034 - Embody Stoic Principles To Become A Better And Less Reactive Investor

Stoicism is an ancient philosophy that can not only change your day-to-day life, but it can have a massive impact on how you invest.

Two main Stoic principles that provide the greatest benefit when investing  are learning to let go of the things you can't control (like the stock market) and focusing on managing your own emotional responses.

If you're interested in learning more about Stoicism, Carmela recommends listening to Tim Ferriss's Podcast episode with Ryan Holiday here.

Want some laughs? Watch this clip from Last Week Tonight where they have a Jim Cramer reel of failures. 

We talked about several undervalued stocks that meet our requirements 

• ARLP
• ABR
• PDI
• NEP & NEE sister companies
• BKH

Drop your comments or questions for this episode on one of our posts.  

• Facebook
• YouTube
• Blog 

If you're looking for a more detailed summary of this episode, click here.


We're trying to grow. Help us reach others who want to learn to invest with confidence. Spread the word and leave a review to help us rank in search. 

We appreciate your support!   

Want FREE weekly market updates, Tim's top 10 dividend picks, and our portfolio updates delivered right to your inbox? Subscribe to our email list.

Stay connected. Follow us on social!

**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

Episode music was created using Loudly.

Transcript

Welcome to roaming returns a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions I'm sure you've heard about philosophers like Plato, but did you know that he was actually a Stoic? In today's episode, we're going to cover Stoicism, what it actually is, and why Tim considers it an essential part of investing and a whole lot of other areas of life. Let's get into it. We are back.
I'm back from the Grekans. I'm back from playing basketball every day. That's all I did when she was gone for two weeks.
I know, I made him this huge list of things to do around the condo and zero of them got accomplished. Hooped and pooped. But a little housekeeping first.
We want to try the first podcast of every month. We want to kind of do a quick review of the previous month. On January, the S&P was up about 2.1. The Nasdaq was up about 2.7. What am I missing? The Dow was up, I think, a little under 2%, like 1.8, 1.9. And the Russell, the small cap, was up about almost 3%, like 2.7, 2.8, something like that.
Overall, our portfolio was up like 1.2%, and I'm not going to get into details why ours is different, but I kind of expect that. If you remember when I said I expect the market to be up about 16% to 20% this year, and I expect our portfolio to be up about 6% to 10%. Our portfolio generally does like half of what the S&P does, but I'm okay with that because we're getting a lot more income than any of the S&P stuff, and we don't have to sell anything for capital gains and whatnot.
I did read an article that I think is relevant. They backdated every January of a presidential election year back to 1934, and if January was up generally, the market, no, not generally, the market was up between 6% and 10%. Sometimes it's up 20%, sometimes it's up 25%, sometimes it's up 2% or 3%.
So from 1934 until now, every January of a presidential election year, if January was up, the market's up for the year. So that data supports what we were saying a couple months ago, that this is going to be an up market year. With the housekeeping done, today's episode is going to be kind of philosophical.
The reason we're doing this episode is because my travels in Greece, the logistics component was an absolute show. We're talking, I think it was 19 hours of travel the first on the way out, and then there was a miscommunication with our Airbnb host where we were actually staying in a room with a lady in Athens, and I was asking her for information in advance telling her I wasn't going to have internet when I was actually in route to her place once I got there, because I didn't want to activate any SIM card stuff, and she gave me her address, and I was like, I wanted your information on how to get into the building and into your actual apartment. So I ended up having to walk down to a dry cleaner place to get a Wi-Fi thing.
My mom tailgated, we're in the hallway. She said it was floor two, apparently it was actually floor four because the elevator had weird numbers, so we pissed off the neighbors, and I was ringing doorbells for the wrong stuff. It was just so bad, and that was just the first day.
The tram or the metro was like sardine packed. My mom was stressed out. Then our ferry got canceled on the way back from when we went out to Santorini.
We missed buses, then we ended up missing the last metro, ended up paying for a taxi that was absolutely ridiculous after we used our metro cards because we didn't know the last one went through. We missed the bus. We almost missed our ferry on the one route.
They were actually lifting the thing up because we were at the wrong part of the port because there was some other issue with something. I was having trouble checking into things. Then our ferry was actually canceled on one of the other islands, and we had to take a puddle jumper from the island to the mainland, which we were very fortunate we were actually on that part of things.
Then we had to catch a bus that we almost missed that they held for us. It was just like an absolute cluster, and then I was in the airport for literally two 16-hour stints between Athens and Zurich on the way back. I split ways with my mom because she changed her flight.
Then the flight that she ended up being on actually got canceled because they were striking in Germany. Apparently, there was all this crazy stuff going on. Then I somehow was trying to relay to him the new pickup time information because it's a two-hour drive from here to Dulles.
I sent him to the wrong airport because I was so sleep-deprived. My mom had to wait an additional hour and a half, and then some crazy drunk lady on her plane was so unruly and unrowdy that they had major, major issues with that whole thing. It was just a giant, giant clusterf**k of situation.
The whole stoicism thing comes in with ... That's what we're talking about today, stoicism. Got to roll with the punches. You can't get hung up on the fact that WTF is going on.
It's old. It's back from Greek and Roman times. Apparently, it was created ... Some dude was on a boat named ... I can't even remember his name.
Zhe Jing or something like that. He was on a boat. His boat sank.
Zeno. His boat sank. He ended up in Greece.
Oddly enough, Greece, right? Yeah. From a boat sinking. Rather than be a woe is me, all my belongings are gone.
Giant pity party. All that. He just learned the philosophy and spoke to the philosophers of the time, and he came up with his own school of thought, which is stoicism.
