(beeping) - Welcome back to Ask the Compound. Excuse me. The S&P 500 is still in a 13% drawdown from all time highs. Duncan, on this show we are at a new all time high in questions. I swear. The inbox is just overflowing. The Google Doc, remember if you have a question, askthecompoundshow@gmail.com.

- No one took us up on the video or audio question. - Nah, it's gonna happen though. Someone's gonna do it. Yeah, send us a video. We'll show it right here on YouTube. Today's show is sponsored by Bird Dogs. I was excited when Bird Dogs came to us for a sponsorship because I've been wearing these shorts for years.

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- I forgot mine. I meant to have it today to show. - More cold? - But I forgot it. - Stock up on those for the summer. It's great. All right. The main line of questions this week was debt default, debt ceiling, these kind of things. So let's get into some of those because this is where people are thinking.

Some people are saying, "I don't care." Other people are saying, "I'm worried." So let's get into it. Let's do it. - Okay, let's do it. So up first today, we have a question from Aaron. And Aaron writes, "I've recently shifted "a substantial portion of the cash portion of my savings "into three to four month T-bills "to take advantage of higher yields "and state tax advantages.

"As of today, they are all set to mature "in June and July. "I know a U.S. debt default is highly unlikely, "but the risk-averse part of me "is still a little nervous about what would happen "if Congress actually lets the unthinkable happen. "Are my worries misplaced? "What would happen to my treasury investments "if a default did happen?" So this is the big question.

And yeah, this is what people are kind of starting to freak out about because this date is coming up very quickly. So what are your thoughts? - Yeah, this is the right area because there hasn't really been a whole lot of market volatility. The market didn't really fall that much.

And now that we've had a few good headlines the last couple of days, the market has taken off a little bit. But this is the one area of the bond market or any financial market that has seen some movement, which is treasury bills. So John, give me a chart of one-month T-bill rates versus three-month T-bill rates.

And what you can see with the one month is at the beginning of April, yields were like 4.75%. Three weeks later, they dropped like a rock, down to 3.3%. Since then, they've taken off like a rocket ship and going from 3.3 to 5.6 in less than a month. And you can see comparing to the three-month T-bill, which is the purple line there, three-month T-bills have been above one-month T-bills ever since this rate hiking cycle began.

Now one-month T-bills have shot up above three-month T-bills and you're seeing a ton of volatility there. And so what's going on here? I think this is just bond traders positioning for this exact thing that Aaron's talking about. Like what if my short-term T-bills happen to mature right when this stuff is going on and maybe I miss a payment or something, right?

So I think one of the reasons that the rates crashed in the first place is because people were buying them to get ahead of this and then now they've been selling them and the rates have taken off. So obviously the biggest worry here is that both sides don't come to an agreement.

I think, I really hate the debt ceiling stuff. I mean, we can print our own currency. And so the people that compare the U.S. government to a household, like listen, it's just, it's apples to Mars. It's not on the same planet because the U.S. government has the ability to print their own currency.

So the fact that we put this arbitrary debt ceiling limit makes zero sense to me. It's all political posturing. I'm not a fan of it. It's a crisis that is totally unnecessary, but politicians use it to try to get some negotiating power or leverage or just show that they have some power, I suppose.

And so there's always the possibility that we don't come to an agreement. I do think that even if there's no agreement in place, I would be shocked if we missed a debt payment. Colin Roche, who's been a two-time guest on this show, had good take on this recently. He said, "I don't even think you get to a crisis scenario "because the Treasury, President, and Fed "have tools to work around this, "and I think they'd be obligated to use those tools.

"For instance, let's say we get to May 31st "and the Treasury announces it has no money on June 1st. "Meanwhile, Congress can't agree on anything. "In this case, the President is forced "to invoke the 14th Amendment "to uphold the full faith and credit of the USA. "Once we're on the verge of defaulting, "we're breaching the 14th Amendment, "which states that it's illegal to default "so we could do some sort of premium bonds "or coin seniorage or selling Treasury assets "or the Fed invoking some crazy circumstances "where they do something." So, there are contingencies and plans on the table.

Trust me on this. So, if a crisis, my whole thinking is, if a crisis is on the table and we can avert it, we probably will. Calmer, cooler heads will prevail. But I think if it really worries you that much, extend your time horizon out to six or 12-month TPLs, the yields aren't really that much worse.

So, I think that's if you're really, so, I don't know, I guess worst-worst-case scenario, your payment's delayed by a couple days or a week if we really got bad. But I can't see a situation where this kind of thing doesn't get resolved in like 48 hours if it came to an ultimate crisis situation.

