00:13
Peter Dunn
Good day. Good day. Good day, everyone. It's your buddy, Peter Don. Pete the Planner, host of the Pete the Planner show. We're trying to think of what to call the show, and Pete the Planner is what we settled on. Joining me, as always, is my good friend, my colleague, my namesake, Damien Dunn. Hello, Dame.
00:30
Damian Dunn
Hey, Pete.
00:31
Peter Dunn
It makes it seem like I was named after you. I wasn't. You are older than me. So it's conceivable that your family of Dunn's consulted with my family of Duns, and they're like, well, let's go ahead and give him the same last name even though they're not related. What do you think?
00:43
Damian Dunn
I appreciate you pointing out that I'm older than you.
00:46
Peter Dunn
Thanks much. Okay, Danza. Hello. Welcome to the party. Listen, everybody, we're going to record a radio show here. That's what we do every week on the Pizza Planar Show podcast. Dame, let's do a little show planning. So we did get that question in about self directed IRAs, which we are going to not only talk about. Hello, Mike. Good to be with you. We are then probably going to go into alternative asset class discussion in the second and arguably third segment. The third segment is sort of nebulous right now. I think we're going to find our way to it. You know what I mean?
01:23
Damian Dunn
Yes.
01:24
Peter Dunn
Guam and news to follow, Dame. Also, please remind me to mention the affiliates again and again.
01:33
Damian Dunn
Sure.
01:34
Peter Dunn
Repeatedly again. Okay. Sometimes I do a good job of that. Sometimes. Most of the time, I do not. Hello, Casey. Good to be with you. You want to start the show? Because I have things I got to get done today, and so you know how that goes.
01:47
Damian Dunn
All right. We can jump on and gosh. We could just about have the first segment knocked out before people really start signing on.
01:52
Peter Dunn
Did I ask you, how are you?
01:55
Damian Dunn
That doesn't matter.
01:57
Peter Dunn
Well, I don't know. I'm actually trying to decide whether I'm interested in your answer, but it does seem important to ask.
02:05
Damian Dunn
Wow. Since you asked, I mean, I'm doing great, Pete. I've got a big weekend planned, and it's going to be fantastic.
02:12
Peter Dunn
Hello, Jameson. Hello. Is TD watching here today?
02:16
Damian Dunn
I don't know. It's a fair question.
02:17
Peter Dunn
All right, Thomas, if you're watching, hello, Brian Pinkins, ladies and gentlemen, join us on Dame. Do you know what I do every Tuesday night at 10:00 P.m.?
02:28
Damian Dunn
Well, I didn't think were talking about that on the air.
02:32
Peter Dunn
I go to Twitch.
02:34
Damian Dunn
Really?
02:35
Peter Dunn
Yeah, and I watch my friend DJ Metronome, who is a legendary DJ in central Indiana. No, seriously. He has a show called Take That Tuesday. And they used to have for 15 years, they had, like, a DJ set at a particular establishment live. But then when the pandemic happened, they had to go online, and so they created this live streaming community since last March. And of course, you know I'm not going live to an establishment at 10:00 p.m.. On a Tuesday. That's just ridiculous. But I have been virtually tuning in and feeling relatively cool. Needless to say, I'm always the first person there I comment, and then at some point, like, 27 minutes in, they're like, all right, well, Pete, you're probably heading to bed now. And I generally am falling asleep when they're saying that. I bring that up because my friend Brian Pinkins, who is joining us right now, is a frequent attendee to that virtual party as well as his parents, which is why it's so amazing.
03:34
Peter Dunn
Yeah, that's how cool you know you're cool when your parents do cool things.
03:38
Damian Dunn
I might have to download Twitch to check this party out.
03:41
Peter Dunn
You should. Okay, so go to DJ. Metronome. All one word. Metronome is G-N-O-M-E-D-J. Metronome. All one word. Anyway, let's start the show.
03:56
Damian Dunn
All right.
03:59
Peter Dunn
I almost messed up. I almost messed up. I didn't have a clock ready to go. I knew I was missing something. Now it's ready in three, two, one. This week on The Pete the Planner Show, we answer your money questions. Here's how the show works. You email us. Askpeed@peteeplanner.com that's askpete@petetheplanner.com. And whether you're listening to us on our podcast, our Live Friday stream on Facebook or YouTube, or one of our eight affiliates, such as WIO in Cocomo, Indiana, welcome back to the show. Damien Dunn joins me, as always, no relation. He is a colleague, a coworker, a friend, a confidante. He's basically my Golden Girls cast all in one. He is Damien Dunn. Hello, Dame.
04:43
Damian Dunn
Which one would you say I most like?
04:45
Peter Dunn
Pete, that's a good question. How's the song go?
04:49
Damian Dunn
Thank you for being a friend thank.
04:51
Peter Dunn
You for being a friend and a.
04:55
Damian Dunn
Confidant confidant I met which golden girl?
04:59
Peter Dunn
Oh, Dorothy. You're Dorothy.
05:03
Damian Dunn
Yeah, you're probably right.
05:05
Peter Dunn
Who am I? My Blanche.
05:08
Damian Dunn
No, you're probably Estelle.
