car payment, if you own it past the length of the loan, you're essentially giving yourself

00:09:59.000 | free monthly payments. I get that.

00:10:01.700 | But there actually has been someone who did the numbers on this. So this guy, Jesse Kramer,

00:10:05.600 | emailed us into Animal Spirits and we talked about this a few months ago. He wrote this

00:10:09.440 | blog post called "The Cost of Car Ownership." He decided to break down what is the break-even

00:10:14.600 | level here. When does it matter if you're buying a car and what are the things that

00:10:18.640 | you want to look at? Here's a few of the factors that he said matter. How long you drive it.

00:10:22.680 | So of course, the longer you drive it, the more you want to own. The shorter you drive

00:10:26.080 | it, the lease makes sense. He said cars typically depreciate 10% per year. I think 10% when

00:10:31.640 | you drive it right off a lot, which good luck with that. He said the average cost of owning

00:10:36.520 | a car, if you wanted to do this yourself, is in the range of 35 to 65 cents per mile

00:10:41.580 | over the life of a vehicle. That includes things like registration, insurance, gas,

00:10:45.560 | all this other stuff, maintenance.

00:10:46.560 | He said when you add in all this, the gas, registration, insurance, maintenance, you

00:10:50.320 | could be looking at an all-in cost over the life of a car if you drive it to 100,000 miles

00:10:55.680 | of, say, $90,000 versus a $30,000 vehicle. He said that there's probably like a 5 cent

00:11:02.240 | per mile premium for leasing versus buying. But the upside is totally taken away if you

00:11:07.440 | have a catastrophic repair and maintenance, you know. So anyway, I think right now is

00:11:12.440 | probably the hardest time to buy a car. And if you want to find one thing in the economy

00:11:16.560 | that could be transitory for inflation, I think it has to be cars. Because there's a

00:11:20.320 | reason there's so few cars on the lots when you go to look for inventory. They can't produce

00:11:24.560 | enough of these chips anymore to get the cars off the lot. So they have all these cars.

00:11:28.760 | I know this in Detroit. They have all these cars sitting there ready to go on the lots,

00:11:33.620 | but they don't have any of the technology to put in them to make them function, basically.

00:11:38.060 | So eventually when that happens, you're going to see a lot of this come off the inventory.

00:11:40.680 | And this is one of the reasons used cars cost much right now, because there's just such

00:11:44.040 | a lack of inventory for new cars. So I think you have to ask yourself, like, are you going

00:11:47.800 | to drive a lot? Do you want to trade up to a car every few years? Do you plan on driving

00:11:51.560 | it well past the time it's paid off? That's the only reason it makes sense to buy. If

00:11:55.600 | you're going to take out a six-year loan and get a new car in five years, owning it doesn't

00:11:59.800 | seem to make sense, because you get a lower payment with a lease. I will say this. It's

00:12:02.920 | really difficult to negotiate right now, because inventory is so low. So you're probably going

00:12:06.160 | to have a hard time finding exactly what you're looking for. If you can put it off, I would

00:12:10.040 | probably wait. It's one of those things where if you wait to buy a house, maybe in a few

00:12:13.440 | years you're going to have a hard time finding it at a lower price. But with a car, I think

00:12:17.560 | that's reasonable to think. So if you can wait, I think it makes sense. Duncan, do you

00:12:20.800 | have a car in New York? Yeah, I do. Parking for you probably costs more than your monthly

00:12:26.000 | payment, right? Well, we street park, so we just have to move the car every week for all

00:12:31.600 | street parking in the middle of the day. It's a mess. It's terrible. I hate it. We looked

00:12:36.960 | for one for my wife, and the lot was empty. Usually you go inside one of these dealerships

00:12:42.080 | and it's full of cars. You can look at the new models, and they're spiffy and brand new.

00:12:45.640 | There were zero cars inside the actual dealership. It was empty. It looked like the place had

00:12:48.800 | been ransacked. So yeah, I think it's a really hard time. I think if you can wait, it probably

00:12:53.200 | makes sense. Yeah, it seems like it, with all that in mind.

00:12:56.920 | All right, let's do the next one. Okay. Up next, we have a long one, but a good

00:13:02.680 | one. I think a lot of people will benefit from this. What's the difference between a

00:13:06.600 | wealth manager, a financial advisor, a premium banking/brokerage rep, and an accountant?

00:13:12.000 | How does one know which of these they need? For instance, I've been pitched by financial

00:13:15.260 | advisors before, but never really considered it. I'm in my 40s and have a middle to upper

00:13:19.240 | middle income. Could someone like me benefit from an advisor? What about an accountant?

00:13:23.680 | Should I not be ignoring the calls and emails I get from premium division units of my bank

00:13:27.840 | and brokerage? Are there other types of financial services that a person like me ought to consider?

