Kid Money, Sorted

SPEAKER_00 0:05

You're gonna do a really great financial feature. Tom and Don are talking real money.

Wordle and Pshaw

SPEAKER_02 0:11

I still don't think Peshaw is a word. This is my wordle this morning. It was terrible. The word was peshaw. Peshaw! All of you will have done it by now. That is not a real word. It's a sound.

SPEAKER_01 0:25

What's the Webster's dictionary definition of that?

SPEAKER_02 0:29

Actually, the only dictionary I have is the one on my computer, which is I think the new Oxford. That's a 19th century technology.

SPEAKER_01 0:41

I think that's right. Yeah.

SPEAKER_02 0:42

It's big, big. An expression of contempt or impatience. Yeah. Impatience, yeah. That makes sense. First recorded in English in the late 17th century. I'm sorry, but that's not a real for us.

SPEAKER_01 0:54

That's a good idea.

SPEAKER_02 0:56

I failed my Wordle today.

SPEAKER_01 0:57

I'm going to start using that now because you brought it up and see, by the way, how many of these people under the age of 30 will have any idea what a they will go, what? Did he spring a leak? Yeah. Pretty close. They think that already anyway.

Investing for Kids

SPEAKER_02 1:10

So Hello again. Welcome to Talking Real Money and Wordle and whatever the heck we feel like talking about from time to time. I'm Don. That guy's over over there is Tom. And today, today we're going to talk about the children. We're going to talk about things you do for the children. How you invest for children. Back in the olden days, it used to be you just gave them a quarter for an allowance, and they did what they could with it.

SPEAKER_01 1:38

Sometimes savings bonds, too. That would be a good thing.

SPEAKER_02 1:40

Savings bonds. Oh my gosh, my kids still have a bunch of savings bonds that they do not know how to cash in. Because apparently you can't just take them to a bank anymore.

SPEAKER_01 1:49

Just take them to the Department of the Treasury next time you're in Washington.

SPEAKER_02 1:52

Right, where which is fully staffed, I'm sure.

SPEAKER_01 1:54

Oh yeah. They're waiting for you at the gate there, sure.

SPEAKER_02 1:56

Uh anyway, so it's yeah, savings bonds. And then uh we had the Uniform Gift to Miners Account. Which still exist. Yeah. And then the uniform in some states, the Uniform Trust to Miners Account. That's right. U TMA. We'll talk about those. Then we started getting these educational plans. 529s. Then Coverdale. Yeah, the Coverdale plans. That was another education plan. Yep. Then we got uh recently the the what the kid account.

SPEAKER_01 2:30

Well, we you still got the Roth IRA, custodial Roth IRA. Okay, well, we're not there.

SPEAKER_02 2:35

That yeah. Yeah, yeah, okay. That's true. But that's not true. You can't really give money in that one. You can you your kid has to do that.

SPEAKER_01 2:47

The goal behind today is to tie to try to pull all these apart, and especially in light of the recent 530 accounts. Isn't that what they're known as?

SPEAKER_02 2:57

The 530. Well, not in some circles. I know.

SPEAKER_01 3:00

The current president gets to put his name on them for reasons I don't understand. But that's here nor there. We're not uh don't do it to me again. You're gonna want to take the slings and arrows on this. I'm the one who gets all the reviews and so uh the point is to try to figure out, shake it all out, help because people it's very confusing. And I think throwing the and I'll say it there's a lot of things.

SPEAKER_02 3:21

There are a lot of options.

SPEAKER_01 3:22

It's made it more confusing. So let's let's start at the beginning, Don, because we're talking about the kids, and so we don't want to jump in halfway.

SPEAKER_02 3:31

You know, they say the beginning is a very good place to start.