05:11
Peter Dunn
Okay. Estelle getty okay, so here we go. Dame, we actually have a great question about self directed IRAs. Dear Pete, my husband and I by the way, I'm reading an email from a person. Hi, Pete. My husband and I are trying to get more information on moving our 401 KS to a self directed IRA for each of us. We've had no luck with local investment people. They either don't know enough about them or do not want touch moving the money to a self directed IRA. We are anticipating the market will be tanking soon and don't want to lose most or nearly all of our money that's tied up in a 401K, like what happened in the early 2000s. Can you provide additional information as to whether the self directed IRAs are a good money move for not losing our nest egg in a 401K, or is there a better alternative to the move?
06:05
Peter Dunn
Our money? Thanks for any input. L and J. I didn't say their full names. Listen, here's the thing, dame. We read this earlier in the week and we said we're going to make this a segment, but now reading it again, this is the whole show. I've just decided this is absolutely the whole show today.
06:23
Damian Dunn
All right.
06:24
Peter Dunn
So much there. There is we're going to park self directed IRAs for a second because there's so much more we have to hit before we even get there to answer this question. So this idea that you can take money out of an active four hundred and one K and move it out of the active 401K is a very rare thing. Help us understand that, Dave.
06:49
Damian Dunn
Yeah, so what L and J are referring to, or may not be completely aware of is an in service withdrawal 401. KS can offer, and I say can because they certainly don't have to offer the ability to take money out of the plan and move it into an IRA, a traditional IRA with a broker dealer or a vendor of your choice, a custodian of your choice. A fair number of them do offer this capability. I think it's close to 60 or 70%. Yeah. But according to my research department, it is 60% to 70%. Wow, I was shocked. I would have thought it would have been 30 or 40%, honestly. But there are some stipulations on who can access that money. So there's an age restriction. You have to be, oh my gosh, I'm going to space on this.
07:51
Peter Dunn
I'll tell you, when I was a financial advisor, it was incredibly rare. Only the biggest employers really offered in service withdrawal.
07:58
Damian Dunn
I think that's flip flopped a little bit now, but research can be wrong. It's happened occasionally, but there is an age component to it. So if you're in your thirty s at this point, and you're asking this because you remember the last time there was some big turbulence in the market and you don't want to go through it, and service withdraw is not going to be for you, it's just not going to happen.
08:19
Peter Dunn
Yeah. Which gets to really the second part of this question, Dame. If you have fear around a we'll call it a market correction, primarily because that's what it's called. Moving your money out of your 401K doesn't solve anything necessarily. I mean, it does, but it's just sort of overplayed. If you really feel like you want to protect your money from sinking in value because it's an equity in the equity market, just move it to the cash account within the 401. Yeah, it drives me nuts.
08:54
Damian Dunn
You don't have to be the smartest person in the room on something like this. If you are fearful, do something simple with it. Move it to Treasuries, move it to cash. Do something that's going to hold its value during this time period. You don't have to try and make money on the other side of this correction either. So there are certain asset classes that people like to flee to at times like this. The problem is getting there at the right time, but then getting back out at the right time, too. We're talking about market timing at this point. Using those assets long term as a component of your portfolio is probably going to be the better solution rather than making a wholesale change.
09:40
Peter Dunn
At this point, people don't realize if you feel like a market bump is coming up, and by bump, that actually generally means go up, but you're getting kicked in the teeth. How about that? The market go down. You got three options, right? You can just say, I know it's coming, I don't care. I'm in it for the long term. I'm going to let it dip. Because the reality is when this person said 401K is like they got beat up in their early 2000s, guess what? It recovered. It's up hundreds of percent since then. Okay? So that is the ideal thing to do. The second thing you can do is like you said, I'm just going to sit this one out. You guys have fun. I'll jump back in at some other time, which is also a bad idea because you don't know when to jump back in.
10:20
Peter Dunn
And then the third thing to do I mean, it's the old pigs get fat, hogs get slaughtered situation where it's like, not only am I going to avoid the market meltdown, but I'm going to invest in something alternative to that and make money as the equity market is falling. I would say that takes guts, but I would say it takes a lot of skill, a skill that most people don't have.
10:48
Damian Dunn
I would go a step further and say it takes a crystal ball, because the chances of you pulling this off even within a few days on either side, maybe a week of either side, is slim. Essentially picking the time to get out and then making sure that you get back in at the appropriate time. Because if you leave it in those safety classes, whether that's cash, treasuries, gold, whatever it may be, long term, you're going to suffer for it. So the emotions and the behavior that go along with these decisions are the crucial component of it. If you can't get that right, you're going to be in trouble.
11:26
Peter Dunn
Isn't this also why when people ask a financial question of a show like this, or Financial Advisor or even a coworker, sometimes people ask their coworkers just like, hey, what do you think about this? You seem smarter than me. It's so important to get to the heart of the problem they're trying to solve.
11:44
Damian Dunn
Sure.
11:45
Peter Dunn
Are they really scared of the market? Or do they just want to invest in something they can't invest in within their 401K? Or have they been watching infomercials that tell them that a self directed IRA filled with this, that, or the other thing is the smart thing to do? Because the government's collapsing or this, that, or the other. And that, I believe, is where we're at. I mean, that respectfully to the person who sent this email. I think this person, if they really want to avoid what they view to be an impending market meltdown, there's ten other ways to do it that don't involve an in service withdrawal to a self directed IRA.
