- Welcome back to Ask the Compound, where each week we go through dozens and dozens of questions from you, the viewer, to figure out what to answer. On today's show, we're answering questions about some career advice from young financial advisors, figuring out when you actually need an advisor heading into retirement, why tips have performed so poorly despite the highest inflation in four decades, when it makes sense to allocate to your taxable account instead of your 401(k), and then how to put cash to work into stocks at all-time highs.

Remember our email here, askthecompoundshow@gmail.com. Today's show is sponsored by Rocket Money. Everyone hates inflation, but no one is doing anything about it. You just keep spending money, right? It's hard to change your behavior. Rocket Money is here to help. Listen, I have subscriptions to streamers. I still have magazine subscriptions, physical magazines, gym memberships, music stuff.

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It's very easy to use. I like it. - Great app. I love that it shows you what's coming up that week too, so you know exactly what's coming out, because it warns you. - Yes, it could be kind of painful to see what you spent last week, but I always get the undetected spending, and you kind of, "Wait, what is this?" - Right.

- All right. Let's get into a question. - All right. Up first today, we have a question from John. "I heard Josh on the Ryan Russillo podcast a few years ago talking about older advisors who promise their practice to younger advisors, but then never leave. I'm in that exact situation right now.

I was promised a book of business by my senior advisor who said he was planning on retiring soon. Fast forward five years, and he's still around and showing no desire to let go. What do I do? I help out his clients so I can't exactly take them and leave.

Do I wait him out? Feels like I'm stuck." - All right. Well, let's bring in Josh to help with those. I've heard Josh talk about this thing for years. - Same. Hey, Josh. - Josh, you predicted this. You said, "Listen, these guys that say they're going to retire, they never retire, especially in the wealth management business, because why do you need to?

It's not like you're doing back-breaking work, and if these younger advisors are handling all the behind-the-scenes stuff for you, why do you need to?" So this is going to happen forever. - Why would you? Yeah, you're not a band-saw operator. You're not at physical risk. You're talking on the phone.

You're playing golf. No one leaves. - And we know boomers are going to have a hard time letting go of their jobs, especially like this. So what do you tell young people like this? Because most of them are kind of stuck. - Well, all right. So this is not easy.

And I feel very confident saying the things that I'm about to say and not offending people, because I'm always the first person to say how stupid my own career path was in my 20s and early 30s. So I don't mean this disrespectfully. I mean this as somebody who has all the battle scars.

Never work for a family business if you're not part of the family. This is the number one thing. So many young guys, they end up as part of a team, but it's not really a team. They end up as the grunt working for somebody who is either at a large wire house or has left a large wire house and has their own independent practice.

And then before you know it, like, oh, my son is graduating in two years and he's going to intern now. And then the guy's son's going to be your boss. What are you, stupid? How do you not see that coming from a mile away? What's wrong with you? And if it's not his son, it's whoever his daughter marries, his son-in-law might be your boss.

So this is like, I mean, this is not, this is so universal, just beyond financial advisory. So that's one. Two, it's not a business that people retire from. I've seen people sell a firm, sit around for 18 months and then start a new firm and then call back all their old clients.

Like nobody leaves, nobody stops working. And all of the research that advisors themselves use to talk with clients about the concept of retirement states, like literally the last thing you should do is stop working forever or stop doing everything. So more frequently, you'll see the candle slowly go out and not be blown out.

So it's not like, oh, I'm 70, today's my retirement, where's my cake? It's like, oh, I'm going to slow down a little bit. And that process can play out for like 10 years and they're in Boca and you're in Pittsburgh grinding out, you know, financial planning, quarterly meetings. So the right answer, I think, is think in terms of like, what would be a better career for yourself?

Be completely beholden to one Jedi master and hope that, you know, he or she honors their word or work at a firm that's got a career path where you don't have to wait somebody out. And, you know, I'm obviously talking our book because we are providing that career path for young advisors.

Unfortunately, I can't take 10 of them. I don't, I don't have, but that type of firm, that type of opportunity is what you should be looking for when you're interviewing. And if it's like a, a situation where you're going to be backed into the corner or waiting on someone else's lifestyle to change, that's probably not your best bet to take that role.

