Rick Ferri: A Fighter Pilot’s View of the Markets

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[Music]

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welcome to fun with annuities where

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every single week I welcome a celebrity

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guest expert that can help you maximize

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chapter two of your life listen learn

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laugh and love every minute of the most

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let's get to it

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[Music]

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welcome to fun with annuities I'm your

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host Stan the annuity man America's

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annuity agent we have a repeat guest

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celebrity guest host on with us today

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you know if you wake up in the morning

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you say you know what I would really

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want a very straight shooting smart high

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IQ financial advisor person but I also

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need them to be a fighter pilot in a

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previous life there's only one person on

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the planet that fits that and oh by the

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way he's like the go-to source for all

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the Bogle heads out there his name is

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Rick Ferry Rick welcome back

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thank you Stan thank you for having me

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back

1:04
really looking forward to speaking with

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you you know I was thinking about you

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the other days with chaos happening and

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um in fact today I had a call and

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somebody uh you know wanted something

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very simple and to understand uh from a

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portfolio standpoint uh pointed into

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your site like I do everyone else uh and

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all the all the people that are

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listening to us on the major podcast

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platforms welcome to to you and all the

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people on the fun with annuities YouTube

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channel you can see our faces

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interacting but uh I'm gonna have Rick's

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all of Rick's um links or website and

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his core for portfolios out there so you

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can link in and look at that but you

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know you definitely need to check out

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what he's done he's a little bit like me

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from the standpoint we both like

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Simplicity and we both like to explain

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things and it's um cleanest terms so you

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understand it you can make good

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decisions on your terms and your time

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frame Ricky just got back from the

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bogleheads convention I think you were

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at and I'm dying to know what the

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sentiment was there from all the smart

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people in the room you leading the way

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what happened

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that was a fabulous conference we had 27

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great speakers everyone from Jason's

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wide of the Wall Street Journal to

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Michelle Singletary from The Washington

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Post

2:20
Christine Benz from Morningstar I mean

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it was just a fantastic assortment of

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great speakers everybody volunteering

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their time nobody paid to just educate

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investors and on financial planning

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matters as well it wasn't just about

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investing so we had a lot of different

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sessions and we had a lot of different

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speakers and it was just a fabulous

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three-day event

2:45
excellent

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um BOGO heads for people that don't know

2:49
and and you're under a rock somewhere

2:51
that comes from John Bogle the founder

2:54
of Vanguard

2:56
um the low-cost mutual fund disrupter I

2:59
mean he disrupted the industry 100

3:01
percent and to this day I think Rick

3:03
does one of the best jobs of carrying

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that mantle of Simplicity and low-cost

3:08
investing onward can you explain to

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people the Bogle head

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environment that's out there we're we

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get a lot of people from Bogle heads

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that contact us because they like people

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that shoot straight that's what we do

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but tell us about Boggle heads in

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general

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well it's a philosophy of Finance

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personal finance uh and there's

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different

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ways and we'll just use investing

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and uh what is the boglehead philosophy

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on investing

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uh it's

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keep it simple keep it low cost keep it

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low tax

3:48
use index funds when you can because the

3:53
performance of active funds that are

3:55
trying to outperform the indices is not

3:57
very good and this is historically goes

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back a hundred years

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so everything is about low cost low tax

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Simplicity this is the philosophy of

4:08
investing it's the philosophy of the

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Vogel heads approach live below your

4:13
means don't care for others and also

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help others I mean so the part of it is

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adopting the philosophy it's sort of

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stepping into the church

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and then moving up in the pews as you

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begin to understand this as you move

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along and eventually hopefully joining

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the choir

4:30
telling others about it so that's what

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it's about how do people how do people

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become a Bogle head I know there's

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forums that um there's boglehead forums

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I've actually spoken on a few uh via

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Zoom Etc if someone's interested in

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learning more that you just described

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who they are how do they get involved

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with that

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well the new site that we use is

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boglecenter.net and we call it the

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center of the bungle Universe okay so

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it's the website

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ovalcenter.net and from there you can

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get to all of our different channels

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there's the

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bogleheads.org Forum the bogleheads wiki

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we have a bogleheads Facebook page

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bogleheads Twitter Twitter live vocal

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heads podcast vocal heads uh YouTube

5:20
channel we have the John C Bogle

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archives which are all the Jack vogel's

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speeches and all of his writing and I

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know I'm missing oh we have the vocal

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conferences everything is videos so

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podcast

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you're going to see all the different

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channels that you could go to depending

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on how you want to

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get your information

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uh and that's

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that that's what we're doing it's uh we

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also have Bogle local chapters where you

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can go locally if you're living near a

5:56
big city and you can meet with people

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they meet in restaurants libraries or

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whatever so it's like a individual

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investor

6:03
local chapter type conference uh that

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you can go to they they do those once a

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month they also do them on on Zoom I

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mean it's just all of this information

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you can find it all under

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vogelcenter.net and including link to

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the Forum which you can ask questions