12:27
Damian Dunn
Yeah, it's a great question, great point. What's the purpose? What's the emotion behind this? What are they trying to avoid? If you can narrow in on that, then there are, just like you said, there are a number of ways to try and circumvent those issues or make sure that you're taking care of those issues and hopefully accomplishing your overall goal, which is getting through this period, which you foresee coming unscathed.
12:52
Peter Dunn
I want to do something. After the break, we're going to come back and we're going to talk about the self directed IRA, though itself, because it is a thing and it's important for people to understand what it is. But prior to doing that, Dame, I'm going to tell you a slightly awkward story. I was on a radio TV show thing with a guy who's very well known, and he had a theory that 401 KS are a scam, and he put me on the spot on the air. And so we're going to talk about that next, how I responded and why the eyebrow certainly went up. All that is next on the Pete the Planner show. I'm your host, Beat the Planner. All right.
13:29
Damian Dunn
Sorry.
13:29
Peter Dunn
Just doing a little housekeeping here. Levi makes it into the building. Hello, Levi. He says, does an individual with less than a million dollars regular income, but selling something like a business over a million dollars count as income and therefore qualify for the new capital gains rate? That's a good question, Dame. I don't know. I will say I don't know if you're going to talk about today, but I think in a future episode, I'd like to talk about that capital gains rate thing. Do you have it in the news?
13:59
Damian Dunn
Yeah, I don't have it in the news. I wanted to give it a chance to play out and see what kind of traction it got before we inserted it here. But Levi, my guess is going to be that's going to be taxed primarily as capital gains at that point.
14:12
Peter Dunn
So Levi was on my Instagram this week and saw that I posted this pizza planner, Bobblehead, that my coworkers so kindly gave to me for the holidays a couple of years ago. And I held it up and I was talking about male pattern baldness and whatnot. And he noticed that the designer of this particular doll by the podcast people, this visual is fantastic, isn't it? The doll has two Apple Watches one on each wrist. And Levi noticed that, although it's pretty funny, I'm not a cuff bracelet sort of guy. Not that there's anything wrong with that, but I just don't think that's my fashion jam.
14:49
Damian Dunn
You could be.
14:50
Peter Dunn
All right, Todd has a question before we jump back in. I came in a little late, so maybe this has been pointed out, but the fact that Damien has changed his art pictures around in the background is throwing me off. Wait, you did?
15:01
Damian Dunn
There used to be a picture right over my right shoulder. This shoulder. It fell, so I'm waiting to get some way to hang it back up there, but it's still here with me. It'll be back up there soon. Maybe replaced by a different picture.
15:16
Peter Dunn
Actually, I don't think it's creepy at all that Todd was staring that closely into your background.
15:21
Damian Dunn
I just like that he appreciates good art.
15:24
Peter Dunn
All right, dame coming up after the break here, let's get into self directed IRAs. And then obviously, I think we're going to make our way into alternate asset classes in segment three. Like I said, this would all work out well.
15:36
Damian Dunn
Don't forget to talk about affiliates.
15:39
Peter Dunn
Three, two, one. Back on the Pizza Planner show. It's good to be back with you, whether you're listening on WIBC indianapolis, w AWK. Is it called The Hawk? 95 five in Kendallville.
15:54
Damian Dunn
I believe so.
15:55
Peter Dunn
I mean, if your call letters are the Hawk, it's got to be The Hawk. And then wvki and Knox, Indiana. That's Knox with a K. Dame for the break, someone emailed us, and we're asking about a self directed IRA. Maybe we should talk about what a self directed IRA is, because it sounds like an obvious, oh, it's an IRA that you direct yourself and then you ask the question, well, don't you direct all your IRA investments yourself? You can just put stocks in them. You can put mutual funds or ETFs. Why is it not that simple?
16:26
Damian Dunn
Sure. So when most people think of self directed IRAs or they hear self directed IRAs, I think you're exactly right. People go to the fact that I can open up an IRA at Vanguard or Fidelity or betterment or whatever and put money into it and have some choice of what the investments are going to be and how risky it's going to be and all that. And to a degree, I have to agree it's self directed in those ways. However, when we say self directed IRA, we mean it's something a little bit differently. Regular IRAs can only house certain kinds of investments. Pete alluded to that. Stocks, bonds, mutual funds, ETFs, cash, things of that nature. Those are standard, part and parcel, easily to be transacted investments that you can house inside of an IRA. A self directed IRA, well, that gets a little bit different.
17:18
Damian Dunn
You could have potentially real estate inside of a self directed IRA. You could have physical gold purchased with IRA funds. Your investment options broaden quite a bit for a self directed IRA. Now, of course, that brings in other issues that come into play with rules that you have to play by and other costs that get layered in there. And so you don't just open up a self directed IRA unless you really have a specific plan and use and you know what you're doing with it too, which the emailer made a comment about. The local people they talk to either don't know enough about them or they don't want touch them. And I think that's pretty darn common. Most financial advisors that I know, unless it's something that they hang their hat on, they don't want anything to do with self directed IRA. It's just because they're so different and the regulations around them are just off enough that it's not worth it to them to engage in business with somebody who wants to use a self directed IRA.
18:20
Damian Dunn
So it happens occasionally, but it's not common. If you want a self directed IRA, you're probably going to be on your own unless you can find an advisor who specializes in them.