The general purpose of it is it's a philosophy designed to make us more resilient, happier, wiser, et cetera, better people, and blah, blah, blah, blah, blah. Many people today, they don't really use stoic the way it was intended. They basically use it to describe someone who is indifferent to emotions, and that's not accurate at all.
A stoic person does feel pain. They grieve anger. The difference between someone that's practicing stoicism and somebody that's not is the stoic's reaction to their many different emotions.
Tim is a natural stoic. Yeah. I stumbled upon this, but even though I basically practiced my whole life doing it, I was like, oh, so that's what I was doing my whole life.
It's actually kind of funny. I think I ran into stoicism on Tim Ferriss's, I think, third podcast episode, way, way, way back with Ryan Holiday, I believe his name is. He's a younger guy who really fell into the whole thing.
I think he wrote a book about stoicism. Tim hasn't listened to that episode yet. I want him to do that, because I was so intrigued by it, I put it on my list of things I want to explore at some point.
I just haven't actually done a deep dive, and then it was funny when Tim actually found stoicism, and he latched on, like I've latched on to the personality stuff, so this is actually really exciting to see him now finding stoicism. Didn't you find a stoic investor, somebody who actually is a stoic investor? I found stoic investing, which is what we're going to discuss here down the road, but I don't have an individual stoic investor in mind. Oh, okay.
There's the school thought of using stoicism to better invest with, but okay. The basic, well, to me anyways, this is my opinion, obviously I don't have a PhD in stoicism, but to me, the basic principle of stoicism is you have to separate what you can control in your external life, in your internal life, like your house, or your external life, like your work, or your investing, or your clubs, or whatever you might do in your free time, and then you have to separate that from stuff that you can control. They call that the dichotomy of control, and it basically just means you can't always control your environment, but you can control how you approach things and how you react to things.
Yeah. In Greece, I'm not going to lie, I was a bit panicked when that last ferry got canceled because it was the day before we were supposed to fly out, and then because my mom's airplane thing got changed to a much earlier time to 6 a.m., it was before the public transit system was even running, so we actually had to sleep over in the airport and lost money on the last Airbnb we had. I mean, it was like one thing went wrong after one thing went wrong, and had I let all of that ... Oh, I didn't even mention the fact that we had gale force winds for two days.
We're talking 50 mile an hour winds, consistent winds, for two full days of the four days we were on Santorini. A normal person probably would have stayed indoors and said, oh, I didn't get to do anything. I went out there, ended up peeing on my foot, or eating questionable berries off weird bushes.
I was just like, whatever. It got rained on. It makes our trip to Texas seem like a ... It's like walking the park.
I know. Right, right, right. The reason that's funny, if you've never been to Texas during the wintertime, they have the 4440, which is basically 40 days of winds in excess of 40 miles per hour, and we were there, and it was crazy.
Our van was rocking and shaking, and we had took wind days, so we've never taken a wind day in our life. I've never even thought about needing a wind day for anything, so it was pretty crazy with grease still on that whole thing. It was like I actually enjoyed the crap out of myself.
One of the videos my mom took of me, I was trying to walk up over this hill, and I literally could not get over the crest, because the wind was blowing up at me so hard, I could not go over it. It was pretty interesting. I had a lot of fun.
I don't care if it was windy or not. I tried to maximize my thing. That last day was a little panic making, though, because I was just worried about getting hurt at the airport and everything with the logistics component.
I was like, I don't even know if there's a bus available, and our internet was glitching out, but the lady that we were staying with, I was like, we got to go figure something out. Talk to a local. Talk to her.
She's like, ha. She's like, get to the dinghy. We got to the dinghy.
They shot us across, and the bus driver was super helpful, got us on. It was an amazing drive through the – it was like a cliff edge in the mountains. Greece is actually very mountainous outside of the popular destinations with the beaches in Athens, if most people don't realize that.
The inland is so much more pretty. That's where we spent the five years ago when we went before. That was actually, I guess, a blessing in disguise in a lot of ways, but it's like you got to roll with the punches.
I could have cried. I could have – The whole point of it is if you focused on things you can control versus things you cannot control, it actually will negate emotional reactivity. If you have ever been talking to someone and they just piss you off or annoy you and you blurt something out emotionally, just emotional reactivity is to blurt something out to piss them off.
That is what stoicism tries to avoid. In Carmela's case, like the gale force wind, like if you didn't exercise the emotion from it, she would have been like, oh, I paid $500 to come to this island and it's like 50 mile an hour wind. I can't do anything, whereas if you take the emotion out of it and you just like look at things logically, logically you'd say I paid $500 to come to this island.
I better get my pictures no matter if there's wind blowing or not. It's just a – That's how I looked at it. I was like screw it.
It's an adventure. I look at anything with nature as an adventure because it's not like I didn't check the weather before we went. It wasn't supposed to be like that.
Again, our luck with everything because this is just the part for my life because Tinda wasn't there to balance things out. Yeah, I wasn't there. Like when I'm not with her, her luck is – It is so bad.
When I'm with her, my good luck balances out so we have neutral luck. Her mom generally has good luck but then I do believe she's in a karmic shift to like where it's kind of counterbalancing all her good luck to now she's having some not so good luck. I actually think all the bad luck during that trip was her because once we actually split planes on the way back, bad luck followed her and I actually had some random woman give me like free food and I ran into some kid that was really cool and then the chick next to me on the last airplane actually had a cat in tow and I was actually wondering how the heck that all worked logistics wise because I was thinking about actually shipping over to Europe sooner than later.
So it's like I had great experience on the way back. My mom had just like more and more and more stuff go wrong. It is what it is.