00:13:33.760 | The gist of this question is basically, when should you seek out help from a financial

00:13:37.760 | professional, and then how do you gauge which one to use? I think a lot of that is circumstantial,

00:13:41.960 | but I have some thoughts here. I wanted to bring in an actual financial advisor to help

00:13:46.360 | here because she's dealing with this on a daily basis. Blair Duquene, who's been on

00:13:49.560 | the show before, is going to come help. Blair is dealing with clients on a daily basis,

00:13:54.940 | her current clientele, and then prospects as well. Blair, if you had to sum it up in

00:13:59.840 | four or five different buckets, I guess, what are some of the main reasons people come to

00:14:03.960 | you for financial advice? What gets them to make a decision to do this?

00:14:10.400 | Yeah, absolutely. I think the number one reason not to hire a financial advisor is because

00:14:15.400 | somebody is trying to sell you on their financial services. That is not a reason. We do see

00:14:20.320 | a few reasons for why people want to have a professional helping them out with those

00:14:26.080 | financial decisions. There's really no magic age, no magic net worth, no magic circumstance

00:14:32.020 | in which you must hire a financial advisor. In fact, Vanguard found years ago that 25%

00:14:36.960 | of investors are already do-it-yourselfers and they do just fine. Today, there are plenty

00:14:41.560 | of tools and software out there where if you are that do-it-yourselfer, you can probably

00:14:46.200 | make it all the way through. It's a matter of preference. With TurboTax, I could do my

00:14:51.380 | own taxes. I prefer not to. I see many high net worth investors still doing their own

00:14:55.600 | taxes and they're not really making mistakes. At the end of the day, you may be one of those

00:15:00.160 | people who never needs financial advice. Here are the reasons that we see people coming

00:15:03.840 | to us. The number one is their life has become too complicated. They're too busy. Working

00:15:10.160 | parents fall into this, busy professionals. I've seen people with cash just piling up

00:15:14.320 | in their bank account simply because they didn't have time to invest it. If things are

00:15:18.360 | just becoming overwhelming from a time perspective, that's when an advisor can come in and make

00:15:22.720 | sure that they're taking care of that for you. We all have administrative duties, whether

00:15:26.760 | it's work, family, household chores, and all those administrative items, especially finances

00:15:31.480 | seem to get pushed to the back. If it's not getting done, that's probably a good reason

00:15:35.200 | to look out for help.

00:15:35.960 | Maxwell: I think people like us in finance probably take for granted that some people

00:15:39.400 | just don't care about this stuff as much as we do. We pay attention to this stuff on a

00:15:43.160 | daily basis. Some people, it's like watching paint dry. They just don't care and they would

00:15:46.520 | rather outsource it to someone, right?

00:15:48.720 | Craig: Exactly. Another reason that people come to us are major life changes and events.

00:15:52.840 | Marriage, birth of a child, divorce, death of a family member or spouse, even personal

00:15:57.360 | health issues. Those reasons can trigger wanting to bring in an outside professional to help

00:16:03.560 | with a more complicated situation. Maybe the spouse has died. They used to handle the finances.

00:16:08.480 | Those types of reasons are pretty common.

00:16:11.000 | Another one that we're seeing a lot recently are retirees who are sick of spending the

00:16:14.520 | time to do it themselves and they want to hand that over and go and enjoy their life.

00:16:19.480 | It's really just taking up too much time. They don't want to watch CNBC anymore. They're

00:16:23.120 | tired of being tied to the markets and so they want to come in and bring a professional.

00:16:27.400 | Then I think the last one is really the people who know that for behavioral reasons, we all

00:16:34.200 | succumb to fear and greed and emotions, but there are some people that just know themselves

00:16:38.720 | and they know that they are going to need an advisor to help them not make a mistake.

00:16:43.040 | That can pertain to anybody at any income level, any asset level, at any age. Unfortunately,

00:16:48.960 | sometimes it takes making mistakes for people to really have that realization about themselves.

00:16:53.640 | It doesn't apply to everybody, but there are some that really do value that behavioral

00:16:58.360 | component that an objective professional can provide to them. Those are common reasons.

00:17:03.880 | Yeah, some people aren't ready until they do make those mistakes and they realize, "Okay,

00:17:07.080 | I need to get my hands off the steering wheel."

00:17:08.320 | I think another one, a good one is, especially even for those DIY people who have all the

00:17:12.360 | tools today, if they have the rest of their family, so they're planning for their kids

00:17:16.120 | or their spouse that doesn't pay attention as much as they do, especially as you retire,

00:17:20.760 | "What happens if something happens to me? What if I get hit by a bus tomorrow? Who's

00:17:24.400 | going to handle the finances for my family?" I think that's another thing where it's almost

00:17:27.800 | like a backup plan where you have someone waiting in the wings to help out if you can't

00:17:32.240 | do it anymore.

00:17:33.240 | Exactly. I mean, I just traveled with my husband together on a plane. We left our children

00:17:37.800 | behind and I realized I needed to write down a list of just in case. Yes, there are people

00:17:43.840 | that have the foresight to say, "I'm handling this for the whole family. If something were

00:17:48.120 | to happen to me, that's a big risk. Let's go ahead and bring in an outside objective

00:17:52.600 | professional advisor to help us out with that."