- Yeah, I was reading about this before the show and it's interesting. It's a bipartisan thing, though, right? Typically, the debt ceiling has been raised historically over and over and over again. I can't remember how many times, but a lot of times in the last 50 years. - We should just get rid of it.

It makes no sense to have in place with the way that our system is structured. It's just a way for politicians to feel important. That's kind of where I fall in. - You know what was kind of tripping me up is I was like Zach Galifianakis thinking about this.

So, the Fed keeps raising rates, so it's making the U.S. government have to pay more on this crazy debt, right? - Yes. - So, it's like a loop of making things worse in that regard. - A little bit, yeah. Interest expense is much higher. I got a chart for that for Animal Spirits next week.

So, again, we have a lot of questions of the debt ceiling, so let's do another one. We got another one of those. - Okay, up next, we have a question from Matt. "We are mid-30s. "Kiddo is two years old. "Kids are expensive, so we have to leave the city.

"Looking to buy a house in the next year or so. "How do we slowly sell out of our brokerage accounts "so that we aren't at the whims of the market "if it crashes during the debt ceiling situation? "I'm worried the market might tank "and we would be forced to wait "until the market rebounds to buy.

"However, selling and paying the taxes next year "won't be fun either, "plus all the other expenses that come with moving." - You know, last week we talked about moving somewhere cheaper, right? This person's doing just that, which is great. At face value, this sounds like a debt ceiling question.

It's not. This is not a debt ceiling question. This is an asset allocation, risk profile, and time horizon question. Listen, everyone has a different appetite for risk, right? People who take more risk than you, you think that they're just irresponsible. People who take less risk than you think they're just being wimps, right?

This is kind of how it goes, but I invest heavily in equities as a long-term investor, right? I have a very high tolerance for risk when it comes to assets that are five, 10, 15, 20 years into the future. Maybe not as high as you, Duncan. I'm not in the levered stuff or oat milk penny stocks.

I don't know. - We're not technically a penny stock yet. - Okay, not yet. We're getting there. But when it comes to short and intermediate term goals, I'm extremely risk averse. So if I need money next year for a house down payment or a vacation or anything, there's no way in hell that I'm going to be, have that money invested in the stock market.

No, thank you. The downside far outweighs the upside. And that downside could come from anything. It could be debt ceiling drama, recession, flash crash, the Fed, inflation, anything else that we're not even thinking about right now. So John, do a chart on of the rolling one-year returns for the S&P 500.

I got this 1926 to 1923. Do I not have this? Okay. Maybe I didn't put this in. So what it looks like is on average, the stock market has been up 75% of the time on a one-year basis. By the way, that's not John's fault. I think I forgot to put it in the doc.

- Yeah, I was about to say, I don't see it in the doc, to be fair. - That's on me. Whoops. Anyway, the point is on a rolling one-year basis, I went back to 1926. 75% of the time, the S&P 500 has been up on a rolling. Like, that's a pretty good hit rate, right?

If you're going to the casino, those odds are great. But a one in four chance of loss is not a great probability when it comes to something as important as a house down payment. Plus, when stocks were down those one out every four years, on average, they were down 10% or worse more than 52% of the time.

They were down 20% or worse 25% of the time. They were down 30% or worse 12% of the time. So I think this person is worried about the wrong things here. We're not worried about debt ceiling or tax payments, any of that stuff. That stuff's not fun to go through, but you should be worrying about your housing fund losing money at the worst possible time.

Let's say you have 100 grand saved up for 20% down payment for a $500,000 house, right? I'm just using round numbers here. If you're down 10% in a year, you now have $90,000. You're down $10,000, right? You're down 20%, you lost $20,000. Imagine having a house lined up and realizing you don't have enough money to come up with that down payment.

So, sure, could this go the other way and stocks are up and you make an extra 5, 10, 15, $20,000 if you're lucky, sure. But I think you have to weigh the regrets here. And you're right to worry about short-term market volatility but the reason itself doesn't matter. So my advice is however you wanna get out, you could do it slowly, but I think having that money in the stock market to begin with for a 12-month goal is pretty irresponsible.

And I would get it out of the market if I could because I would rather know that money's there and available than take any risk with it. - Yeah, and like we've talked about ad nauseum, it feels like at this point, but you can actually get something on your cash.

