(audience applauding) Okay, so now we've done a great job budgeting, we've done a great job saving, we have money sitting in a retirement account, what do we do with it? We're gonna buy something with it later on down the road, maybe we know what we're gonna buy, but we're not gonna buy it yet, so we need to invest our money for the future.

And that's the next segment. It's gonna be three sessions. Alan Roth will come up and talk first about the language of investing, and then I'll come up for a while and then Alan will come back. So Alan is the founder of WealthLogic LLC, an hourly-based financial planning and investment advisory firm.

He's also the author of a bestselling book, "How a Second Grader Beats Wall Street," and he writes for several leading publications. Maybe you've read him in AARP or other places. Alan has served as a corporate finance officer at two multi-billion dollar companies and consulted with many others while at McKinsey & Company.

He holds a Bachelor of Science from the University of Chicago and MBA from Northwestern University. He's a graduate of the executive program at Stanford University. He's a licensed CPA and CFA, oh, excuse me, CFP. Excuse me, Alan, sorry about that. And despite his credentials, he still claims that he can invest simply.

So Alan, come on up. (audience applauding) - Rick, that's University of Colorado, not University of Chicago. - Oh, is that what I said there? Did I say that wrong? - I had to say that. - Well, I was trying to give you a little bit more, you know. - But I'll support you in something.

One of the ahas I had in my practice is clients would come to me. Some would be really optimistic. I can retire soon, right? Others are, I'll never be able to retire. Which ones do you think had saved far more money? The pessimists, the ones that were afraid of living under a bridge.

And SC, I'm older than you. Guess how much I made in my first job? $15,100 a year. And I knew I couldn't spend that amount, and I didn't. You know, Roth is right. Investing is simple. If you want it, just get the market return. But we here at Infinity Wealth can do much better.

By analyzing fundamental indicators such as P/E ratios, EBITDA, dividend yields alongside technical tools like moving averages and MACD, we seek to identify undervalued assets and entry points. I'll use other big words like understanding the nuances of the market, economic indicators, GDP growth rate, interest rate fluctuations, anticipate macroeconomic shifts while maximizing alpha and managing beta exposure.

My goal is to teach you what this means. Anyone know what this means? - You're about to get a big bill. - You're about to get a really big bill. Well, you won't see the bill because I'll just take it 1% of assets. You won't actually see it. It won't cause any pain.

So what I'm trying to do is, Infinity Wealth impress you with our expertise, but it's financial jargon that has been proven not to work for investors. You'll be impressed and hopefully intimidated. So you'll hand your money over to me that you've worked so hard for, and I can buy a bigger yacht.

(audience applauding) I chose hourly because yachts aren't really big in Colorado. We don't even have big lakes. All right. A question I ask every prospective client. They have to fill out a questionnaire before I'll have the talk with them. Guess which of the four I'm least likely to take?

The sophisticated. It takes far too much time to teach them that they don't know what they think they know. So if you guys are beginners, you have a huge advantage of some of the people in that room. (audience laughing) So I'm just gonna cover some basic. What's a stock?

You're part owner of a corporation. You've got upside and downside. You hope to make money from dividends paid, and the stock goes up. What's more important, by the way, dividend return or total return? Total return. So you may get lucky. You may buy Nvidia. You may get unlucky, Pacific Gas and Electric.

By the way, trick question. What earns more, stocks or bonds? 96% of stocks earn the average of bonds. It's the 4% of stocks, and lately it's been more like 0.1% of stocks that drive the entire market return. So types of stocks, you can slice and dice them any way you want.

There are US and international stocks. Now Nvidia does business overseas. Nestle, based in Switzerland, does business here. So the definition is where is it headquartered? You've got value, core, and growth. Growth are those high-flying companies. Nvidia, value are those that are struggling, like Ford, not growing rapidly. And you've got large, mid, and small.

