Hey everyone, Dan Thompson with wise money tools. Glad you could join me this week, we're gonna continue our conversation where we left off with this Facebook post. Because this has been really interesting to see all the comments that came after this one little post. Okay, so the next comment was kind of interesting. This guy said, I do use a financial advisor. And I can tell you why and the risk. PM me, you know, private message me. The reason it was interesting is maybe he can tell you why he's using a financial advisor. But how do you quantify the risk this financial advisors willing to take. I mean, does this he mean this advisor is taking too much risk, not enough risk. I wasn't sure what the comment meant. I really like to hear this conversation. If he does PM him, I always ask people who call me wondering about their advisor? And if he's really any good or not. So I asked them, Well, have you ever asked your advisor? How much of my money are you willing to lose?


Most people haven't asked that question. And of course, they have no idea how much their advisors willing to lose. So unless this advisor tells them exactly how much he's willing to lose, this is unquantifiable. And if the advisor is willing to tell you how much money they're willing to lose of your money, maybe that's not the right adviser at all. I mean, I want to tell someone that I'm not willing to lose any of their money. And sadly it's just a dream if you're gonna put your money at risk that at some point, you're not gonna see some losses. All right, then the next comment said talk to so and so. Now they name somebody but I took out their name don't want to get anybody into trouble. Anyway he says talk to so and so. He's got a combo that's working really well. And we just used etrade. I think, by combo, he meant he does some stuff on his own. And he uses a financial advisor as well, once again, I point out, he's doing really well compared to what a bank savings account. Is he doing? Well, compared to Warren Buffett, what is well, so to speak.


And here's the here's the other thing. And the way I understood this is people look at their statements right now. And I just want you to understand that money is not your money yet. Unless you're thinking of pulling that out, taking it in locking in those profits. That's not your money. Those values are a snapshot in time. You may think that your money but unless again, you're willing to pull it out chances are pretty high. You're gonna write it down as well. That's just what most people do. So you really don't get to count your money until it's out of the market in a safe place, then you can say, all right, this is my pile of money. And I wonder if this advisor combo is ever gonna tell him when to get out. Most advisors don't. It's really interesting in my 35 years, I don't ever hear about advisors telling their clients to get out of the market. Now one of the reasons why it's counterproductive to the advisors goals.


Now, what are the advisors goals, to keep as much money under management charging fees as possible? So there's always a reason to stay in from the advisors perspective. If a markets dropping, they're always saying, Hey, you got to stay in. You don't want to lock in these losses. This is gonna come back. If a markets going up. It's Hey, you got to stay in. You don't want to miss out on these returns and we're in this great economy. Here is never a good time to sell on Wall Street. You know, I remember the.com boom very, very well, late 1990s. Everyone was a stock genius. People were buying up internet stocks at a 1000 or more times earnings. That means for a company that would earn $1 people were willing to pay $1,000 for that dollar. And sadly, there were so many of these internet companies who didn't even have earnings and they were being bid up just ridiculous. I remember Yahoo at the time, probably worth about $3 billion.


But people were buying it up at $34 billion valuations. That'd be like, you go in to buy a house that's worth $100,000. But you're paying 1.1 million for it, hoping one day it's gonna be worth more. That's just how insane things were at the time. We called it the greater fool theory. If you bought it today. You were just hoping that a greater fool would buy it from you tomorrow. There really were no valuations that made sense. There was no concern for earnings, no understanding of economics. I mean, it was the wild wild Wall street West. And then it happened again a few years later in a way. And that downturn, we saw a lot of people lose 50% or more in just a really short period of time. Now, I don't think we're there quite yet. But there are a lot of advisors thinking that they're kind of King of the hill because the markets been so good to them. And they look like geniuses. But what is geniuses like Warren Buffett doing right now?


Well, as of December 2019, he's sitting on $128 billion in cash. Is he a big buyer in this market? No. Do we think he's stupid sitting there in cash? No. I mean, everyone else is at least buying the index, shouldn't he? Well, he's a very, very patient and disciplined investor. He's gonna wait till this market turns, then he's gonna just buy like crazy when things are on sell. And he's gonna do what he says he's gonna buy $10 bills for $5. So, he says to be greedy when others are fearful and fearful when others are greedy right now, I don't sense much fear in the marketplace. Will the general population and these Facebook commenters wait it out? Probably not. They're gonna get aggressive. They're gonna start buying, they're gonna take each other's advice and then one day, you know, kaboom, it's gonna blow up. And they're probably gonna panic and then, you know, sit there and miss out on 1 or 2 compounding periods, which is so important in life.