- Yes, that's the thing. People were complaining forever about not being able to earn anything in their cash. Now you actually can get something. - Yeah. - Right? So again, in my example, if you've got $100,000 and you're earning 5%, in a year, you could make an extra $5,000.

I could cover your closing costs. - Right. - Right, so it's, yeah. So it's not like a situation where you're being forced out on the risk curve anymore. - Yeah, and we'll just ignore the fact that houses will go up another 20% in the next year, you know. (laughs) - Someone looking, but yeah, you're right.

It's never been easier in the past probably 20 years to find somewhere to park that cash that is not the stock market. And the stock market is, you don't wanna be at the whims of the stock market of a flash crash or, you know, in early 2020, the stock market lost 33% in a month, basically.

I mean, I'm not predicting that's gonna happen, but that's the kind of thing with the stock market that's always there just in case. So I would just avoid the stock market for short-term goals like this. - I never saw last year coming, you know. - Exactly. - Happened overnight.

- Who knows? All right, next question. - Hey, this next one's a fun one from Justin. My wife is a middle school math teacher and I've been roped into teaching her students a personal finance one-on-one class during their last week of school. That can be brutal, last week of school.

No one's paying attention. But I have a finance degree and consider myself to have sound personal finance practices, but teaching the basics to a group of sixth graders has me a little unsure of where to start. What are the best personal finance concepts to teach kids? Some things I have in my agenda, the power of compound interest, the power of diversification, and the importance of savings rate.

But I'd love to hear how you would approach crafting a 60-minute lesson plan. - All right, Justin, I hate to sound harsh here, throw your entire lesson plan out the window right now. Sixth graders do not care about diversification or compound interest or the importance of a savings rate.

Maybe when they're in high school or college, maybe, but at that age, they are not going to care about this stuff. I mean-- - Pokemon? Do sixth graders still care about Pokemon? - Well, I think a lot of this stuff doesn't matter until people actually experience it themselves. That's why even teaching personal finance in high school probably is just over people's heads in most cases.

But I do think you could get them interested in business and money in certain ways. Like, talk to them about some of their favorite companies and how much money they make and how they make their money. Disney, Roblox, Hasbro, Mattel, Nike. My oldest daughter has gotten into Roblox lately, and I can see why that-- - I gotta be honest, I still don't even understand what Roblox is.

I don't think I get it either. It's a game, but you have, it's kind of one of these, it's free to play, but then you have to buy stuff on the game, and I'm sure a lot of kids have their parents' credit card numbers and just buy stuff all the time and the parents don't even know it.

- I love that business model. - So I think help these kids understand how companies make money and how they grow, and then maybe that'll help them understand why stock prices grow over time through earnings and these sorts of things and revenue and how a business works. Maybe that's more helpful.

So one of my favorite examples of this for young people was Nike and the original Air Jordans, which I just watched air last weekend, which was fantastic. The first Air Jordan back in 1985, Duncan, what was the retail price? Not adjusted for inflation or anything. What do you think?

- $80? - 65, close. So if you would have taken that 65, and Justin, I'm giving you this to use in your talk. You can take this word for word. What if you would have invested that $65 instead of buying the shoes and wearing them out and throwing them away in a year, what if you would have instead invested in Nike shares?

All right, John, throw the chart up here. That $65 grew into $61,000. It was over a hundred before, but Nike has fallen down a little bit. Obviously extreme example, but this just does a nice job of illustrating the difference between spending money and investing money. So I think the idea of compounding is an important concept to grasp.

But again, I don't think these kids are gonna latch on to 10% growth in the stock market over 30 years. I don't think that's gonna help. So Duncan, have you heard the rice story before? Maybe this is a good way. So there's the old story about back in the medieval days, we're talking like when "Game of Thrones" happened, right, whenever that was.

And there's a king who likes chessboards and a con artist is really good at making chessboards, right, and he goes to the king and he's selling him chessboards and he realized, oh, this king knows nothing about math. So he says, instead of giving me gold or fine clothes or whatever, how about you just give me enough rice where we start with one piece of rice on the first square of the chessboard and then we double it every time.

So one, two, four, eight, 16, that sort of thing. And the king has all this rice. He says, that sounds great. So it doubles and it's pretty small. But then by the 20th square, I think or something, it's over a million grains of rice. By the 30th square, it's over 500 million.

By the 40th, it's like a trillion grains of rice. How many other chessboards, 60 something? - I actually don't remember. And I should know that, I play chess. - And so then the con artist says, don't worry about the rice. You can just pay me in gold or land after he is up to trillions of grains of rice.