18:30
Peter Dunn
I have breaking news. Dame? Yeah? I'm boring. Did you know that?
18:36
Damian Dunn
You are?
18:36
Peter Dunn
Yeah, I'm heinously boring. I always have been. And when it comes to my own investing, I'm also heinously boring. I think boring wins the race. Can you talk about it at a cocktail party? No, but I'm not going to a cocktail party anyway. I find self directed IRAs to be just unnecessary, risk, in trouble, in my opinion, for my life. If other people want to do them, have at it. But Dame, you mentioned people could even put a rental property within an IRA, a self directed IRA. But help us understand where that gets immediately ridiculous on accident with someone just trying to do what they think makes sense.
19:18
Damian Dunn
Sure. So there's this thing called self dealing and there's a no self dealing rule inside of self directed IRAs. What this means is you can't provide services back to the IRA. So for example, rental property faucet breaks in the kitchen, you decide, you know what, I'm going to save some cash. I'm going to go to Home Depot, buy that faucet, replace it myself, not pay somebody else to do it. Well, guess what? You just provided services back to the IRA and that's a no inside of a self directed IRA. So that's one of the rules that I'm talking about that you could easily run afoul of not know it and have major consequences if you do so. So this isn't something to be opened and starting to transact business in just willy nilly. You got to know what you're doing.
20:05
Peter Dunn
A lot of people are talking about putting bitcoin within self directed IRAs. I want to read this directly from investopedia fees for bitcoin trading take on various forms during the investment process, from initial setup fees to custody and trading fees to annual maintenance fees. For example, setting up a $50,000 self directed IRA account. And I just want to say, Dame, that's incredibly common. $50,000 within a self directed IRA account almost seems like a floor. More than anything, it's going to have at least $50,000 in it. Setting that for training can cost as much as $6,000 in charges during an initial setup, depending on the provider when you're dealing with Bitcoin specifically. And so, again, if what you're trying to accomplish is a hedge against the market, an alternative to the S and P 500, if you're in such a rush to provide that hedge, it's really easy to get caught up in self dealing rules.
21:12
Peter Dunn
It's really easy to get caught up with astronomical fees where you feel better because you've got this hedge. But the reality is, Dame, you are hurting your financial life. Now let's go to what we view to be probably the most common filler within a self directed IRA, and that is gold. Gold bugs, buddy. The gold bugs are back. Did you know this?
21:37
Damian Dunn
Well, it stands for reason. Anytime there's going to be some turbulence, you're going to hear gold bugs start chanting gold from the back of the room. And it will get progressively louder as they catch more ears. And before you know it, you've got a movement on your hands.
21:54
Peter Dunn
Gold rather consistently holds its value. Sometimes it doesn't, sometimes most of the time it does. But if what we're trying to do is to have our money grow, then we should probably go to the data and see what the data suggests around gold. So, Dame, from 1990 through 2020, the price of gold increased by around 360%. That's phenomenal.
22:26
Damian Dunn
Sure.
22:27
Peter Dunn
30 years, 360% cumulative return over the same period of time. The Dow Jones Industrial Average. You know, the boring one gained 991%. Yeah, you hear that? And when the market itself, which everyone wants to hedge against, is three X, the hedge, that seems problematic over a long period of time for the hedge, yeah.
23:03
Damian Dunn
I think when somebody enters into this debate with themselves, they have to decide what they want to accomplish with this hedge. Is it simply tread water? Which is fine. I understand that. I feel you totally on that. You just don't want to lose value in your account. Are you going to try and make money? Because if you are, that's another proposition altogether. So if you can figure this out, there are alternatives to gold, to figuring this out. Gold has a long, mythical history that people, I think, attribute a higher value to than they possibly should. But it is what it is. It's where it's at. And I don't know how to break that emotion that times are tough. I'm going to gold because a gold coin is not going to do you any better than something else.
24:01
Peter Dunn
At that point, I don't mind if people hold gold at all, but if they view it as an alternative to an equity portfolio, as the majority of the portfolio that doesn't even make sense to me. Have 5% of your money and go, I don't really care. But the idea that you would move the core portfolio into a gold holding makes no sense with two other elements here. Dame number one, it is worth noting that over a 15 year period, it's a little different. Right. Over a 15 year period as opposed to a 30 year period, it's really different. From 2005 to 2020, gold increased by 330%. Okay. And the Dow Jones increased by 153%. So it smoked it. But here's my reality as we go to break. You don't have to make money in the market every single year in order to have a successful investment outlook.
24:50
Peter Dunn
You just don't, oh, we're going to lose money this year. Who cares? You don't need your money this year. And that's what people need to understand. Coming up after the break, more yelly, screamy, bald guy. I'm Pete the planner. That was unique. I always feel bad ripping all the gold bugs because I have no problem with people holding gold. It's the people that think that other things make no sense in comparison to gold. I don't know. I don't know. I'm not even articulating myself any.
25:21
Damian Dunn
Well, gold is not a silver bullet in this case, which is confusing because we're mixing metals.
25:27
Peter Dunn
What?
25:28
Damian Dunn
I know gold pays no dividends. It doesn't compound. It has no economic growth component to it. It's just there. This is the primary difference between using gold as an asset class and a mutual fund or stock or whatever. There's going to be compound growth on basically everything else that you invest in, traditionally would invest in. And gold is just going to try and hold its value, maybe go up a little bit, but timing it and how much you hold of it. Again, I don't have any problems, just like you, Pete, of people holding it as an asset class, but just do it in moderation like you would any other kind of alternative investment.
