00:12
Peter Dunn
Good day, good day. Good day, everyone. It's Peter Dunn. Peter Planner, CEO of your life. I don't know. Hello? It's Peter Planner. Show live. Facebook, YouTube, Twitter. Hello. Damian Dunn, co host of the Pete the Planner show.
00:28
Damian Dunn
Hello pete the planner, host of the pete the planner show.
00:32
Peter Dunn
Dame, how are you? Have you had a good week?
00:35
Damian Dunn
It has been a action packed week, full of ups and downs and ins and outs. It would have made a great Hallmark special.
00:43
Peter Dunn
Boy, I can feel the podcast turning off right now. Dame we did get some feedback from Jeremiah, a longtime listener of the show, who said to me via Twitter this week, can you please quit saying you've got other places to be? It's making me anxious. There he is. Jeremiah there. See what you actually just said it right in the Facebook Live. And I mentioned you, jeremiah, I have only time for you today. That's it. That's all I got. That's all I got is you dame.
01:10
Damian Dunn
Pete, I've got stuff to do today. We're going to have to.
01:16
Peter Dunn
I just genuinely laughed at you. Someone take note. It is February. Or wait, March 4. I don't know. I'll tell you. It's Mrs. Planner's birthday, by the way. Do not wish her birthday on social media because she would not appreciate it. So there you go, dame on the show this week, it's all investing episode. Like, we're trying to increase people's financial acumen this week, so that's what we're doing. We're talking risk tolerance versus risk capacity. We're talking about the diversification mistakes, if you will. And then we're also talking about the herd mentality, which is a lot easier to explain given that, well, it happens on a daily basis in the modern market and the sort of ancient market on top of that. So, Dame, anything else before we get started? Because if not that I have anything to do, but let's just go ahead and do the show, you know what I mean?
02:07
Damian Dunn
No. Let's roll right into it and get this moving.
02:10
Peter Dunn
This party started. Okay, here we go. Three, two this week on The Pete the Planner Show, we answer your money questions. Here's how the show works. You email us. Askpete@petetheplanner.com, askpete@petetheplanner.com. We'll answer your question. We appreciate you listening here on the radio. I'm Peter Dunn. Pete the planner. Joining me, as always, is Damian Dunn. And the last names are the same, but the family's not. Dame, we are not related, and you are joining me on the show. Hello, Damian.
02:41
Damian Dunn
Hello, Pete.
02:42
Peter Dunn
I love to disclaim our lack of relation.
02:45
Damian Dunn
I think everybody does, especially my family.
02:47
Peter Dunn
Yeah, fair enough. Dame, this week on the show, we are talking investing the whole time. We don't always talk about investing on this show, but this week we are completely talking about investing. And we're talking about concepts that will make you a better investor, that becomes less frustrated with your investing decisions. That's a decent way to think about it, right?
03:04
Damian Dunn
Yeah. I mean there's so much that's wrapped up investing. If you choose to really dig into it and we're going to talk about some of those concepts, it's going to be pretty informative.
03:13
Peter Dunn
Well, let's begin. Dame, there is something called risk tolerance. Risk tolerance and people are, generally speaking, rather familiar with risk tolerance. This is something you talk about on a regular basis to the people we serve. How do you best describe risk tolerance?
03:30
Damian Dunn
Risk tolerance is that little feeling you get in your stomach that keeps you up at night or makes you feel a little lightheaded when you open statements when the markets aren't doing so hot. If you look at a downturn in the market as something that is going to hinder you from making your goals or getting to your goals versus a potential buying opportunity or somewhere on that scale, in between, you're dealing with risk tolerance right there. You want to make sure that what you are invested in and your strategy of investments isn't causing you more anxiety than benefiting you in the long run.
04:09
Peter Dunn
Are there signs or is it just like you feel anxious? Because by the way, feeling anxious is a pretty good sign that you got a problem there. Is it that you're checking the market too much or is it that when you see the market you go, how do you tell that you're invested against your risk tolerance?
04:25
Damian Dunn
Checking the markets is a great one if you work with an advisor, calling an advisor more frequently than your structured appointments. Maybe. I'm not saying you shouldn't reach out to your advisor when you've got questions and things of that nature, but if you're calling specifically to ask about investments and how they're doing or why are they going down? First of all, your advisor is going to clue in on that pretty quick and realize that maybe your risk tolerance is off. But that should be a big clue to you, that you need that extra reassurance that maybe your investment strategy isn't appropriate for your risk tolerance.
05:01
Peter Dunn
Do you think people claim to be more aggressive than they really are or do you think people claim to be more conservative than they really are? What do you think is the more common problem?
05:12
Damian Dunn
First, it goes both directions totally. Some people will say that they are way more conservative when actually they're a little bit more comfortable than that. But usually I see most people say they're more aggressive than they actually have the capacity or sorry, the tolerance to withhold.
05:28
Peter Dunn
Which then brings us to our next topic as it relates to risk, and that is risk or capacity for risk, I should say. And Dame, that's a little different. Capacity for risk is super interesting and it's what takes a conservative investor and sort of shakes them and says, hey man, you got to do something because your inability or your unwillingness to take risk is actually hurting you. Yeah.
