I Was 100 In A Global Index Fund Until I Realised This

Look, I know how equity works. There are periods of incredibly good returns, but then you get these 40% peak to draw falls. I know it will happen. I don’t know when. Ramen Nikisa from Pension Craft is back. Like me, he spent years explaining why investing 100% in global equities works, but recently he’s changed his portfolio, cutting his exposure by almost half. What changed and what might make him change his mind again?

There are certain things which are toxic for bonds and equity. What worries me is that these kind of situations where we get inflation spikes seem to be becoming more frequent. How have you worked out that number? But I really want to ask you is how have you worked out what you want in life? Cuz I’m still trying to figure that out myself and it’s like give me give me some wisdom please. So a bit like me your philosophy as far as I could gather was always 100% equities but you’ve recently changed that and that’s the reasons behind that are what we’re going to go into today. I want to ask first of all though, what was your justification for being 100% equities up until this point? Well, I think a lot of the research I did just showed that equity just does really well if you’re willing to hold it for the long term. So, I think I was pretty cautious when I started investing and then I moved towards 100% equity eventually because the stats are just overwhelmingly impressive. If you look at its returns above inflation, it’s what five 6% over the last 120 years. This is the Dimson Marsh Storton numbers. So, I just thought, well, I just want the extra return. I’m comfortable with the risk. I don’t need the money anytime soon. So, I just thought, yeah, I would make it really simple as well. Cuz I had a member of my community who said, “Look, you’ve got these different regional allocations.” Because when I first started, it was just, you know, really complicated my portfolio. And he said, “Look, what’s the point? You could have done something much simpler and probably got better returns.” And I realized he was right. So that’s why I switched. And it was a simplicity I think which also was very helpful for me cuz I was never second guessing myself and thinking, you know, I should put more into this, less into that. It was just one thing I can I can use. Kind of like your uh red button, you know, it’s just one button to press, more money in, and that was the only choice. Yeah. Every time I’ve ever tried to experiment or have a portfolio that does something a little bit different, I always tinker with it. um to my own detriment. Uh individual stock picking. I recently tried to put together a little bit of a dividend portfolio because I was thinking, “Oh, this might be fun to do.” And I would every day I was looking at thinking, should I buy that? Should I sell that? Whereas a VWRL or a global broad index has always been just really simple, really easy for me to stick with. I’ve never been tempted to mess with it. Basically, yeah, I just find it’s just psychologically it’s easier to live with because you know what you’ve got. It’s easy to track. you can just say if someone says what’s in your portfolio, you can just say, “Oh, this is it.” And I know exactly what’s in it. I’ll never forget that. So yeah, I think it was just better from a behavioral point of view. That was the biggest reason for me, I think. So why has the behavior changed? I think my circumstances changed. I think that was the big reason. Uh I reached my number, so I knew I had enough. And of course the three things you’re thinking about when you think about your allocation uh when you have a portfolio is have I got the risk appetite for this you know am I happy taking a loss what’s my emotional reaction to a loss and then you’ve got your um risk capacity which is your economic ability to take a loss if it goes down 10% 20% is it going to affect my quality of life and then the third thing is the investment horizon. So the investment horizon is still long, you know, so that wasn’t the reason. The risk capacity again, you know, I’ve still got income from pension craft and it’s doing very well. So I don’t really need the money. So it wasn’t because of that. It was purely the risk appetite. I just didn’t like having 100% equity. It’s just not something that sits comfortably with me. Is it Sorry. Go on, mate. Yeah, I was just going to say, so before you changed were your portfolio, you were in just one fund. Is that correct? or you in well I mean I was one one global equity exposure but because I had different platforms I had different things on different platforms I just usually go for the cheapest fund which gives me roughly the right exposure on the platform so stylistically you were global index but you just had a few different versions of exactly and they’re all pretty much the same they’re highly correlated and there’s not much between them so on Vanguard you’ve got to use their funds so I had uh VHVG which is developed only but then on other platforms like invest engine and trading 212. I could have aqui which is a very cheap global equity fund that traps track tracks the MCI all country world index. So I mean those were my choices. Um FWRG was another one which is a footsie all world tracker. But if you plot them against each other almost indistinguishable even when you like I’m I’m global all cap on Vanguard. Um I’ve got FWRG and then VWRL because I like to reinvest the dividends myself. you most people would go VWRP which is the accumulation but like you say even ones where it’s it so the all cap will include smaller companies all capitalization all sizes they’re still pretty big businesses but whereas VWRL won’t and then you’ve got your one that’s only developed so it doesn’t include the emerging market economies but if you plot them on a chart they all basically look the same so it it does maybe there’s points in time where there is a difference you would need a significant emerging market outperformance for a period time cuz they’re all a feature of the fact the American market’s done well. That’s why they’ve all it’s such a dominant theme in the in the funds that just dominates everything. Yeah. Uh and the concentration that you get right now. So, it’s a kind of fun experiment if you build your own little portfolio, a global market cap portfolio, and just build from the biggest to the smallest. So start with one, the biggest, Nvidia, Apple, whatever, and then work down to number 10, and you plot that portfolio’s returns versus one of these MSEI global indices. Again, it’s really close. You don’t need that many to track. Uh I mean, obviously, it gets better the more you add, but that’s why, you know, once you get to EN, which is like 10% of the market cap of the world, it’s not going to move the needle that much. you know maybe for you too because you’re going to live a lot longer than I am. So if you invest now and India becomes like China or even a developed country which it may do over your lifetimes then yeah it’ll move the needle but for me you know by the time I pop my clogs it’s I doubt that’s going to happen. So but if you’re young yeah I think there’s a case to be made for EM. So your your um d-risking though coincides with a period of the market where people are nervous about concentration risk within global equity. So that that point you just made about take five businesses and it’s b that is the global index essentially. Um was your decision because of current market conditions or was it because oh I’ve got I’ve hit a number that is enough regardless of what the market is like at the minute I’m I’m dialing down. Oh yeah. I mean, it was very much that I’d reached my number and whatever the situation was, even if we were in a blistering rally, I’d have done what I did because look, I know how equity works because there are periods of incredibly good returns, but then you get these 40% peak to drop peakto trough falls. That’s inevitable, you know, and I just didn’t want that. I just didn’t want to live with it. And I knew it was coming at some point. It’s a guaranteed thing that it will happen at some point. We don’t know what the trigger will be or when it’ll be. and I just didn’t want to live with that and I didn’t need the risk to be honest. So I think the the goal here is to reach your target and to achieve what you want in life and that’s you know the goal is what you’re getting towards. The portfolio is the means of getting there and for me really I just didn’t feel I needed the risk to get to where I needed to be. How how have you worked out that number? But I really want to ask you is how have you worked out what you want in life? cuz I’m still trying to figure that out myself and it’s like give me give me some wisdom please. It’s funny because I made a video about this and u I showed me in a Lambo thanks to AI when I had big gold chains so I made it made me think of joint video. Is it