26:15
Peter Dunn
I agree with you agreeing with me.
26:17
Damian Dunn
It works.
26:18
Peter Dunn
Well, all right, let's do this. We're going to come back and we're actually just going to talk about alternative investments in general. We're going to go to the classic I'm trying to think, what was the name of the chart I can't think of is it called like a callan chart or something like that?
26:32
Damian Dunn
The one you sent yesterday?
26:34
Peter Dunn
Yeah. Someone asked a question. Oh, it's danza. I find it so interesting when folks get hung up on a particular investment or investment esque thing, such as bitcoin metals, whole life insurance. I agree. I mean, look, all of those things have a place. They absolutely do. I just think they're often misprescribed, or misadopted for that matter.
27:03
Damian Dunn
Sure.
27:06
Peter Dunn
Have I asked you if you hold maybe you don't want to answer this. Do you want to answer what I'm about to ask or no?
27:13
Damian Dunn
Sure.
27:15
Peter Dunn
I assume you hold physical gold. I don't, not even a piece.
27:22
Damian Dunn
A teeny tiny little nugget and some scrap.
27:27
Peter Dunn
But there's nothing that's like I'm going to trade this for horses or something like that.
27:31
Damian Dunn
No, the medals. I trade in Peter Brass and lead.
27:35
Peter Dunn
That's a gun joke. I don't have any gold. I would be afraid I would lose it. I can't defend myself. I'm a tickle fighter. Okay, let's get onto the show in three, two, one. Back on the Pete the Planner show talking, I guess were talking self directed IRAs and gold. We might as well talk about different asset classes and how they perform over time. Dame, you've been in the financial business, well, a really long time. And here's what I know. Different classes perform differently every single year and it is impossible to pick the winning class in any given calendar year. And a classic financial chart called the Asset Class Winner Chart proves this.
28:31
Damian Dunn
Is that what it's called?
28:32
Peter Dunn
No. Okay, so Dame, what I'm going to do now is for the last ten years, okay, so what's it take us back to? If we go for 2020, then I start in what, 2011, right? Is that how that works? One, two, three. Okay, I'm going to tell you the top asset class for the last ten years, you looked at the chart, do you remember? It not that well, do you remember what is probably the most common winner within that group?
29:06
Damian Dunn
No, I don't.
29:07
Peter Dunn
Okay, good. And let's go through what some of these asset classes are. Everybody, just to help you out, there are small cap which are going to be smaller companies, small capitalized stocks. We've got high yield bonds. Okay, so lower rated bonds that potentially could create more yield for you. Large cap stocks, these are often called blue chip stocks as you hear commodities. Okay, Dame, commodities. Now we actually theoretically could be talking about gold or corn, orange juice futures, things like that. It's crazy. That like pork bellies, pork bellies. On to emerging markets, equity. Okay, so those are countries that are emerging economies. We've got REITs or real estate investment trusts. Oftentimes this is when real estate markets are going up. You can invest in these companies that manage portfolios of real estate, more or less. I always like my oversimplified definitions that really do everything in disservice.
30:20
Damian Dunn
They're really helpful, they're great.
30:22
Peter Dunn
An asset allocated portfolio. Now what's interesting about that is d***, I don't know the mix on that, but we're just going to go with it. We're going to keep going. It is a blend of all of these things. Fixed income. So fixed income, you're going to look at either bonds or you're also going to possibly look at dividend paying stocks too. And then developing market economies is number, whatever. And then the final one is cash. Okay, so those are the categories I just gave you.
30:51
Damian Dunn
Okay.
30:54
Peter Dunn
Just occurred to me. This. May not make for interesting radio maybe.
30:59
Damian Dunn
We'Re too far into it to turn.
31:01
Peter Dunn
Back now you never know 2011 REITs took the cake at 8.3% return on the year REITs real estate investment trusts the worst in that particular year emerging markets equities at -18% okay so dame here's what you know it's 2011 REITs did well emerging markets did terrible now you got to decide how to invest your money the next year which is always complicated. Well, in 2012, it was REITs again at 19.7%, which is highly unusual. To have back to back winners like that. And commodities were the loser. At -1%. 2013 is where it gets pretty wild in 2013, small caps won out at 38.8%, blew everything out of the water in 2013, and REITs were at 2.9%, just if you're wondering. And the loser was commodities at minus nine and a half percent. Then I'm going to just name the years because I think this could really get deep into the weeds.
32:09
Peter Dunn
2014, REITs again 2015 REITs again. 2016 small caps were the winner. 2017 Emerging markets were the winner. 2018 are you ready for this? Yes, cash was the winner at 1.8%. That actually speaks to our first segment today, does it not?
32:31
Damian Dunn
Totally.
32:32
Peter Dunn
Because if the person would have gone the commodities route, which is going to be a blended portfolio of gold and other sorts of things. This person would have yielded -11% that particular year 2019 large caps at 31.5 2020 small caps at 20% dame. This is why when people get fixated on something, they hear on CNBC or something they watch on Bloomberg and this fund is going to be good. And this is the one you need. That's great and all, but does this not prove the point of diversification?