05:53
Damian Dunn
Risk capacity is a really interesting little critter because you may have a very high risk tolerance, but the capacity that your portfolio is able to withstand or needs to withstand at any point in time could vary differently than what your risk tolerance is. So let's say you are within a couple of years of retirement, and you want to make sure that money isn't going to fluctuate or be exposed too much volatility because you're going to require it to live in retirement. That capacity is going down. Your tolerance may still be high. You still might be okay with some swings mentally and emotionally, but your portfolio can't stand it because you need those assets to make sure that your retirement you're going to be able to transition to retirement smoothly. So risk tolerance, risk capacity are related, but they are not equals.
06:41
Peter Dunn
It's one of my favorite concepts. I think of it a little different. I think about what my financial goals are and I think the minimum amount of return I need to get in order to achieve those goals. And then, generally speaking, in my opinion, for my own financial life, I don't take any more risk than I have to. There it's a little different spin on it, but I find that sometimes because people don't have well defined financial goals, that they don't know their capacity for risk, which is a giant mistake.
07:15
Damian Dunn
Yeah. If we think about generalized risk capacity for the average person, it's going to be really high. When you're younger, you've got your first job, not going to retire for a long time. If we're saying retirement is the goal, you have a large capacity for risk because there's plenty of time for markets to go up and down and for you to accumulate assets over that period of time, that capacity is going to diminish the closer you get to retirement. And frankly, it'll probably be as small as it will ever get, potentially right before retirement, right before and right after retirement, you need those assets to be stable. Interestingly though, the older you get, the possibility is there that your risk capacity goes up because you may not need as much money the older you get in retirement. So you might be able to take some additional risks if you choose to, because the demand on that cash may not be the expected need for longevity in that cash may not be what it once was.
08:13
Damian Dunn
10, 15, 20 years prior.
08:15
Peter Dunn
This weekend in central Indiana. This past weekend, it was very nice, 60 some degrees. It felt like spring. There's always that nice day. And I played basketball with my son and his friend. They are in fourth grade in our driveway, and we lowered the goal, and I was dunking on them. And I went to dunk on my son Ted, and he nearly undercut me because he did not know that you can't undercut a large person while they're hurling towards a basketball rim and dame it was after that game when I went inside and said to my wife, hey, Ted almost killed me. That my risk tolerance. I had to reevaluate it, honestly. And you think about it, the older you get, it's not just investment risk tolerance that changes. It's the risk I'm willing to take with my body to play basketball. I stopped playing in pickup games a long time ago when I tore a muscle in my legs, I was like, what's the point of this?
09:12
Peter Dunn
Think about food, too. I used to be able to risk having a triple cheeseburger. That was a risk I was willing to accept. Or a fiery hot bowl of chili, not so much anymore. Basically what I'm saying is I've become bland and old in my bland oldness.
09:32
Damian Dunn
Do you want to confess to how low that rim was that you were dunking on?
09:36
Peter Dunn
I'm not good with numbers. That's a good question. I think it was seven and a half. So, I mean, it was pretty yeah.
09:43
Damian Dunn
Higher than I would have given you credit for.
09:46
Peter Dunn
How much? I mean, I know this is a financial show every once a year, but what goal could you currently dunk on? What height the max?
09:58
Damian Dunn
Probably eight and a half would be my guess.
10:00
Peter Dunn
Me too. Yeah, me too. Eight and a half? Yeah, maybe eight and a quarter. Those extra three inches is where the ball gets hung on the rim. Dame all right, so if your advisor talks to you about risk tolerance, which is a very common thing, you take a risk tolerance questionnaire. Be sure to talk about capacity for risk or risk capacity. It is a additional element that I think in many ways is more informative once you've come to terms with your risk tolerance, what do we say? Dama I was listening to a show about basketball, and the guys were talking about risk capacity. How do you bring this up?
10:44
Damian Dunn
Ideally, it comes up naturally inside of a conversation led by the advisor. However, as you start to look at the projections towards retirement, ask, okay, how much volatility can my portfolio withstand within that? Maybe five year on either side of that date that you pick out. And make sure you've got a plan so that if you have a rough market, you don't have an adverse sequence of returns risk that you're going to run into, and your money is going to be just fine.
11:11
Peter Dunn
Beautiful. Our goal really is not to displace your financial advisor, because we are not financial advisors. Our goal is not to make you feel worse about your financial advisor. Our goal is to help you become a better client so your financial advisor can serve you better, plain and simple. Coming up after the break, we'll do more about that. Sort of like, what are the risks of diversification? How can it go wrong that's next on the Pete the Planner show. I'm Pete the planner. My man Brian pinkens comes in with his last dunk, was on a ten foot goal was six years ago. It is worth noting that Brian pinkens is a large man.
11:49
Damian Dunn
I was going to say that indicates one of two things to me about Brian pinkens. Either he is very tall, or he is very young.
11:55
Peter Dunn
Mr. Pinkens, what are you, six? Six? I think he's six, which when I talk to him face to face, I'm basically looking at his navel. It's very I was in my driveway the other day doing something, and I don't know why. This other person walked by, and they were very tall, and I thought, you know what? I think I'm a small man. It just hit me. I was like, I never really aspired to be a small man, but I am a smallish man compared to big men.
12:25
Damian Dunn
I mean, you're just over average height for a US. Male, aren't you?
12:28
Peter Dunn
I'm five nine and a I think that's just over. I think five I'm average in any way that you look at it.
12:36
Damian Dunn
Well, then you're average, I guess.
12:38
Peter Dunn
Damien, what occurred to me this week that there's a huge disparity between how much people bowl and how much rich people purport to like bowling. Have you ever seen a mega mansion? There's always a bowling alley in the mega mansion, and it makes you think wealthy people must like to bowl. How many times a year do you bowl?