- Sorry, Michael just walked in, so I'm a little distracted. - Okay, he's been known to do that. I don't know. So I'm saying use stories to talk about these concepts as opposed to giving people facts and figures and numbers and talking about the stock market. So I do like the idea of teaching young people the importance of money and personal finance, but...

- Hey, Michael. He's got a lot of gear on there. But I mean, try to tell them stories that they're gonna remember, not just numbers and facts and figures, because most of them is gonna go in one ear and out the other and especially if it's towards the end of the year.

So teach them some stories, maybe they'll remember and share with their parents. Most adults find this stuff boring too. I love finance and investing and all this stuff, but most people find it boring, even as adults. So kids are gonna find it even more. So I would figure out a way to talk about stories as opposed to numbers.

- Right. - That's what I would... - When I was in sixth grade, I think you would have had to put it in skateboarding terms for me to have paid attention probably. - You were a skater? Did you have the hair over the face kind of deal too? - No, not really, no.

- Okay. - I did have longer hair, but yeah, not like that. - All right, let's do another one. - All right, up next we have a question from Alex. I'm contributing to my 401k plan, 50% traditional before tax and 50% Roth after tax. I'm currently 31 years old and I like the idea of tax diversification now and in retirement.

What happens once I reach retirement age from a tax standpoint? Where would I roll the balances to and how do distributions work? Do I have control over which bucket I pull from, Roth or traditional, or will there be forced pro rata taxation on all distributions? - Good financial planning question here.

See, the thing is, I think a lot of people realize like making the contributions is a lot easier. Obviously saving some people is difficult, but making contributions is way easier than taking out withdrawals. And this is where financial planning comes in. So why don't we bring on a financial planner here, Alex Palumbo.

- Hey, Alex. - Hi, Ben, hold in your enthusiasm introducing me. Seriously, it's okay. (laughs) - All right. - And I prefer if you refer to me as director of attire for today, if that's okay. - Come in, hi. - May I explain why? Is that okay? So, because Michael with the impromptu cameo recommended yesterday on your show, Animal Spirits #Plug, that it's now Hawaiian shirt season.

You have to wear Hawaiian shirts now every day. So me, being an avid listener and follower, leave my apartment complex today in a Hawaiian shirt. It's 50 degrees, it's freezing out there. So what I do, I scramble. I throw on this fakakta raggedy polo, and I shouldn't have done that.

So second plug, what I should do is pick up a lovely polo from Bird Dogs. They ship on June 15th highest quality polo shirt on the market. - You do look nice. - But mine was dirty, so I'm wearing this raggedy one. - Alex, you can be my salesman anytime.

- So there you go. - This is why you're not the director of attire though, because you didn't check the weather before we left the house today. It's gotta be sunny if you're gonna wear a Hawaiian shirt. - All I listen to is Michael Batnick and whatever he says, I just do, blindly.

- Maybe you're more of a director of retire. (laughs) - All right. - Nice. - So Alex is in his 30s, and he's already thinking ahead pretty far down the line. But this is obviously something older people that are in retirement have to think about more. So by the time he gets their taxes and RMDs and stuff, the rules are probably gonna be different.

But how do you think about portfolio withdrawals when you have a client coming to you and saying, "Hey, I've got this money in a 401k and this in an IRA "and this in a taxable account." How do you think about it in terms of asset location and where they should be taking money from and planning out those withdrawal strategies?

'Cause again, that's way more difficult than it is to put money in. Putting money in is easy. Taking it out can be difficult because you have to think about all these moving pieces. - Yeah, it's a good point. It's a great question from Alex, excellent question. So I think it's actually a great idea to diversify the traditional and Roth contributions to your 401k.

Now to establish the basics, when you establish pre-tax, you're not paying taxes on those contributions. You defer it until when you retire and you take distributions from the traditional 401k. It's taxed at ordinary income rates, the opposite with the Roth. You're paying ordinary income rates now, but then all of that growth is tax-deferred, not tax-deferred, it's tax-free, and then you never pay taxes upon the distributions.

So that sort of answers this first part of this question, what happens when I retire? Sort of acts the exact opposite of how you contributed. And I do like the idea of overall 50/50 diversification for sure. There's obviously more nuances though. Like if you're in the highest income tax bracket right now, should you use a Roth?

I know Bill Sweet would probably say yes, and I wouldn't disagree, versus if you're in the lowest income tax bracket right now, I would definitely not use a traditional 'cause you wanna take advantage of that very low income tax bracket. - I guess that's the point. He's not gonna be able to plan it out now, but when he gets there, having that diversification will help because you don't know what your spending's gonna be at that point.