It is what it is. She came back in a pretty good state of mind though like – For a day. For a day.
24 hours of everything's cool. I'm in a different place. I have a different frame of mind and then 24 hours later, we were – Hijacked by my dad.
Back to where she was prior to the trip but that's not for this. Okay. There are four cardinal virtues of stoicism like pillars if you want to call it, if it helps you to identify four pillars.
The first is wisdom. The second is temperance. The third is justice and the fourth is courage.
Now if you can I guess conquer these pillars or like implement like ways to navigate these different – Master. Master the pillars. The pillars.
It should help you become a better person. Like the first part of this is going to be like how stoicism makes you a better person. The second part is going to be how stoicism makes you a better investor.
I think you can kind of see how it can make you a better investor but I'll actually have like up-to-date examples of how to actually implement stoic investing. The first pillar is wisdom. Wisdom means the ability to navigate complex situations in logical, informed and calm manners.
Okay. I mean that's just like I'm always calm. If you see me not calm, that's like a weird thing.
It's very rare that he's in a mode of panic and it's usually like when something else stirs up and he's like, I don't even know what. Because I have so much – my brain is like logic driven and it logically doesn't make any sense to panic or become like mad or super happy, like just stay the course. The second pillar is temperance.
Temperance is basically just self-restraint and moderation in all aspects of life and this is the one where I think a lot of people will have a difficult time implementing stoicism with the moderation of life like eat what you need, not what you want. Buy what you need, not what you want. Like it's – This is the one I struggle with in a lot of areas.
It's kind of like a minimalist type of lifestyle. Like it's very difficult for people to go from having a 2,000 square foot house to like say a 300 square foot apartment because all they need is 300 square feet. But that's neither here nor there.
The third pillar is justice. That literally just means treating everybody with fairness even when they've done you wrong. I know that's very difficult because I mean I have a black book where people – Oh my God.
We make jokes about Tim's freaking – you made the black book. You made – like if you make the list, you never come back from the list. So I'm still trying to implement how to erase names in my black list but like – and the fourth is courage.
Courage just means any challenge you have, you use clarity and integrity to basically – Overcome the challenge? Overcome any extraordinary circumstances but also your small daily – day to day life as well. Like you can actually use courage and with clarity and integrity to like conquer your day to day lifestyle. Point being like work.
Work is a day to day thing for most people. Like if work – I'm not going to go into my life story because it has nothing to do with this. But like I came from – and I somehow came out better.
I think anybody can look at how they've actually had certain points in their life where oh, okay. I actually had a couple of those stoic principles in my lifestyle because I'm pretty sure everybody has been mad at some point and they didn't like lash out and I'm pretty sure people have remained calm and like adversity. Like there's been multiple times when we're out hiking and stuff where there's adversity and – We got rescued off the side of a mountain.
That's just us. Like we're crazy. But like most people don't have the crazy stories that we do.
So but say like you're driving and you get a flat tire. Like if you don't react to the situation like all emotional like oh, I'm going to be late for work or oh, I'm going to – like I want to get home but I have a flat tire and you actually – as opposed to that, you basically say oh, well I have a spare tire. It's not a big deal.
Or I have AAA. It's not a big deal. I'm just going to be home like 30 minutes later than I need to be like.
It's like the flat tire, you have no control over. How you react to the flat tire, you have all the control in the world over. And I think everybody can relate to a situation where if they've got rear-ended or gotten in an accident and it wasn't a big deal like it was like a fender bender type deal.
If you've ever been in a situation where one person freaks out like absolutely just geeks out, is a complete asshole, like a rager, just spazzes, is hard to work with, uncooperative, just a huge pain in the – and then you've been with somebody who's just like shit happens, let's exchange information, let's not make this like an end – world ending event and you go your separate ways and it's like when you find – when you run into somebody that has that type of mentality, it's just so much – you can't help the accident happen. You got to just move forward. There's no reason to overreact like a crazy person about it.
It's not going to help anything. If anything, it's going to exacerbate stuff. So – Well, like I don't know if this is accurate but this is my interpretation of life.
Like if you're being emotional, there's no room for logic. And if you're being logical, there's no room for emotion. So if you react emotionally like your brain just takes that period of time off and you're just like all body-wise, it's not brain-wise.
Yeah. I would just imagine they run through the same neural pathway and then it's like it's a flip switch. If you're in one mode, the other mode is off.
So how can stoicism help with investing? Well, the number one reason that people are not successful investors and unable to create wealth is because they're unable to control their emotions. And we said numerous times, emotions, emotional decisions in investing lead to losses of money. Like for example, like last week, ARLP, which is one of my favorite stocks in our portfolio had a really good earnings report and people like were just panic selling because it's like some – like one like little blurb in it.
Like the fundamentals of ARLP hadn't changed. The dividend payout hadn't changed. The payout ratio, the revenue, all that hadn't changed.
It was just like one little blurb that had nothing to do with any of the fundamentals and people were panic selling and it was down. I don't know, 8%, 9% and I said to Carmel, we need to send an email out right away. We sent a special email out to our subscription people.
You should be buying this dip because the company is still really good. Did it go up since? Yes. How much? It went up like 4% already.
So had you actually acted on that email we sent out, you could have potentially already had a 4% gain in like less than a week. In a really good quality and it's a stock that yields about 15%. Like it's a good company.