- Your point about the family business is so key. That was my situation. My very first job I worked for the guy had started the business, the consulting business, and all three of his kids worked for him. - Yeah, where'd you think that was going? - But he even laid it out.

He said, listen, this is a three-year job for you. I'm going to teach you everything I know, and I'm going to help you find a new job, but you have an escape hatch. You don't want to stay here for more than three years. So I think you have to have that.

Do you think it's even worth talking to these people? Like going back to the guy and saying, listen, you told me you're going to leave soon. What's the story? Is it even worth it having that conversation or do you look for your own escape hatch and just try to find something else?

- Yeah. You know, I think, I think having that conversation is great the first or second time, but then it's like going to be dependent on the honor of the person involved. And by honor, I don't mean, oh, this guy really wants more opportunity. I better leave sooner because that ain't going to happen.

You could end up talking to somebody that's like it secretly in the process of selling their firm to a private equity buyer or to a rollup or an aggregator. And then it's like, oh, he did retire, but you know how he did it? He sold the business out from under me.

And now I have to go to whatever firm we were sold to. So I think if you're open, if, if I think it's each situation is going to be dependent on, on who that senior advisor is and how honest they are with, and you know, it's a whole spectrum.

Everyone's different. - You want to have your own, you want to like be as independent as you can, even if you're working for someone else in terms of like having clients that are attached to you in some way. - Yeah. Look, the reality is that in some cases, the senior advisor does so little as the years go on and has such little contact day to day with these families, especially the younger generations within these families, that the apprentice advisor really ends up becoming de facto the actual advisor.

And then in that case, there's some mobility. It's like, look, I'm not going to like try to recruit your whole business away, but I'm doing all the work and I'm going to leave and we'll see where they, we'll see where this shakes out. I'm glad you played golf with this dude's grandfather, but I'm the one in their lives really helping them and answering questions.

So, you know, it is what it is. I wouldn't be afraid to make that leap. Understand that you're probably not going to leave retaining most of the clients if they weren't yours to begin with, but do what you got to do if that's what it takes to get yourself up and running.

But I have to reiterate this, I think it's really important. There's like this mental illness in our industry amongst young people and it's not their fault. They're being sold this idea that like they could graduate from CFP track in college and within two years be running their own firm.

Yeah, maybe, but most of you can't because most businesses don't succeed in any endeavor. And this is even harder than most businesses. Think about what you're trying to do. You're trying to get people in their fifties and sixties to entrust somebody that's the age of their son or grandson with their life savings.

Why would they do that? So now you have to deal with younger clients who have less assets and are less willing to pay for advice because their lives are less complex. That's really, really hard. So I think like focus on career path, where do I really learn how to be an advisor?

And in some cases it might be sitting side by side with a solo practitioner who runs their own show independently somewhere. But for most people, that's not great. Like you want to look for an enterprise that's willing to teach you, even if it's not where you want to end your career.

Look, manning the desk at Schwab or Fidelity is a way better path in my opinion, than sitting next to a 55 year old. Because over the next five years, you know, for a fact, the 55 year old's not retiring. But if you do that time at Vanguard or Schwab, you know, for a fact, you're talking to thousands of clients.

You're honing your chops, you're getting reps, and you're actually delivering advice, helping people. None of those may end up being your future clients, but you're learning how to do this. And you're giving yourself the experience to become valuable for wherever your next stop is going to be. Even if that ends up being your own firm.

Yeah, the delusion of young people you're talking about is, it's so much easier for them to research their career path these days. And people come out of school saying, I want to work for an RIA, which is really hard as an entry level position. So I agree, you go to that big firm first, you learn a bunch of stuff, you put the reps, and then you move on to an RIA.

We've trained a couple of young people right out of school. That's not what we want to do in general. We happen to have met a couple of superstars. But I don't think we're a great first firm for students coming out of school. Because I think when they come to us, it's such a long period of time before we're going to be, from a quality control standpoint, it's going to take so long before we can actually put them in a seat where they can alter their own trajectory of their career.