You don't know what the tax rates are gonna be. So maybe having that diversification can allow you to think through what the best bucket is to take from at the time instead of being pigeonholed into one bucket or the other. - It definitely adds a lot of flexibility. So now you'll have a Roth bucket, a traditional bucket, and then potentially like a non-qualified trust or brokerage bucket, and you can sort of play the flexibility tax game, which we do with our clients all the time, and it just saves our clients so much in taxes in terms of short-term distribution tax planning, and then long-term planning as well.

To answer Alex's like very quick, more straightforward questions, you would roll the balances into an IRA from a 401k, unless from age 55 to 59 1/2, you can actually take distributions penalty-free from your 401k, and you cannot do that from your IRA. Duncan, did you know that? - Right, so if he retires early, he's got some avenues beyond the taxable account.

- So I had a client retired at age 55. Instead of rolling over his entire 401k to an IRA, we kept a few years worth of basic living expenses in that 401k. So that's a pretty important four-year window 'cause that's a pretty common retirement age. And then the question, do I have control over which bucket I pull from?

There's no such thing as pro-rata distributions. You can pull fully from the traditional or the Roth, a ton of flexibility, which is really one of the main benefits we discussed. - Yeah, so having some diversification here is probably not a bad decision. - For sure. - I like it.

Okay, let's do another one. - Okay. So last but not least, we have a question from Robert. With the SBB collapse, a ton of employees lost money on employee stock option plans. How much of your net worth should be in your employer's stock? 5%, 10%, 20%? And this is one I'm sure a lot of people have after that, because a lot of these tech companies, that's how they compensated people, right?

- The funny thing is, is that a few years ago, people were asking this question differently. Like, why shouldn't I go all in on my stock company? Now people are saying, maybe I should diversify. So Alex, you've had plenty of clients come to you over the years who made good money in concentrated portfolios.

So let's talk about stock options and some of the thought process behind this here. - For sure, this is a super relevant topic. And I think for starters, we could do a primer on really the four most common types of employer and employee stock plans. Big John, give me the PowerPoint.

- This is our first ever PowerPoint slides on Ask the Compound. So Alex, giving you a lot of leeway here. You did a rant on clothing and now you're doing a PowerPoint. - You're gonna absolutely love it. So there's really four different types. Restricted stock units, employee stock ownership plans, employee stock option plans, and then employee stock purchase plans.

We're gonna go through each in like 15 to 30 seconds 'cause I think it's important to establish the difference. RSUs are the most common one that I see because they're the most simplistic. Very straightforward, when you're granted units, let's say 100 units of ABC stock, there's no tax nature at all.

Then once they vest to you, that is taxed at ordinary income. So you get 100 shares at $100 a share, you have to pay $10,000 of ordinary income. Then when you sell it, you pay capital gains. Boom, easy to understand. Next. Employee stock ownership plans, Duncan, you still with me?

- Yes. - The ownership plans is when the employer contributes. So your employer is just giving you money. It's great. It goes into a pre-tax account, and then when you wanna take distributions, it's taxed at ordinary income rates to you. If you wanna defer that, you can roll it into an IRA, but this is where NUA, net unrealized appreciation, comes into play.

We're not gonna go into that, but that's a very important concept. Next big job. - You got three exclamation points there, so it has to be important. - NUA is absolutely huge. I think actually on my first appearance, we went over NUA a little bit. The third one is a little bit more complex.

It's employee stock options. There's two types, NQSOs and ISOs. We're gonna only focus on NQSOs. They're a little bit more common. Not taxed when you're granted. They're not even taxed when they vest. Duncan, can you believe it? - Sounds too good to be true. - They're only, but there is a kicker, some caveats, and some risks.

They're only taxed when you exercise them. So the difference between the strike price and the market value, that's taxed. And then subsequent sales are sort of taxed, like capital gains. And that bargain element is taxed at ordinary income. But these can be completely worthless. They can just expire worthless.

We'll get into that later. Last one, big job. An employee stock purchase play. These shares, pretty much you have to buy these shares. So it's sort of where you're buying something and you're not just giving it. And you typically get a five to 15% discount on the market value.

And you purchase it with post tax dollars. - And these are usually a publicly traded corporation, right, where you get a, it could be Walgreens or something like it, or Pepsi. You can buy it at a 10 or 15% discount and you can do it on a set basis, right?