6:19
and get answers and again it's all

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volunteers nobody gets paid anything

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this has been going on for over 20 years

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it's been growing into different Avenues

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and it's quite an organization there are

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hundreds of thousands of people who

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belong to it and it gets bigger every

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year not only in the United States but

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internationally and I'll have that link

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on Rick's page we have a page uh for for

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our celebrity guests and we'll have

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links to his site Rick's site and also

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this Bogle

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um the buglecenter.net site as well so

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you don't have to write all this down if

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you're driving down the road or on a

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treadmill somewhere

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um as you're walking around and people

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are trying to pick your brain what was

6:58
the sentiment you were getting in this I

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mean you were this was held kind of in

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volatile times look at the date of this

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of this um yeah podcast what were people

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thinking saying or was it the calm Jack

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Bogle nature there

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well

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surprisingly there wasn't a whole lot of

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discussion about you know where the

7:19
market is uh or was and now where is it

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because two years ago

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and we kind of explained this right at

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the beginning we did this thing called

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Vogel head University which was a

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three-hour pre-conference for people who

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were new to the bogleheads it was all

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free

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I talked about

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you know two years ago if you would have

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invested in the

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stock and bond market using a 60 stock

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40 Bond portfolio that you'd actually

7:44
still be ahead from two years ago so

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even though the market went way way up

7:49
in 2021 everything went up from Real

7:51
Estate to stocks to bonds to uh crypto

7:55
currencies and non-fungible tokens I

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mean you name it there was froth

8:00
everywhere from

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tremendous amount of liquidity out there

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that have been dumped on the market from

8:06
government stimulus and the FED but but

8:10
this year all that froth was blown off

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so you know people focusing on 2022 and

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saying oh I lost a lot of money but if I

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ask them well haven't you been investing

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since

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2020 and they go oh yeah I said well how

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have you been doing since 2020. oh yeah

8:27
I'm actually ahead so the problem wasn't

8:30
2022 the problem was 2021 and everything

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just got out of control now if you would

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have had the full the hindsight being

8:37
2020 if you would have known that of

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course you would have sold everything

8:41
um at the end of 2021 but you know I

8:44
mean who knew that uh you can't you

8:46
can't predict these things you just

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don't know so you know we go forward

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from here we have much higher interest

8:51
rates which is a good thing for retirees

8:53
and we have lower stock prices which is

8:55
a good thing for people who are

8:56
accumulating for retirement so nothing

9:00
bad actually happened

9:02
nothing worries a fighter pilot because

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you're going 600 miles an hour and

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you're you're you know you're

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multitasking as you're doing that but

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what what

9:12
um for people that the joke is if you

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didn't hear the intro Rick is a is a

9:16
next fighter pilot so I kid him all the

9:18
time that he's he's he's a unicorn in

9:20
the business so nothing nothing worries

9:23
him but when you wake up in the morning

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Mr fighter pilot extraordinaire is there

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some things that do concern you that you

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you're keeping an eye on

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yeah I guess it's what what concerns me

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and I know I may go off topic I

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apologize please do people the amount of

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people who need financial help

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um and I just need a little bit of

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advice

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um you know there's a lot of financial

9:45
planners out there who want to manage

9:47
your money they want to sell you

9:48
products this and that but they're

9:50
there's not that many financial planners

9:52
who just get paid for giving advice and

9:54
the people like me who that's what I do

9:56
and I'm not touting my services there

9:58
are others as well that just get paid

9:59
for giving advice we're swamped I mean

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we're overloaded we've got I've got a

10:04
one-year waiting list uh for people just

10:06
to get a couple of hours with me a one

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year waiting list and and the other

10:09
advisors who are doing this hourly and

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you know helping people that needed

10:14
advice

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um you know as needed they're they're

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completely swamped too

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um so we need more advisors who are

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willing to just give advice and get paid

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for the advice and not have any kind of

10:25
a

10:26
uh conflict of interest involved in it

10:28
or you know any kind of a financial

10:30
incentive other than just getting paid

10:32
by people so I mean what worries me is

10:34
is just not people don't have access to

10:37
a good advice uh and because that that's

10:41
what it does for you it's what worry me

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for a long time but it continues to

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worry me especially now

10:45
so it's an ongoing Black Swan event with

10:48
you there's the Black Swan is is uh

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people just are getting bad advice I