SPEAKER_01 3:34

The first the what is it trip to the moon starts with with one step. Ah and don't don't put me on some of the rockets they're sending up today. So, okay, so let's just assume a couple of things. First of all, the division for me is between money you're trying to set aside for a kid or grandkid that's going to be used in the next 20 years, non-education, right? Then you got the education, and then retirement. I think you need to break it up into those things to try to figure out. Because frankly, when you do that, the aforementioned Ugma or UTMAs, that's money that goes in after you've already paid tax on it. You're you're putting it into securities for them, right? You're buying an ETF, a mutual fund, whatever it is. Um but then when it comes out when they're turn 18, right? When that money is 18 or 21.

SPEAKER_02 4:28

It depends. It's a age of majority. But yeah, it they they take ownership of it. They may not take possession necessarily, but that's that's on you if you don't tell them.

SPEAKER_01 4:41

When they sell the securities and take the money.

SPEAKER_02 4:45

It's their money, it's taxed at their rate.

SPEAKER_01 4:47

There you go. Okay. So but that those, frankly, that should for me, if you're gonna do that, that's for like a car or house, I guess, or you know, some other major expense a a young person might have trouble meeting. Um and I think in today's world, fewer and fewer people are putting money in those, right? I mean, that's a that's kind of a well they've been certainly 20th century part of the yeah. It's still 20th.

SPEAKER_02 5:13

Yeah, they've been usurped, really. They were originally the biggest usurpation was the 529 plan.

SPEAKER_01 5:21

Yeah. Um, so the UTMA, Agma, that's that. You and you could still, by the way, I think you can still do a custodial like savings account, right? If you wanted to, you could open a savings account.

SPEAKER_02 5:30

Well, that would be under an UTMA or UGMA.

SPEAKER_01 5:32

Okay, still would be. Okay. Yeah. Um But that's again, sort of the shorter

529s Beat the Rest

SPEAKER_01 5:37

term money. Then you move into the education part. Now, we mentioned 529s, but there's still Coverdells out there, too. We favor the 529. Money goes in after you've paid income tax on it, right? The money grows, tax deferred, money comes out if it's for an educational expense. And by the way, that includes is it grades after six or something?

SPEAKER_02 6:01

I mean, so you can use it for um You can use it for all manner of private education. That's right. Even pre-uh secondary.

SPEAKER_01 6:10

That's right. Yeah. So that comes out and there's no tax on it as long as it's used in that for that purpose. And the added advantage, and we've discussed this on the program, the one that is, I think, absolutely huge, if you really want to give kids a head start. You could take 35,000 of the money left over from educational expenses, and over a seven, pardon me, yeah, seven-year period, put $5,000 in each year for that young person into their Roth IRA. So now you've taken money that was set aside for education and you've moved it into a Roth IRA. They have a huge head start for retirement. I mean, a massive head start. I think I mentioned this at the retirement recently.

SPEAKER_02 6:54

Um, yeah, to me, of all the programs out there, uh the the uh the 529 has the greatest flexibility, the better options, a higher degree of control by those who made the gift, who created the account, who are the custodians of the account. Uh that makes them really attractive. I mean, UTMAs and UGMAs, let's go back to those for a moment.

SPEAKER_01 7:20

I just want to kind of get those on the You're more familiar with those because you were a broker at the time.

SPEAKER_02 7:24

Yeah, I want to move those to the back burner because the only big advantage to a UGMA or a UTMA is the account is owned by the child but managed by the adult until the age of majority. That means that any money that's made by the account is taxed at the kid's rate unless it gets into the earnings during the dividends and things.

SPEAKER_01 7:51

Okay, yeah, dividends.

SPEAKER_02 7:53

You may not have to pay taxes on those, maybe. Depends on how much. But there's there's a little bit of income tax arbitrage because the kitty tax kicks in when the kids earn more than $2,700 a year. But if they earn less than $2,700 a year, that's essentially tax-free. But as we mentioned, the downside is lack of control when they become of age. Yeah. How many of us were irresponsible 18-year-olds?

SPEAKER_01 8:25

No. Twenty-one, maybe, but at 18 I was pretty good.

SPEAKER_02 8:28

No, I wasn't. Okay. Um so it's not the best thing. That's where the 529 starts to sound really good. Yeah. And and because of uh by the way, you can you can put $7,500 a year into a Roth. From the because that's the max contribution a year.