13:02
Damian Dunn
Zero.
13:03
Peter Dunn
Okay. Mrs. Planner and I were having this discussion last night because I was making this point to her because I like to be tedious to everyone in my life. And were like, okay, we've bowled twice this year because it was a pandemic. We had nothing else to do. So twice. If you're a wealthy person that has, like, a bowling alley in your house, like Tony Stewart put up his hunting preserve in Columbus, Indiana, up for sale for $30 million this weekend, and it's like he has a bowling alley. It's like, well, okay, maybe that translates a little bit, but sometimes out in Bel Air or something, people have a bowling alley. It's like, who's bowling that much?
13:43
Damian Dunn
Have you ever had a bowling alley in your home while you've been enjoying a couple of glasses of wine? Because maybe your perspective changes.
13:50
Peter Dunn
It's a good point.
13:51
Damian Dunn
At the level of your blood alcohol content.
13:54
Peter Dunn
Is that the thing? If you have bowling alley, you like to parte.
14:00
Damian Dunn
There'S pictures of was it Nixon bowling in a bowling alley of the basement of the I mean, I think it was super popular at one point, but for whatever reason, it's just somewhat fallen out of vogue.
14:11
Peter Dunn
I wonder if the White House having the bowling alley is what sort of influenced other large estates to have a bowling alley. I'm sure it did, yeah.
14:20
Damian Dunn
Can you imagine having foreign dignitaries over to the White House, and it's like, hey, want to go bowl a couple of rounds?
14:29
Peter Dunn
I don't know what made me think about this, because we're talking about partying, but when Ted was like four or five years old, he came home from school one day, and we're just talking. And it's like when you're a kid and you hear that people that party is a verb. Do you remember when you first learned that party is a verb? It's not like, you're going to party. You're going to party. He like, looked me straight in the eyes. He's like, do you like to party? It was like he was offering me coke on South Beach or something like that. And it was, like, still one of my favorite moments of my life. He just looked me square in the eyes like, do you like to party? I was like, no, I don't want your street drugs, Theodore. First coke reference on the show in a long time.
15:10
Peter Dunn
Not really my thing.
15:11
Damian Dunn
But give up Miguel, and you got to transition to something.
15:15
Peter Dunn
I may have over caffeinated on Wednesday of this week in a high stakes situation. Could have backfired. Could have backfired. Yeah, it's uncomfortable anyway, you know, Dame, I was called I don't know why I'm doing this. I was called salesy this week on two separate occasions by two separate people in two different mean. I am a lot of things, but I've never viewed me as salesy. I just happen to have a big personality. Let me tell you. If you don't view yourself as salesy and you view that to be a negative characteristic and two different people in the same week call you salesy, it burns you to the core.
16:05
Damian Dunn
Yeah, I think that's just more of a common trait among sales. People have bigger personalities, more being able to turn up that extrovertedness and really go after it. They just don't know you, Pete. It's okay.
16:20
Peter Dunn
Yeah, no, that's why I chalked it up. Like, you know, I had a short period of time to make an impression, to talk about what I was talking. So, you know, some people can perceive that as salesy. And maybe I was. I don't know. The fact that I took it so hard when I saw that feedback a couple of different times, I was like, yeah, I probably was. I mean, at some point when someone gives you feedback you disagree with, but it's consistent enough, in a short period of time, you have to stop fighting it and sort of acknowledge it. Yeah.
16:45
Damian Dunn
It becomes instructive, and you can correct whatever things you think might have led to that judgment and move on.
16:52
Peter Dunn
I have. It was Miguel. That's my point. Okay, let's start the show in three, two, one. Back on the Pete the Planner show, dame Diversification is often talked about in the financial world as something that is very good and very healthy. However, what we've learned as people who've been in the financial world for quite some time is that a lot of errors occur when it comes to diversification, even when a person is attempting to diversify. So what I want to do is, of course, take some time to explore the errors that occur when you don't diversify. But more importantly, I want to talk about the common errors that people make in their attempts to diversify. And I will kick this off with something that we see in the 401K space. A number of times, there's two things that people do that don't make a lot of sense, even though there's good intention behind it.
17:53
Peter Dunn
And the first one is to just have a little piece of every investing option within your portfolio, just to say, oh, 5% of this, 5% into this. Just because they're different doesn't mean they're worth diversifying against. And then the second thing we see people do, and this one's actually not good at all, is if you choose to invest in what's called a target date fund, which is a fund linked to the year in which you are likely to retire if you choose to the number of target date funds. So instead of going, hey, I'm going to retire in the year 2045, I'm going to put all my money in that, which is if you're using target date funds, what you should do, what people tend to do, is they'll go, well, I'm going to put 50% in that one and 50% in 2055. I don't know if there's any percents left and I'm going to put them in other ones.
18:39
Peter Dunn
And I was like, well, that's not how they work. And that is a diversification error.
18:43
Damian Dunn
Yeah, there are some super common mistakes and we actually saw this a lot, at least in one of the offices I worked in. In the early 2000s, there was a very popular mutual fund company that I'm sure they knew it, but American Funds. Yeah, they used the same ten stocks in almost all of their big mutual funds. And so you had this thing called stock intersection, whereas you thought you were diversifying into a few different strategies using different mutual funds, but in reality you were just overlapping a whole bunch. So you ended up having larger concentrations in a few number of stocks that were going to impact your portfolio and you never realized that. Now, to their credit, they came up with a tool to help you root that out of your portfolios. But the fact that they had to come up with a tool to help you root that out is a little telling.