10:54
mean that's been kind of the the problem

10:56
in the financial services business for a

10:58
long time and I've been all through the

11:00
gamut of that with Dean Witter Morgan

11:01
Stanley Payne Webber Dean where I mean I

11:04
bet I've been in the big buildings I've

11:05
been World Trade Center two worked there

11:07
done it all and nothing seems to have

11:10
changed and I think do you find

11:13
frustration I know the bugle heads are a

11:15
little bit different but you're not

11:16
talking 100 to them obviously do you

11:20
find the frustration in the markets and

11:22
and people feeling like it's not

11:24
transparent enough or Fair

11:26
just

11:27
well I don't I don't feel any different

11:30
now than I did 35 years ago when I enter

11:33
a business um

11:35
um you know no I I think that uh

11:39
I'm not getting that feeling that that

11:41
things are unfair that people are saying

11:43
they're unfair they just

11:44
they're just trying to figure it out

11:46
that's all they're trying to figure it

11:47
all out

11:48
and and they just need some a little bit

11:50
of help figuring it out and and with a

11:53
little bit of direction and guidance

11:54
which again getting back to the vocal

11:56
heads you can get it for free

11:58
um they'll figure it out you know read

12:01
the writing books read the right blogs

12:02
yeah go to the right places I mean you

12:05
could figure it out it's not it's not

12:07
hard but um it does it is a real source

12:11
of uh

12:13
frustration

12:15
um anxiety uh for people uh because

12:18
they're just getting so much so much

12:19
conflicting advice and and I I do feel

12:23
bad about that of course Jack Bogle felt

12:25
bad about that that's why he started

12:26
Vanguard and index funds and everything

12:29
else and tried to put this information

12:30
out there for people and it's just a

12:32
it's a going ongoing

12:35
thing uh that uh that will go on for as

12:38
long as I'm alive and you know we're

12:39
trying to pass the Baton on to younger

12:41
people to bring on more younger people

12:43
to help explain these things but you

12:45
know

12:46
that's the way I see things Jack bogle's

12:49
Legacy he would laugh if he solve it I

12:51
mean he would his legacy is so cemented

12:54
and growing but he would have never

12:56
dreamed of this of what you guys have

12:59
taken talk about taking the ball and

13:02
sprinting with it I mean he would be so

13:05
happy he really would well we're we're

13:08
trying

13:09
um

13:10
and it's not I mean it's great I mean

13:12
there's a lot of people who are

13:14
volunteering a lot of people who are

13:15
helping uh you know we're trying to

13:17
start our Bogle heads fire Community I

13:20
know Financial Independents retire early

13:21
and we've got Young

13:23
young people in that community that that

13:25
want to you know do something there so

13:28
it's you know once once you've stepped

13:31
into the church and you move up in the

13:33
pews

13:34
when you're ready to join the choir a

13:36
lot of young people out there have a lot

13:37
of great ideas on how to help spread the

13:40
word so you know that's part of what

13:42
we're working on it's a community I mean

13:44
I think people are looking for that

13:45
especially in the investment World

13:47
sometimes you feel like you're on an

13:48
island

13:49
and people are attacking your Island

13:51
trying to sell you something and you

13:53
know it's one of those things but um one

13:55
of the reasons I also wanted to have you

13:56
on obviously is to is to pick your brain

13:58
on what we just talked about but you you

14:00
were just um mentioned in an article

14:03
about and the title of the article

14:05
jumped at me and that's when I shot you

14:07
an email I was traveling I was like yeah

14:09
I'd like to feed a comment on it and the

14:11
title of the article was

14:13
why November 1st might be a smart

14:15
retirement date for your older clients

14:18
obviously this was written kind of

14:20
toward the investment advisor group

14:23
but I wanted you to dig into the

14:25
listeners who are primarily consumers

14:27
about what you're talking about what's

14:30
why why November 1st and I know there's

14:32
more to it but I'll throw you the ball

14:33
from there

14:35
okay well well thank you um I had a few

14:37
clients where I was looking at their

14:41
defined benefit plan and here they've

14:45
been accumulating money in an account or

14:47
the company has been putting money away

14:49
for them and only maybe 15 of the

14:51
companies out there have to find benefit

14:52
plans now so it's a narrow you know

14:55
narrow Market

14:56
but they were looking at retiring early

14:59
next year

15:01
and they sent me their information about

15:04
what their benefit would be if they took

15:06
a lump sum distribution right versus

15:09
doing an annuity versus doing the

15:11
pension

15:13
and my first question to them was well

15:15
when does this lump sum value change

15:18
because it the company will revalue

15:22
uh these lump sum distributions once a

15:24
year normally it happens uh in November

15:30
December of each year where they use the

15:33
current prevailing interest rates that

15:34
are set by the IRS to do this to

15:39
determine what your lump sum is so they

15:41
take the annuity that you were going to

15:43
be getting and you know I'm not a I'm

15:45
not an expert on this so I want to make

15:47
that as a caveat so let's say that

15:49
you're going to get fifteen hundred

15:51
dollars a month as a pension

15:53
that may have been worth I don't know

15:56
three hundred thousand dollars as a lump

15:58
sum

15:59
in 2021.