And another one that's recently had like it had a, there was a blurb came out that said that it might have an EPS decrease, which is what that means is earnings per share. Like generally that's how- But that's somebody speculating. It wasn't actually from the company.
It's ABR, Arbor Realty. The one that I really like, ABR, like it's down like probably 15% in the last two weeks. You should be picking that up on the dip because it's a really good company.
The fundamentals haven't changed. The revenue is still good. The dividend is still good.
But there's a bunch of panic selling. And we just talked about that one as a top. Was that the BDC REIT? You said REIT.
That was a top REIT in that episode we just did. Yeah, that's like one of my, like I think if you are starting a portfolio from scratch right now, ABR and Maine should be like one of your, like two of your main pillars in your portfolio. One of the things people think about people like me is we don't have a philosophy about money.
That's not true. Money is a tool. Money and wealth, they're basically tools.
They're practical. They're a part of everyday life. We just view them as indifferent.
True happiness doesn't come from money. True happiness comes from using money as a tool to find your passions, to do whatever makes you happy. So Stoics believe that money and material possessions, they're not good or bad.
It's just indifferent. It's literally just a tool. So Tim just innately has that whole perspective thing going on.
So it's easier to actually maintain an attitude of detachment when it comes to like your portfolio losing value, quotes and value. I think that's the best way to look at that from a principle. And we've talked about that before, especially with the yield max ones, because we said it's almost like a different account of money when you're doing the yield max specifically because you're creating an asset that's a cash generator, like an extreme cash generator.
So if you just assume you're taking that cash and turning it into like a physical, tangible thing that just shoots money out of it. Yeah, like the yield max is a prime example. If you don't look at your portfolio, the value of your portfolio going down because Tesla like the Tesla yield max has gone down significantly since we first discussed it.
But the dividends we got from Tesla that we've dumped into better investments. We wouldn't have had otherwise. We wouldn't have had because like that's like instead of putting our paychecks in, we literally just put money into the yield, the yield maxes, the yield maxes are our paycheck.
So we're using money as a tool to grow our other investments as a tool to then fund our passions and happiness. It's all like if you can focus on money, it's literally a tool. You're a step ahead of a majority of people.
And like in my opinion, like the yield max is essentially the same thing as getting a part time job. It's just you don't actually have to do any work. So that's why I consider it an asset, a time exchanger and a cash generator.
So it's how you look at money depending on how it's being used because it can. You need money to be happy. You need to actually look at your life.
I'll just say it. I'll just say it like that. Like money is a tool.
It's indifferent. It's nothing. And if you need money to be happy, you need to look at your life.
Why do you need two thousand dollars a month to be happy? Yeah, I'd say dig deeper. That's all I'm going to say about that, because it's like I've known people that need money. They need cash in their pocket.
They need they need the shiny new things. And if you need that to be happy, that is not really what this podcast is about. But you need to look at your life.
If you've been an investor for any period of time, you know there are things beyond your control. Market fluctuations, economic conditions, interest rates. People's reactions, analyst upgrades, analyst downgrades, things like that.
That's all out of your control. You literally have no control over any of that. So if you can, I guess, create like a pathway in your brain like, OK, I have no control on that.
The only thing I have control on is how I react to these things I have no control over. Do I? How do I make a better investment strategy and how do I allocate my assets? How do I do risk management based on what I know? Like I go into investing knowing there's going to be market fluctuations because people are crazy. I know economic conditions are going to change from like week to week, month to month, day to day.
I know the Fed is kind of a bunch of incompetent idiots. So I take all that data and I make a investment strategy and I allocate my assets and I mitigate risks just knowing that's going to happen. That's why our portfolio doesn't perform as high as like the S&P was up 2% last month.
We were up 1%. That's because I have a lot of risk mitigation factors and I have asset allocation that's different than the S&P because I just know there's all the other stuff going on. Are we losing? Are we leaving money on the table? It's possible.
But we also have a different strategy that focuses on income generation and not valuation growth. So it's not quite apples to apples. We'll really see the fruition of the way we invest once we go pretty deep into this bull, I think.
Now, the two biggest factors are the same emotional reaction, but the two biggest factors that make it very difficult for people to generate income and maintain wealth is fear of missing out and fear. So literally just fear, either good fear or bad fear. It's the same exact emotion.
Fear of loss is when you're like, oh, like say you're in like ARLP last week and it was down like 6%, 7% and you panic sold because you were like, oh, it's going to go down more. I'm scared. So I don't want to lose any more money.
You would have panic sold. Okay. The other example would be, I don't know, NVIDIA, maybe like when NVIDIA took off and it went up like 20% or 30% like in December.
The fear of missing out would lead you to actually, by majority of the time, maybe not in the NVIDIA example, but majority of the time, fear of missing out makes you buy high. Buy high. Then it'll pull back.
Well, I think Tesla's a really good example of that because didn't Tesla just have a- They had a shit earnings. They had a big drop just happen. They went down like 20%.
So we were talking about how that was, it's hard to predict the growth stocks because they're so volatile and like news really affects how they move. So had you been late to the game with Tesla and then that news came out, you could have potentially lost however much it went down depending on how you got in. And then if you cut your losses because you got scared, you would have lost like locked in that loss.