Market capitalization, are they the most valuable companies? And by the way, is it the most valuable company has the highest stock price? It's the stock price times the number of shares outstanding. What's worth more? $25 bills or $520 bills? The same. What's a bond? A bond is you're merely lending money to a government, a corporation.

They're gonna pay you back your principal if they don't go out of business. And by the way, the Vanguard Total Bond Index Fund follows the Bloomberg Aggregate Bond Index. It used to be called the Lehman Brothers Aggregate Bond Index until Lehman Brothers went under. And see, I'm so old that I remember the statement as a kid, "So goes General Motors, goes America." Buying GM stock is every bit as safe.

Buying GM bonds wasn't as safe. Bond holders got back 5 cents on the dollar. So you have, if the company does incredibly well like NVIDIA or just does okay, you've got no upside, you just get paid back your principal and interest. Now, one of the few terms that my industry has gotten right is something called junk bonds.

Those are bonds from risky corporations. And my advice is take your risk with stocks and have your bonds be the most boring part of your portfolio. Bulls and bears. We had the cutest bear that lived behind our house. But bulls are better. Bulls mean the market is generally up over 20%.

Bears, not so much. When's a better time to buy, bull or a bear market? Bear, I'll show you that in my next presentation. What's a mutual fund? A mutual fund is an investment vehicle that pools money from multiple investors and buys a diversified portfolio of stocks and bonds. It's priced only once a day.

What's riskier, one stock or thousands of stocks? Are thousands of stocks still risky? Yeah. An exchange-traded fund, ETF. Very similar to a mutual fund, but it trades throughout the day. It can be far more tax-efficient, but it's typically more tax-efficient and lower expenses even for Vanguard. For Vanguard, however, many ETFs are just different share classes of their mutual funds.

And the Vanguard index funds, whether they're mutual funds or ETFs, are very tax-efficient. Active management, finding undervalued securities like infinity wealth claims. Timing the market. Passive management, no attempt to find undervalued securities, no attempt to time the market. I'm a market timer. I'm gonna show you in my next presentation.

And holding an efficient portfolio. Anyone know the definition of an efficient portfolio? Owning every stock. You diversify as much as you can by owning every stock. So the three passive funds that I taught my son to invest when he was eight years old, hence the book "How a Second Grader Beat Wall Street", total stock index fund owns as close to as possible over almost 3,700 companies based in the United States.

Very low cost. Total international owns roughly 8,700 companies. And total bond tries to replicate. There are so many bonds out there. Even though this particular fund owns almost 18,000 individual bonds, it's still sampling of all US investment grade, like Lehman Brothers and GM. But it's roughly 2/3 backed by the US government, either treasuries or US government agencies.

And all of these have very low expense ratios. And all were introduced by someone I would call my hero, John Bogle. Power of compounding. I'm gonna also show you the tyranny of compounding in my next presentation. But $1,000 today, if it grows by 7.2%, the rule of 72, by the way, is just an easier way.

And it's an approximation that can be wrong. But if you take 72 divided by a 7.2% return, which is how I picked it, it doubles every 10 years. And you can see how fast it grows. In my book, I noted that Albert Einstein called the power of compounding the most powerful force in the universe.

But that was probably myth, by the way, Jason Zweig taught me, that why would a mathematician think that it was any more than an exponent formula. But nonetheless, by budgeting, by putting money away and letting it grow and not make my industry rich, and betting on capitalism, I'm gonna go through a case study in the next presentation of one guy that really got it wrong.

So where to find definitions? Investopedia.com, I found, is very good. To my surprise, and I haven't tested it for every term, but ChatGPT is pretty darn good. And by the way, I've got the title to Jason Zweig's book wrong. It's The Devil's Financial Dictionary. If you go in and look at some of the terms in my first slide, and look at his book in that dictionary, you'll see what baloney it really is.

So I say that investing is simple. If you can't explain your investments and your investment strategy, maybe not the tax part of it, to any eight-year-old, without jargon, you're probably doing it wrong. But if you can't explain your investment strategy, maybe not the tax part of it, to any eight-year-old, without jargon,