16:02
but in 2022 at the end of the year going

16:05
into 2023 you'll still get fifteen

16:08
hundred dollars a month but if you take

16:09
the lump sum it's not worth

16:11
300 000 anymore it's only worth two

16:14
hundred thousand and there's a switch it

16:16
changes it just flicks and when does

16:18
this thing flip from three hundred

16:20
thousand to two hundred thousand it's

16:22
based on your plan document and when the

16:25
assets are revalued

16:28
and my

16:31
question to the clients that had this

16:33
and I had two clients who had this

16:35
situation in the last few months you

16:37
need to go to the employer and you need

16:38
to find out when does that switch when

16:41
does it drop because it's as interest

16:42
rates go up the value of the lump sum

16:44
goes down because a smaller amount is

16:47
needed to produce that type of fifteen

16:49
hundred dollar a month and stand the

16:51
annuity man I mean you can explain this

16:52
very very well yeah and we do these

16:54
pension comparisons all the time where

16:56
people will say well this is what

16:57
they're offering can you run right the

16:59
the spea comparison quote which we do in

17:02
Apples to Apples quote typically eighty

17:04
percent of the time the company beats

17:05
the street but what we're finding now

17:07
recently is they are not beating the

17:09
streets the street is exactly is beating

17:11
them and then you have to make that

17:14
decision correct primarily the biggest

17:16
decision as you know is do you need

17:19
income and if the answer is no then take

17:21
the lump sum it doesn't lump sum and if

17:23
you wanted the the annuity then go out

17:26
and talk you know annuity man and get it

17:29
get yourself a good annuity through a

17:30
good company yeah so go backwards make

17:33
more money go backwards to the the

17:35
November first date and why it's set I

17:39
mean we're both not experts on how these

17:42
things are set up but I see this all the

17:44
time I get calls where hey Stan's gonna

17:46
be 500 000 November 1st but if I wait

17:48
it's gonna be worth you know 350.