- When you do that, is there a lockup? Because otherwise, wouldn't people just arbitrage that and immediately sell it for a profit? - I have no idea what Duncan means. - If you're getting a discount when you buy the stock from your own company, if you're immediately getting a 15% discount, could you not just sell it on the open market?

- Absolutely amazing question. It's almost like this next slide completely answers that. - Okay, let's see it. - So a little bit intricate here, but stay with me. I think I'll be able to explain it. So this is how it typically goes. First, Duncan, you're offered the stock at let's say $10 a share, but you cannot purchase it until a year later.

And let's say the purchase price is $20. Then in order to have a qualifying disposition, you have to sell it two years after it was offered, right? So that's how it sort of answers your question, Duncan. And let's say the stock at that point is $30. Now to be a qualifying disposition, that discount that you paid, right Duncan, because it was worth $10, but you only paid 8.50 for it, that discount is taxed at ordinary income.

There's no free lunch here. Of course you're gonna get taxed at ordinary income. But the rest of that game, and I thought that this is like, this is a pretty big deal. That entire amount from 10 to 30 is taxed at long-term capital gains. So even though you purchased it at 20, you pay long-term capital gains from 10 to 30.

That's huge. A disqualifying disposition is if you don't follow those rules, you pay ordinary income tax on pretty much everything, except for the discount. - Get these numbers out of here. - Yeah, get these numbers out of here. - All right, but so that makes sense. So Duncan's question was, there is no free lunch here.

- Right, and so you go from paying $22 of ordinary income tax to only $1 of ordinary income tax. That's a big difference. - This is why financial planners exist, because this stuff is complicated. - Right. - All right, back to the original question. How much should you have?

You've had people come to you with concentrated positions in the past, probably anywhere from 5% to, what's as high as you've seen? 80% maybe? - 5% to 100%, it's a huge range. - I know we've had people with 90% of the net worth in their company's stock. And they know in their heart of hearts, they need to diversify.

Some people are worried, well, I could be leaving money on the table. But how do you think about this idea of still making money in the stock versus reducing your risk and spreading your bets? - Yeah, first thing I say is, typically, your entire career is tied from an income perspective to the company, right?

They're the ones paying your salary. So if you own 100% of your portfolio, or really any of it, of your investable assets, you're doubling down. That's the first thing I'd like to mention. The employee client typically knows more about the company than I do, but they're inherently a little bit more biased.

I've seen clients with an employee stock ownership plan in oil and gas companies, multiple clients that I have, they pretty much have their entire net worth in this company, and now they have millions of dollars. I've had clients who had RSUs in the regional banks that you mentioned, and they had 200K drop to zero now.

And that's a disaster. I had a client who had options that were worth about $5 million. Now they're worthless, 'cause you can't even exercise the options. So I've seen the whole gamut of clients who work at Google, and their RSUs are just steadily vesting, and they're performing better than a lot of the market.

So I've seen the whole gamut. There are certain strategies you can implement, though. Like, for example, it's all about the person. If you wanna take more risk, how about this, Duncan? When the stock goes down a lot, sometimes people have the options to choose between stock options and RSUs.

You can maybe switch a little bit more to options when the stock goes down a lot. That's obviously a risky proposition, 'cause options can be worthless. But when it goes up, you have that leverage component, which is why Duncan, of course, loves that option. And there's everywhere in between.

- Duncan's middle name is Risk. He would like this one. - So RSUs are always gonna be worth something, typically, and options can easily be worthless. - I do think, obviously, the level is a comfort thing, but I don't know. I think anything more than 10 to 20% is probably a little irresponsible.

I would say that that's a pretty good line in the sand. - 20% seems high. - Yes, right. - But tell that to someone who's been working at Google for the past 10 years. - I do agree with you that you work for the company, you probably become a little overconfident, and it's gonna be harder for you to see the potential downside.

But if you were someone who worked at General Electric and you were the biggest company in the S&P 500 in 2000, you wouldn't expect your stock to fall 75% over the next 20 years or whatever it is, and just be decimated. So that's what you're trying to protect against.

- It's just like what you said earlier. - And back to Justin for question three, for teaching the kids. - Don't keep all your eggs in one basket. Right, that's it, easy. Easy story. - And what you said earlier, it's like people don't understand risk until they live through it.

- Yes. - It's unfortunate. - It's regret minimization. Okay, all right. Alex, you're fired as director of retire for, sorry, for not wearing the right shirt today. - Oh my God. - Next time director of retire. Thank you for having me. - Yeah. - Thanks, Alex. - As always, yep.

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