They're going to learn so much from us. But for a lot of young people, there's impatience. And I totally understand it. I also think they don't even realize our young advisors, if they've been to two or three firms before they come to us, they realize why what we're doing is so special, in my opinion.

I think if you first come to me, you don't even understand what goes on out there, and you don't even understand why what we're doing is special. So I just spoke to a group of college kids last week, and shout to Nate Jefferson, who is one of our superstar young advisors, a Michigan State.

And I'm not pitching these kids to come work at our RIA. I think most of them would be better off at a larger firm to really get reps and then come to me, like come to me in three to five years when you actually know the difference between all the firms in the industry.

And that's like a much better path. Right. Yeah. But your first thing you said is the important point. It's not easy. Whatever path is, it's not going to be easy. It's a great career. Why should it be easy? If this were easy, why wouldn't millions of people do this for a living?

Because it's not. Yeah. All right, Duncan, next question. Let's do it. All right. Next, we have a question from Larry. Larry writes, Josh is right that I'm inclined to trust my money with someone that I like, which I'm sure is the thought behind all the content you put out.

My question is, when do I know it's time to make that call? I have a goal number in mind, which I'm tracking towards nicely, but I'd hate to be too conservative or too aggressive as I approach retirement. I'm currently 14 to 16 years away from retirement. When do I make the call for help?

Five years away from retirement, a year, six months. I'm curious to hear what you guys have to say on this, because six months to a year doesn't sound like much time to get a lot of help from a firm. No. Well, there's going to be millions of people asking this question you just had.

John, throw this chart up here. This shows the number of people turning 65 by year, and I guess it's a record this year. It's going to be a record next year. There's going to be millions of... We've never had this many people live this long who have this much money, and there's obviously different...

Is this saying that every year for the next seven years, we're going to have 4 million new people turn 65? Yes. The person who was asking the question about financial advice, the person, financial advisors, this is so bullish for financial advisors, because for people who have built wealth, the idea of saving or starting a business and creating wealth, that part is a little easier than transitioning into the next phase of financial planning of, "I have to spend it now, and I have to figure out taxes in retirement, and I'm not making as much money," and all this other stuff is people are going to be turning to someone, a professional, for financial advice.

I think Larry here sounds like a DIY group, which we deal a lot of, people who've done it themselves. They know how to create a portfolio, they know how to save, they know how to live on less than they earn, all that stuff, but now they need some expertise from going from a saver to a spender, and when is that?

I think that's a question that a lot of these people have to figure out, and a lot of times it's, "Listen, I have a spouse or family members who are dependent on me, and God forbid, something should happen to me that I'm getting older. I want to make sure something's okay," or, "Listen, I don't have the expertise to handle my finances in retirement.

I need to outsource this to someone else." I think that's the idea. I don't know if there is a perfect time to do it, but I think it's kind of, if you're asking the questions, you're getting close. Yeah, I think that's right, and go back to the phrasing of the question.

He said he's 14 to 16 years away from retirement, when do I pull the trigger? I'm not sure that's framing the question correctly. I don't think it's temporal, like how many years before I retire, should I? I think it's more like, what is the level of complexity in your financial, in your life, in your financial life, and what is the trajectory of that?

Because it's seemingly getting more complex with every passing year, and for a lot of households, the answer is yes, because you just have so many more moving parts, so many more variables. The other thing is, and this is kind of universal, anxiety doesn't diminish with increased financial wherewithal. You're probably not worried about, "How do I pay my bills?" If you're in your late 40s, early 50s, making good money, okay, so that's different from your 20s and 30s, but you're worried about other things, and we will always find room to have anxiety and to worry.

Yeah, am I going to be okay, am I making the right decisions, how do I not screw this up? That's the thing a lot of these people want to, and it's, when you get to retirement age, it's, do I have enough to live on, and wait, can I buy this second home on the lake, or can I take this trip, and that's the stuff that you want someone to lean on when you're anxious about all those decisions, and you want someone to help you make better decisions, or sign off for you, and say, "Yes, you can do this, it's well within your financial plan." That's when you need the help.