17:51
correct that's about right you got about

17:52
a 30 haircut on a lump sum yeah so think

17:56
about it so you know I had both of these

17:57
clients who were thinking about retiring

18:00
January February of 2023 because they

18:04
wanted to wait because they were going

18:07
to get a bonus so my question to them

18:10
was how much is the bonus and the bonus

18:13
in one case was going to be about fifty

18:15
thousand dollars but it was going to

18:17
take a hundred and fifty thousand dollar

18:18
haircut on his lump sum

18:21
so I said hey you need to talk to the

18:24
company about this and

18:26
you know I mean the bonus is great but

18:28
you should probably retire if it's true

18:30
you should probably retire by November

18:32
1st or maybe by November 30th whatever

18:36
the company

18:37
date is before it flips and the value of

18:41
your pension drops from 500 to 350

18:43
because

18:44
you want the 500. you know and then you

18:48
could go out you could take that 500 and

18:49
then you could annuitize it if you

18:52
wanted yeah sure immediate annuity and

18:53
you're going to make a you know extra

18:55
thousand dollars a month I mean this is

18:57
a a lay down you know I mean or a layup

19:01
or whatever

19:02
depending on depending on the sport now

19:05
one of the things that jumped out at me

19:06
and I'm reading the article was the was

19:09
the

19:10
um phrase minimum present value segment

19:14
rate yeah and I'm thinking to myself

19:16
that's fantastic

19:18
um that has to be an IRS

19:21
it's a blend it's a blend of the yield

19:23
curve it's a blend of short-term

19:25
intermediary explain that and why that's

19:27
important I can't I I again I'm not an

19:30
actuary I'm I'm not going to be able to

19:32
we're not going to hold it to you can

19:33
you do a 30 000 of what that is sure I

19:36
mean they have to come up with a rate of

19:37
return where they're going to Discount

19:38
right these these annuity payments to

19:41
you so if your annuity payments are

19:43
going to be fifteen hundred dollars a

19:44
month they have to come up with a

19:45
discount rate and so it's just an

19:47
interest rate and if interest rates are

19:49
very low then that makes the lump sum

19:52
high and if interest rates are higher

19:54
which they are it's been an

19:55
unprecedented year yeah 2022 or interest

19:58
rates went way up now they're going to

20:01
Discount those few those payments by a

20:03
higher interest rate which makes the

20:05
lump sum smaller makes the value of the

20:08
bond if you will smaller so you need to

20:12
know that you need to know what it is

20:14
now you need to know what it's going to

20:16
become and if you're getting ready to

20:18
retire in the next few months or so you

20:21
need to make a decision and

20:23
you know based on what bonus you may or

20:25
may not get and based on what kind of a

20:28
pension it is because there are

20:29
different companies have different types

20:31
of defined benefit lines you need to

20:33
understand all of this and and make an

20:37
informed decision about your retirement

20:39
day and then taking the larger lump sum

20:43
and doing something smart with it you

20:45
might just roll it into an IRA you know

20:47
put it in stocks or you might annuitize

20:49
it sure and I get a higher payment but

20:51
you just need to be informed and I'm not

20:53
sure if the companies are telling

20:55
anybody this because they really don't

20:56
want them to take the larger amount of

20:58
the lump sum yeah the education level

21:01
that is really really poor I thought one

21:03
of the one of the best things that you

21:04
pointed out in the article which is uh

21:07
it's a no-brainer if you think about it

21:08
but people don't do it is get to know

21:10
your HR people get to know the plan

21:12
administrator get to know the plan spend

21:15
some time

21:16
on learning about this thing that has

21:20
been accumulating all these years and

21:22
get to know it because you're getting

21:23
ready to make a decision and as they say

21:25
in golf there's no Mulligans in

21:27
retirement you're going to make a good

21:29
decision here so I think Rick's correct

21:32
you know get to know that an employee

21:34
your employer's HR department and then

21:37
find out the administrator of the

21:39
administrator of the plan try to locate

21:42
a person that can that can explain it to

21:45
you simply on what your choices are and

21:47
then have them provide backup

21:48
information and writing so you can

21:51
do it next week

21:55
this is an option expiration here I mean

21:58
this is right this is going to go away

22:00
very quickly so you need if this is you

22:03
if this is you if you're one of those 15

22:06
percenters and you're going to be who

22:08
gets a defined benefit planning you're

22:09
going to be retiring or thinking of

22:10
retiring now is the time now

22:15
I agree with that let's pivot away from

22:17
that I think that's important and I I

22:19
wanted you to address that but it really

22:22
comes down to you've earned you've got

22:24
this money that's been accumulated

22:27
get serious about it you know get

22:30
serious about your money and um and find

22:33
out what the rules are and then play by

22:35
the rules but you got to know the rules

22:37
and it's like it's a Time urgent

22:39
situation in most cases November 1st is

22:42
coming upon us obviously this this is

22:45
releasing way before that but uh you

22:47
know that's that's a good thing maybe

22:49
it'll give some people a heads up I know

22:51
at the time of the staping markets are

22:52
gyrating they're always gyrating but it

22:54
does seem like we do have a lot of

22:56
external factors you know Wars pending

23:01
Wars

23:02
um interest rates Etc

23:04
um from your fighter pilot view 30 000

23:07
feet I know markets things are happening

23:09
all the time you can look back

23:11
historically what seems to be different

23:13
about this time or is there such a thing

23:16
as different I guess a 31 trillion

23:19
dollar Federal deficit is different

23:22
correct well and that's and that's low

23:26
in a lot of people's calculations I

23:28
think that's that I mean that's a big

23:30
number but uh anyway it's uh

23:34
it's it's difficult to swallow because

23:36
what's going on now we've been borrowing

23:38