19:37
Damian Dunn
So even if you do try to diversify, you may end up investing in the same stuff if you're not careful. So that gets a little bit confusing, but it is something you need to be aware of.
19:48
Peter Dunn
Yeah. What's interesting too, with modern portfolio theory is that some types of investments interact well with other types of investments and actually get that balance out. Just by the nature that things are different doesn't mean they balance each other out. So sometimes what you'll see people do is it's almost like an adverse reaction to mixing prescriptions. It's like, oh, there's unintended consequences. You see that a lot with people that say, oh, don't put all your eggs in one basket, let's choose this basket. And they've haphazardly evaluated the other basket.
20:22
Damian Dunn
Yeah. Knowing what you are investing in, having a strategy that's one of the areas that a financial advisor could really help someone out in is making sure that you have a cogent strategy on how you're going to invest your money. And it's not just a shotgun approach.
20:36
Peter Dunn
One of the ways that I used to see when I manage people's money that they always wanted to go is they'd say, okay, we're going to be in large cap growth companies, large cap value companies. Then we're going to be in some mid caps and some small caps. There we go. And then they'll say, oh, and then we'll throw in some international. And by the way, when you throw international, you're generally throwing in large cap international and you're not actually looking at the other types of international investments that would truly balance out your portfolio. Or you would say I want to be international, but then you would be in like Brazilian stocks and when you really should be in the other brick nation stocks and it used to get sort of complicated. Yeah.
21:17
Damian Dunn
One of the things that's super closely aligned with what you're talking about is a home bias. Often we just invest where we know and the US investment market, us. Stock market is large. It's around 50% of the global stock market. But that's only 50% of the global stock market. And yes, when we have troubles, oftentimes other parts of the world have troubles as well. But if you are solely invested in US companies, you're leaving a lot on the table and you're not actually diversifying. Even though everything else in your portfolio may look diversified, you need to get some geographical diversification in your portfolio as well.
21:56
Peter Dunn
I think back to probably the year 2000, I was trained in the financial services industry to be an investment advisor and I can see my trainer at the front of the room. Sort of a weird story. I graduated from college, but I had to get securities license before I graduated from college. I passed my Series Seven as a college student. Then I was going to get married at the end of July in the year 2000, early July, they sent me to Secaucus, New Jersey to train for two weeks. And I looked out the window of the training room at the World Trade Center every single day for two weeks. And I remember my trainer saying, good sense. I'm like, when you get home, look around your house. How many of those things are made overseas, name them and people are like Sony Television. Then people are like Mitsubishi toaster.
22:47
Peter Dunn
And they're saying, then you see. So if 80% of the things that are made overseas are in your home, shouldn't that be in your portfolio, too? And I'm 20 to nothing years old, and my mind is like, man, he really tied it together. This has really come together for me. I'm going to make it back to Indiana and really help people out.
23:08
Damian Dunn
And you bought a million shares of Capital World Growth and Income and lived your life.
23:12
Peter Dunn
Exactly. No, I had Capital World Growth and Income and Growth Fund of America.
23:18
Damian Dunn
Of course. What else do you need?
23:21
Peter Dunn
I mean, those two together. What's? The Balanced American Balance Fund too. ABAX? Something like that?
23:29
Damian Dunn
I remember I'm going to forget that one.
23:33
Peter Dunn
So anyway, the point is this just because there's a lot of ingredients in the cake doesn't mean that the ingredient belongs in the cake. And I think when you invest and you were like, I'm diversified, I've got 15 things, you just need to pump the brakes and realize that you have different things, but you might not actually be diversified. And the reason you want to be diversified, by the way, goes back to your risk tolerance, which we talked about in the previous segment. This isn't just diversification for diversification's sake. It's so that you're taking the proper level of risk in order to get the reward that you're going for. And if you don't play those two things off of each other, then it doesn't make a lot of sense in relation to your goals. Which is why I also think a lot of modern day trading for amateurs gets sort of weird because there really is no financial goal.
24:24
Peter Dunn
The risk tolerance is not established, and diversification is an afterthought.
24:29
Damian Dunn
Absolutely. It's a lot tougher to have that cogent plan that we talked about if you don't have that long term goal. Day traders have a goal. It's a very short term goal. It's to make sure that they're trying to make money on a daily basis. And that is a lot harder than most people give it credit for. And that's why day traders in general don't make money except in raging bull markets. You catch some times like this or like we had a couple of years ago, all of a sudden you find out who's actually in it for the long term and who's just there to make easy cash. Can we move on to a different area real quick before we break?
25:05
Peter Dunn
Feel free. You've got a minute? You dazzle us.
25:08
Damian Dunn
So I think one of the other areas that we often overlook is excluding anything other than conventional investments. And so it could be precious metals, and please don't hit me up because of the times that we're in, but gold and maybe rentals and farmland, if you're in that part of the country, artwork or whatever it is, there are lots of opportunities for people to try and get invested in these other areas now more than ever. And they are vastly different than what we would see in the stock market and the ups and downs there. So if you have the ability and the capacity to get into some of those other areas I'm not saying you go all in, but maybe have some other things to balance out your overall investment portfolio. Investments just don't have to be stocks, bonds, CDs, things of that nature. They can come in the form of.