Well, here's the next comment. He says, I use a financial specialist and he partners with my company and gives great non-biased advice. Also, not fee based. And then he goes on he says our company does not manufacture their own funds. So I'm guessing this is some sort of a financial company, and he can utilize most major fund companies. So let me know if you'd like to get a second opinion on what you have in place. It never hurts. Well, first off, I have no idea what a financial specialist is. It's either, you know, some made up term, or this guy is really got his clients fooled into thinking he's something special. Anyway, he says he also partners with many companies and gives great non-biased advice. So one of the first things I think of is what in the world is non-biased advice? And what is great advice compared to what. Right. Now we're all biased. It's kind of human nature to be biased towards something.


The fact that this guy is giving mutual fund advice and selling mutual funds tells me he's probably biased in favor of funds over individual stocks or gold or real estate. Right. Now, I don't care if you're biased. Just tell me why. And give me some good reasons why I should listen to you. And maybe I'll be biased with you as well. I remember a few years ago, one of the comments on of my videos can't remember what the video is about, but I do remember the guy says, Hey, don't listen to this guy. He's biased. And I immediately answered, well, of course, I'm biased. Why do you think I did this video? Right? I'm biased toward whatever this video was. But for the most part, I'm biased towards safe money and compounding. I have a biased against advisor fees that have no real value. So yeah, it's okay to be biased. Biased is not the issue. Ignorance is the issue. I like to hear ideas and I'm open to most things.


However, after 35 years of doing this, I've kind of heard about Lot of the garbage that doesn't work that's still being sold today. So yeah, I do get a little bit biased. And then he went on to say also not fee based. Well, if his advice isn't worth the fees, then yeah, you definitely want to, you know, avoid that kind of a thing. Now, I'm not a big fan of fees, but if someone can get me Buffett like returns. And they're worth paying a fee to, that's a little bit different story, but your traditional advisor who's just buying mutual funds, and doesn't even understand the buffet way, probably not worth paying the fees. I'd be interested in his level of knowledge of how to invest again, if he's investing buffet style, it might be worth, you know, paying a fee. Sadly, again, most advisors aren't worth really the fee that you're paying them and they don't know much more about investing, then a lot of you do. Studies have shown that fees can rob you from as much as 30% of your total return. You know, if you assume a 2% total management fee and 8% returns. So about 30% of your total returns. Very, very expensive.


Well, it sounds like this guy in this comment simply picks mutual funds for you. And if that's the case, we really don't want to be paying fees. He does say that this guy gets to pick from all the major fund companies. Well, that's got to be a winner right? At wrong. You can find so many reasons why the major fund companies lag even an index. Well, this is kind of what I end up calling barber shop advice, not trying to, you know, pick on barbers but that's kind of where you know hear about the advice coming from the barber shop, it can be pretty much worthless. Then he says at the end, that he can be there for a second opinion. Well, look, as I said this before, and I'll say it again, you need to become the expert. If you're in interested in investing, and stocks and all these kinds of real estate, whatever it is, you need to understand it. You need to understand money and investing and valuations and everything that's gonna to help you become a great investor.


If you're not willing to do that, if you're not willing to put in the time, which by the way, it's not like it's that hard. But it does take some time and effort and energy, and you really need to have a desire. It's just not something that you can just learn overnight. But if you're not gonna do that, then you're going to be susceptible to this barber shop advice. Which is worth about as much as the hair on the floor. Right. So then the comments started to go into different brokerage firms that they use and up and comer brokerage companies like Robin Hood and then one. And you know, those are good firms, but they're good firms in actually executing the trades, but they're not unnecessarily good. Helping you learn how to make good investment decisions and becoming a great investor. They're not gonna find you a strategy that works. They're just gonna help you execute trades.And this is why I go back to Einstein's wealth equation because it works and we can implement it and it's easy to implement.


And it's something that we can help our clients implement easily and you know, the equation y=(1+r)x, pay yourself first, start today. Don't lose money, let it compound and leverage for exponential growth. It's a pretty simple equation. And since we're on the topic of stocks, don't lose money should be the focus. That is probably the biggest wealth killer is when you lose money, you lose compounding, you lose time. You don't have to be a market or a stock genius. You don't have to tie markets. You don't have to take any advice from the barbershop crew. Because it's not gonna get you there in the long run anyway, you've got to be smart be deliberate be compounding be safe with your money and wealth on naturally follow. Okay, so that's it for this video. If you have any questions, shoot them to questions at wise money tools.com, we'll answer them just as quick as I can. Also make a comment below. Don't forget to subscribe. And if you want to talk about this stuff more in detail in your specific situation, just click on the time trade link below and we can have a quick conversation. That's it for this week. Until next time, take care.