money at very low interest rates for a

23:40
long time so the cost to

23:43
us taxpayers for interest on this loan

23:47
that's been building and building and

23:49
building they the interest cost has been

23:51
going

23:52
no I mean the interest rates have been

23:53
going down for 40 years sure so it's

23:56
really hidden

23:57
what 31 trillion dollars really is well

24:01
now what's going on well now we have

24:04
higher interest rates uh treasuries as

24:07
they come do are refinanced at higher

24:09
interest rates that cost of borrowing is

24:13
going to go up it's going to bite more

24:16
and more and more into our federal

24:18
budget this is what's new this is

24:21
something that our politicians in

24:23
Washington will have to address and it's

24:25
not going to be pretty it isn't

24:28
and uh hopefully uh compromises can be

24:34
made but

24:36
I mean it's difficult to to to see that

24:39
uh and I

24:41
I'm I'm concerned about that I mean

24:44
Empires don't last forever and debt is

24:47
usually what brings them down yeah and

24:50
we're you know

24:52
I don't know how high the federal

24:54
deficit can go before this interest

24:56
payment starts to overwhelm everything

24:59
else we do as a country

25:00
but there is some point of no return and

25:03
hopefully

25:04
you know hopefully we don't get there

25:06
hopefully our leaders in Washington make

25:08
the right decisions that don't get us

25:12
there so that's my my concern

25:15
and that is a big one and that is

25:17
something that I get questions on as

25:19
well and of course

25:21
there's no perfect answers right

25:23
um with you know they're gonna it's got

25:25
the the poop is going to hit the fan

25:28
eventually as I say in the South you

25:30
know it's funny I remember when I was in

25:32
college it was during the 1970s and we

25:34
didn't have a federal deficit I mean and

25:37
and this all occurred during our

25:38
lifetime I know and it was just you know

25:41
during my working years and at the same

25:42
time interest rates are coming down

25:43
coming down and the value of stocks are

25:45
going up and going up and it's a

25:46
wonderful world right as the government

25:48
spends all this money well

25:50
there's a Day of Reckoning that's coming

25:52
and it's not going to be a single day

25:54
it's going to be

25:56
I think a lot of slow pain uh you know

25:59
we had some fast pain here in the last

26:02
well 2022 we've seen some fast pain but

26:05
it's I don't see any kind of a Define

26:07
slow pain Define slow pain from Rick

26:10
Ferry's point of view you know a long

26:12
time of uh of not very great returns in

26:15
the stock market uh companies struggling

26:18
to you know grow earnings because

26:20
they're being overwhelmed with labor

26:23
costs and increased uh taxes

26:27
um you know the the government now is

26:28
going to tax stock BuyBacks they used to

26:31
be government you know stop companies

26:33
can buy back their own stock now they're

26:34
going to have a one percent tax on that

26:37
and that's just the beginning I mean we

26:38
know where income taxes begin they begin

26:41
at like one percent and right see where

26:43
they are so

26:45
um

26:46
there's going to be a lot of slow pain

26:49
and uh

26:52
it's just going to feel a whole lot more

26:54
like the 1970s than you know the Roaring

26:57
uh

26:59
1990s uh or 1980s and I think that's

27:02
just

27:03
the way it's going to be for a while and

27:05
we have to get used to that and you're

27:07
seeing that slow pain unwinding in the

27:11
real estate market the car market where

27:13
you have to borrow money to buy it's

27:16
getting it's it's getting tough out

27:19
there

27:20
um for for this these sectors

27:23
I'm assuming that you think recession is

27:26
on the way if we're not already there

27:29
um I don't know that

27:31
what is yourself something optimistic

27:33
about yeah what is your thought on that

27:35
well certainly I'm we're much better off

27:37
here in the United States uh than they

27:39
are in Europe where they've got all

27:41
kinds of energy energy problems which is

27:43
just driving Energy prices up five times

27:46
with it which they were a year ago they

27:48
have real problems and they can't raise

27:50
interest rates

27:51
because the European Central Bank it's

27:55
not just one country it's many different

27:56
countries and if you raise interest

27:57
rates you're going to really hurt

27:59
countries like Italy and they're already

28:01
being heard so unlike the United States

28:03
where we're dealing with 50 different

28:04
states it's a little different we can

28:06
raise interest rates very rapidly here

28:08
we can try to slow down our economy uh

28:11
so that inflation doesn't really get out

28:13
of control but in Europe it's a much

28:14
more difficult task

28:17
so and on top of that their energy

28:19
issues where uh you know they're energy

28:21
dependent and we are energy independent

28:23
we are so fortunate in this country to

28:25
be energy independent now I know that

28:27
people don't like fossil fuels and all

28:29
that but fact is it you know we are

28:32
where we are and and it's a good thing

28:34
for us plus we have full employment

28:36
right okay well I mean it's really hard

28:39
to see people stop spending during full

28:41
employment they they do continue to

28:43
spend so we may not see a a recession or

28:49
a deep recession I don't know uh that I

28:52
mean of course that's the that's the

28:54
question everybody is asking in the

28:56
stock market in the bond market is you

28:58
know what's the probability of recession

29:00
in the United States because 70 of our

29:02
GDP is spending consumer spending

29:06
um right here within our own country so

29:08
it's really important but I don't know

29:11
uh if there is a recession or it does

29:13
look like things are going to turn and

29:14
we are going to have a recession here in

29:16
this country then the stock market may

29:17
take another leg down if there isn't

29:20
going to be one

29:21
you know we could we could be at the

29:23
bottom we could be and this this is a

29:26
good valuation for buying stocks in the

29:28
long run I mean we're at reasonable PES

29:30
sure and uh I think I'm not hesitant at

29:34
all to say let's put some money to work

29:36