not that one you parked outside? Yeah, that’s the black Lambo. Yeah. Uh and I just thought, you know, that’s just so not me, you know, driving along in my Lambo with my gold chains. And I also had a video of me with Teddy, my dog, walking in the woods. And that’s me, right? And that’s a very cheap hobby. And I don’t really want that much out of life. And I find that bling is not what makes me happy. And I think you reach a certain point in your life when you realize what does and doesn’t make you happy. Some things I mean you think it’s going to make you happy like buying something or becoming some member of some community that you think is really aspirational and then when you get there you think you know these people are or you know this thing that I bought it doesn’t make me happy at all. So for me it was pretty much coming to that realization and that point in my life when I realized what it is I I actually wanted and for me fortunately that’s very very cheap things. But you’ve always I mean like from what I know about you and I obviously I know you from the conversations we’ve had I don’t know you like personally very well but you’ve always pursued had a clearer idea of kind of what you wanted even when that’s gone against the grain right because you gave up your your city job to pursue YouTube even though it probably wasn’t a sensible thing to do. So you always seem to have had a bit of a an idea of that more so than I feel like I I do for myself. Well, I’ve heard other people say the opposite. Like I started off, you know, but I started off in academia. I thought I wanted to do physics, astrophysics, and then I moved into biopysics and then I did um I went to study cognitive psychology at Oxford. You know, I did neural network modeling, which is really interesting now. What was happening with AI, you know, I kind of get an insight into it because of that. So, I kind of drifted in that sense and then I went into banking. But then banking I kind of found what I was looking for I think because it was so interesting and finance applied the maths for something really practical. So I I think I’ve picked up a lot of tools along the way, you know, intellectual tools, money, you know, because if you work in banking, it’s a side effect often um which helped. But yeah, you build up the richness over the course of your life. And I think if you’re intellectually curious, you fill your kind of intellectual bag as you go. And those tools come back again and again and again. Weird stuff that you learn when you’re doing physics and you just think this is useless. But then suddenly, you know, you realize, oh my goodness, this is exactly what I studied, you know, 20 years ago. Weird links that you would never guess. So things like uh the black shells equations, right? It’s just like diffusion. Sorry, what is that? Okay, so how you price how you price derivatives, there are these kind of differential equations that help you price derivatives like call and put options. But these come straight out of the same physics, the same equations which govern how fluids flow. So things like that, you know, I know it’s so weird. And then things like vector embeddings, like when I was at Oxford, we were studying neural networks. So we teach these neural networks how to take a word and make it plural, right? Sounds simple, right? So dog, dogs, pig, pigs. But then you’ve got irregulars, uh, like child, children, you know, where does that come from? And then kids have to learn all this crazy stuff. So we taught these neural networks and they’d make the same mistakes as kids and then we’d have to work out how the neural network did it. So we had to work out these representation spaces. Think of it like an embedding. Yeah. Where you represent the meaning of something. It could be an image, could be a sentence. And now that’s exactly what these AI models use, these embeddings and this idea of meaning. So you know all of this stuff, it’s all connected together. It’s just so beautiful. And that’s what I mean by filling your intellectual bag as you go along. A lot of this stuff resurfaces. And I just think that’s fascinating. Mhm. And you continue to do that now, right? You’ve said openly, I’m in my retirement. This is my retirement job. But basically, so was there a was it as binary as I’ve hit the number or was there like a catalyst or a moment where you thought, oh, it’s time it’s time now to do to make this change? I think the market kind of made up my mind. I mean, I’d written a lot of tools for our community members to work out their number like Monte Carlo simulation where you you kind of work out given the randomness of markets, am I going to hit my target? If I’ve got a certain amount of money, how long is it going to last if I draw out this amount using this rule, these rules? So, I knew based on those tools, of course, you try your own u situation out when you’re building the tools. So I knew I was I was getting close. Uh and then I actually reached it because there was just an unbelievable equity rally and it happened almost precisely at the time when I put you know gone full into equity. Um after that it just kind of went crazy and then you know I reached the number and and at that point I kind of realized that that was enough. I mean there’s never enough right? It can always have more, but it’s a question of if I stop today, could I pay my bills and live a lifestyle which which I’m comfortable with? And that’s the point where I just thought, yeah, I’m there. How did you calculate your number that you needed and when did you come up with it? Well, for me it was, you know, what income do I need to live based on a lifestyle that I want? So, that’s the starting point. And then you think about, well, do I want to die with zero, in which case I can withdraw more every year, your withdrawal rate can be higher. Or do I want to leave money for my kids when I die? In which case, your withdrawal rate is lower because you’ve got to keep the pot constant in real terms. So inflation can’t eat away at it. Uh so for me, I thought probably die with zero. Although, you know, if there’s money left over for my kids, good. uh people use the 4% rule which is like a very very approximate thing. The way to think of it is imagine you’ve got a tank of water right and if you’re pouring in 5% of the tank every year through equity returns or bond returns and then you’re draining four well on average the size of the pot the size of the tank will remain constant. So that’s where it comes from. It’s based on the returns people expect but the tank is on a boat that’s going like this and sometimes loads all over and sometimes lots in as well. I mean that’s the other weird thing. Um so there’s volatility. Yeah. So that’s why you have an excess, you have to build in an excess. Um and obviously the sequencing risk, you have to think about that, but there are nuances. But that’s a good starting point. So I knew I was about there based on the income I needed and based on the 4% rule and then I had all of these simulation tools like the Monte Carlo simulation. So I knew from that that I’d be fairly confident that I’m not going to run out of money. Um, and I had the income from pension craft which meant that I probably wouldn’t need it at all. Right? So, you know, because I don’t want to retire. I enjoy what I do. I think for some people they hate what they do. And I think it is unfortunate that we are in this kind of situation where they hate their life essentially. You just think I don’t want to get out of bed every day. And I’m really lucky in the sense that, you know, I love what I do. Uh, and that is a privilege. You know, I love it. But yeah, that income is going to be there for as long as I can be bothered to generate it, I think. So, for me, it was fairly lowrisk thing to do. Um, and I didn’t need the risk from the portfolio. And it’s quite risky in running a business. You know this, it’s kind of you don’t know what’s going to happen in the future. But the predictable cash flows or income from your human capital allowed you to have a more risky approach in the market basically. Yeah. Yeah, you were like redeeming your human capital through pension craft at a level that was higher than you thought and that allowed you to go I’ll be you take more risk in the stock market. Um, prior to that when it wasn’t going well, were you more cautious? Oh, yeah. Yeah. Yeah. So, when I started off, I’d say that there were kind of three phases to the investment journey for me. So, walk out of the investment bank into the sunshine and you know I had a family. I had a wife that wanted an income um understandably and I had two kids which needed an income but like I say I had six years money so I had a fairly long runway but I was very cautious because at that point I had zero income right nothing so I used other parts of my human capital physics and maths and I was driving around Buckinghamshire teaching