I think that's right, so there's no right answer, it's not a number of years till retirement, it's not an age, it's not a dollar amount. It's at a level where you say, "You know what? This has gotten to the point where it's costing me peace of mind. There are so, I have more questions than answers, and I just want a pro in my life, and let me just get started on the path, and let me at least start talking to advisors, and seeing what they even do." You would be shocked.

Yeah, if he's that far away, he can at least have some conversations, doesn't have to sign his life away. Yeah, you would be shocked at how many people just don't even know what wealth management and financial planning is. Think about how many people come to us, and the first encounter they have with one of our CFPs, they think we're doing security selection, or market timing.

Everyone wants Josh's stock picks. Yeah, and we have to reorient, it's like, "All right, we'll get some portfolio stuff in the third meeting, fourth meeting, but can we figure out where you even are today?" Yeah, where you are, where you're going, and all that stuff. Right, so you could have that conversation any time is the right answer.

Yeah, fair question, though, but I think if you're getting to ask the question, you at least start talking to people. All right, next one, Duncan. All right, up next we have a question from Dylan. "In March 2021, I bet on high inflation and bought $12,000 worth of tips, and have since seen the price drop per share.

I distinctly remember that at the time, inflation was not on most people's radar, which is why I'm confused about how it was priced in. I probably wouldn't change anything because the dividend payments are nice, and it's good to have bonds in addition to my stock-heavy portfolio, but I'm wondering what I missed.

Why has the price dropped despite record high inflation? Can you guys further explain tips, bonds, and ETFs?" I guess there's probably a good lesson here in knowing what you own and why you own it. This guy knows why he bought tips. And how the product that you've chosen works.

Yeah. John, do a chart on here. I showed three bond funds on here, so I did TIP, which is the biggest tips fund. I did the ag on here as well to show total bond, and then I did the short-term tips. And you can see the ag is still-- this is from March 2021, when he says he made his inflation call.

You still outperformed in TIP. It was down a little more than 3%. Ag is down more than 9%. But the short-term tips are actually up 6%. So you did better, and here's where our guy Dylan went wrong here. There's two components to tips. So it's the inflation components, so the Treasury Inflation Protected Securities.

You get that inflation hedge. But they're also the bond component. And if interest rates are rising, especially as much as they did in 2022, they're going to act more like bonds and stocks. In that TIP, the average maturity is almost eight years on those bonds. For the short-term one, it's more like two to three years.

And so you have way more interest rate risk than inflation protection on that longer-term tips. And so that's why they acted more like bonds than an inflation hedge, and you still lost money. Whereas the shorter-term tips, because they're so short-dated, you actually take out the bond component much more in the interest rate risk and just have the inflation part.

Ben, can we back up? Let's take the ETF part out of this. I don't think that there is a genuine understanding amongst the public about the difference between TIPs and Treasury bonds. Why would people think that TIPs would protect them from rising inflation? What is the aspect of TIPs that would even lead somebody to a TIPs ETF?

TIPs are actually probably the most unique normal financial product that there are. It's basically, you get a yield on these plus whatever inflation is every year. So let's say you're-- The yield doesn't change. The yield is fixed. The yield is fixed. It actually increases your principal. But what can change is CPI.

Yeah. So the CPI changes your principal. So if you buy a bond for $100 and you earn 1% and inflation is 3, now you have $103. It increases your principal, and that's one of the-- it's a real hedge against inflation. The problem is, if interest rates rise, it still acts like a bond if you have duration.

And rates went much higher because these TIPs yields were so low, because we were having deflation in the early 2020s, that you were paying a negative yield on them to own that inflation protection. So you didn't really get much bang for your buck. There was no yield there to protect you, and interest rates went up, which meant bond prices went down.

So you got kind of a double whammy of no yield, and it acted more like a bond than an inflation protection. You know, it's interesting. And I think when we look back on this period, we're going to remember that a lot of the attempts to hedge or protect against inflation worked against investors.

And they would have been better off trying to react as little to inflation as possible. You look at commodity stuff. You look at certain types of equities that historically have been good inflation protection. You look at reducing NASDAQ and long duration growth bet exposure. Some of these things initially worked in 2022, and then if you stuck with them for long, you got murdered.