33:12
Damian Dunn
Totally. We don't know. From one year to the next, you may be able to have a decent and maybe even a good guess at where things may go based on geopolitical things and knowing that it's going to be a tough year for developing markets or emerging markets. But to be able to say, you know what, this is blue chips year, we're going all in on blue chips. Or you know what, REITs are poised to make a huge comeback after a down year last year, which I would imagine REITs were towards the bottom of the list last year. Pete, do you have that there they.
33:49
Peter Dunn
Were at the worst they were at.
33:50
Damian Dunn
-5% go figure now do you think that's going to change very much this year? No, but we don't know either we have no idea. So if we can make a good allocated portfolio, that's going to stand up to our risk tolerance and our time horizon and to make sure that it's going to accomplish our goals within a reasonable amount of return either way. What I'm basically outlining is an investment policy statement, Pete, which is a fantastic concept for people to try and walk through and not get hung up on some number that all their friends are achieving. At a cocktail party, make sure that you're hitting your goal year in and year out, and don't worry about it. Then you can move on with your life. Set up reasonable goals. Create a portfolio that's going to accomplish it for you. Let it go.
34:41
Peter Dunn
Hypothetical cocktail party that you and I always mention, it would be amazing. We've talked about this on the show before. Do you have a rate of return that is your target? Like, for me, it's 8%. I don't really care if I get more. I know sometimes I'll get less, but I just want to average 8% over a long term. And all of my own calculations are based on that.
35:03
Damian Dunn
Yeah, same eight. I mean, I've been told that I should expect twelve, but eight, I think is more reasonable.
35:10
Peter Dunn
Levi, in the Facebook Live ask, what was the aggregate performance comparison for the whole time, though? Small cats seem to crush it more years than not. Okay, so the aggregate time frame that I grabbed the last ten years, but it's actually 2006 through 2020 is the aggregate time frame that they looked at. And what's fascinating and by the way, I'm going to answer that levi REITs won six times during that 15 year period. Okay. Won six times during that 15 year period, yet it is not the winner during the aggregate period. Large cap is, and it only won once during the 15 year period. It averaged 9.9 over that period of time annually. Small cap was 8.9 just under that. And so, again, when you look at diversification, you don't have to be the winner in any given year. You just have to avoid being the biggest loser during those years.
36:05
Peter Dunn
The primary loser in any of these years, commodities was almost always near the bottom during this 15 year period. Cash, understandably, was near the bottom, and so were the emerging and developing market portfolios. But that's the whole point of risk is sometimes they'll jump up and get you one. Like in 2017 when it was up 37%, these are the conversations that you would have with an investment advisor. Instead of hearing something dumb like this on a radio show and making the trades yourself on your own, don't do that. If you go like, I didn't know what REITs are, I'm going to look into them. Don't just talk to your advisor. This isn't the show. It's like, hey, you can do it yourself. First of all, don't come to us. We're not trying to manage your money. We're just trying to get you to understand that if you look at charts like this and you're not an intelligent investor that deals does this all the time, you're going to make a mistake.
37:00
Peter Dunn
You just are.
37:02
Damian Dunn
Yeah. If you can't comprise or create the portfolio yourself and then have the discipline to let it go, you need to talk to an advisor.
37:13
Peter Dunn
I thought, we're going to get a frozen joke there. No, I couldn't come up with one fast enough. So now we're just going to go to the break. Dame coming up after the break, biggest waste of money of the week, the bomb in current events. Oh, TD is watching the show today. All right, everybody, we'll be back in just a moment. This is the Pete the Planner show. I'm Pete the planner, and Lucy distracted me there.
37:34
Damian Dunn
And Lucy?
37:35
Peter Dunn
Oh, Lucy's watching, too.
37:37
Damian Dunn
That's an LJ there.
37:38
Peter Dunn
It looks like a smiley face with, like, a tongue sticking out. I know what's happening. That could have been hello, LJ I remember when I first got in the investment business and seeing this chart and feeling, this is so embarrassing. Feeling like, I remember getting this chart in training right after I passed my Series Seven again, a training course. They hand it to me, and I'd never seen anything like it. And I remember taking it home and studying it and pretty much trying to pick winners. If you see this chart for the first time, that's what ends up happening. You're like, well, yeah, I got to pick that one. You know what? Let me see if I can show it real quick.
38:14
Damian Dunn
I was wondering if you were going to try.
38:16
Peter Dunn
Well, I am going to try now, so let's do that. And everybody who's watching along, you can see what this chart looks like. I didn't want to do it during the radio show because then I would be referencing all sorts of stuff. All right, so this is what it looks like. You all yeah, this is what it looks like. And so each color represents a different asset class. And then you can see how it does over time. This particular one just Google asset class returns. Asset class returns. JPMorgan. Put this particular one out. I don't know. But when you start looking at it, don't get so caught up that you start picking stuff, you know what I mean?
39:01
Damian Dunn
Totally. This should be used more as instructive than prescriptive at this point. Just look at it. Realize that a well diversified portfolio is going to be your best bet making this work year in and year out, not just picking winners.