these kids about electrons and uh and you know difference squares you know mathematics but that essentially allowed me to have time to make the videos. So that was very cautious. You know, I’d come out of a fixed income world, so bonds. So I had a lot of bonds in my portfolio, but my attitude initially was quite arrogant. I think, you know, I’d been at the investment bank. I thought I knew it inside out. But markets tell you always, you don’t know anything. Yeah. You might think you do, but you don’t. And you’ve got to be humble. Uh but but anyway, initially I was quite cautious. Then I started doing the research for the videos and I started to see you know the Dimson Marsh Storton stuff equity returns being amazing long-term um and then I started to take a bit more risk and then I think you know I reached the point where where Pension Craft really took off and I could take a lot of risk and then I went you know single global equity fund. So those were the those were the steps and then I reached enough and I thought well now I can derisk. Yeah, we had um Mosha Mleski and we’ve had Bill Bernstein on as well. Similar the kind of you as a stock or a bond thing and it’s it’s good for the audience at home listening. If you have a number but you haven’t hit it but you have a fairly stable job that you think those incomes will persist, you can take a fair bit of equity exposure on the other side because you have stable income. And that’s what you did. You reflected that in your portfolio allocation. And then now you’ve hit the number, you come back down the other side in terms of you ramp away from the equity exposure which has a chance of being volatile. But that’s not because you think you’re going to stop pension craft anytime soon. No, you’re still going to potentially have that income. Yeah. It’s like a perpetual bond or a kind of annuity the business. So T, would you describe yourself as security conscious? Absolutely. Um I’m not trying to get kidnapped, you know, like all those crypto boys getting kidnapped. I always wear a lot of gold. So like I’m got my head on a swivel or 24/7 drive most places. Yeah. Always security conscious. You took your chain before you? I never took my chain. I had to wear it proudly and let someone try take it off. My chains got smaller over the years, mate. As my money got longer, my chain got smaller. As Ludicrous Asudist once said, did he? Yeah. My money got longer, my chain got smaller. You’ve got to be security conscious with your personal finances and in your business life. It’s not just that bad things can happen in business if you’re not. It’s that you have to prove you’re compliant with security protocols if you want to sell to larger companies. This is where our partner Vant comes in. They automate compliance with security protocols like GDPR, HIPPA, ISO 27,01 and sock 2. The beauty of Vanter is they save you up to 90% of the time it takes to prove you’re compliant with these standards and on average half a million. If proving your compliance is something you need to get done, you can get started at vanta.com/making. There’s a link in the description and we’ve put a QR code on the screen. Okay, so the portfolio now it’s gone from 100% equities which is one of a few different global funds. They just track the global stock market. You’ve now dialed that down. What is the equity position in the portfolio now? So equity is now 60 and then the fixed income side is 40. And you know, so I still get some of the upside if markets go up like they have recently. You know, I think that’s great. But if they go down, I can rebalance and I get some of the extra juice because you’re buying at a lower lower price for the equity. So, you know, you get the equity rebalancing benefit as well, which you don’t get if you’re 100% equity. Is is I’m sure you have back tested it. So, is a rebalancing strategy more efficient? Like is that does that generate an excess return over just being all invested at once? It depends. uh it does generate a small positive revenue uh longer term. I mean there’s there’s mixed research on it. It depends also on what you’ve got in the bucket right because if it’s highly correlated like if you have say high yield credit combined with equity they tend to fall together. So that wouldn’t work. But if you’ve got commodities uh cash fixed income combined with equity there you get much more alpha because they’re uncorrelated. the things that make one asset class freak out and say going to crash. Uh it that wouldn’t affect everything in the portfolio. So just that rebalancing effect. I guess the um the presence of higher rates helps that argument as well. In the previous environment of very low interest rates, you were leaving money out of the market in somewhere that wasn’t generating much of a return. Probably a negative real return. You might even argue that they’re real negative real returns now. But yeah, one of the tools I’ve written is really cool. It’s kind of got the bond uh yield curve. So these are the individual bonds which the UK government issues and it’s got the yield on each one which is roughly the return you receive on it based on how many years to maturity. And it’s like a living thing. You I’ve got this animation tool so you can click on play and you can watch all the bonds kind of jiggle around. If you go back to 2022 it’s all flat and low and if you put it in real terms it’s below the curve. It’s negative. And then suddenly in 22 23 you get this huge inflation spike. the central banks raise rates and it starts going like that you know it starts twitching and then you get this massive shift upwards to like 4.5 to 5% which is where we are today which is normal right the situation we were in previously was abnormal and it had been there for so long that people forgot but I think now with fixed income like you say you earn a pretty good income can you if you think about the return and the risk that you’re taking to generate it is the UK government going to default on it debt No, they’re not. So, when you see a bond selloff, you just think, “Oh, nice. I can be paid half a percent more than I was last week because people are freaking out.” Great. How so? How often do you rebalance? And how do you rebalance? Well, not very often. I think that’s the other takehome from the the research on on on rebalancing. You know, once a year is probably enough. If there are periods when you have big crashes, then you can rebalance more frequently. But it’s it’s very little work. And nowadays, a lot of the platforms, they just have a button where you can literally just click on it and it rebalances it for you. So, it’s so easy to do, but it does incur trading cost. So, usually it’s a good idea not to do that very often. So, yeah, once a year is pretty good. Yeah, I think so. And then, you know, so if you see a big crash, you don’t go, “Oh, I need to go rebalance.” You just not immediately. No, just give it give it a couple weeks, see what happens. And then Yeah. Trading 212 will constantly tell you that like it’s out of balance and do you want to rebalance? But, you know, you don’t have to. Well, you incur tra you incur fees, FX fees potentially if you’re buying foreign instruments and yeah, you might just overtrade essentially. Yeah. And you want to leave it as much as possible really. Yeah. Yeah. So, the idea of moving away from the equities is simply so that if the stock market was to drop significantly, you don’t have you’re not 100% exposed to that. By dialing in a 40% bond equity or fixed income, sorry, I know you’re a specific type of bond, which we’ll get on to in a minute. Um do you know what kind of impact that will likely have in terms of dampening and the returns how little how less how much lower the returns will be as a result? Yeah, I mean it scales roughly linearly. Not exactly because of the correlations. But if I have 60% of the equity exposure, I’ll get 60% of the return long term. So do am I happy with that? Yeah, because I’ve worked out that that’ll get me to where I need to be because I’m there already. So, it’ll just get me deeper into okay territory. Uh, but if there is a huge fall in the equity market, I could live off the 40%, if I had zero income tomorrow, I could live off that for quite a long time because it’s a fair old chunk of money and I don’t spend that much. So, I think that’s the way to think of it. Is it linear on the way down as well? Do you reduce the impact by 40% roughly? Yeah. Yeah. I mean, if it’s just a one-off shock. Yeah. So I just take 60% of the hit rather than 100%. Have there not been periods where bonds have moved in in a depth with equities especially recently. Yeah. And this is what worries me and that affected my choice of the bonds I chose. So you’re right. I mean usually bonds and equity they go in opposite direction. So good economic news good for equity bad for bonds. Bad economic news good for bonds bad for equity. That’s the usual situation. But