Like in the case of TIPs, the rate of inflation was rising slower than the rate of interest rates. Like the Fed was literally outrunning inflation. So that actually works against you. Now you have-- all right, so now you're hedged against inflation, but you're directly opposed to what the Fed is doing with overnight rates.

So you actually caused yourself more harm than had you just stuck with a low duration or a money market fund. Yeah. You know, cash or money markets were your best hedge against inflation for the most part, because you had the short term rates ratcheted up so quickly, and you got to reinvest quicker.

And that's why-- I mean, you have to feel for these people who did this, because we heard from a lot of people who did this. They said, listen, I thought inflation was a risk. I invested in TIPs. But you're probably getting more of that protection in TIPs from shorter term instruments.

The problem is, it'll be interesting, because if and when rates fall, the longer term TIPs will do better, because they have that bond component, and shorter term TIPs will lag. But you're not-- On the way down. Yeah. It's not because of inflation or anything. It's just because they're going to act like bonds.

You know what's going to be funny? Like in five years, they're going to be making TikTok videos showing the correlate-- they're going to show 2023, the biggest Fed interest rate increases in 40 years, and NVIDIA going straight up. And they're going to say, the best inflation hedge is large cap semiconductor stocks.

So people should stop playing this game. You can get the macro right and still get the trade wrong. That's the point here, is understanding what you own. But yeah, the simple hedges worked better. And guess what? Even though the stock market was bumpy, the stock market is still your best long term hedge against inflation.

And I agree. Trying to out think these things is maybe a little too-- getting a little too cute with these investments, since it was so short term. Here's my full proof inflation hedge. Ticketmaster just blasted out new Pearl Jam dates for later this year. They're going to do two nights at Madison Square Garden, September 3rd and 4th.

Wait, I thought Eddie Vedder was going to wrestle with Ticketmaster's CEO. I didn't think they used them anymore. Maybe they found a way to do this where the Pearl Jam fan club doesn't get screwed over. And because I'm part of it, I got this message. I don't know. Anyway, I guarantee you, whatever CPI is between now and September, the face value of Pearl Jam tickets the week before Labor Day in New York City is going higher.

It's almost like a-- I don't even think I can go to the show. It's my wife's birthday. But it's my inflation hedge. So I put myself in the lottery. However many tickets they'll let me buy, I'll buy them. And I'm pretty sure I'll be hedging out some consumer inflation at a minimum.

You heard it here first, Josh Brown's inflation hedge. Eddie Vedder. Pearl Jam tickets MSG, almost a no-brainer, those are going to be $1,000 tickets. The real best inflation hedge is having the ability to increase your income. I think that's the thing most people probably miss on. Well, Nick Magiulli does a lot of content around that concept, is like, I don't care how much effort you're putting into optimizing your portfolio, put 10x that amount of effort into optimizing your career.

Because that's really going to be the difference maker. And of course, he's right. The problem is you can't sell that in a newsletter or a trader alerts product. That's why it's such valuable advice, because it's hard to package. Yeah, because to your point about your career path, I had the same thing.

My career path was not normal. It's hard to tell people, like, I did this crazy career path, now you try to try to mimic it. It's impossible. You can't mimic anything. Read these books about like the Wall Street legends. You can't do anything these guys did. The serendipity, like who they were in Columbia Business School with in 1965.

You're going to replicate that? You know what I mean? So yeah, I think focus on how you're going to raise your level of income, keep your expenses in check, and give yourself the flexibility to grab hold of opportunities when they come. That's what's going to make the difference, and not which tips ETF do I protect cash with.

That's not going to be the thing. Did you see the government's going after shrinkflation? That could help, right? I thought junk fees. They're doing shrinkflation too? Shrinkflation too. Yeah. All right, good. All right, next question. I think we have a question from another John. Here's my take. Hot, warm, cold, or whatever you determine it to be.

I feel like it makes more sense to put excess money in a taxable account than to max out a 401(k). My why here is that there's a lot of life to live between now and 59 and a half. My biggest fear is turning 50 and just staring at a big pile of money we can't touch for 10 years.

I think this strategy allows for us to have a rich life during all phases of our life and not just save it all for a specific period. I'm well aware of the tax benefits of 401(k)s and the disadvantages of the taxable account. At the end of the day, having that money more accessible just makes more sense to me.

