Hello, everybody. It's Sam from Financial Samurai, and I hope everyone is doing great. In this podcast, I want to talk about the bull market checklist to living your best life today. And before I get started, there's some housekeeping items I'm going through right now. If you're an RSS subscriber to the blog articles and have been using my FeedBurner RSS feed, we're going to be making some changes and no longer using FeedBurner.

And so I suggest you go on to Feedly or BlogLovin or other types of RSS readers and input www.financialsamurai.com/feed to switch things up because we're creating a new feed for the podcast. So again, if you want to be an RSS reader, check out Feedly and BlogLovin. But on to the main menu, bull market checklist.

It is amazing right now, folks. It cannot get better than right now. If you're not feeling wealthy today, I'm sorry, but you're probably never going to feel wealthier. Every single asset class, if you look around, is at all-time highs. Real estate has rebounded quite nicely since 2018. The S&P 500 is almost at 3,000.

Interest rates have come down to around 2% on the 10-year bond yield. Things are kind of nuts. You're saving money and you're making money. So when you can do that double under, things are looking pretty good. So I wanted to highlight 10 things we should all be doing during this bull market to make the best of the situation.

Because you know what? It might not last forever and it probably won't last forever. So number one, take advantage of lower rates. This is a slam dunk guaranteed home run. 10-year bond yield is at two-year lows, folks, which means mortgage rates are also at two-year lows. So for example, if you're looking for a 30-year fix, you can probably get one for 3.5% to 3.75% depending on your credit and your relationship.

I'm personally locking in a 7-1 arm at 2.75%. This is a relationship pricing. All fees are baked in. And I'm getting, I think, $4,000 credits. So they're giving me $4,000 to refinance for free. So that's pretty darn good, folks. Two, you're probably going to want to stay exposed, exposed to risk assets like stocks, bonds, and real estate.

They're your friends in a declining interest rate environment. Lower interest rates make owning other assets with higher interest rates or potentially higher returns more attractive. I can't really tell you how much risk exposure you should have since everybody's risk tolerance and financial situation is different. All I can say is that you need to quantify your risk tolerance using the financial seer, S-E-E-R method, and then invest accordingly.

For myself, I'm relatively conservative, folks. I have less than 50% of my stock and bond portfolio in stocks. But it's OK. It's up about 11%, 11.5%, 12% while the market is up 18%. I'll take it because my bogey is 5% a year. So if I'm doing double what my bogey is, I'm feeling good.

So you guys have to figure out how much you're looking to risk in order to get what type of reward. The most logical risk asset for me is to invest in real estate because of lower mortgage rates that will bring in more real estate demand. Given I'm in San Francisco, I'm thinking there's going to be a liquidity event come November or December of 2019 when the lockup periods expire for many workers at Uber, Lyft, and many other firms.

So I think spring 2020 is going to be pretty frenzied. So I've done some things that are going to go and take advantage of that. Three, ask for a raise or change jobs. We're currently at full employment, folks. The national unemployment rate is only 3.6%, which means that anybody who wants a job pretty much can get a job.

So in this situation, it is not an employer's market. It is an employee's market. The general rule of thumb is that you can get at least a 20% or 25% bump in pay if you put yourself up on the open market. That's just the way it is, folks. And then depending on performance and industry, you can probably get 50% or 100%.

I remember when I was working in finance, every two years, people would be job hopping for 30% to 50% more guaranteed, and some people got two-year guaranteed bonuses. This one guy job hopped seven times in 10 years. I couldn't believe it. I'm like, you know what, he got pretty, pretty wealthy doing so.

So take advantage of the crazy tight job market. Four, take a sabbatical. I know it's tough to get off the grid when so much money is to be made right now, but it may be now or never, as it might be career suicide to take a sabbatical during a downturn.

Because when you get back, you might not have a job, right? Not taking a sabbatical was one of my biggest regrets before retirement. Like I wish I took at least a one-month sabbatical, if not three months. At my firm, you're allowed to take up to three months sabbatical every five years you work, and I was there for 11 years, and I didn't take anything.