SPEAKER_01 8:46

Is that what it is now? I think it's change that.

SPEAKER_02 8:48

No, it's $7,500 now.

SPEAKER_01 8:49

So $7,500 a year.

SPEAKER_02 8:52

A year from that. Up to $35,000. Right. Okay. Right. So that that's a another huge advantage. That means the money doesn't all have to go to education. As a matter of fact, if it's less than $35,000, none of it has to go to education. It's a huge benefit.

SPEAKER_01 9:06

And I've got to do that with my daughter because I'm going to spend up, I'm going to sit make sure the $35K is left over. Right.

SPEAKER_02 9:12

You're going to leave her a future.

SPEAKER_01 9:15

Yep, exactly. So, okay, so that's that. But then then I think forgotten before we get to the Trump accounts, is still the custodial Roth IRA. Now remember, a young person has to have earnings of some kind, has to make money. Now we could get into all the definitions. But I've seen people do use lawn mowing money. Um I don't recommend that because the idea that 50 years from now the IRS says, wait, you put in $300 in uh 2004 when you were eight years old. What was tell us about that money? I don't know if that could happen.

SPEAKER_02 9:49

Yes, it could.

SPEAKER_01 9:51

Maybe it doesn't. I don't know.

SPEAKER_02 9:52

I'd rather be because it's the IRS. They can put in their statute.

SPEAKER_01 9:57

The W-2 income, actual income from a job. That'd be my take. But so custodial Roth IRA, and as Don said, you I guess you can go up to the $7,500 on that. And uh that money is going to grow tax-free for a very long time.

SPEAKER_02 10:13

Let me just give you a number, just a sort of hypothetical number. No, it is hypothetical. Let's say you put that away and your kid has $35,000 in their Roth IRA now at age 25. Okay. 25%.

SPEAKER_01 10:31

Remember, I did this at retirement.

SPEAKER_02 10:32

They're gonna leave the money there until they're 65.

SPEAKER_01 10:36

It's it's a it's close to a mil, right?

SPEAKER_02 10:38

No. At 10%, which is the average annual return of U.S. stocks over a hundred years almost. Well, and we're at a hundred now. Yep. That's $1.6 million. Wow.

SPEAKER_01 10:49

Tax free. Free.

unknown 10:52

That's true.

SPEAKER_01 10:53

Which is another reason I think all this should be tax, you know, pay the tax, put the money in, let it grow. Because I think it makes a lot of sense. But okay, so that's the same.

SPEAKER_02 11:01

Particularly when you're young. Yeah, put pay the tax, put it away when you're young.

SPEAKER_01 11:05

So, but and this is by the way, the 529s I've done for my kids and am now doing for my grandkids, because I think it's a great advantage. For my youngest daughter, she's been an earner. She's already piling up money in her Roth IRA,

Trump Accounts Explained

SPEAKER_01 11:18

so she's doing that. But let's move on to the topic de jour, because this is the one that uh it's getting all the attention right now. It's getting money and it's free money. This is the Trump accounts, the 530s, and if your child or grandchild was born between 2025 and 2028, you get $1,000 a year, right? Isn't it a year?

SPEAKER_02 11:42

You get a thousand a year, yeah. Boom from the government. Free money from the government. But only if you're born in those three years.

SPEAKER_01 11:51

Well, and you're gonna have to pay it back in taxes later because where's the thousand? It's a whole other topic. But okay. Then you can take from your uh parents, grandparents, employers, and save another five thousand a year into those accounts. This is money that grows tax deferred. Now here's the I think the real advantage.

SPEAKER_02 12:15

Really? There's I see I'm still fine other than the $3,000, I'm still having a problem finding an advantage there, particularly over the $529.

SPEAKER_01 12:23

Yeah. Yes, that's true. But here's the thing. At 18, you can then begin the conversion process. Take that money that would be basically in an IRA and convert it to a Roth, pay the tax on it, your tax rate probably pretty low at age 18 and start building up your Roth account using that money that you saved in the 530. All right.

