Learning a Payneful lesson, there are no new eras in investing, Ep #32

2021-04-07

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It's episode 32 of Payne Points of Wealth, we’ve got the news in plain sight, you've seen the headlines, and we give you the real story. The real story is mean reversion! Investors are learning a "Payneful" lesson, a trend we identified on this show months ago, and that is technology stocks are starting to sell-off. You might be wondering what’s a mean reversion? How does it work? We're going to break it down for you and explain why it's so important to understand as you're building your investment portfolio. On the tipping poin...

On the tipping point, we're going to pinpoint the Payne points having the biggest impact on your wealth right now. Which are rules of thumb when it comes to financial planning. What rules of thumbs should you be using? Which ones should you disregard? We're going to tell you what kind of customized planning you should be doing right now, what you should be applying to your financial plan, and we've got lots of fascinating facts of finance.

You will want to hear this episode if you are interested in...

No new eras in investing [1:24]
Long term investors vs bubble makers [3:51]
Two hard questions to ask yourself as an investor [5:31]
The Tipping Point [9:12]
The rule of 100 [9:39]
The rule of 75% [10:36]
6 months savings rule [11:54]
The rule of 5 [13:36]
The 4% rule [15:45]
The Payne Capital A to B rule [16:53]
Hidden Facts of Finance [18:32]

Two hard questions to ask yourself as an investor

First. Are we too optimistic about some markets’ potential or an “addressable market”? Is mom going to go Venmo grandma or maybe pay with Crypto or is she still going to write a check out of her Bank of America account? Is Tesla going to be the only electric vehicle option in town? Are we being naive?

Second. Is this newfound optimism already priced in? Look at a company like DocuSign, a super hot stock right now, it trades for 153 years worth of profits. So maybe that addressable market is already priced in the stock for decades to come. We don't know, but these are big possibilities. And we don't think investors are asking themselves those hard questions.

This week on the tipping point: Rules of Thumb

In this episode, we talk about some financial “Rules of Thumb” you’ve probably heard in your lifetime. The rule of 100. The rule of 75%. The 6 months savings rule. The rule of 5. The 4% rule. In the episode we chime in on each of these, so you should definitely go listen, and these are all pretty good rules, but when it comes to investing... rules are made to be broken.

The only rule you need to follow is the rule of A to B, and that's getting your family from your point A— where you are right now financially— to your goals...your dreams...to your point B! That's the Bob Payne rule. That's the Payne Capital Management rule. And that rule will help you to rule your life financially, forever.

This week’s hidden facts of finance

40% of companies successful enough to become publicly traded lost effectively all of their value over time. The Forbes 400 list of the richest people in America has roughly a 20% turnover per decade for causes other than death or transferring money to another family member. It just goes to prove that the numbers show it, that investing in individual stocks is not investing, it's speculation. Investing in the market and a diversified portfolio is the only way to go.

How lucky do you feel? Lucky enough to pick a company that not only stays in business but outperforms the index, or will you end up with a bunch of companies that go under? I don't know about you, but I don't speculate. I invest. Capitalism's messy. Anything that's incumbent today, whether it's Amazon, Facebook, or Google, is only a couple of steps away from creative destruction from some other force of the universe. So it's a great reminder that you can't stay complacent as an investor.

Resources & People Mentioned

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