39:17
Peter Dunn
Absolutely. All right. Dame so here's what I'm loading up. Biggest waste of money of the week here. So I sort of just showed my hand there. Let's get started. Oh, I got to do something. Totally forgot to do that. Entertain people for, like, 2 seconds. Dame all right. Thank you. Awesome. We're back at it. Give me a half second here. I forgot to do something, and now I've done it, and we're good. Okay, awesome. Here we go. I'm ready to go in three, two, one. This week's biggest waste of money of the week right here on the Pizza Planner Show is the Budsy. The Budsy. At first glance, Budsy is nothing more than a water bottle. I mean, Dame, if you're looking at it, because I'm showing it to you right now. And for those listening on the radio audience, it looks like a Nalgene bottle.
40:18
Peter Dunn
Like the classic wide mouth Nalgene bottle. Twist off the lid and flip up the spout and it actually turns into a water pipe. A hidden ceramic bowl inside holds flour and has a rubber tab for safe handling. And the discrete design is made from BPA free Triton, just like its hydrating cousins. Fittingly, it requires 420 water to function and it is best used with standard non torch lighters. It's a marijuana pipe, Dame.
40:52
Damian Dunn
I got that.
40:53
Peter Dunn
Yeah, for marijuana drugs. It's $50. Here's my point. First of all, not a weed guy. Not a weed guy. If other people are, great. Enjoy responsibly. Are we not all adults at this point? If you're going to be at a place where you probably are going to enjoy this out in the open, why would you have it disguised like it's an old cold war era Pepsi can that you're hiding a microfiche in? Help me understand why the espionage movement.
41:26
Damian Dunn
I don't see what the use is for this. Honestly, I don't get it. It's not like you're going to try and sneak this into work.
41:33
Peter Dunn
Was Levi says it's perfect for when you're hiking, but you also want to get lost. I can't do any jokes. Better than that. Anyway, I think last year on this show about this time, maybe a couple of weeks ago, a year ago, I was making the prediction that Indiana, the state in which we live, was going to be on track to legalize marijuana in our particular state. And I know a lot of states have gone that route this year based on tax revenue, projected tax revenue to increase the coffers, so to speak. I think Indiana would probably end up being the last state in the United States to do that.
42:16
Damian Dunn
It'll be towards the bottom of the list. I'm pretty confident when I say that.
42:20
Peter Dunn
I am too. But you know what, I got enough other vices. I don't need a new one. Dame, what's in the news this week?
42:26
Damian Dunn
You don't need a reopened AMC. To catch the latest Fast and Furious installment, just turn to retailers, new facilities in same day delivery wars. Three years ago into a partnership it should be three years into a partnership with UK Grocer meets tech provider Okado Kroger unveiled its first shed of delivery sorting bots and a 375,000 foot square square foot. You know what, I'll read going English words at some point. Anyway, there are 1000 robots in this one facility and they sort 28,000 items a day for next day and same day delivery. They also fulfill about 20 stores worth of orders per day. Target, meanwhile, testing sortation centers and micro fulfillment hubs that are being store picked orders or bring store picked orders to consumers in minneapolis. What this gets to kroger expects to double its digital business by 2023, still after the pandemic, and its sheds may not be profitable for several years.
43:28
Damian Dunn
So they're dumping all this money into it because they see business that's going to continue to explode, yet they expect to make no money off of it.
43:35
Peter Dunn
I have so many thoughts. Number one, did you say the word sortation?
43:39
Damian Dunn
I did, and I read that correctly.
43:42
Peter Dunn
Wow. This is the name the reader show. The second thing I want to mention here by the way, did I just make a drug reference on the show knowing your kids were watching?
43:50
Damian Dunn
Yes. Thank you.
43:53
Peter Dunn
I'm sorry.
43:54
Damian Dunn
It's all right.
43:56
Peter Dunn
Don't do drugs, kids.
43:59
Damian Dunn
What he said.
44:03
Peter Dunn
Anyway, the other thing I want to mention here, I remember years ago, there's a large beer and liquor distributor in central Indiana called Monarch Beverage, and I went to their newer facility a couple of years ago to check it out, and it's basically this. It's like robots grabbing and sorting and wrapping and pulling orders. It is a mind blowing facility, but they're big pallets of booze. This is interesting because it's like, all right, and we'll take one string cheese. You can just imagine.
44:34
Damian Dunn
It's like oh, okay. As of Tuesday, you can not only use Venmo to creep on celebrity transactions and your couple friends'relationship dynamics, you can also use it to buy crypto. That's right. The move comes just after a week of Coinbase's head turning direct listing. Venmo users can now buy, hold, and sell Bitcoin, Ethereum, Litecoin, and Bitcoin cash as long as the transaction is at least $1. Using funds from their Venmo balances, linked bank accounts, or debit cards, the feature will roll out to all 70 million plus users in coming weeks.
45:11
Peter Dunn
You know what I think about a lot? Did our parents think newfangled things were ridiculous? Like, I think all newfangled things are ridiculous, I would guess. And then their parents were like, what? That doesn't make sense. But they were our age. They didn't use that voice.
45:29
Damian Dunn
It would have been awkward if they did.
45:31
Peter Dunn
I am feeling increasing. Like, you know me, I'm feeling increasingly jaded. To Nftcoin, I would say I don't care, but clearly I care, because I talk about all the time. I don't know if I'm jealous. I don't know if I just feel silly because I don't understand them. What is my problem?