So the first principle of stoic investing is focus on things you can control, which we just mentioned like there's market fluctuations. So you basically factor in your investment strategy, asset allocation, that is focus on things you can control. We're in the maintain emotional detachment where you literally cannot be an emotional investor because you actually will fall prey to fear of losing money or fear of missing out.
Either way, it's a fear and it's bad. You shouldn't have that emotion when investing. The third principle is anytime there is market volatility, which there's going to be, you have to use that as an opportunity, ARLP, ABR, prime examples.
They've went down a lot by the dip. Just stick to your principle and your investment strategy, your research that you do. Or if you don't do it, if you just say, Hey, Tim did the research for me, whatever.
I do the research. If that's what you do, rather than being fearful of market downturns, you will view them as opportunity to buy assets at a discounted price and you're getting ABR at a discounted price. At a discounted price, it should be like $17, $18 a share.
I think it's a little bit below $13 a share right now. That's like a 20% discount. Same one if you do close-ended fund investing, it'll literally tell you on the page that this is trading at 12% discount.
I think PDI is at like 8% discount right now. PDI is the bond fund that we mentioned. If you don't want to get into individual bonds, PDI is they basically just do all the shopping for the bonds for you and they pay you a monthly dividend.
PDI is like 8% undervalued right now compared to its NAV price. I like that lazy man approach for that one. What was that one you just had in the email that was down a whole bunch? That was NEP.
If you recall, if you've been listening long enough, you know that I was last year, I think it was end of September, beginning of October, I was not counting on the table because that would make the microphone move, but I was, I guess, metaphorically pounding on the table saying NEP is a buy. It's a buy. If you don't know NEP, NEP is the ... We mentioned it in the utilities episode.
It's a green sustainable energy offshoot of NEE, which is the largest utilities company in America. What NEE did is they said, okay, you're going to be our green energy, sustainable energy offshoot. Here you are, NEP.
NEP was down at like 20 bucks a share. I said that is, it was like at least 30% discounted that it was a buy because it paid at the time, it paid like almost a 15% dividend. I think it's at like 11% now.
It's still a buy, but it's not near as much of a buy as it was. Had you followed what we did because we bought in around the $20 range and I just looked at it last night and it was at $30.30, that's a 37.7% value increase, not even including the two dividends that we've received in the interim of honing it from October to now. That's crazy for dividend investing.
If you listen to the episode where we discussed how to determine if there's value, like what's a good value investment. I have found in my personal experience that utility stocks are the easiest ones to determine if they're a good value or not because all you really have to do with utility stocks, any of them, is when you pull up the page and it says the PE is whatever, you just literally compare that PE to its peers and that's a pretty good barometer of if it's undervalued or not. It's because of the sector they're in.
They're really easy to evaluate. They're really easy to evaluate. And that goes exactly what we were talking about with stoicism.
You don't freak out when the price goes down. You question why it's undervalued because everybody else is probably panic selling for some reason. And if you still see all the metrics lining up the way that hit all of your green lights.
For example, NEE is discounted, BKH is discounted, BKH is the one that I was talking about that's paid a dividend increase for 50 some years. That one is, both of those are very, very, very, very, very valued right now if you want to actually get into some dividend stocks that they've been paying. Dividend increases for years and years and years and years, they're both undervalued. So if you apply that Stoic principle, we have a system in place that essentially negates the whole emotional thing where we can make very logical, very systematic decisions to get into these companies when everybody else is panic. Well, that's the next principle of Stoic investing is focus on intrinsic? Intrinsic.I can never say that word, value. So we basically look at the value of investments over any short-term market trends. Even I would hypothesize to even put that over like long-term macro trends.Like one of the long-term macro trends currently is interest rates. I would actually say you could overlook the interest rate right now and you could find a bunch of good utility companies that are very undervalued that you can just pick up shares every month until the interest rates start getting reduced. That's just me.Basically, you want to understand the fundamentals of the companies or the assets you invest in and make decisions based on long-term prospects rather than a short-term market sentiment. You know who's really good at this is Mr. Buffett. If you'd like to follow him, he's really good at focusing on value.And so he's actually a Stoic investor. I don't think he would ever admit to it, but I'm pretty sure he is. Yeah, I think he actually is from what I've read about him and what you just wrote about everything.Yeah, I'm pretty sure he falls into the category or at least pretty far on the spectrum compared to most people. Whereas Kramer. There is a, if you ever watched last week tonight, there's an episode on cryptocurrency where John Oliver just shows you how just shit poor Jim Kramer is at predicting things.And there's like, he told you to buy Enron right before Enron collapsed. He told you to buy four or five other companies and like a week later, they all just shit to bed. And like he just, he has a whole like two minute segment of all of Jim Kramer's awesome calls, as he calls it.Don't follow Jim Kramer. If you follow Jim Kramer, you need to stop doing that right now. I'm pretty sure there's an ETF that actually is the inverse Jim Kramer ETF. Like when he says buy this company, like the ETF will actually sell that company. That's really funny. I think they actually do better than he does.He's horrible. I don't know how you couldn't do better if that's his track record. I don't know how he still has a segment on.Because he's entertaining. He has all the bells and whistles. He hits the button and it's like, brr, brr, brr, brr.And like all these, they keep changing. Well, if that's what you're following and you don't care about money loss, I guess cool for you. The next principle of stoic investing is you have to accept the uncertainty of outcomes.Basically, that means there are things out of your control. You have to acknowledge that. M-P-W-I-E-P.I'm still in them. Two prime examples of that. Basically, you recognize that despite your best efforts and research, there will always be elements of unpredictability