00:17:54.560 | I think if my wife and I were on a plane and it went down, the number one thing my kids

00:17:58.240 | would be looking for is who can get them a snack fastest because that's what they see

00:18:01.800 | is my job for them is who can get them a snack. All right, let's do one more question here,

00:18:06.520 | Duncan.

00:18:07.520 | Okay. Last but not least, question about 401(k) loans. If I have $40,000 in my 401(k) and

00:18:13.480 | choose to take a loan of $20,000, does my active balance continue to be $40,000 or does

00:18:19.140 | it drop to whatever my balance is as I repay? In other words, do I continue to grow the

00:18:23.320 | original $40,000 or does the working balance drop to $20,000?

00:18:27.560 | I've never actually taken out a 401(k) loan or gone through this, so I'm a little unfamiliar

00:18:31.380 | with it. I know the reason a lot of people say that it makes sense to do this because

00:18:34.800 | you say, "Well, I'm borrowing from myself here. What's the harm?" Blair, how does this

00:18:40.080 | process actually work?

00:18:41.680 | Yeah, this questioner hit the nail on the head and this is the part of taking a 401(k)

00:18:47.040 | loan that many people miss. Everybody says, "I know I've got to pay interest, but I'm

00:18:50.280 | going to be paying it back to myself. It's all good." But you are taking that money out

00:18:54.400 | of the market. So not only are you having to make payments on the loan with interest,

00:18:59.480 | you are missing out on the growth of that investment in the market. So that's probably

00:19:03.460 | the number one reason and the reason that we say the 401(k) is probably the last place

00:19:07.880 | to tap. It's still a good resource in a crunch if it's really the last place you have to

00:19:12.680 | tap. The interest rate is going to be lower than credit cards. You are paying the interest

00:19:15.920 | back to yourself. But at the end of the day, you're taking a chunk of money out of the

00:19:19.760 | markets where it could grow and taking it off and then also adding in the extra payments.

00:19:25.600 | And then if you want to still continue to save on top of the loan payments, now you're

00:19:29.960 | taking away from your monthly income just to pay the loan back. So it can be a nice

00:19:34.160 | alternative to taking higher interest rate loans. But you have to remember that that's

00:19:40.080 | a big factor that a lot of people miss. There's no phantom balance. That money is actually

00:19:45.160 | coming out of the market. It's not going to earn returns. You could get lucky. It could

00:19:48.600 | be when the market goes down. But these are long-term retirement savings. So for the most

00:19:53.120 | part, you want to stay away from 401(k) loans as much as possible.

00:19:56.440 | If this is like your last resort, what are some better alternatives?

00:19:59.960 | Yeah, that's a tough one. That cash reserve in financial planning, we always say you want

00:20:08.000 | to have a minimum of maybe three to six months in cash. You can look at after-tax savings

00:20:13.560 | and investments that you already have. And then what are you using the loan to buy if

00:20:17.720 | it's a home? You can look at creative financing with home equity loans. Banks have gotten

00:20:24.520 | a little bit better. It depends on your income situation. But yeah, that's the reason that

00:20:29.720 | people do end up taking these 401(k) loans, is because there really are no better options

00:20:33.640 | sometimes, unfortunately. But just keep in mind, you are taking that money out of the

00:20:38.680 | market.

00:20:39.680 | Alright, Blair, I have one more question for you here. We talk a lot about behavioral bias

00:20:43.800 | in investing and behavioral psychology. What is a behavioral bias for a guy like me believing

00:20:48.440 | that the Big Ten could actually beat an SEC team in the college football playoff? Because

00:20:52.960 | your Georgia Bulldogs just put an ass-whooping on my Michigan Wolverines. And for some reason

00:20:58.320 | in my brain, I thought, "Wait, we can probably hang with these guys." What is that bias called?

00:21:04.560 | I don't know what the bias is called. But unfortunately, you are not seeing your team

00:21:09.400 | week after week beat every other team in the SEC. And there's just no conference that compares

00:21:14.840 | to the SEC, unfortunately, Ben. I'm so sorry. The Georgia team that played through the regular

00:21:19.920 | season undefeated showed up that day. The team that played in the SEC championship and

00:21:24.300 | lost to Alabama terribly did not. We're going to see who has to show up Monday night, and

00:21:28.300 | I hope it's going to be the team that beat yours.

00:21:30.320 | Good luck in the next one. My heart is broken, and you ruined my New Year's Eve. But I'm

00:21:36.080 | happy for you.

00:21:37.080 | Sorry about that.

00:21:38.080 | If you have some thoughts about the questions today, if you're a big Buffett Indicator person,

00:21:42.120 | leave us a comment. If you have a question for the show, askthecompoundshow@gmail.com.

00:21:47.880 | Don't forget to subscribe here. Hit the Like button. Duncan likes seeing those numbers

00:21:51.820 | go up. idontshop.com for Portfolio Rescue t-shirts. We are going to be back next week,

00:21:58.200 | same time, same place. Thanks for watching.

00:22:00.960 | Thanks, everyone.

00:22:02.440 | [Music]

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