45:54
Damian Dunn
Yeah. How much of the fun that I poke at crypto is because I just don't get it. I started to read a used case earlier this week. How it's being used? I think it was in the Bronx to help out some communities, some poorer communities. I still didn't get it. I'll be honest. I still didn't get it. So I'm not sure I need somebody to explain it to me, because I want to understand this. I think I understand the blockchain portion of it, that bases bitcoin, but I'm not sure I get how the bitcoin itself is going to make this work.
46:35
Peter Dunn
For longtime listeners of the show. We used to have a guy on named Jeff, the car guy, who's a buddy of mine who owned car dealerships, and he would talk about cars and whatnot. Go figure. He's a buddy of mine. And I remember years ago him telling me that blockchain sort of technology is the future of everything, and maybe specifically within parts and distribution and logistics within the world he was in, but he was studying it. My guess, and I've not talked to him about this in a long time, but my guess is he went after it and made some serious investments. I can't tell if again, my disapproval of crypto is a jadedness because I didn't have the foresight to get in. I'm just being honest. I don't know what it is. But I also know that I'm not willing to try to get in now.
47:25
Peter Dunn
I'll just say that.
47:27
Damian Dunn
A hospital employee in Italy has been accused of skipping work on full pay for 15 years. The man is alleged to have stopped turning up to work at the local hospital in the southern city of Catanzaro in 2005. He's now being investigated for fraud, extortion and abuse office. He was reportedly paid €538,000 in a total over the years that he is thought to have not been working. The employee is a civil servant, was assigned to a job in the hospital in 2005, and it was at this point he stopped going into work, the police said. The police have also accused him of threatening his manager to stop her from filing a disciplinary report against him. That manager later retired and his ongoing absence was never noticed by her successor or human relations.
48:16
Peter Dunn
Isn't this the storyline of Seinfeld when George stops showing up for work? Or Kramer or somebody. Right.
48:23
Damian Dunn
Interesting. Maybe this is just the life imitating art theory here.
48:28
Peter Dunn
So, Dame, I think I would know if you didn't show up for work for 15 years.
48:33
Damian Dunn
I appreciate that. I'm flattered.
48:35
Peter Dunn
Yeah. I don't know if anyone around here would know.
48:39
Damian Dunn
Probably not.
48:39
Peter Dunn
I didn't show up for work.
48:41
Damian Dunn
Oh, well, they might, but it might be a different reaction.
48:43
Peter Dunn
I'm convinced most of our coworkers respectfully don't exactly know what I do because it's sort of a nebulous, weird, strange role.
48:53
Damian Dunn
Yeah.
48:53
Peter Dunn
I talk a lot.
48:54
Damian Dunn
You do?
48:55
Peter Dunn
I don't know if I do anything else.
48:57
Damian Dunn
Finally, Pete, the Academy Awards are this weekend. My Oscar pick this year is going to the Grouch. I'm looking forward to seeing him deliver his acceptance speech from his trash can on stage.
49:11
Peter Dunn
Was that the big one?
49:13
Damian Dunn
That was it, yeah.
49:17
Peter Dunn
Dave said I got a great joke to end the show today.
49:19
Damian Dunn
No, I didn't say great joke. I said I had a joke that's not going to go over well, but I wanted to say it anyway.
49:24
Peter Dunn
Oh, man, that was great sending you good vibes, because good vibes are all that's in the budget. That's dame the reader. I'm Pete the planner. So glad you listened this week. And this is the Pete the Planner show. Never tell anyone, including me, that you've got a good joke.
49:42
Damian Dunn
I didn't say it was a good joke. I said it was a joke.
49:47
Peter Dunn
But by the fact that you tell someone you have a joke means you think it's good.
49:52
Damian Dunn
That's true. I'll go with that.
49:54
Peter Dunn
I'll tell you one of the worst things ever, and I've stopped. If I'll do an event, they read your bio. And in my event, he's like, former comedian. And as much as I can, I avoid that now. Right. Because while it's interesting for people to.
50:07
Damian Dunn
Go, oh, this is going to be.
50:08
Peter Dunn
Funny, telling people you're funny before you try to be funny is not a good idea.
50:16
Damian Dunn
Noted.
50:17
Peter Dunn
No, this is not criticism of you. I was just telling other people, I.
50:21
Damian Dunn
Think we all know what you're doing.
50:25
Peter Dunn
D***. You taking the rest of the day off, buddy?
50:27
Damian Dunn
Yes, I am.
50:29
Peter Dunn
To explain the marijuana references to your kids.
50:32
Damian Dunn
Yeah, I'm going to have to sit down and have that discussion with my kids now. Thanks.
50:36
Peter Dunn
You know what? You should, though.
50:38
Damian Dunn
I should.
50:39
Peter Dunn
You know what? It's weird when you watch stuff on TV and, like a commercial, and it's like a little bit racy, and you're like, my kids sitting right here, like, do I bring it up? Do they know that? Did you have those thoughts?
50:55
Damian Dunn
Yeah, I was reading the comments on the sidebar and watching people have comments on my joke.
51:04
Peter Dunn
Well, I'm glad you were listening to the show. All right, hey, let's just go ahead and end it there so I can do some things. Thank you all for joining us. Next week, we're going to do a show again, and it's going to be real. I'll be fully vaccinated. I probably will be in a fever state like I was last time. I was dead during the vaccination, but I'm fine. All right, thanks for joining us, everybody. Have a good week. Bye.