and you can't control that, so don't even focus on it.You just stay the course. I mean, you can fine tune your research to incorporate. If you miss something.If the unpredictability keeps happening over and over, well, then you can fine tune. You are missing something. You can fine tune your research to include that data.Or you can do proper asset allocation where you only have a single stock making up a tiny percent of your portfolio. Yeah, like our portfolio. To hedge your risk.No, they say that you should only have like six to eight. Do we have like 40? But I don't have more than like 5% in any one thing. Like I basically, I've found 40 really good companies and I just navigate those 40 companies.And if I find something else that's really good that I like, well, I'll either sell like one that's not doing very well or I will turn the drip off on a couple of the high yielders for a couple months and I'll use those dividends to actually start a position in something else that I found. He doesn't use arbitrary numbers to determine how many stocks he owns. He uses the metrics, the valuation.I use macro trends to an extent. Like we're kind of heavy on BDCs because interest rates are high. So once the interest rates start coming down, I might get out of a couple of the BDCs and I might actually put that into REITs.Yeah, I think that makes a lot of sense. Because I was looking at some of the allocations where they try to hedge certain things throughout different market climates and you'll have certain pieces of your portfolio that'll go up and down. But it's like if you understand the macro trend component, you can actually adjust your allocation to have less of a hit and more of a gain.And that's obviously a more advanced strategy. But if you have that insight, then why not apply it? And the last principle is discipline and patience. So I mean, you have to be disciplined.Tim is so disciplined when it comes to investing. If you are one of those that believes in a stop loss, well, then you have to stay disciplined at the stop loss. Even if you really like the company and it hits your stop loss, you sell it and you'll get back in at another point if you believe in that.I don't believe in stop losses. I find them kind of counterproductive, if that's me. Especially when you're investing to hold.And you have to stick to your research as long as your research is good and it's a quality research plan. Stick to your metrics. Stick to your allocation.Like if you don't want to have more than 4% of any stock in your portfolio, but like you say you really like Hercules Capital and it gets up to 6 or 7%, stick to your discipline and basically sell that 2% off to bring it back down to where it was. Take that 2% and put it in something else that's only like 1 or 2%. Patience, basically, it's a long-term game.It's a long-term plan. It's a game. Like investing is a long-term game.There are books that literally say they're a game of investing. You can never time the market. So if you've ever tried to time the market, you have failed.Many times, even if you've won a couple. And if you stick to your discipline and your patience principle, you're going to actually avoid impulsive decisions, which would be the FOMOs and the fear of loss. Yep, metrics are everything.Discipline is everything. If you've ever, like, one of the stoic principles that they say that's not investing, but I find actually it relates to investing quite well is if you have a bad year, for example, like say 2020 was just a bad year for you because you were trapped inside and this one happened. Well, what you do as a stoic is you'll actually pull out, widen your calendar, and you look at, like, 2010 to 2023, and you'll be like, well, in that 2010 to 2023, I had one bad year in 2020, but the rest of them were really good years.I got this job, I got this house, I had this car, I made this much money, I did all these activities that I like to do. That applies to the market as well. Say 2022 was a really bad year for investments, so then you just pull your gaze out and you look at, say, 2018 to 2023, and you'll see that you're actually up.I talk about that all the time. Pull your scope out, change your scope. It really helps change your perspective on things.Okay, one of the facts that I found while doing the research for my stoic email was according to Pew Research, only 41% of Americans under the age of 35 have investments, and only 58% of people between 55 and 64 have investments. So- Those numbers are low. You need to be invested in the market.If you have any intention of actually growing your wealth or passing your wealth on, I know a lot of people have this, they wanna pass wealth onto their heirs and things like that. That's a legacy component. If you have any of those inclinations, you need to actually be in the market.You can't just think about it, you actually have to do it. So if you're invested, you're ahead of a lot of the public, so that's good. But that's the thing with manifesting and having anything happen, and even in the woo-woo communities, you still have to couple intention with action.Action is the key to actually moving things forward. And the last point I made in my email is, this is like, if you've ever read any articles, the people where they recommend, well, this is the best REIT to get or whatever, they always blah, blah, blah, blah, blah, there's like past returns or no, they're not indicative- No indication of future results. You have to understand that any time you make an investment or trade, you have to deal with the risk of losing money, missing out on major opportunities, and you have to be willing to accept your returns, whether they're positive or negative.And if you can't do that, you shouldn't invest in the stock market, you should invest in other things. Every stock you get into, no matter how good the metrics are, no matter how good the company's ran, there is the possibility that it could go to zero. If you can't deal with that, then don't invest.Go invest in Worthy, go invest in cryptocurrency. You shouldn't be investing in cryptocurrency if you can't invest in the stock market. Wait, why did you just say that? Well, cryptocurrency, like Bitcoin's gonna be around forever.You could do bonds, you could do treasuries. Treasuries, or CDs, things like that that are like- Heck, you can invest in your own company startup. Would you say wine, gold? Wine, gold, art, cheese, there's all sorts.To invest in REIT, you can do like Fundrise, you can do Yieldstreet, which has real estate as well, as art and wine and things like that. The reason that you won't make it as an investor is not because the company's gonna go to zero, it's because your mentality is you're so scared of losing money that when there's a market downturn, you're going to sell and you're going to lose money. Self-fulfilling prophecy.It's exactly what's gonna happen. And the whole reason you do the asset allocation and diversify