there are certain things which are toxic for bonds and equity. So inflation is one of them because inflation is like the mortal enemy of bonds because you’ve got a fixed income and inflation gobbles away a little bit of it every year. Equity inflation above 5% usually means that equity derisks. So the uh price to earnings multiples fall. So both fall together if you get inflation spikes. So high inflation regimes the hedge breaks. uh bonds don’t hedge equity. Whereas normal conditions when inflation’s reasonable, you know, two 3% that’s the sweet spot, the correlation breaks breaks down, it’s negative or zero and they hedge each other. So what worries me is that these kind of situations where we get inflation spikes seem to be becoming more frequent. So we got the huge one after COVID when we switched the global economy off and on again and that was a hugely inflationary period because governments were printing money. We had supply chain issues which pushed up prices. So it was a perfect storm for inflation and we had double digit inflation. But then we’ve had this situation where we’ve got tariffs from the US also we’ve got the straight of horm being shut and again we’ve got an inflationary shock. So it seems as if the world is moving towards one in which these supply shocks are more frequent and if that’s the case then the bond equity correlation isn’t as reliable being negative and being a good diversifier. It always seems after a shock as well it takes a while for the the the inflation to kind of work its way out of the system. We have that kind of sticky core component in the UK that was the after effect plus further shocks. So, I feel like even if there wasn’t the shocks, we would still have a higher baseline inflation rate right now than we would have had prior to the the big surges, the 10%s that we saw. It seems to be we’re in a higher inflationary environment just in general. I think that’s true. And if you look at the numbers for services inflation in the UK, you’re right, it didn’t come down. Chocolate inflation 17%. That never came down. I was really upset about that. So is Laura. They just took all the chocolate out of it. You’re just eating palm oil now, aren’t you? Every time I go on see advert, the comments are amazing. Like, boycott these bastards. They ruined us our chocolate. You’re so right. I mean, the services inflation’s been very high in the UK. And it was just coming down. That was the beauty of it. If you listen to the monetary policy meetings, which of course I do, um, it was it was so exciting because we were finally seeing the bank saying, “Oh, we’ve we’ve finally licked it. You know, services inflation is coming down. Wage growth is slowing down. And it’s still positive in real terms, but uh so we was like we were finally getting there and growth was improving and then suddenly you get this straighter form thing. And if there was one thing that would scupper the UK economy, it’s oil. Because to first order, you know, we ship in oil, we ship out services, that’s the UK economy. You know, China’s the workshop of the world. We’re the office, right? And the worst thing you could have done is switch off the oil supply. and that’s what happened. So, it’s going to have stagflationary effects in the UK. We’ll have higher inflation. We’ll have lower growth. You know, it’s really awful. But it will be temporary. You know, I think eventually we will recover. But you, like you say, it’s going to be a an impulse, a shock. But even if you went back to the previous oil prices today, it works through the economy and it’s going to be higher for a while. Yeah. because you get higher inflation which initially in the oil prices you see at the petrol pump would be the most immediate example but then you get the service-based economy demand higher wages because they’re like well now I’ve got to pay more to heat my house and fuel so you get that wage spike and then oil prices all the other way so it’s not just spiking over it ripples through doesn’t it to every part of the economy so we get this elevated inflation and people anchor right they see the price of petrol at the pump and they think oh my goodness numbers are going up you know the prices are going up my wage has to go up as Well, yeah. And and and I think rightfully so, and I’m always wary about saying that, you know, people asking for higher wages is a bad thing, even if the, you know, the the guy in charge of the Bank of England was begging people not to ask for wage growth. But it it is an effect. And like you said, we’d only just started to see the end of the last one, and now we’ve got another shock, which means we might see another couple of years of sticky core inflation in the UK again. How did you combat that then in the portfolio? cuz I know if you’re worried about it, you wouldn’t have just gone, “Oh, well, I’ll I’ll ignore that point.” You see, what I went for was a money market fund instead of uh instead of longer duration guilt fund. Cuz the way the way the way fixed income works, bonds, get ready on the button, is you’ve got duration. He’s already slacking on it to be honest. You g you gave him a definition of something before with like and I was like, you didn’t get a word of that. No, not stagflation. I know stagflation. You hit it before. What was it for? There was a definition. Black Scholes. Black Scholes. And then you were like, “Yeah, derivatives.” I’m like, “YEAH, YEAH, YEAH, DERIVATIVES.” YEAH. But this is one of the best things about coming on the show. When I put him in a brew, don’t you? I just watch his eyes glaze. It’s just like It’s like watching a man die slowly slowly die over four episodes. Like when you keep bringing back to kill me again, mate. He’s digging me up and burying me again every time. Okay. Anyway, so uh duration. Yeah. So you’ve got short duration bonds and you’ve got long duration bonds, right? So it’s almost like a different asset class, but shorter duration bonds if you if interest rates increase hardly affects them. Long duration bonds, they are all over the place. The volatility is like equity. So in the UK, you know, my community always jokes that TR73, which is like this 2073 maturing bond, uh it’s got this incredible volatility and we call it old man’s crypto because if you want to take a punt on rates, you buy TR73. If you think rates are going to go down, you buy a TR73. You can’t short it. Uh but if if rates are falling, that’s what you do. But that’s really sensitive. If rates increase, that thing tanks. So in 2022 23 they look like meme stocks selling off you know they fell about 80%. But now you know the yields are higher so I think those kind of crashes are less likely but I didn’t want to take that risk. I was taking risk off the table. I knew I couldn’t call which way yields would go because there was a lot of uncertainty with Trump as president new new government in the UK at that time. So for me, I just went for a money market fund. And at that point, short-term bonds were giving you more income than long-term bonds, which was weird. The curve was inverted. Since then, the curve is now turned back to being normally upward sloping. And since the war with Iran, what’s happened is the whole curve has shifted up. So now it is the case that you’d be better off with a guilt than you would with a money market fund. So money market funds earn roughly the Sonia rate the sterling overnight index average rate which is currently roughly bank rate uh which was falling but now looks like it may not be falling again due to the inflation shock. So you know you’re earning pretty good money with it. It’s very very very low risk because they only buy very very very safe things. It’s very boring which is what I want. So that’s what I’ve got. No duration risk, very little credit risk, very little income, but a reasonable income. Are there not bonds that track the rate of inflation when I make that linkers? Yeah. Yeah. Wouldn’t that be something if in your 6040 portfolio then if the inflation goes up then your bond your returns give me the button? Oh, mate. Brace yourself on here. YOU DUG HIM UP ON YOU. OKAY. You sitting comfortably. No, I mean I bought some linkers for this very reason. But what’s weird about linkers is they bake in an expected rate of inflation. It’s called a break even. So let’s say you’re going to be investing money for 5 years. You think inflation’s going to be 3%. Okay. Well, if that’s the case, then what’s the break even rate for the linker? If it’s 4% then inflation in your belief system is not going to be high enough to pay for the inflation linker. So that’s that’s the problem. You got a shock cut to the upside. You need to think it’s going to be more than they expect it to be in order for the link break even. Yeah. And the break even will be based on a forecast of whatever it they think it should be or is it and it’s just based on market dynamics. It could just be that people don’t want to