Is it silly of me to think this way? I think they need some better fears, honestly, if that's their biggest fear of having a bunch of money at 50. Josh, you mentioned Nick actually made the case on this show a couple years ago that you shouldn't max out your 401(k) and he was saying it's not worth giving up the flexibility you get from just owning index funds in a taxable account and it's kind of a negligible difference.

Bill Sweet might have a problem with this. I don't agree with Nick's take, but I get where he's coming. I'm not saying he's wrong because this is almost subjective. There's always a mathematical answer and then a what's best for me personally answer. I think what Nick was saying made a lot of sense, what this guy is asking makes a lot of sense.

I think you have to know yourself. For most people, they're not disciplined enough to take-- what's the contribution now, 23,000 a year? Yeah. For most people, they're not disciplined enough to take $23,000 a year of their own volition, a set amount out of every paycheck, set it aside into a brokerage account, and then not pull it out whenever they feel like it.

That is one of the benefits of the 401(k) structure. It makes it almost impossible to get access to your money in a good way. You never see it hit your checking account when you get paid either. It's just taken off the top. That's right. That's behavioral. Dude, Nick is a computer.

He computes. He doesn't need that behavioral Jedi mind trick. I actually like having the 401(k) stuff. I actually like having it locked up so I'm not going to touch it in the next 20 years or whatever. I like the fact that it's difficult to access. I don't even count it.

Yeah. I'm not even tempted to touch it. Right. I don't even think about it. I look at it because I get an email. We have a nice match at our firm and blah, blah, blah, and everyone's in it, and it's working out great, but I don't think about my 401(k) money because I'm 46.

I'm not going anywhere near it for two decades. It's irrelevant. It's fully invested in stocks, by the way, for anyone that's curious. I wrote this in my book, How I Invest My Money. I have zero cash. I have zero bonds. It's 100% invested in global equities. I never change the amounts.

Whatever the max is, I max it out, and I never try to time it, and I never alter what I'm putting where, and I just leave it alone. Since we started the firm in 2013, I think we had our first year for the plan that year. It's done incredibly well, obviously.

Markets have done incredibly well. Could I have optimized it? Could I have put in less and put more into a brokerage account and maybe use that money differently? Yeah, but I'm busy. That's the other thing. It's something that's already taken care of, automated. I don't even think about it or look at it.

I do agree with this. If he's saying, because we get a lot of people who say, "I want to retire at 55." For some reason, 55 is always the year. I don't know why. That's just the one people pick. It just sounds easy. If you're going to retire early- What are you going to do at 55 years old?

Fair. No, honestly. Literally, what do you think you're going to do? Traveling? How much golf? Seven days a week? That is true. You will not retire at 55. No, if you want to retire early, you have to give yourself more flexibility. I agree. It's hard to think right now how you're going to feel at that age and what you're going to do with yourself.

Do you know people in their 50s? Do any of them seem like they should have more free time? To do what? Read about World War II? What are we doing here? You might sell your business. They could get super into politics? Yeah. Sell your business, sit around for two years, sending emails to your kids that they don't read with jokes in them, and then at some point, you have to go do something with yourself or you're going to lose your mind.

This might be a regional thing. I don't know anybody in their 50s who's retired. I know very wealthy people in their 50s. They're working more. There's just so much to do in this world. I don't know. I can't relate to that, unless you really hate your job, which doesn't sound like is this gentleman's problem.

All right. We've got one more. All right. Up next, we have a question that came in through Twitter, which by the way, I'm always, like you say, Ben, I'm always going to call it Twitter. It's hard for me to remember to say X, but someone did call us out for the fact that we changed the name of our show from Portfolio Rescue to Ask the Comp Out.

Oh, man. I got it. Someone did point out that we did that. That's true. All right. If you want to call us Portfolio Rescue, I bet it. Exactly. All right. This one is, "Any advice for someone with a large cash position, but SPY, QQQ, and BTI are at or close to all-time highs, dollar-cost average, suck it up and buy?" All right.