your risk across many different companies is because if one of them does go to zero, it doesn't, you don't lose everything. I hope that, I hope you can understand that it's not because say you invest in Hercules Capital, Hercules Capital probably is not gonna go to zero, but when we go into a bear market, Hercules Capital's probably gonna drop 20 to 30%. And if you are that adverse to risk, you're going to sell at a 20 to 30% loss. And that's how you destroy your principle. It's not like your portfolio balance going up and down in an average fluctuating during average market time.It's when you sell in a bear market because you're scared of losing money, you've actually lost the money. You don't lose money until you sell. And we talked about this in the investor profile episode that we just did two episodes ago.It's, time horizons come into play too. So it's like even if you're a person who wants that really easy, simple approach and does that one S&P 500 fund, index fund, you're still gonna have those massive swings because it swings with the market. And they say the hardest part of that strategy in itself is not selling during the downs.And the prime example of like, here's a prime, two recent examples would be in 2008, 2009, when we had the, just everything collapsed. There was a lot of people that panic sold. So they sold during the crash.They lost like 30% of their money and they were so scared of the risk, they didn't get back in. And after 2009, that was one of the biggest bull markets in like the last 70 years. Yeah, usually the biggest falls are in the beginning of the bear and the biggest gains are in the beginning of the bull.And then the second one would be in 2020 when COVID went crazy. People did the same thing. If you recall, it dropped like 15% like in two days.Bunch of people panic sold and refused to get back in the market. And that was the second biggest bull market in like the last 70 years. So if you're risk adverse, you're going to lose money, and then you're going to be scared to get back into the market when you should be in the market and you're not going to make any money.And the best way to hedge any of that with the dividend approach is you just leave your drip on and your stuff keeps buying shares the whole way down. So you're accumulating shares the whole way down and larger quantity, the lower things go. And when things rebound, you actually come back up with more money than you started off with.We did. We did. We did like, we, her mom's account and our account, like I had the, like when COVID happened, I was like, okay, there's two possible outcomes here.We can either sit on the sidelines and think COVID is going to last like five to 10 years and like just keep our money in cash. Or we can start investing in these companies that are good companies that even if they go down, we're still getting dividends. So we're getting more shares because they're going to go up whenever COVID is over.Like that's part of the pulling things out. If you look at every downturn, you can see that there was like, for example, the Great Depression was like 10 years of downturns. And it took like 20 years to get back up to the level that it was prior to the Great Depression.But if you look at the falls, like past that point, they've gotten better at businesses pivoting or- But even if you, but what I'm saying is even if you look at just that prime example there, okay, so you panic, you panic, oh my God, the Great Depression. Had you been in dividend stocks, even if it took 20 years to get back up to where it was, you would have been accumulating 20 years worth of dividends. So you would have been well ahead of where you were prior to the Great Depression happening.That is the beauty of compounding. That is why it's been referred to by smarter people than me as the sixth wonder of the world. Do you see what I mean? Sixth wonder of the world.Einstein talks about it. Benjamin Franklin talked about it. Like if you're not taking advantage- Benjamin Graham talked about it.Warren Buffett talked about it. Like scientists talked about it. Investors talked about it.Bankers talked about it. Politicians have talked about it. Not that I trust anything those a-holes say.Well, that's why I said even the scientists understand or like the great mind, Einstein, Benjamin Franklin, like they understand compounding and dividends. The only time that compounding is bad is if your research is flawed and you're in a company that sucks. Or if you have credit cards.Credit cards do the same thing with compounding. So if you're compounding, if you keep reinvesting your dividends in a company, you keep getting more shares of a company, like say, for example, Enron, if you were investing your Enron dividends back into Enron stock, well, it was a shit company that was severely flawed. So it didn't matter how much you compounded your shares because it went to zero.That's the only time that- But if that only made up one to 2% of your portfolio, whatever, your own stuff- Well, like if you're that adverse, then you should be in ETFs. Like you can find an ETF that covers, like they have 100 ETFs that cover any possible thing that you can want to invest in. Tech, chips, bonds, REITs, BDCs, oil, you can get in ETFs.They'll do all the hard work for you. So they'll hold like 100 companies. So if one of the companies goes to zero in their 100 company basket of eggs, well, it's not going to go down too much.So if you don't want to do the individual approach, you can actually get into ETFs or close-ended funds, which do the exact same thing that like what we do as investors when we have a bunch of individual stocks. We do still have some ETFs and close-ended funds because I like that they have everything together and I don't have to actually research that particular- Yeah, it definitely lowers your risk from that perspective. You do have a little bit higher fees, but, and I think, are those high dividend payers or are they a little bit less just because it's a fund orientation? Close-ended funds are some of the highest dividend payers.And ETFs, you can get ones that yield 2%. You can get ones that yield 7%. Generally, our ETFs are between the 6% and 10% range and they have like a less than the 1% fee.So it's the 5% to 9% range. So you couple that with higher- Because I think, as we said before, if you don't want to try to pick the sectors that are going to go off, you can do a full market index fund, but a lot of the issue with those is that they don't have as high dividend aspect to them. Even though Tim did find a couple that were more than the- The reason I don't like- Piddling 1%. A reason I don't like the full market index fund is a reason that I don't think a lot of people think of is say you got into an S&P fund. It doesn't pay you a dividend, but it follows the S&P. Well, to actually make money from that, you have to sell shares.I don't want to sell shares. I want to make money from what I have