25:59
Peter Dunn
Other things, more things that you can talk to your financial advisor about. Look, there are people can do it yourself and you can have a diverse sort of all in one fund. A target date fund offers a lot of diversity a lot of times. But if you can't do that or if you don't have the capacity to do that, talk to a financial advisor. Help them, help you diversify the right way. Coming up after break, our favorite quality, the herd mentality. I'm Pete the planner. I don't exactly know why that's our favorite quality. I was sending a text, a slack, doing the time and then trying to close the segment. So needless to say, I just said words.
26:40
Damian Dunn
It worked.
26:41
Peter Dunn
Go figure. Look at it. I feel like we're teaching things about money today. It's weird when the show is valuable to others.
26:50
Damian Dunn
It'll never last.
26:51
Peter Dunn
I know. Do you think we can give up for three segments?
26:53
Damian Dunn
Well, we're going to find out. Herd mentality is going to be interesting.
26:57
Peter Dunn
Because it can peter out pretty quickly. Yeah, I mean, it's a pretty simple concept. Did you ever oh, you don't have access to the HBO Max. I was going to ask if you watched that Carl icon documentary. Did anyone in the Facebook Live or anybody watch the Carl icon documentary on HBO Max that I recommended last week? Because it's phenomenal. It's phenomenal.
27:21
Damian Dunn
I'll take your word for it.
27:24
Peter Dunn
You know what I might do is later this weekend I'll like FaceTime with you while it's on. And just like I think that's illegal though, isn't just I'm rebroadcasting it.
27:34
Damian Dunn
Didn't Apple release that thing where you can share what you're watching on your phone?
27:39
Peter Dunn
Dame I'm also to the point where I use and understand about 30% of the capabilities of my iPhone.
27:46
Damian Dunn
Did you just have that same realization that I did? This is exactly what it was. Within the last couple of weeks, I looked at my phone and I was like, I don't even know how to use most of what's on here.
27:56
Peter Dunn
Well, it hit me the other day. So on the iPhone you hit up from the top right corner and pull down and there's all these buttons. I'm like, I don't know what that one like. This one here, I've just hit it. What's it do? NFC tag reader. I think I just started. I don't. Know what happened, but that doesn't seem good.
28:15
Damian Dunn
I think you can clear a lot of those buttons off to make you feel better about yourself.
28:19
Peter Dunn
When did I become my father? I like my dad. There's nothing wrong with it. But I found myself, I think I told this last week, I was sort of dancing and I saw myself in the rearview mirror and was like, oh, my God, I'm dancing like Michael Douglas.
28:33
Damian Dunn
Oh, well, I mean, if you can only look like Michael Douglas.
28:37
Peter Dunn
Yeah, I mean, he's a handsome older man. Okay, enough about Michael Douglas. In three, two, one. Back on the Pete the planner show. Dame, has it ever occurred to you that when peer pressure takes hold in the financial world, there's a term for it that leads people to make mistakes they don't intend to make, but they get so carried away with what's going on, and the name for it is.
29:09
Damian Dunn
Are you going to tell us?
29:10
Peter Dunn
No. I was going to hope I was.
29:12
Damian Dunn
This is like a mad libs herd mentality.
29:15
Peter Dunn
Herd mentality. It's been going on as long as people have been exchanging goods and buying and selling them in the capacity. You think about moments like tulip mania, you think about things like all sorts of thing where the herd is going one way and are you going to get dragged alongside of them? So what do you think, dane, help us understand the herd mentality in the.
29:39
Damian Dunn
Most basic level, I think kids these days would refer to part of this as FOMO, making sure that they are being involved in whatever culturally relevant thing they deem appropriate at the time is investing. It's hard not to chase trends when you are trying to make money or build assets for a certain goal. We saw it with the tech bubble a number of years ago. We saw it with just about everything over the last 18 months. But it is very difficult for us behaviorally, to not see something that has done very well, whether it's over a past month or past quarter or past twelve months and not want to be a part of it. And at that point, as you're getting in late, you are often getting in too late. You're not going to receive all of the benefits of just having a nice measured investment strategy where you owned it the whole time, whether it was in good times or bad times, you're going to ride that entire wave.
30:43
Damian Dunn
So herd mentality can of course, you'll benefit a little bit in good times, in bad times, that's where it gets really tricky. Because if you decide you're going to sell out because your friend in the next cubicle said, I can't take it anymore, I'm selling out, I think those things go into the floor. Getting out is one thing, getting back in is another. And that's the really tough part of that decision. But you will have the potential to create long term problems for yourself with those long term goals. If you start to succumb to herd.
31:17
Peter Dunn
Mentality, I want to paint a picture for you sitting around the break room with your colleagues. Let's say, for instance, Dame, that you're 27 years old. And for some reason people say, well, that Dame, he's an old soul. So the coworkers you're hanging out with, they're eating their egg salad sandwiches are all 59 years old. You're 27, like I mentioned.
31:40
Damian Dunn
Sure.
31:40
Peter Dunn
And your coworkers start to talk about how the company stock that they have is no longer a good idea. And one of them said, my broker told me to sell it. And then the other guy says, Well, I have the same broker and he told me to sell it too. And by the time he gets around the table, four of the five people there are selling the company stock. And so you Dame, the 27 year old sitting there. You had hair in this example, no? Yeah. It looked good though.
32:06
Damian Dunn
Wow.