buy linkers, you know, or a big part of the linker market stepped back like insurance compan. Exactly. But it is you I mean people say that it’s the expect the market expectation about inflation. Whether that’s true or not is kind of irrelevant. It’s just based on what you believe, right? Anyway, my belief was wrong for my linker. I thought I was going to earn about 7%. When I actually bought it, it was just on the kind of tail end of the very high inflation period. I thought it would be stickier than it was. I was wrong. And the market told me I was wrong by making less money than I thought. So, I made about six. I thought I’d make about seven. So, you got to be right, right? You got to be right. And you got to know what’s baked in. So, inflation linked bonds protect you against unexpected inflation. Okay. Normal government bonds protect you to against inflation that’s expected. So, there’s some of that baked into those, too. And equity is the best uh hedge against inflation longer term because businesses have pricing power. Exactly. They can put their prices until it reaches about 5% inflation at which point they they derate. So they provide you with limited up inflation protection but beyond that 5% 6% inflation equities start to suffer as well usually. Is that everybody hurts at that point? Is it is it like a five six% or above there’s nowhere really to hide? Well, the linker would have done okay because they wouldn’t have but it’s only you can’t buy a linker after the event. Or you can buy the source of the inflation. So if the source of the inflation was oil, you could buy oil exposure. If it was industrial metals, you could you could buy those, you know, I mean there are various ways you can hedge for that. And you know, commodities are one way to do that. You can get commodity exposure which limits the damage to your portfolio. So that’s another way to do this is to hedge via commodities. But you don’t have any commodities in your not in the core. No, but I’ve been experimenting with that. Yeah. This is what you do. You say I’m 100% equities. I’ve just got a million experiments. Got a bit of gold, a bit of crypto. I got this. I got that. You’re just an experiment. So mate, you’ve started your company T Unlimited open for business. It just made more sense financially for me really. It’s a bit more admin though. Tell me about it. I bet you haven’t sorted out your accountancy stuff yet, have you? That’s that’s a problem for future to me. Not right now. But I know you’re a fan of Zero. I am actually. I genuinely think it’s probably the best finance product I use within the business cuz every single business that I run has a zero membership. You need accountancy tools to run a limited company. But it’s also increasingly necessary for soul traders and landlords too because of making tax digital. This change means that if your turnover is more than 50k, you have to use approved software like Zero to file your income and expenses every quarter. It’s not just making tax digital though. You can use Zero for all the necessary filings like company accounts, VAT, payroll. But what I like most is how easy it is for me to see what’s going on in my business. Revenue, profit, cash flow, all the stuff I need to be on top of it. So, if you’re looking for accountancy software, then definitely check out Zero. You can get 90% off for 6 months by going to zero.com/making podcast. There’s a link in the description and there’s a QR code on screen. Is there a circumstance that would make you change the bond allocation as in move away from the money market fund into guilt or something? Oh yeah. Yeah. I mean, we’re in there now. I mean, that’s why I think this yield curve tool is cool because you can see that it’s a living thing. It changes day to day. And if there’s a bond selloff, then yields get higher, right? And then suddenly all of those bonds are above the dash line on my graph for what you earn with a money market fund. So at that point, you’re better off switching into guilts. So we’re kind of there now. And I am tempted to switch. I think it could get even higher on the on the yields. For example, if there’s a political change in the UK, but let’s say there was a change in in government or eventually there’s going to be a change and the government is much more spendy. In other words, they say, “Oh, you know, this debt to GDP thing that was just made up anyway. You know, we’re just going to carry on to 120%, 150%, it’ll be fine.” Well, if that happens, well, the yields then would, you know, they they’d go up a lot. So that could be another point at which to get more exposure. So there are lots of reasons why I might switch and at the moment we’re kind of reaching the point where I’m thinking yeah there are quite a few guilts now where I’d be better off than you know getting a money market fund. Why would you be better off with a guilt? Just a higher return. High rate return. So let’s say you buy it today you lock in five 4.5% say for the next two years. Whereas with a money market fund, it just picks up whatever rate the monetary policy committee thinks up that week, you know, and that can change over time. So you earn a variable rate. What do do you think, you know, for someone who’s not into the bonds as you, do you think a money market form could just suffice, you know, if if that they would get a good enough return on that long term to have that as the component? Yeah, I mean, in the UK, we’re kind of blessed in the sense that we have a high short-term interest rate. A lot of people say it’s bad and it is for the government because they have to borrow at that rate, but for us it’s great. You know, I speak to people in Europe where the rate’s 2%. Rather than four, you know, in the UK 3.75. So, yeah, I think we’re in a situation now where a money market fund is pretty good. It’s simple. They’re very cheap. The fees are about 0.1 for the cheapest. And so simple, right? You just put your money and that’s it. If you go for the income version, it’s always worth a quid. It just throws out cash flows every so often. If you buy the accumulation version, it just looks like a bank account where it just trundles upwards. Yeah. Mine goes up and then drops and you get like a a dividend if it’s a rampy one. That’s the income version. Yeah. Yeah. Yeah. I love it. You go builds up like a ski slope and then just drops and then a few days later you get your payment and that’s Yeah. It’s I think it’d be a bit unnerving for someone if they weren’t expecting it because it just suddenly disappears the value. I’ve had people call me and say, “What the hell’s happened? you know, I thought this was safe, but then you actually look zoom out on the y- axis, it’s just loads and loads. It’s literally going reflective of the rates. It’s like a penny above one one pound or Yeah. Yeah. But you see like the a little movement in the past and then from 2020 it’s like because of the rates went high. When when the rates were low, it was hardly visible, wasn’t it? It was like a heartbeat suddenly kick kicking up. Yeah. Yeah. No, I mean I you put you kind of got me into them, which is Sorry. No, no. I mean, it’s it’s a it’s a really good way to park business funds. um at a good rate as well, you know, or to have a bit of kind of like emergency funds and things, you know, I separate money in different places. I put tax money I don’t want my tax money anywhere near my business money, but I need places to keep capital and the money market funds are really good for that, I think. And you know, when it’s business cash, it can be it can be quite a lot of money, you know, where that that falls in every quarter or whatever. Um, so yeah, and you can sell at any time and you’re just up that slope, so you’ve generated your return. It’s not like you’re missing out. That’s right. I mean, you don’t miss out. It’s just kind of accumulated income. I do think they’re a bit counterintuitive because to people they look like a stock like the charts and stuff. So I think people need to wrap their heads around what what the version is they’re buying and what that will look like on the chart before they go into it. Otherwise you might get a shock. Yeah. The rampy ones are the income ones and the accumulation ones are the slowly upward moving ones. Yeah. So would this would the slowly upward moving ones have gone steeper at the time the rate? So it would have looked like a more aggressive climb. That’s right. So when interest rates were zero is just flatlining and you just think why would I buy something like that and there isn’t a good reason other than capital preservation but then when income rates are higher then yeah the the slope is just higher. Yeah. So for our audience where do you get a money market fund and where do you get a bond? Well a lot of the platforms now offer guilts. Uh so for example Harruves has them interactive investor has them. Free trade now offers them. Free trade trading 212 