while not touching what I have. That's why I do the dividend approach.If it works for people, that's awesome. Invest in funds all you want, or index funds all you want. I just don't like having to sell things to make a profit.Yeah. I think the index funds are more applicable to somebody who's early, early in their investment lifespan, like in their 20s, maybe early 30s, because you have so many years to retirement, and you can take advantage, and you really, really, really do not want to actually pay attention to your investments. You put it in that one fund, and you literally set it for good.The only way I would do that is if I was in my 20s, and I had an IRA where I could put, say, 6,500 into an index fund and just let it compound, or let it grow like the S&P is going to do. If it's in a retirement account that you can't even touch, there's like- So that whenever I sold it, I wouldn't have to pay capital gains on it. But even then, you still have to sell shares to actually make money.I don't like that concept of having to sell what I own to take the money from. I don't like it. I think one of these episodes will actually maybe break people down into our own investor profiles, and say the strategy that we would use based on your objective, or what you're willing and not willing to do.I think that would actually be a really good episode for people. Yeah, probably. So- That's stoic- That's stoicism.Stoic investing. Stoicism investing. If you really want to learn more about it, literally just Google stoicism.It's very fascinating. It actually is, it's made my life easier even though I didn't know I was doing it. And I've had a- time in my life.So like- I'm actually going to put Tim Ferriss' podcast episode link in the show notes with the interview with Ryan Holiday, on his whole thing with stoicism. Because that was one of the things that actually like really got me even intrigued going down into it. So if you're interested in that, it's an audio obviously, so you don't have to read, since I'm finding more and more people who do not like to read.I mean, it's fantastic. I don't- I can't imagine not being like that. I can't imagine- I can't imagine being someone that is so worried about things they can't control, that it actually affects their life.I feel like my mom falls in that category in a lot of ways. There's a lot of people I know that fall into that category, that it's just like, you can't control that. Why worry? Why focus energy and resources on that? That like literally doesn't matter.Well, and that's the whole point of Viktor Frankl's book, when he was locked up in, I think, Auschwitz. When he decided he had to focus on the things he could control, which was what was inside of him, and that's why he made it out. He inspired so many people to not die in that prison camp.So, I've started reading that book, but I definitely want to get through that at some point, because just that mindset fascinates me. So, if you don't take anything from the podcast, in investing terms, we'll hopefully take the control what you can control. Emotional decisions in any aspect of life are bad.Anything that's important. Like, I know you've been there and you're like, oh, I'm going to buy a new car. You make an emotional decision to buy whatever car.And because the world is so focused on people being emotional, they can sell you anything that you don't really need or you can't afford because you're making those emotional decisions, whether it be groceries, whether it be cars, whether it be houses. When you insert emotion to that, it ends poorly. Yeah, it takes resources away from you and the things that you want to actually buy.And we're probably going to do an episode on intentional spending because I think it's actually the better counterpart to budgeting. Intentional spending is very, that's very difficult to learn, but it actually helps a lot. It helped create money to invest, obviously, but it actually helps to, because once you actually come, can train your brain to, okay, I want to be intentional with my spending, well, then your brain automatically programs itself, okay, I want to be intentional with my free time.I want to be intentional with this. I want to be, so it actually helps you. It's a great start for all that.It helps you. And when you look at things from the allowing yourself areas to spend in or getting excited about areas to spend in, you're not focusing on not spending or budgeting, and that negative component usually creates this feeling of lack, which then creates bad decisions. So when you focus more on what you want to spend your money on and you're intentional, it's easier to cut out the stuff you really don't care about.And I did put that in an email recently. I forget if it was, I think it was last week's email. Like the odds of you being here are like one in 10 with like three million zeros behind it.Like if you think about it, it's actually accurate. The odds of your mom and your dad being together long enough for that particular sperm to hit that particular egg that created you, and then you need to go back further, your grandparents, then you go back further, further, further, further, further to the like, that your lineage basically it's uninterrupted for four billion years from like microscopic things. Like the odds of you being here are astronomical.It's a gift. So you should be pursuing things that you love, and you should be doing whatever it takes to do things that you love. It shouldn't be about the going to work every day to make money on shit that you don't need.You should pivot to a job you love because life's just literally too short to. You're here for 80 years. If you're lucky, there's a lot of people that aren't that lucky that they're gone in their teens, 20s, 30s.There's some people that actually are above the 80, but like generally you're here for 80 years, and like you shouldn't waste any of that time because it is a gift, and it's an astronomical gift that you should actually be grateful for and be thankful that you have the opportunity and that you should do whatever you can to whether. Take advantage of it. Whether it be to teach other people, whether it be to follow your dreams and your passions, whether it be to help other people, whatever it is that you want to do, you should be doing it.Working at a bank, working in construction or whatever, like whatever these things are, you shouldn't be doing that. That's why we do the income investing. That's why we have all these podcasts trying to show you the ways that your money can make you money now so that you can do what you love in the near future.And everybody's going to be different. So if somebody tells you, like Tim just said, construction's crap, but you love construction, completely disregard what he just said. You got to follow what gets you going.So we will talk to you in next week's episode. I have no idea what it's going to be about yet. We'll surprise you. Toodles. Toodles.