there in the stock market you know you

29:38
should continue to do your dollar cost

29:39
averaging don't be afraid of investing

29:41
for the long term at these interest

29:43
rates in this stock market valuation

29:45
well and the great thing about this

29:47
country and companies in general is they

29:50
adapt and they figure it out they're not

29:53
just going to sit there and get hammered

29:54
they're going to figure something out to

29:56
make it happen which is all good in a

29:57
perfect world that I live in Rick and

29:59
you know I live in the purple world

30:01
where the unicorns Chase and catch the

30:03
butterflies all fighter plot Pilots you

30:06
know land perfectly on boats

30:09
but isn't that perfect but in that

30:11
perfect world Rick

30:13
um Rick Ferry is the chairman of the

30:15
Federal Reserve

30:16
yeah

30:17
he is no he is and uh so what I'm asking

30:21
you chairman Ferry is

30:24
um

30:25
what are you doing here

30:26
uh I'm gonna I'm gonna shock the system

30:28
I'm shocking the system I'm gonna tell

30:31
me what that means I'm going to raise

30:33
interest rates really fast really hard

30:36
I'm going to give a lot of fast pain to

30:38
this economy really quickly a volcker

30:41
moment if you will why well volcker with

30:44
a Band-Aid rip

30:46
you're ripping the Band-Aid off is what

30:47
you're saying ripping the Band-Aid off a

30:49
lot of fast pain need it you need it

30:53
um got to get interest rates back up

30:55
we're gonna have a chance

30:56
you know the retirees have to be getting

30:59
four percent on their fixed income uh

31:02
the the

31:03
price to earnings ratio of the stock

31:05
market has to come below 20. there has

31:07
to be growth uh in in earnings down the

31:10
road in GDP growth so I in order to get

31:13
there

31:14
it's a rip the Band-Aid off moment and

31:16
we've had that and we may have that

31:17
through the rest of this year and then

31:19
it probably will stop next year just to

31:21
pause and see where are we you know what

31:25
is this done what has it done what has

31:27
it done oh my gosh money has been

31:29
flowing to this country like there's no

31:30
tomorrow I mean the dollar has just

31:32
rallied correct to like a highest point

31:35
because we've ripped the Band-Aid off we

31:37
raised interest rates much more

31:39
aggressively than other countries and

31:41
we're providing the value uh other

31:44
countries are sending their money here

31:46
people want to hold dollars now that

31:48
hurts us

31:50
for exports particularly technology

31:52
companies which do a lot of their

31:54
revenues overseas it's hurting them it's

31:55
going to hurt hurt their earnings but

31:58
other parts of this stock market should

32:00
do well I mean the energy companies

32:02
materials and so forth we should see

32:05
that segment of the market which has

32:06
done so poorly for so long come around

32:09
and it has come around

32:11
and international stocks which are very

32:14
low valuations relative to Historic

32:17
they're also in industries that would

32:20
come around so as we buy more materials

32:23
and so forth from uh emerging markets in

32:26
other countries because they're cheap

32:28
right because the dollar is strong that

32:31
should help Emerging Markets as well so

32:33
you might see a rally in value stocks

32:34
you might see a long rally in

32:36
international stocks eventually I don't

32:38
know I mean I'm just guessing and I'm

32:39
not trying to make any Market time any

32:41
uh plays here but that's just what my

32:44
crystal ball is showing

32:46
I like you as the FED chairman I mean

32:48
you wouldn't I mean it would be it would

32:50
be kind of fun to watch it because you

32:52
know as the media would come at you I

32:54
believe you'd destroy them verbally and

32:57
factually which would be fun to watch

32:58
instead of acquiescing to them as we see

33:01
these pseudo-politician people in place

33:04
but they they have a I mean everybody's

33:06
an armchair quarterback and hindsight's

33:08
2020 on this whole thing and we can all

33:10
point back to Paul volcker and what he

33:12
did Etc but these are weird times

33:16
um it's like you said the you know if

33:17
the 30th I agree I might quote you on

33:19
this the 30 000 foot view is the 31

33:21
trillion in debt correct and that's the

33:23
problem right that's the issue it's yes

33:26
we can do all of this with the Federal

33:27
Reserve you know there are supply chain

33:29
issues and so forth we might keep

33:30
inflation up that are different than

33:32
labor supply issues where you know we've

33:35
got low unemployment right now

33:37
um you can do something about the low

33:39
unemployment you know you could stop

33:41
companies from hiring you could slow

33:43
things down but that's not gonna going

33:45
to fix the supply chain issues which is

33:48
causing inflation and this includes uh

33:52
you know the war in the Ukraine I mean

33:54
we can't fix that so you know we have to

33:57
kind of go along with it but um you know

34:00
I think we're doing the right thing I

34:01
think the Federal Reserve is doing the

34:02
right thing I understand what they're

34:04
doing it's not an easy job it's a

34:07
thankless job I don't know I don't want

34:09
to be the Federal Reserve chairman

34:12
um but it's tough because you you know

34:15
they when they moved to fed the FED to

34:18
Washington I think in the 1930s it did

34:20
start to become politicized and some

34:23
presidents want to politicize it more

34:24
than others and

34:26
I I think that they've got a tough job I

34:28
think they're doing a good job

34:30
but you know they don't have the crystal

34:32
ball either uh uh and there's a long lag

34:36
time before actions that they take and

34:38
what actually happens and and they miss

34:40
it a lot I mean they over stimulate or

34:43
they under stimulate and they over

34:45
tighten I mean they're just they say

34:47
they're always behind well yeah because

34:49
you can't tell in real time what the

34:51
economy is actually doing so it's a very

34:54
difficult job but I think they are doing

34:55
the right thing right now

34:58
if Jack Bogle if he was alive boy would

35:01
be great because you know a lot a lot of

35:03
us have uh modeled our

35:05
our businesses around his simplistic

35:07
approach you know I know we have