And so basically, I lost out. Please take full advantage of your company benefits. Five, start strategically living it up. This is the core of this podcast, I think. If you can't live it up when times are good, you certainly won't be able to live it up when times are bad.

When times are bad, you'll just want to save more and take on more side hustles to make more money because you're freaked out. The end result is that you never end up spending any of your money on living the good life. And I see older generations, like my parents and their parents and other parents, they're always super frugal, no matter how much they have.

They've got lifetime pensions, they've got no debt, and they still aren't willing to spend it up. So I am encouraging my relatives, specifically my parents, to spend their money, to order that nice bottle of wine, to order that Wagy steak. It's okay. Things will be okay. During a bull market, you're making way more beyond your normal expected income, right?

Day job, side income, hustling, passive income, capital appreciation. So in other words, bull market money feels like free money or funny money. And your goal is to calculate how much funny money or free money you've made each year from the bull market and proceed to spend some of it on yourself and your family and your friends and your loved ones.

You don't have to spend all of it, of course. However, you should try to spend at least 10% of your funny money on living it up. For example, in the fourth quarter of 2018, I was down about $300,000 in my house fund portfolio, and that hurt a lot. The house fund portfolio is what it says it is.

It's to buy another piece of property. But luckily, the house fund made up all of its losses and then gained about a couple hundred thousand for a $500,000 swing in six months. So gaining back that $300,000 felt a little bit like free money because I had foolishly over allocated towards tech stocks.

But making that extra $200,000 really felt like funny free money. Therefore, I took a portion of that $200,000 and lived it up a little. Went on a nice longer vacation, bought some new socks, some new shoes, maybe a new tennis racket. Hey, it felt great, and I know it's going to be there with me for a long time.

And I just really want to encourage everybody to spend money on memories and higher quality items that will bring them joy. Six, hunt for unicorns. During a bull market, bigger bubbles tend to form. And this is the time when you can really, really get rich and when you see people really, really get rich.

If you can catch a bubble and ride it before it implodes, you could potentially make a lot, a lot of money. So I would set aside about 10% of your cash flow, not existing investments, your cash flow in search of the next great speculative investment. Speculative investment is usually an unproven product, doesn't have positive cash flow, and is something not mainstream.

It's something that people will probably ridicule you about. But that's okay, because by the time everybody recognizes what you've recognized, it's going to be a little bit too late. You should expect to lose 100% of your 10% with the chance of making perhaps a 1000 plus percent return. The likelihood of either happening is probably small, but there's a saying, no bet, no win.

You just can't be on the sidelines and not take a little bit more risk if you want to get richer. It's absolutely fine to invest in index funds like the S&P 500 or the Dow Jones or the Nasdaq or the bond index, whatever you want. They're low cost, they're great.

You don't want to try to outperform the market with the majority of your money. The thing you just have to recognize is that you have little chance of ever getting richer faster than the majority of the investing population. And Financial Samurai really is about achieving financial freedom sooner rather than later.

Because if everybody makes a million dollars and you make a million dollars, you're just another regular person. If everybody's retiring at 60 and you retire at 60, it's just no big deal. I'm trying to get folks to get wealthier quicker in a risk adjusted and appropriate manner so that they can live much richer and fuller lives.

All you need is one lucky break to supercharge your wealth. And once you get that lucky break, you want to protect your wealth and make it multiply and make money for you for the long term. Seven, this is probably not applicable to most people, but shop your business around.

When valuations are high, just like they are in the bull market, you've got a great opportunity to unload your equity on someone who might not be able to get the same amount of returns going forward because the valuations are high. And really folks, if you want to make next generation wealth, you've got to build equity, own equity and watch that grow and multiply over time.

Number eight, become a charlatan. In a bull market, qualifications and credentials are often overlooked because everybody's making so much money. As Warren Buffett said, you only know who's swimming naked until the tide goes out. It's only after people start losing money that folks start carefully reading the fine print and questioning the background of the person.