SPEAKER_02 12:50

So but let's step back a moment. The 529 allows you to put $35,000 tax-free into a Roth IRA if it is a certification tax-free. No tax. The other one allows you to put it in a Roth, but you still have to pay tax. The only really big deal in there that makes it because you you can still do a a kid can do you can do a Roth, as you mentioned, a custodial Roth for your kid. So how is this any better? I don't see that it is.

SPEAKER_01 13:25

Well, employers could put money in and you can't put employers can't put money in a kid's Roth IRA or $529 for that.

SPEAKER_02 13:32

Boy, that just sounds like one of those.

SPEAKER_01 13:34

And if you live in a zip code that's where the median income is $150 or less, Michael Dell will pop in another $250 for you. Okay. I mean, so it's it it is it at the fringes? Yeah.

SPEAKER_02 13:49

Yes.

SPEAKER_01 13:49

Yes, it's a good thing. Here's the thing. Setting aside that, that I mean, here's the thing it does do. It does get more people sort of in the market. Remember, they're going to invest this in index funds. And of all the choices, by the way, because I know somebody will write me and ask me, I would pick the Vanguard Total Stock VTI out of the choices that they offer now. Yeah. Rather than just the S. You can't get VT. I know. It's that's not United States of America. Uh-huh. Oh, good Lord. Anyway, so they're all this advantage this. You may you raise a great point, the 529, um because that then you have the retirement kicker at the end.

SPEAKER_02 14:27

You could look at the 529 to me in terms of in terms of all the aspects control, investment options, spending opportunities, tax advantages, future retirement advantages, it's got all of this baked into one product that I hope they don't take away, because I think this is one of the best ways for parents to really set their kids up for one form of success or another. Because it can be used for trade schools, it can be used for uh for college, it can be used for retirement. That that gives you so many wonderful options. So for me, it's the winner.

SPEAKER_01 15:07

Yeah. And by the way, I'd be fascinated to see, and I won't be around likely to see it, that when these young people start turning 18, how much of the money stays in these accounts or gets converted to a Roth IRA, or how much just comes out and you're gonna pay tax on that withdrawal, and you're gonna pay the penalty, the 10% penalty.

SPEAKER_02 15:27

Dude, you only have to make it into your 80s to see if that works out.

SPEAKER_01 15:31

A little more than that. Oh, 18 years old. 18 years, you're yeah, it'll be your late 80s. Yeah. I let's let's be honest about that. I don't see myself getting 85.

SPEAKER_02 15:43

I just don't know Paul Mary. Yeah, probably because of that that suspicious boat accident.

SPEAKER_01 15:48

Um, whatever accident it was.

SPEAKER_02 15:50

I don't know how Tom fell off that boat and drowned. He's a great swimmer. I mean, he just went right to the bottom.

SPEAKER_01 15:56

Never never found him. Anyway, uh so I think that's good. So there's all

ETF Picks Under Fire

SPEAKER_01 16:01

these options. If if this is important to you, and I agree with you on the 529s, Don, that's probably a really great option for most people.

SPEAKER_02 16:08

All right now, ladies and gentlemen, the moment you've all been waiting for, it's paper QA time. Tom has his big old stack of dead trees just every night I go to bed and say, it's gonna start going down.

SPEAKER_01 16:20

And next last night, people sent another four questions.

SPEAKER_02 16:23

So we're not even keeping up. No, we're not. So we better try to do four questions today.

SPEAKER_01 16:28

Yeah. All right, let's go.

SPEAKER_02 16:29

Just to keep up. Go.

SPEAKER_01 16:32

Uh Greg from Greg from Lake Mary, Florida. I'm not familiar with Lake Mary.

SPEAKER_02 16:37

Lake Mary's very close to where we are. Really close, yes.

SPEAKER_01 16:40

Don and Don. Writes Greg. Apparently I'm X'd out of this one. I don't get that, but that's okay.

SPEAKER_02 16:46

Been digging into where to put a guy's name Don. That'd be confusing.