This is like-- The math says buy, but it's not always the right answer for every personality type. Yeah. This is like the psychological barrier of-- we showed on last week's show, the JP Morgan study that if you bought at all-time highs, your average returns over one, three, and five years are better than picking any random day.

So your average returns are higher from all-time highs, and I still get the psychological barrier that people have here of, "Yeah, but what if I put all my money in at the all-time high before bear market, and then I feel like an idiot?" Totally. I mean, Ben, you did the definitive answer to that question, "What if I'm the worst market timer in history, and I only buy major generational tops in the market?" You looked at a hypothetical investor who bought 2007 and all of these other market tops, and you can correct me if I'm wrong, but I think the conclusion was even if you are the absolute jinx, these lump sum investments that you've made at generational market tops still haven't put you that much further behind the eight ball.

As long as you keep the money invested, you're probably going to be okay. As long as you don't give up. Right. I think-- so, John, throw the chart up. We've been talking about this for a while on all of our shows about the money market funds. We're at $6 trillion.

I think there's $2 trillion in CDs. I think people in a lot of these funds are going to be having this conversation themselves like, "Geez, if the Fed cuts from 5% to 3%, what am I going to do now? Am I going to buy that?" Michael doesn't agree with you.

Michael thinks these assets are going to be sticky. I think he's wrong, and I'm in your camp. So a trillion dollars came into money markets last year. I don't think a trillion comes back out and goes into the S&P 500, but I don't think it's sticky. I think the longer this rally goes on, the less likely it is to be sticky, obviously.

But I could see treasuries being a hot asset class, like three- to five-year treasuries being a hot asset class. That's the thing. If you see short-term yields going down and bonds rallying because yields are falling, then-- Yeah. You're going to extend. Yeah. We're sending a letter this week, but we did that for our own clients.

It's like, look, we already made the short-duration bet during the pandemic. It was not a market timing call. It was just risk/reward. Why take duration risk with rates at zero if everyone's earning the same yield anyway? And that ended up being a very wise move on the part of the investment committee.

Now it's the opposite. We're not predicting what rates are about to do, but why wouldn't you extend? If it's not that much of a differential between short- and long-term rates, why wouldn't you get a little bit longer here just in case? If you want to dip a toe in dollar-cost average over months or quarters or whatever it is, I can get behind that, even if it's not the right spreadsheet answer.

Yeah. I like AAA corporate bonds here. I like municipal bonds. I like anything other than cash right now. I don't think we're getting the amount of rate cuts that the consensus seems to think we're getting this year. But ultimately, the longer they leave rates higher, the more obvious it is that they're going to be forced to cut them.

Because we're about to run into commercial real estate refinancing risk. We're about to run into a lot of corporate bonds repricing. And it'll hit the lower end first, and people will dismiss it at first. But ultimately, it'll cascade. It'll get worse. And the Fed will cut rates, because conditions will simply be proven to have been too tight.

So it's interesting. It's a paradox. You don't have to be betting on them cutting rates. The better bet is to say, they're going to cut rates too late, but they're going to be forced to. They're going to have to go even bigger. So instead of getting 25 basis points once every other month, it'll be 50 basis point cuts, because they'll be reacting to some bank in Oklahoma blowing up.

So that's the way that I'm thinking about the next couple of years. So I think that that's like a-- it's interesting. I don't think it's like a flight out of money market funds. But I don't think it'll be as sticky as Michael thinks it will. We'll see. I think it'll be a slow trickle.

And maybe that's the way to do it, too, if you're worried about that reinvestment risk. Absolutely. Was this good for you? Was this fun for you guys? Because I got to tell you, this is the highlight of my day. That was great. Yeah, it was great. Always good to have you on.

This is good. Absolutely. New TCAF on Friday. Thanks to Josh, as always. Thanks to Duncan. Yeah, man. Love you guys. Thanks so much for doing the show. Thank you, Josh. Askthecompoundshow@gmail.com. We get these questions from everywhere-- Twitter, people DM me, they respond, YouTube replies, the live chat. Email us.

We're always happy to answer. See you next time. How do people email-- how do people email us? Askthecompoundshow@gmail.com. There it is. There it is. All right. See you next time. See you. you