During the last bull market, I know one guy who wrote a book about how to get rich despite having recently graduated from college with hardly any money. And then he sold courses, $1,000 courses online on how to negotiate a pay raise. Meanwhile, the guy had never had a job for more than two years.

He had not been in the work industry for more than two years. So he ended up partially getting rich because of his book and because of these courses. And now he can get even richer because he's now rich. Today I know of 25-year-olds with zero financial backgrounds who are teaching people how to invest in the stock market and retire early.

It is unbelievable, folks. You can do anything you want. I've got fellow physicians whose expertise is in obviously surgery, medical stuff. They're talking about making money and all that. And they might be confusing their high incomes with their investment prowess, but it doesn't really, really matter because it's a bull market and everybody's getting wealthy.

So if you've ever wanted to make money as a charlatan, now is the time to take advantage. It doesn't matter if you're a failed political consultant trying to position yourself as a financial expert or a company founder with no pertinent experience. If you fake it, chances are the highest during a bull market that you're going to make it.

Nine, calculate your financial independence number. It's fun to calculate how much you'll have if the bull market lasts for XYZ years. It's also very dangerous to extrapolate massive gains for a long period of time. So if you're extrapolating 10%, 15% year-over-year gains for the next five to 10 years, I think you're going to be in for a big disappointment.

I'd be extrapolating maybe 4% to 6%. Four to 6%, again, because the 10-year bond yield is 2% and everything is relative to the risk-free rate. Your goal should be to come up with your financial independence number that will produce enough investment income so you never have to work again.

This is my definition and I think the only definition of financial independence on a mathematical level. Having enough investment income cover your best life's living expenses. So once you've created various financial independence scenarios, you'll naturally start taking steps to get there. Too many people just wing it when it comes to their finances.

Then they wake up 5, 10, 15, 20 years from now and wonder where all their money went. It's really easy to lose track and lose sight of your money if you don't have a plan and you don't check them and if you don't stick to the plan over the long term.

In my case, my FI number keeps growing because of kids. One kid in San Francisco is very, very expensive. Two kids is going to be more expensive. So hey, luckily we can't populate the earth forever because we're getting old. One of the final things that I recommend everyone do, the 10th item, is to really think about generational wealth.

This is a tricky subject because you want to obviously set yourself up to be financially independent but you want your loved ones, especially your kids, not to have to suffer in case you guys are gone. So the 10th item really is to talk to an estate lawyer, estate planner, and figure out how to create generational wealth that won't be wasted because there's a great saying, "From rice paddy field to rice paddy field in three generations." You've busted your butt working, saving, investing, taking risks.

You want your kids to do the same and to grow their own wealth. And just in case they fail, just in case they just cannot succeed in this super hyper-competitive world, you've got a safety net. But the key is not to let them know they have that safety net.

Nobody knows how long this bull market will last. I don't know, really. I thought things would fade a little bit and things did fade a little bit in 2018 with the real estate market and the stock market. But now it's back to bull markets because the Fed said they're going to do whatever it takes to keep the party alive.

All I know is that for the foreseeable future, the Fed is on our side. Interest rates are low and there's a presidential election coming up promising us lots of freebies. We're going to get free tuition, free health care, free back massages, whatever you want. You name it because the politicians need our votes.

So it's conceivable that at the rate candidates are going, that our children will never have to work for a living again. Pretty cool but also kind of dangerous. So in conclusion, let's really enjoy this bull market. But also, let's not be delirious and delusional at the same time. There is one recession indicator we must all be aware of.

And that is when the Fed starts actively and aggressively cutting their Fed funds rate, a recession is not far behind. It always happens. It's within 12 months away once the Fed aggressively starts cutting rates. And the reason why is because the Fed is a little too slow in cutting rates so they have to aggressively cut rates because they see the slowdown coming.

And it's coming quickly. So if the Fed only needs to cut a little bit, let's say one to four times instead of eight times, things will be okay. But if the Fed has to be like, "Oh my gosh, we've got to save the economy," that's when things start spiraling out of control.

The good times aren't going to last forever. The hammer will eventually drop. But if we prepare when times are good, maybe only our toes will get bashed in instead of our heads.