off. No, but Free Trade are the first of like the NEO kind of newish brokers, the discount brokers. They don’t offer all of them. I think at the moment it’s just the liquid ones. Uh but Interactive Investor gives you all of them and you can trade them electronically. So once you know the ticker TR73, whatever, the old man’s crypto man, but you get the shorter ones like TN28, whatever, uh you just type in the ticker and you just buy it like you would with the stock. But they trade on the London Stock Exchange. So you can check out the prices if you want to. You just search search for the ticker again. So it’s pretty easy. And money market funds are just like a buying a normal fund. You buy them on a broker. Most brokers have some on there, different ones. Yeah, Vanguard’s got two uh which are OEIC’s. So if you’re on an ETF only platform, you can’t buy Vanguards. A lot of people buy open-ended investment company. So it’s just I knew that a fund. Yeah, I mean it’s just a fund. Uh, and some platforms have them, some don’t. If it’s ETF only, you can’t buy OIS. But ERNS is it? ERNS is another one. That’s the one I think I can. That one has a bit of duration in it. Okay. So, yeah, but CSH2 is the ETF that a lot of people buy. That’s from Amundi. It’s a smart cash fund, but that’s an accumulation one. Yeah. So, that’s that’s that’s a frequently used one. Raw London has one which is again a fee of about 0.1%. The fees tend to be very low because the income’s low. What would they be described as if you were reading them? Sometimes it’s under fixed income. Sometimes like on Vanguard’s platform there’s only one money market fund. So if you tick that category it’s like one fund that pops up and they’ve got both flavors income and accumulation. Um both flavors. Is is 0.1% a good fee? Yeah. I think 0.1 is the lowest I know of. Royal London is 0.1. CSH2 I think is 0.1 or.12. So yeah, generally the fees tend to be quite low. You wouldn’t pay a lot for that because it’s such a simple product. Awesome. Uh a lot of our audience would have heard about the 100 minus your age rule. So I mean I’m 25. So if we did 100 minus my age, um it would be 75. So 75% in equities, 25% in bonds or safer assets. Um how do you feel about that rule? I’m not actually 25. I’m 26. Uh, how do you feel? Oh my god. How do you feel about that rule? I’m disgusted you’re so young. No, I’m not. I’m 38. Okay. But I could have passed for 25. I’m glad that you believed me. See, that’s why this why you’re going back on. I wasn’t going to say anything, but I can see the gray hair, mate. Uh, do you know how many of them I snipped out? I got my Mes to snip out this morning. You can still see them. So getting to be a fulltime job for her. She’s I need a salary to cut all these grays. Oh, but I think I think Yeah. The um the the rules that people come up with. Yeah. Okay. you want to take less risk just before you retire. I think that’s that’s a given. There’s something called sequencing risk where if you’re just about to start drawing on the money, so you have to sell stuff in order to eat. Well, you don’t want to have to sell things after they’ve crashed. So at that point you want things which don’t crash which would be things like cash, money market funds, shorter duration guilts, um maybe even global bond funds, you know, non-crashy things because then if equity markets fall 40%. Well, you can eat the safe stuff until equity markets recover so you can avoid the sequencing risk. The way to think of it is you’re kind of scooping off a fixed amount of stuff, right? So if you’re taking say £40,000 every year is what you’re selling from your portfolio. If the size of your portfolio is halved, then the percentage you’re withdrawing that year is going to be higher than it was before it shrank. So that means you’re depleting the portfolio much more quickly. So that’s why you want stuff where it doesn’t shrink so you can allow equity to snap back up. But if you are like starting out your investing journey, say you’re 20 and I mean do you think 20-y old should be 80% in equities? You I mean you’ve just gone from 100% equities recently and you’re not 20. So do you think 20-year-old should be even do you need to be 20% in in bonds? It depends. I mean some people I speak to they’re very nervous. So for them they probably wouldn’t want to be 100% equity because they will see a 40% peak to trough fall at some point and they could be a nervous wreck if that happens or they may even sell. you know the worst possible thing you can do. So I think that’s really important. It’s about risk appetite as well as risk capacity. So your risk capacity is very high because if the portfolio went to zero tomorrow, it wouldn’t affect your ability to live, your quality of life, where you shop, but it would affect your ability to sleep perhaps because you’d be really upset. So I think the emotional side of it shouldn’t be underestimated. So I think you could be 20 and have 50% equity, 40% equity. It really depends on the person. Really, it’s about finding a portfolio you can live with. And for different people, I think they have different levels of risk that they can stomach. But if you went back and you were 20, you’d be would you be 100% equities? I think so. Yeah. Knowing what I know. Yeah. Knowing what you know and being comfortable and having all the knowledge. I think um rules sell books, don’t they? So like you know the X Y Z rule people are oh what is it I’ll click on that I’ll watch that I’ll consume that I think you know 100 minus your age the idea that every year you die at one point is probably a bit bit broad um and I think for a lot of people so for example me in my early 20s I probably would have been quite risk averse because I would have thought I’m just going to mess this up so I might have had a higher exposure to e to bonds then but then in my mid-30s now I’m like pretty comfortable in my my view of been been around the mill and I know that I can earn So I’m like 100% equity. So you got your kid I assume in 100% equities. Yeah, I have. Yeah. Yeah. Because he’s got the longest time horizon. Yeah. But he might then take it over at 18 and be like there’s a bit of money here. I don’t want to lose it. So the 100 minus your age thing doesn’t really work in that capacity and like you know would it would would my son not point of birth be 99% equities 1% bonds? Like why? Yeah. Why? It’s just an odd. So I do think like rules of rules of thumb are good like the 4% rule but they don’t they don’t normally survive a landing do they when they’re in the real world and it depends on rates as well like in the 19th century rates were really good. So if you’d have bought fixed income in the 1800s actually it wouldn’t have been a bad allocation at all. So it just depends on markets and where we are with yields depends on lots of things but I think risk appetite is a really important one. And I think some people do some crazy stuff like for example there’s the idea of the reverse glide path. Have you come across this where instead of ramping down the equity as you get older you start off with very low risk. So you start off with 20%. Just as you retire to avoid the sequencing risk and then you re-risk. So you start increasing your risk as you get older. And actually the B back test show that that works very well. I like that. I like it. So at the point of retirement you have 20% equities and then you start well I mean just I’m just pulling number and then you start every year maybe so you avoid that that taking a bite of the apple as it shrinks thing. Um you know so you can but then you dial it back up because then you you might be retired for 30 years 40 years. So that’s actually quite a long investing time horizon. So you want that equity exposure. Never heard that one before. Yeah. You live to 125 and you’re like Jesus. Yeah. Yeah. No, I I I I sit here often think I would like to be quite high equity exposure in retirement, but then as you say, if you’ve got enough, why bother, you know, cuz it might mean that you don’t sleep at night because on paper it works. If if you get the average return of the market, but the year that it drops 30 40% and that stays down for 3 years, you might then have 3 years of your precious retirement where you can’t do anything and you’re stressed and that’s not a time you want to be stressed. Now, the yields are higher, you know, four 5% for a guilt, which is very low risk. I mean the risk of default is very low and if you hold them to maturity you don’t worry about yield curve movements because you’ve locked in the rate of return. Your real worry I think is inflation because that can eat away in which case you buy linkers you know. So some of the people buy inflation linked bonds. Some of our community have got like huge inflation linked bond portfolios because they’re really you know kind of like inflationisters. They really believe it’s going to kick off. Those are linkers. Yeah, those