SPEAKER_01 16:49

Some people some people like writing Ron and Don because that was a popular radio show, I guess, or something. And I don't care. Call me hey you. Uh I've been digging into where to put real money to work, and I think I've got one. Thesis. Mega cap growth has run hard. So actual bargains now are quality value buffet bargains. Two ETFs do this systematically. Moat, M-O-A-T, buys wide moat companies. I assume these are something's developed, a product that nobody else can do without being a really great swimmer that you just mentioned. Only when they trade trade to protect the castle. Only when they trade below fair value, the literal Buffett playbook. Yeah. That's Moat.

unknown 17:32

Yeah.

SPEAKER_01 17:33

Then he's got a second.

SPEAKER_02 17:34

Oh, M-O-A T. Hold on. I got M O A T. I got to pull it up because I haven't done it.

SPEAKER_01 17:37

Then he's got a second, which apparently is just about time for the barbecue. Cows, C O W Z. The 100 highest free.

SPEAKER_02 17:45

Is that the Chick-fil-A fund? No, that's the anti-Chick-fil-A fund.

SPEAKER_01 17:50

The 100 highest free cash flow yield names, 18 PE and minus 6.4 FCF yield. And it's out of favor right now. Contrarian entry leaning cows for the entry. This is very complicated. But at the end of the day, he says, let's talk real allocation, who's in and how for how much. I probably wouldn't be in for either of these.

SPEAKER_02 18:15

No, I wouldn't. I wouldn't be in for either of these because a couple of reasons. One, they're very small portfolios. I mean, the the cows is a uh 100 stocks. And they have a relatively high expense ratio. The cows fund the PACER U.S. Cash Cows, one just companies that have a lot of cash. They have an expense ratio of a half a percent a year, which is a little on the high side. And then the other one, Moat. And are they buying and selling securities then too?

SPEAKER_01 18:48

Yeah, a hundred stocks. Trevor Burrus, Jr. But I mean, but but the turnover in the fund, there's so things are going in and things are going out. I don't know what the turnover is. See, this is the this is when people tell me, by the way, that's traditional active management of portfolio. Because somebody wrote me yesterday and said they looked us up and we're an active fund manager.

SPEAKER_02 19:07

I said, well, Well, I don't know that that's entirely accurate. They're rules-based like Avantis and Dimensional. Correct. But they're rules-based in a very specific, really tight way. That, by the way, I don't know if there's any historical basis for this because I don't know that there is any robust academic research that not that I can find. Supportable. To support that these are any better than just buying a value portfolio, which you can get for a lot less money. Yep. Yeah, the MOAT is also half a percent, and MOAT's uh portfolio is just fifty-five stocks. Wow.

SPEAKER_01 19:51

So your whole portfolio is 155 stocks. That goes contrary to what we believe as diversification, diversifiers, and our portfolios are going to hold 10,000 plus stocks. So Yeah.

SPEAKER_02 20:05

I mean, again, I'm not horribly against these. I'm not just I'm not uh foaming at the mouth about these. They're not terrible funds. They're just a little on the pricey side. They appear, at least in the shorter term, because we don't have history. They appear to not provide a uh any kind of outperformance that I can see generally over a long period of time. Um so I again I think we're just overthinking stuff. We're trying too hard to find a gimmick that will solve whatever perceived problem we believe exists.

SPEAKER_01 20:43

Yeah. All right. And speaking of that, uh and you may be frothing at the mouth on this

Bitcoin Isn’t Wealth

SPEAKER_01 20:47

one.

SPEAKER_02 20:47

Um because Oh, I'm sure one of these is gonna get me.