32:07
Peter Dunn
Of course, dreads were a strange choice, but I do like your hair in this scenario. And you think, oh, well, I should totally sell. These guys know what they're talking about. They are my friends, they are smart, they have a broker I should sell. And I have just described a herd mentality and B, I've described why investment objectives matter so much. Those four dudes sitting your table, combined age a lot, 236. There's some math on the fly on a Friday, 236 years old, they have a different investment objective for you. So just because someone sells an investment that doesn't make sense for them, doesn't mean you should sell it because you have your own reason for having it. Yeah.
32:51
Damian Dunn
And it's very difficult to give 27 year old me the benefit of the doubt. It's very difficult. Hear people that you are friends with that you most likely respect, for the most part say, you know what, this isn't good, I'm getting the heck out. And not to think, well, gosh, if they're doing it, I should do it too. So it's very important. There's a thing called an investment policy statement, and it might be overkill for some people, maybe for a lot of people. But the crux of it is this it lays out how you are going to approach investing. It's going to give you a target to shoot for on annual basis. It's going to give you bumpers to try and stay within. And if your overall strategy does fall within that range, then you just keep your head down and keep contributing money to it and let it do its thing.
33:43
Damian Dunn
You'll review that every once in a while, of course, but what somebody else does should have very little bearing on what you are doing, if you believe in what you've set up and how you're approaching it.
33:54
Peter Dunn
I know everyone's expecting us to talk about cryptocurrency right now, but I'm going to skip that and instead talk about NFTs. I mean, I feel like there's a massive herd mentality right now when it comes to NFTs. In fact, I read last week, I believe I may have even talked about on the show aaron Fox, I don't know how to say his name. He's the point guard for the Sacramento Kings and the NBA. He issued, I don't know, released some NFTs and sort of went Awry and went silent and is being accused of fraud. And I think even at that level of celebrity or notability, where a person can capitalize monetize on their fame via NFTs if they were to understand them, that is a herd mentality where people are saying, hey, that is a good idea.
34:43
Damian Dunn
Yeah, this could have easily fallen into part of the diversification strategy as well, but NFTs may turn out to be something that actually has value in the long run. I don't know. I'm not saying that you shouldn't look at them, but certainly don't put a bulk of your assets and your investable assets and wealth into things that are yet unproven. I'm not saying that investment that you've got with your broker is going to turn out just fine, but it's probably got a little bit more of a track record than what an NFT released by an NBA player is going to have.
35:18
Peter Dunn
It's hard not to think back to when you're growing up and your parents would say things to you when you'd get in trouble in middle school and your friends do something, then you join in and get in trouble and they say, well, if friends jumped off a bridge, would you? And then you think about it for a second and you want to be like, Well, I mean, probably, but you can't say that because you get in more trouble. At least I did when my parents would say that, and I would say that back. This is the adult version of peer pressure. And the strange thing is these days that's when you sound like an old guy when you say that people are marketing into the herd mentality. Every crypto commercial you see where fortune favors the brave, every gambling commercial you see, they're trying to get you to be part of this moving herd and make you feel like if you're not doing it, you are missing out.
36:10
Peter Dunn
That is marketing and advertising 101. But when it comes to financial instruments and the ability to take risk, to get reward, it gets pretty nasty.
36:21
Damian Dunn
The average investor, the average person is being manipulated more today than they ever have, and that's exactly what those commercials are trying to do. Now, you may still see an advertisement for Franklin Templeton Online, although I don't know, they used to run commercials during golf tournaments and Mass Mutual and some of those other companies that are sponsoring large events. You may see commercials for things like that. I don't know if it rises to the same level of coercion or manipulation that some of these other things are. And if there's a mad rush to an area, you need to step back and ask why and make sure you understand why it might be right for you, why it might be wrong for you. Try and figure out why other people are doing it and if it really has any staying power or fits in with what you're trying to accomplish.
37:07
Damian Dunn
Because if it doesn't, tune it out, ignore it, move on, keep your head down, doing everything that you normally do.
37:14
Peter Dunn
Which brings me back to Carl icon. I mentioned last week there's a documentary on HBO, Max, about Carl iconic investor, if you will. And something he said during the documentary was, what I've learned is if everyone is flowing one way, I want to be heading in the other direction. And that is how you acknowledge the herd mentality and sometimes take advantage of it. I don't know. I find this to be interesting that if you are made to feel like an outsider because you aren't participating in something that involves risk, I think that's a pretty good indication that you're fine and your instinct to stay out of it is valid and you shouldn't feel like FOMO is reason enough to get off the porch.
38:00
Damian Dunn
Yeah, there's a whole theory on investing that's contrarian investing, which is where Carl was kind of heading with that. So don't feel like you have to do everything everybody else is doing because you can make money other ways.
38:13
Peter Dunn
Come up after the break. Speaking of biggest waste of money, it's this week's biggest waste of money of the week. And of course, Dame's going to weigh in with current events that'll blow your mind, tickle your soul. That's all next on the Pete the Planner show. I'm Pete the planner. When I said tickle your soul, my brain was searching and found a word and then I dismissed that word and said soul.
38:40
Damian Dunn
I was hoping you weren't expecting me to give like a Pillsbury Doughboy laugh.
38:46
Peter Dunn
You and I have talked about this a lot, actually. We talk about it at work all the time. I am an out loud thinker and there is some downside to that, a lot of downside. And one of them is you find yourself creating the word salad as it's flowing out of the mouth and sometimes you have some unfortunate phrases.