are linkers. Yeah. Do you um do you have any anything else outside the core portfolio allocation? Do you have a cash buffer like emergency funds, anything like that? Um I do have a little bit. Yeah, I mean just sitting in a in a in a in a bank account. Um and you know sometimes I put stuff into cash savings. Um but usually that’s fairly minimal. You know that wouldn’t tide me over for that long. Maybe you know 6 months something like that. But there is some buffer. But you’re not in draw down are you? So when when you at the point you hit draw down where you start spending the money, how are you going to approach it then? Well, I think the way people usually do it and the way I’ll probably do it is, you know, you set aside a certain amount of money for that year. So you kind of locked in whatever it is you’re going to get and then you withdraw that as you need it as an income. Um, so that’s probably the way I’ll do it. And a lot of lot of these platforms, that’s the way it’s worked out. you’ve got a separate account, a draw down account like physically it’s another account or virtually you just tag this as draw down and then that’s what you withdraw that year. Yeah. Most of Mleski we had it on and I talked to him about a threeyear like waterfall strategy or whatever and he was like yeah it’s a placebo. Yeah. He’s like yeah it will survive 90% of times it won’t work but you go for that Damian or something like Yeah. He he was more into the products where they um they basically cap your upside ETFs with a capped upside but a cap downside. And he said that these are much better products for dealing with sequencing risk and Oh, interesting. So capped and flawed. Yeah. So you you know it can only ever go up by a max of 10% but it can only ever drop by a max of 10% say. So you you give up the upside in years when it goes up 20%. but you don’t feel the full downwards force. But that I mean he he was very bullish on these products. Um but I looked at them and they’re not very widely available in the UK and they’re quite expensive and they’re quite niche. They’re very profitable for investment banks. I can imagine. I can imagine. I mean whenever I hear about this financial engineering stuff, I’m always a bit wary. You know, I just try to keep it vanilla, simple. As long as you understand the risks, I think that’s probably best. And I’d rather keep the upside. You know, I kind of like that that you can have up crashes because if you’re going to be taking the risk, I want I want the up crashes, right? Yeah. I I mean, I over a 30 40 year period, you’re going to get some years where it’s up 20%. Because that’s that’s what tends to happen. Like the the variance of returns is wild. The average rate of return of 10% occurs hardly ever. You get these plus 20s. The next year, you’re going to be like, “We’re going to have a great year this year because we’ve just made 20%.” My mom constantly tells me, “My pension is more now than it was when I started.” and we’ve been living off it and stuff. So, it’s like a magic pot. Yeah. Magic money machine. Yeah. The government should get one of them. Yeah. So, okay. What What we got next to? Okay. Yeah. Yeah. So, um I I’ve I’ve changed my opinion probably over the period I’ve been making content. I I was very much I’ll probably stay 100% equities the whole life and I’ll have a cash buffer. I now concede that if I got to enough and I’ve spoken to enough people that are older than me with wisdom of you don’t really want to be dicing with it when you’ve got enough, why bother? Do you think people like me and and the wider personal finance community focus too much on the equity side and not enough on the the safe stuff? Safe. Yes. Just it’s just unbelievable how little content there is on bonds. I mean, you look on YouTube, nothing. I mean, I’m I’m a sole voice, right, talking about guilt. Why is that? I mean, it’s not because it’s a bad investment. You never learn about them in school. You know, stocks are kind of understandable. A little slice of a company. You get all the upside. It’s a perpetual instrument. And yet, bonds so useful. Nobody understands them. You know, everyone thinks they understand stocks. I don’t. I’m still after three years in, I’m still trying to figure out figure it all out. But it is complex, right? I don’t think people do truly. It’s definitely simpler than bonds, I think, but it shouldn’t be because bonds in theory are simple. It’s a bit more tangible. I think, you know, you see the we even though I’d actually say a stock is almost more abstract than a bond, you have like the personalities and people and the the talk that goes around the stock market. That means like people can see a share of Tesla and they see Elon Musk and they they can draw a line between that. A bond feels a little bit more abstract. You see, I I push back on that. with a bond, you know what you’re going to get. You know, on this date, I’ll receive this cash flow. You know, on this date, I’ll get my money back. Now, that is incredible. I think that’s pretty tangible. With an equity, you’ve got no idea what you’re going to get. You don’t know if it’s going to exist as a company in 10 years time. With a bond, it’s set in law that you get paid those. Yeah. But you get like yield curves and coupon rates. And I think these you get excited. I think I think people just then go like I don’t know what what what what’s going on here and the fact that you can have a certain return if you hold it to maturity but in between that point it can be all over the place and that can probably feel not as safe as you say and it doesn’t feel as liquid as stocks right depends I mean for guilts for guilds they’re very liquid for corporate bonds yeah I mean it can where where bonds are issued by companies yeah that’s less liquid there was a video on YouTube called if you don’t understand bonds you don’t understand money and it was like a young bloke who sat there and said basically all of you were obsessed with the stock market I’m going to explain why bonds are the most important financial instrument on the planet and he just breaks it all down in a really good way so maybe check that out I will um and because I think that that got like a lot of views I think a couple a couple million views um so there are people fighting the bond fight with you it’s not just you on a on a hill you got you got a partner in crime there but yeah but yeah I I I don’t know I don’t know what it is, why maybe it’s because like we kind of internalize the thing that you’re seeking a return and you want to grow your money and the stock market has the best chance of growing your money and when you describe a bond, people probably just think, “Oh, it’s a bit like a savings account or something, so I’ll just use one of those.” Or I don’t know why they don’t have the same sexy sexy or you’re like, “Oh, I can’t get rich off bonds, but I could get rich off the stock market kind of.” Some bond traders get very rich off bonds, but they can do tricks that other people can’t. It’s funny. I was listening to the FT podcast, the one that just launched. It was interesting. They were talking about Turner, you know, the artist. Yes. And he was a bond arbitrageer. Really? He did bond arbitrage in the I don’t know 1800s, I guess, maybe even earlier. But he realized that there was a risk-free profit you could make from government bonds. And you can make almost like I think it was 3 and a half% difference between two different instruments. So, you know, you buy one, you swap it for another, and it’s risk-free. But people didn’t do it because they thought it wasn’t a gentlemanly thing to do. So he didn’t think that. He just did it and he made a lot of money doing it. Do you do you think you were born 150 years too late? You would have just been absolutely finessing the market back in a previous life. I would have loved to been able to do that. But interesting, right? An artist who’s into bond arbitrage. Who knew? I is probably a Bond arbitrageer who got into art because he was so rich, you know, he could I mean, was he successful in his while he was alive as an artist? I think he was successful as an artist, but he did wasn’t born into wealth and a lot of the other artists thought it was quite ungentlemanly because they were all rich anyway. That’s right. Yeah. Whereas he he talked about it as well, which uh which was uncoof apparently. Yeah. I mean, he found a money machine. If you’ve got if you can just farmer save 3%. Yeah. Nice. You you you mentioned before about the 40% draw down. Um and you said you know that it will happen. Um do you think we do one soon? The thing is I don’t know. I know it will happen. I don’t know when. So I think for me it’s about being ready for it whenever it happens. You know my my grandmother always used to say Roman at my age you have to keep your bags packed cuz she was like 70. Um so I I think that’s the way to approach it. You’ve got to keep your bags packed