SPEAKER_01 20:50

Pensacola, Florida, Michael writes this. I figured since questions, comments were few, you'd be forced to play the Bitcoin segment card. Oh, no, by the way, when we did we were complaining about that, that has turned around dramatically. And thank you for all your questions. Although I feel you still lack real understanding of Bitcoin, I have to say I do appreciate you foregoing all of the nonsense about Bitcoin being a fraud, Ponzi, tulip bowl bubble, etc. Well, I still think it's a tulip bowl bubble, so I uh that fraud, I don't know. But there is fraud that occur seems to occur more like more regularly with Bitcoin than it does with other securities, but that is my take. He continues, your most recent comments were much more measured. I would like to correct you, however, on a few things. Number one, Bitcoin IRAs are not new. I've had my Bitcoin holdings in an IRA for years. Isn't this counter to your points, folks? Buy Bitcoin just to get rich quick. No, people have an IRA to get rich quick.

SPEAKER_02 21:50

How long could could you have had it? It's not long term. We don't have a 20 year track record with Bitcoin.

SPEAKER_01 21:56

Well, a couple years. He says IRAs are going back. I don't know how long it'd been. Because you would needed the security other than Bitcoins itself.

SPEAKER_02 22:03

Here's what bothers me is that the Bitcoiners are are much more hyperbolic than even we are. I mean, to use terms like store of wealth. Well, we're getting to that.

unknown 22:15

Yeah.

SPEAKER_02 22:15

Yeah, go ahead.

SPEAKER_01 22:16

Uh he says, number two, I'm by no means a youngster. I have the knees to prove it. I own and continue to buy Bitcoin because I do in fact consider it to be a store of wealth. Yeah. So a store of wealth is I I don't even like gold as a store. Who would you consider a store of I mean, give me one.

SPEAKER_02 22:34

A bank account that earns four percent.

SPEAKER_01 22:38

Do you expect your bank account to go up and down by 40%?

SPEAKER_02 22:41

No, because it's a good store of wealth. You see, here's the problem with calling anything that has vol I don't I can't call the stock market a good store of wealth. It's a good way to build wealth, but not a great store of wealth because my definition of store of wealth is a an asset that preserves purchasing power. Let me just bear with me. An asset that that that protects your purchasing power with some degree of proven reliability over time and something backing it. The last two things do not fit Bitcoin. Sorry to say.

SPEAKER_01 23:32

Number three. Go ahead. Number three. Bitcoin is volatile, yes. Volatility does not equal risk. Yes, it does.

SPEAKER_02 23:41

It does. Okay, then the stock. I'm sorry, let me just change my entire opinion of everything. I'm just gonna totally the stock market is riskless. Okay, I'm being hyperbolic. I'm being hyperbolic. But wait, what is the risk if you own the entire global stock market? Come on. What is the risk if you own the whole thing? Can the entire thing can the whole thing blow up? Sure. Yes.

SPEAKER_01 24:07

Yeah.

SPEAKER_02 24:07

But if the entire economy blows up, what will Bitcoin that relies on computers be worth? Less. Less. A lot of people. By definition, less. At least uh, you know, you got a factory that homeless people can live in the factory. There's some value there. Go ahead. What else is happening?

SPEAKER_01 24:26

Well, okay, going back, volatility is not equal risk. Now, as advisors.

SPEAKER_02 24:31

That's just a lie.

SPEAKER_01 24:32

That is just a lie. Are gonna tell you they're wrong because when things go up and down, that it just they they can't afford to hold them. Uh he says, this is where I'm disappointed with you guys. You should know this. The Bitcoin fundamentals, he says, have never been stronger. I'm not sure what that refers to. The fundamentals of Bitcoin. I mean, maybe ask your friends at chat GPS.

SPEAKER_02 24:55

What are the Bitcoin fundamentals?

SPEAKER_01 24:57

I'm getting to that. Just are they?

SPEAKER_02 25:00

Did he tell you what they were?

SPEAKER_01 25:02

No.

SPEAKER_02 25:05

I'm I'm rarely I I've been a talk show host for over 40 years, and I have been rarely at a loss for words. What are the fundamentals?

SPEAKER_01 25:18

I can tell you that's true, by the way.