39:04
Damian Dunn
Yeah. You understand the struggle I have with radio every week.
39:10
Peter Dunn
Oh, come on. We are oh, I think we're here. This is the two year anniversary of our COVID impact predictions. I should totally go back and find those.
39:25
Damian Dunn
That's what you said last week, but.
39:27
Peter Dunn
I'm not going to. No two year anniversary of you and I going die. Well, this coronavirus, should we serve it with a lime? Actually, were not flip about what was happening. I don't know. Interesting, right? Two years?
39:46
Damian Dunn
Yeah. Man. How time flies when you're having fun.
39:50
Peter Dunn
Okay. Sorry to do that to everybody. You ready to go? Here, let's do this.
39:54
Damian Dunn
Are you ready to go?
39:56
Peter Dunn
I'm ready.
39:56
Damian Dunn
Okay.
39:58
Peter Dunn
Three, two, one. This week's biggest waste of money of the week, right here on the Pete the Planner show is the vintage Stork Club ashtray. Opened in 1929 and closed in 1965, the Stork Club was one of New York City's most prestigious clubs, visited by celebrities, royalty, and a general mishmash of the world's elite. You know, dame like you, of course. This ashtray, believed to be from the 1950s, is a rare piece, most likely stolen from the club in its heyday. Sculpted in black ceramic, it has tapered sides with four indentions for holding cigars or cigarettes, as well as raised white lettering on the outside. Equally as useful as a catch all for small items, it's an instant conversation starter. Dame. The Vintage Stork Club. Ashtray I mean, it's a classic looking ashtray. I feel like Don Draper is knocking the butt off of a palm all under this thing.
41:05
Peter Dunn
What do you think this ashtray cost? It wasn't an was you could buy it. What do you think it is?
41:14
Damian Dunn
I have questions. Will those divots hold my vape pen? Because if they won't, I don't have any use for it.
41:20
Peter Dunn
Dame, of course, is not one that uses the electronic cigarettes or byproducts of tobacco. So that was a joke.
41:30
Damian Dunn
So this is stolen material.
41:32
Peter Dunn
They say that's the thing that's fencing, is it not?
41:36
Damian Dunn
Yeah. How is this legal? I don't understand this, but for argument's sake and for entertainment's sake, I will say that is used ashtray. That's true. Used ashtray.
41:53
Peter Dunn
And that's why it's this week's biggest waste of money of the week. Dame in college, on my 21st birthday, my friend Seamus and I went to Hooters in Clarksville, Indiana all right. To have some chicken wings. And upon leaving the restaurant and getting halfway down the highway on the way back to Hanover, seamus hands me a Hooters pint glass and says, Happy birthday. And at that time and still to this day, I am not one to steal things. I have had guilt for 22 years or 23 years over Seamus lifting a Hooters pint glass and Dame. Every night at dinner when I drink water, I drink it out of my Hooters pint glass to this day. And that is a true story.
42:47
Damian Dunn
How guilty are you if you still use it on a daily basis?
42:51
Peter Dunn
I could feel bad about it.
42:52
Damian Dunn
You could get in your car and drive to the nearest Hooters and say, I need to make something right.
42:57
Peter Dunn
I think the good part for me, and I think this is why I continue to yeah, that's true. I probably should do that. I mean, I'm the one that turned myself in for the accidental shoplifting last week.
43:06
Damian Dunn
Here's the thing. They know you're in possession of stolen property right now. Hooters yeah. As soon as you hit publish on it's out on the interwebs. Right now, Hooters knows that Seamus stole something and you willfully received it. They're going to be looking for you.
43:22
Peter Dunn
I like that. My kids have no idea what's going on with that glass. Like they don't get it because how would they know? It's not really a cultural thing like it used to.
43:35
Damian Dunn
I mean, I started to say you could go to a Hooters and return it. And I was like, do they have Hooters anymore? I don't even know.
43:42
Peter Dunn
Sure, Dave. What's in the news?
43:45
Damian Dunn
Pete, have you heard about surge pricing for new movies?
43:50
Peter Dunn
No.
43:50
Damian Dunn
Ticket buyers at one AMC Entertainment location in Chicago, for instance, could expect to pay an extra dollar more to see the new Batman film this Saturday night than those heading to see the two week old uncharted. And Saturday night screening of the film at a cinemark location in Piqua, Ohio is currently priced $2 higher than one of Dog, according to the chain's website. Though variable pricing has been implemented by the nation's three largest chains, it's unclear how prevalent the new practice will be among smaller chains.
44:20
Peter Dunn
I remember when airlines started doing surge pricing and you were so mad, you just walk around mad. I don't know if this practice at movie theaters raises my temperature at all for several reasons. And part of this dame is clearly the increments are so small they hope people dismiss the ridiculousness of them.
44:41
Damian Dunn
Of course. I'm just wondering what the surge pricing for the new Top Gun movie is going to be when it finally comes out.
44:47
Peter Dunn
All right, so here we go. I'm going to be honest with you right now. It's a question that I'm asking, so I don't know why a question is honest. How much would you pay right now to go watch the Top Gun two movie in theater? What's the cap that you would pay for one ticket? And it's not like a flix where there's dinner and beers. It's just like you're sitting down, you're watching Tom Cruise be handsome with his tooth in the middle of his face. You know about that, right?
45:15
Damian Dunn
No.