35:10
um what would Jack say about crypto

35:14
well

35:16
he would say um

35:18
it's

35:20
they he made he talked about ETFs we're

35:22
like giving matches and gasoline to an

35:26
arsonist right and I think that he would

35:28
have something even stronger to say

35:33
yeah oh man that's funny I I don't think

35:37
he would be a fan I think he'd kind of

35:38
be in the Buffett crowd you know where

35:41
Buffett said recently I wouldn't give 25

35:43
for the whole lot of it I think that's a

35:46
little extreme but uh I was wondering

35:48
just you know because that's a that's a

35:51
different

35:51
different um item on the table uh as

35:55
compared to past Market cycles that were

35:58
in I mean there wasn't a crypto there

36:00
wasn't a crypto space

36:02
is it affecting the markets at all or is

36:04
it such a small space it really is a

36:06
small space when you look at it is it

36:09
just a blip and just kind of a shiny

36:11
thing at this point

36:13
well the funny thing about you know

36:15
Colin let's just let's take Bitcoin for

36:18
example yeah I don't in many cases I

36:21
don't even need to look at the s p

36:22
Futures to know what the s p Futures are

36:25
let's say overnight for example all I

36:27
got to do is look at Bitcoin it seems to

36:29
be the risk on risk off trade is you

36:32
know including Bitcoin now so

36:33
interesting and I wake up in the morning

36:35
and I look at the price of Bitcoin and

36:36
it's up two or three percent probably s

36:39
p Futures are up two or three percent

36:41
because it's all you know risk on risk

36:44
off and so crypto is

36:46
kind of you know you could you could

36:49
just it's not a stable

36:51
uh

36:53
oh

36:54
source of um exchange or anything like

36:58
that no it's not tonight and it's not

37:00
it's not non-correlated either no no no

37:02
it's poorly very highly correlated

37:04
correct a risky assets that's my point

37:07
right my point it's like um well it's

37:09
being traded it has a value and unlike

37:12
other people I believe

37:13
Bitcoin does have a value because you

37:16
had to spend money to mine this I mean

37:18
you had to put your dollars into your

37:20
checks and computers and electricity and

37:22
everything else I mean and you were paid

37:24
for figuring out the algorithm on that

37:27
particular Block in the blockchain and

37:28
you got paid in you know a crypto

37:31
currency for that so there is a value to

37:34
uh Bitcoin

37:36
um but it's just interesting on the

37:37
day-to-day to watch the price of Bitcoin

37:39
no doubt going up and down with all the

37:41
other risky assets and uh

37:44
you know I don't know if it's going to

37:46
be a factor

37:49
for a long time I think that cyber

37:52
currencies will eventually become a

37:54
factor but how many companies

37:56
are trading or allowing you to pay your

37:59
utility bills that's where your you know

38:02
your car payment with Bitcoin

38:04
and I don't know maybe there is one or

38:06
two now but it just hasn't it's not

38:09
embedded in our economy yet it's it's

38:11
it's it's early and um I always remind

38:14
people when the internet first came

38:16
about and me and you were around then so

38:18
we can't comment on it you know there

38:21
were companies called Myspace and

38:23
aol.com that were the leaders and I know

38:26
people still have AOL when I see aol.com

38:28
email address I kind of know who you are

38:31
you were at the first the start of this

38:34
thing yeah but I always tell people it's

38:37
gonna it's probably not gonna be the

38:38
names that are there that are going to

38:40
be the final versions of what you know

38:42
it's been it will be accepted I do think

38:44
the governments will be involved heavily

38:46
because it will give them the

38:47
opportunity to tax real time which is

38:50
always fun

38:52
um but we'll we'll just we'll just kind

38:54
of see

38:55
um let's kind of close it up as I always

38:57
do I'm I'm going to ask you the the

38:59
question the mic drop question

39:02
because you know Rick you're going to be

39:04
able to

39:05
give the uh the speech and and the the

39:08
walk away moment just like you did to

39:10
your all of your your fighter pilots as

39:12
you were getting ready to fly off you

39:13
said this great thing but you're saying

39:15
it now to Consumers across the country

39:17
that need advice Sage advice and

39:19
financial advice

39:20
and Common Sense advice so I'm going to

39:22
count you down in five four three two

39:25
one go

39:27
yeah come up with a sense of a plan

39:29
implement it

39:31
keep your costs down

39:33
keep your taxes down stay the course and

39:35
you'll be fine

39:37
and that's it don't worry about the

39:39
day-to-day fluctuations they're they're

39:40
always they've always been there they're

39:42
always going to be there and you need to

39:44
just look through to the other side and

39:46
try to stick the landing if you can

39:49
okay all right well what we used to say

39:51
is any airplane that you uh get out of

39:54
uh meant there was a safe landing at

39:57
some point prior to that you know as

39:59
long as you can

40:00
get out of the airplane it's a safe

40:02
landing right that's that's for the

40:04
landing any good Landing is the one

40:06
where I walk away from the airplane or

40:07
something alone yeah when you get out of

40:09
the plane and people salute you and you

40:10
walk off great with everyone exactly

40:13
yeah Rick Ferry just an absolute rock

40:15
star fighter pilot bugle head leader

40:19
just everything and now now choir leader

40:21
as I was going to say now he's the

40:23
leader of the choir but really

40:25
appreciate you have you being on and and

40:27
certainly would love to have you back on

40:29
in these times because they people need

40:30
to hear this kind of sage calm fighter

40:33
pilot type advice where you're just

40:34
everything's calm stay calm and with

40:37
good advice behind it once again we'll

40:39
have all of Rick's

40:41
um links on the site but I want to thank

40:42
everybody in all the major podcast

40:44
platforms for joining us

40:46
and thank you for looking at us on the

40:48
YouTube channel if you're watching us

40:49
and our in our faces Rick's the good

40:51
looking one by the way I'm the one with

40:53
the hat and I will see you next time

41:01
[Music]