SPEAKER_02 25:20

Fundamentals. Fundamental value. That is the the what something is truly worth in in any scenario. What is Bitcoin worth if all the computers in the world fail? Zero. Right. What's its value? What's its fundamental value then? I don't see the fundamentals because it's got as much fundamental value as a tank of compressed air. You can compress air and you can store wealth in a pressurized container, and then you can reuse that wealth to inflate tires and basketballs and you know, do do things that you would do with like canned air that costs you money. So there is some value into storing air in a pressurized container. But the air inside that container has no fundamental value. Past it's your ability to breathe it for like 30 seconds before you die if you don't have any more. Thank you for your arguments are so, so blasted spuries.

SPEAKER_01 26:21

All right, let's move on to something else. Spuries. Um by the way, did you know that the Romans cut ice from the Alps and stored it underground so that they could serve ice cream to people at the Coliseum during certain events? Wow.

SPEAKER_02 26:35

Okay, that you know, that was a great example of store of wealth.

unknown 26:40

Exactly.

SPEAKER_01 26:41

You imagine that, and they were telling us that the people serving it had to get it out to everybody before it melted. Or you better hurry with that ice cream. On the day I was there, 95 within it. Don't get me gone. All

Why Public Markets Matter

SPEAKER_01 26:54

right, uh, Gregory from El Cajon, California. Gents, love the show, and I'm an appella client. I hope we don't get in trouble for saying that.

SPEAKER_02 27:01

Well, it's he said it in the thing.

SPEAKER_01 27:03

Okay, shout out to Tom for taking talking rather with me several times, and Sean Hoyt for being my guy. That's really nice, Gregory. Thank you for that. Before I start, Don, I don't record because I have a terrible radio voice. Well, nobody has Don McDonald's voice, so get over it. If you AI generate a voice for me, please make it a pleasant baritone. That's funny. All right. I did a little chat GPT research. In 1989, which is a year I can still remember, there were about 7,000 publicly traded U.S. companies. In 2026, 3,900. I think that's like 3,000 less. In the 1980s, there were 360 IPOs a year. 2026, that number is going to be about 220, so a third less. In 2026, Chat estimates 250 to 400 companies will drop out of the stock market. These figures could indicate several things. Yeah. One trend suggests the stock market could become compromised, comprised rather, of a few mega companies, or it could go away altogether. Another trend suggests the best returns may be shifting to private companies, and dare I say crypto. Can you explain why you think the stock market is still the best place to invest long term? What part of the piece of the puzzle I'm missing?

SPEAKER_02 28:17

You're missing a lot of pieces of the puzzle. Uh a lot, because you can only privatize so much. You own your your pool of potential investors in the private equity market is very limited, and it's limited just to really wealthy people. And while they have a lot of wealth, they aren't they don't have the resources of all of us combined. Them and us, the regular wage earners who put money in our 401ks. There will always there Okay, I can't say that because I don't know anything for a fact, but I am very confident this waxes and wanes. Yep. If I agree. People are looking for an opportunity. You see it happen. You see it happen. Well, I'll use uh use a great example. Let's use a company like uh uh Comcast. It just came to mind. Comcast went out buying things. They bought Universal, which get gave them NBC. They they they they they bought a lot of assets, they bought some wireless assets, they had all these cable companies, they did all this stuff, and they took all these companies that were publicly traded and rolled them under their umbrella and took them off the market, basically. Now they're rolling them back out again because they're spinning off NBC Universal again. So, or NBC. So it comes, it goes, it ebbs, it flows, it's in, it's out, and you can't draw a straight line from any point, anywhere, anytime. And every time you do, you end up getting fooled by the market. My guess is that a lot of these private companies, which they've done in the past, will look at the value they're not getting, they that they're not adding any value to their private portfolio because they're out of people to sell it to, and they're going, well, maybe we should sell it to the public market and see what we can get for it. And they'll generally they'll get rich.

SPEAKER_01 30:10

Yeah, why do companies go public? That was my take. They go public to get money.