45:16
Peter Dunn
He has a tooth that's right in the middle of his mouth that comes right down. It's like in the front. So if you think about your lip and you split it right down the middle. He has a tooth that sits right in the middle where you and I have teeth on either side of the middle split. He has one dead center. You didn't know that. But he's still handsome.
45:33
Damian Dunn
How does he pull that off?
45:35
Peter Dunn
Look it up. You're like, whoa. Anyway, how much would you pay?
45:41
Damian Dunn
Questions on this, too. Is this movie still yet unreleased on like, the only person that's going to have seen it?
45:47
Peter Dunn
No, it's opening weekend. How much are you willing to pay? By what? How much does the movie cost?
45:53
Damian Dunn
Yeah. Because movies in my neck of the woods are less than what they are down in your area. I'd probably pay $20.
46:02
Peter Dunn
Yeah, I think that's probably right. I don't know the last time I've been to a movie. 2019, I got to think.
46:08
Damian Dunn
I will tell you that it's one that I want to see in theater and not wait till it comes out, though, because I think the experience on a big screen with the sound will be tremendously different in that setting versus at home.
46:18
Peter Dunn
What else is in the news?
46:19
Damian Dunn
Well, were talking about NFTs, so I'm going to feed that animal. The Ukraine is planning to release its own collection of non fungible tokens to support its troops defending against invading Russian forces, making it one of the first countries to release NFTs. Ukraine's Vice Prime Minister Michaelio Federov announced the plan on Twitter, writing, quote, every day there are more and more people willing to help Ukraine to fight back. We will announce NFTs to support Ukrainian armed forces soon. End quote. It's the latest initiative in Ukraine's crypto friendly fundraising campaign, which has raised $50 million worth of crypto in the last week. And also a $200,000 crypto punk wearing a blue bandana was sent to Ukraine's wallet on Tuesday. An additional 270,000,000 has been raised in war bonds and some other stuff out there. But NFTs, I have questions, and again.
47:15
Peter Dunn
We have this conversation with respect, given the sensitivity of the situation, but I do have some sincere questions. Number one, it's just chaos in Ukraine. How in the world do they have the ability to organize an NFT offering? And the follow up question to that, sir, is why do people feel like they need to get something to support the effort? Just give them money, if that's what.
47:41
Damian Dunn
You yeah, that's exactly it. I think if you feel so led, then you should just hand the cash over and however method you can get it to them. But to expect something in return feels a little weird.
47:54
Peter Dunn
I would feel incredibly guilty to buy a Ukrainian NFT as opposed to just somehow giving them money. Why do I have to get a memento of a horrible situation?
48:08
Damian Dunn
It's going to be the new War Medal for people who didn't go fight. They're going to be able to display, say, I got the Ukrainian NFT.
48:17
Peter Dunn
Let's end on a better story.
48:19
Damian Dunn
The guy who invented Wordle sold it to The New York Times for an amount in the low seven figures, but he's probably kicking himself for not asking for more. In the first 24 hours that the company integrated Wordle into its website, visits to the page were about equal to the total monthly audience for the entire New York Times site.
48:37
Peter Dunn
I play every morning. This morning I played at 430, and that's about when I play another sign that I'm getting old.
48:43
Damian Dunn
Crossword. This is crosswords for you, Pete.
48:47
Peter Dunn
Has anyone else noticed that in the last couple Of Months. I'm just telling on myself of like I am morphing into an old man. I play every day, and it is the great joy of my life.
48:58
Damian Dunn
This is becoming Pete's confessional time.
49:01
Peter Dunn
Do you play wordle?
49:02
Damian Dunn
I do.
49:03
Peter Dunn
Every Day?
49:03
Damian Dunn
I try to. There's a couple days that slip through.
49:06
Peter Dunn
But most days I know people like to brag on their wordle, so I will do mine. I have missed it once, and I have played for a very long time. Once. Missed Once.
49:15
Damian Dunn
Wow.
49:16
Peter Dunn
You.
49:16
Damian Dunn
Look at you. I think I, too, have missed once, actually.
49:20
Peter Dunn
Look at you. All right, dame, that's it. That's the show. Pretty judicious with time this week. So, dame, we will be back next week, I believe. No one ever really knows. We'll figure that out then. So to everyone else send you good vibes. Because good vibes are all that's in the budget. I'm Pete the planner. That's Damien Dunn. And this is the Pete the show. All right. That's it, man. We did it.
49:45
Damian Dunn
Look at that.
49:48
Peter Dunn
All right, Daniel. I hope you have a good little Friday.
49:51
Damian Dunn
Same to you.
49:52
Peter Dunn
I'm going to go shopping for Mrs. Planner this afternoon because I did not have time this week. So I did not make time this week. I'm doing that after work, and then I'm going to take her home. A new puppy or something. I don't really know.
50:01
Damian Dunn
Danza asks a great question to close it out. What's your opening wordle? Guess.
50:04
Peter Dunn
My opening word will. Guess is about. And my second word is hires.
50:08
Damian Dunn
H-I-R-E-S-I go with arise and cloud.
50:13
Peter Dunn
Mrs. Planner goes with soar with an esoare and until and then our third throw off word. If you have to. We both use Gimpy.
50:25
Damian Dunn
Okay.
50:26
Peter Dunn
I don't know what's wrong with us. Okay, Dame. Got to go. Jeremiah. Sorry. I really do. Dame. Good to see you. Everyone else stay getting money.