for the next crisis and you never know what is going to happen. And if you’re in about to enter draw down, well then you better have your bags packed. Do do you think like from an equity perspective, obviously we can talk about it all day as an as an interesting talking point for the world, but do you think from an equity investors perspective, it’s just kind of part of the es and flows of of the globe and it’s not something that they should be overly worried about as long as they’ve got a long time horizon for investment? Yeah. I mean if you’re accumulating these kind of crises are great you know for you two brilliant you’re you’re buying equities now at a depressed price well not anymore briefly if you were and maybe again but it’s good for you so I think yeah this is just another crisis and a long history of crisis which eventually affect the equity market and but but things snap back you know that’s just the nature of the investment you’ve just got to get used to the idea that something will make them fall 40% 50% % and you just got to get used to that idea and if you haven’t if you’re not comfortable with that then just derisk a bit. If the market doubles tomorrow would you feel bad about the fact that you do risked? I think so. I mean I’d have 60% of that. So you know that’s still pretty good. Would I have wished I’d have done more? Would I wish I’d have had something levered? Yeah, maybe. But you know I have played with levered uh funds. You know, I did like crazy three times Nvidia versus Tesla. So, long Nvidia, short Tesla, and I was just a wreck when I did it. It was in my fund portfolio, but I was checking it every day, every hour, and I was nervous, and I just didn’t get understand why Tesla wasn’t selling off even despite all the negative news flow. Um, eventually it did recover, but it was after I’d closed out my trade, you know, cuz I was just a wreck. And Laura was saying, “Look, you’re spending too long on this.” And she was right. So, it was a bit like being a gambler in that sense. It’s just not my nature to do that kind of thing. So, would I have FOMO? Yeah, probably. Does it feel boring now? Do you feel kind of out of the market a bit? No, I mean, I still have the exposure. So, I still feel uh worried when markets fall, but I think it worries me less than it did. It did feel like things were toppy and it it did worry me. Yeah. Surprises me that it worries you when you’re so stoic and you sit there and say, “Oh, you know, it just is what it is.” I think also the news flow, it just made me quite depressed just reading what’s going on in the world all the time. It just feels as if every generation you think that the world’s going to be better than the previous one. And for our generation, it was true. You know, when I was a kid, we grew up with nuclear weapons. We had the USSR and you know things were you know when I grew up people would quite openly call you a pachy in the street in the 70s and and now you get to the 2020s almost the 2030s and it feels like we’re going back to that world where we’ve got these blocks of people that hate each other both within our country but also between countries. It just feels like things are going backwarded. Yeah. And it’s sad to see and that depresses me perhaps more than what’s going on in market. Yeah, it it does feel like we’ve taken a bit of a step backwards in politics as well. And we can’t finish on that, can we? I mean, I was going to say we’re out here like showing them like the power of friendship. So, like, you know, me and D. Yeah. Showing the world that, you know, it’s all about love. But, um, he keeps coming trying to kill you. Yeah. He keeps trying to kill me, dig me up, depress me. I mean, I know what you mean, though. I mean, you got Trump and you’ve got like a lot of people. It’s like you’re either this or you’re that. You’re leftwing, you’re rightwing, you’re Republican, you’re Democrat, screw the rich, screw, screw the poor, screw the immigrants immigrants. And it’s a lot of that. But I don’t know. I think overall the younger generation I got more faith in like Jen Well, Gen Z. I feel like they’re kind of like, oh, we need to protect the planet. We need to, you know, do more things. So we live in I I’ve always felt very lucky that I live in like a crazy time of of not the the nasty stuff but in terms of like de development of technology and the things I’ve seen the silicon age almost and the fact that you know I’ve sort of seen the development of computers in my lifetime to the point of I used to record songs on a tape player and now it’s like abundant music in my pocket at all points and and all the things that are iPhone and that and and anyone would have said you lived in a miraculous time of development And just as that’s kind of like flatlining, they go there’s AI. Yeah. And like I that’s wonderful. I’ve been coding with Claude. Claude is amazing. Like every day I code with Claude and I feel like a god. Yeah. Yeah. I mean you are you are but I mean like between between like 1066 and 1700 just flatline misery. Do you know what I mean? There was just nothing. I mean, there was stuff, but it was very it was a grinding existence and there wasn’t much development and people’s lives didn’t really change or improve. It was just kind of like this. Whereas, we’ve just hockey stickked and then it’s we’re about to find a whole new gear in this thing. You know, I’m I was at a dinner last night speaking to some tech people and they’re obviously a very like, you know, they drink the Kool-Aid of of the AI, but they’re genuinely sitting there going, “This is going to change everything about how we do our business. We are like ripping up our whole business because of this stuff. And I’m just like this is amazing. Yeah, it’s interesting the people it’s affected. It’s the people who used to be the well- paid people, right? So lawyers, coders. Well, now coding almost anyone can do it. I mean, not everyone can do it well, but you can be so much more productive now. If you if you’ve got AI, you can write what a whole team of developers used to be able to do. In fact, I reproduced a lot of what my team at the investment bank could have written over the space of, you know, months, over the space of a few days. Yeah. Don’t say it too loud because I think what will happen is the cost to access these services will shoot up dramatically when people start going, I’m making so much money off this thing. We need a slice of that. Basically, it’ll get to a point where the economics are it costs just less than a person to hire. Do you know what I mean? And then you’ll have to hire someone to code it or to prompt it. So, but I think the I think the point at which I realized how important it was was when I was speaking to a client. I do coaching sessions onetoone and they sent me what their AI had done and they said, “Is this research okay?” So, I find that quite often now, which is that people send me the AI research and they want me to look over it to see if it’s done something sensible. So you’ve still got that human trust, I think, where people don’t trust the AI maybe as much as they could. I think there’s still a role for people like you and me. And I think, you know, the word AI slop tells you that people don’t want to watch AI stuff. They want a human who had to sweat to generate that video. And it is blood, sweat, and tears if you create content, isn’t it? I mean, we know that and and people appreciate that and they like the kind of human aspect of it as well. But but I do think there’s lots to be excited about. Oh yes. You know, I think we live in a a miraculous time that I think hopefully in a couple hundred years I’ll look back at this moment where we lived and go this is where that all everything started basically. They were living in the stone age before this moment and I’ll still be there like 2,000 years old. Terminator demo. Just chilling out. Buy global index fun. Yeah. Yes. Still 100% equities. Still 100%. Thank you so much as always, mate, for coming on. Great pleasure. No, always. I can’t do it with a bee above. No, your this is going in it. You melt. You being a melt. Look, there’s the bee. Where? Oh, it’s right near you, mate. Stop it. While he has a hissy fit, I just talked to you about Roman’s episode. love having having him on and um are you all right? I don’t know where the B is, mate. It’s on your shirt, bro. Don’t do that. I’ll end up hitting you by mistake. We spoke about AI and retirement in that and actually our AI tool that we’ve been building, we’ve recently introduced some retirement components to that. So, if you want to check out check it out and look at things like um can I afford to retire, when should I retire, blah blah blah, we’ll leave a link to that below for you. There it is. You didn’t just do that when I’m running away from a bee, did you? I’m not running away from a bee, mate. I’ve got work to do. THIS GUY, you’re such a dick. You’re such a