SPEAKER_02 30:15

For the money that they're gonna get money that the invoice uh a another great example, SpaceX. A lot of very wealthy people put a lot of private capital into SpaceX over the years. And they have been, over those years, chomping at the bit, trying to get Musk to take the darn thing public so that they can realize some of that wealth that they they they can't get it out. There's no way they put the money in to SpaceX, but there was no way to take it back out. The only way to take it back out is either to find a greater fool to buy your share, and there aren't that many of those, or it's to sell it to the biggest greater fool there is, the stock market. And look at the speaking of fools, look at what SpaceX has been doing.

SPEAKER_01 30:59

Yeah, can we say failure to launch? Uh the fact of the matter is, do you need to look at again at businesses as and as entities developed by you look at the two of us, right? Because we own part of a business, and at some point we're gonna Don's already done this a bit. We're gonna want the money back from getting the business started and you know, and we have to find somebody to sell it to. Correct. And the easier way to do that, is especially with a large business, is to go to the public markets. So, yeah, there are fewer companies. Does that mean the market's not working? I think it means the market's working well. By the way, I don't know when we look back a long time from now that you won't look back at 2008 and some of the regulations that came out of all that that convince people they just didn't want to go public at all. There may be just people's attitude, and that could all change. Who knows? So I I wouldn't count on that in the future. And yes, I do think public markets are a great way to get growth on your your capital for all the reasons that we've stated many times on this

Listener Questions and Wrap-Up

SPEAKER_01 32:01

program.

SPEAKER_02 32:01

And by the way, the public markets still amount to trillions and trillions of dollars. Let's grab that last one, just the last one. I promise four. Does it short? It's short, right? Oh, it's very long. Oh, well, then we won't do that one. It's really.

SPEAKER_01 32:17

Okay, never mind. We'll do that for another day. Yeah, it's really long. You'll have to listen to the please, if I could some people get this and some don't. Some write, and and we we love all of you. I'll just put that out there first. I do. Truly. Appreciate it. But some people write me that's a uh I love you, but but because some people write a thousand words on, you know, I'm thinking to this, and then here's my portfolio. We can't do that on the show because that would be an entire program. Number two is unless you really want to come on and discuss it, which we're probably not gonna do because even then it's gonna take too long, you really need to sit down and talk to an advisor because there's just things that are that are idiosyncratic to your situation that we cannot do on the program. So while you write these, sometimes I try to pull a little bit here out to see if we can answer it, but for the most part, those really long ones, you just need to talk to somebody else about it. Trevor Burrus, Jr.

SPEAKER_02 33:11

Peep people, listeners don't want uh hour-long podcasts, we found. Yeah. Generally speaking, the the sweet spot is that long. 20 to 35 minutes somewhere in there. Oh, let me share a little invention with you. They've they've invented something that could solve that problem. Yeah. They call it a chair.

SPEAKER_01 33:30

Oh, and by the way, speaking of that, back to the Coliseum. They're sitting on stones. Tom just got back from the Coliseum. All day sitting on stones in 95 degree heat. Oh my god. At least it was free. The empty. But they had ice cream. They had ice cream and they had parts of wild animals. So they not only killed wild animals on the floor of the Coliseum, they would then cook them for you and feed them. Yum. Would you like a piece of giraffe?

SPEAKER_02 33:54

That rhino, that rhino was a little tough.

SPEAKER_01 33:56

A little tough, a little chewy. Tastes a little like chicken, but still not easy.

SPEAKER_02 33:59

If you want to ask questions, go to talkingrealmoney.com, click the button that says ask a question or the microphone in the lower right corner to speak your questions for the Friday podcast. And again, you got a long one. You want somebody that you can sit down and talk to for a little while. Even if you never become a client, we have people that will talk with you and they won't charge you anything as long as you keep it below an hour. Well, even if you keep it above an hour, we'll just say, No, they'll talk to you.

SPEAKER_01 34:24

They'll review your portfolio free, and they will talk to you. That and they won't.

SPEAKER_02 34:33

Okay. So do all that stuff. Tell your friends about the program, and please keep listening almost every day as Tom, me, and you are talking real money.

SPEAKER_00 34:47

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