Greg is a Wealth Advisor/Investment Banker with Sentinus. Previously, he was the founding partner at Coldwater Financial and worked at Bear Stearns, Koch Industries & Northern Trust. He is a graduate of Creighton University and received an MBA from the University of Chicago’s Booth School of Business.
Paul West is a Managing Partner at Carson Wealth Management in Omaha, Nebraska. Paul also has previous experience as a President/COO and as a Director of Capital Professional Advisors in the Greater Omaha Area.
Sentinus – Protecting wealth. Empowering your future.
Carson Wealth – Helping You Pursue True Wealth.
3 Value Bombs
1) Take advantage of mega-trends. Try to identify what those are and align portions of your portfolio to take advantage of those.
2) Never sacrifice your own personal plan to take care of other things.
3) You have to avoid the sense of envy from what somebody else is saying or doing.
Carson Wealth: Loyalty and trust are both traits you’d want when it comes to financial advice and support, and the passion of Carson Wealth’s financial advisors is to help people from all walks of life find their own vision of true wealth. Visit CarsonWealth.com to learn more.
**Click the time stamp to jump directly to that point in the episode.
Today’s Audio MASTERCLASS: Investing for a Better Tomorrow with Greg Johnson and Paul West
[2:12] – The importance of diversification and risk tolerance when it comes to creating long term wealth.
- People look at equities as the only way you can make a return.
- Diversification helps people feel comfortable.
- Risks are behavioral. Everyone likes to chase the latest hot ideas.
[7:11] – How can an investor enter and exit a position properly?
- You need to be smart about when you’re implementing your trade. Good traders know that people who don’t do this frequently will push the buttons at odd times during the day.
- Getting in and out is like guessing.
- It’s always easier to buy a stock; it’s difficult to sell.
- Gains can sometimes make decisions for people. They want to avoid a gain because of taxes. But, gains are good things because that means you’ve been successful.
[14:50] – What is the investment behavior that needs to be avoided and the behavior that investors need to adhere to?
- There’s a theory sometimes used in clients’ portfolios called momentum. Sometimes, when you get a stock at the tail-end, the momentum is gone.
- You have to avoid the sense of envy from what somebody else is saying or doing
- Set your timetable to review your portfolio and see how it’s performing.
[18:14] – Paul’s advice to new investors that a majority of the public doesn’t normally hear.
- People don’t get rich quick. It’s the long term that wins.
- It’s the people who have been continuously executing and implementing the plan versus those who are guessing along the way.
[19:58] – Greg discusses how to discern between bad and good news.
- Know who’s advocating for certain sides of news and what makes sense.
- Some of the news – even if it’s bad news – can create a buying opportunity.
- At the end of the day, it still comes down to fundamental analysis. It’s understanding how forces affect a company, and what the opportunity looks like in the future.
[22:49] – What amount of income and savings should individuals be investing based on the stage of their life?
- In order to be selfless, you need to be selfish. You better make sure to take care of yourself.
- It’s hard to put an actual number on it until you understand what your goals are.
- Never sacrifice your own personal plan to take care of other things.
- No one wants to be 85 years old, full of life, and financially dependent on someone else.
[24:39] – Paul’s key takeaway.
- Avoid recency bias: don’t make your next decision based on what you did last.
- In order for good investors to feel good, they have to have a true understanding of what their goals are.
[26:16] – Greg’s key takeaway.
- To new investors, it’s a long term process. There are no quick fixes for anything in life.
- Learn from your mistakes.
- Take advantage of mega-trends through time. Try to identify what those are and align portions of your portfolio to take advantage of those.
Lights that spark fire nation. JLD here with an audio master class on investing for a better tomorrow to drop these Value Bombs I have brought to the Greg Johnson and Paul West on the mic. Greg is a Wealth Advisor and Investment Banker with Sentinus Previously he was the founding partner at Coldwater Financial and worked at Bear Stearns Koch Industries and Northern Trust. He is a graduate of Creighton university and received an MBA from the university of Chicago's Booth school of business. And Paul West is a managing partner at Carson wealth management in Omaha, Nebraska. Paul also has previous experience as a President and as a director of capital at Professional Advisors in the greater Omaha Area and fire nation.
Today, we are talking about the importance of diversification in risk tolerance in your investment world, what investment behavior we should avoid and what we should actually add here too. And how do you tell the difference between investment media versus actual quality Investment news in the world Today and so much more fire nation. As soon as we get back from thinking our Sponsors Loyalty and trust are both traits you would want when it comes to financial advice and support, and the passion of Carson Wealth financial advisers is to help people from all walks of life, find their own vision of true wealth visit Carson wealth.com to learn more. Greg Paul, welcome to Entrepreneurs on fire.
0 (1m 28s):
We have our listeners' fire nation sitting very patiently listening to all of the great words of wisdom. Are you going to be sharing with us about Investing for a better tomorrow? And Greg, let's start with you. And I'm kind of curious about your thoughts on the importance of both diversification and risk tolerance. When it comes to creating long term wealth, you know, my audience, our entrepreneur, or small business owners, and they really need to understand where diversification and risk tolerance are going to play in their world.
1 (2m 1s):
You know, it's a good question, its a good concept and you know, we deal with a lot of time with our clients. You know, sometimes, you know, when we have new clients or when we're talking, trying to pitch to a new people as well. But you know, what's really kind of interesting is that a lot of people feel like if you're not in the market meeting and buy their terms. So the market is just that equities. That is the only way you can make a return. You know, that's the only way over the long haul you'll be successful. And if you do look at it, you know, the equities will perform better. Then you know, obviously the other asset class over the long haul, but you know, we kind of show to our clients.
1 (2m 48s):
And if you look at, you know, the portfolio of the S and P 500 since 2000, until now, when you look at a diversified where
2 (3m 0s):
It's 60 core, you know, 60% equities, 40% bonds, you may have some high yield in that as well. May have some international stocks on the equity side, but the 60 40 portfolio actually while performing the S and P 500, it's really interesting as you do that, taking less risk. So what I really say to people is, look, there's going to be times when you go up to 70 or 80% stocks, you know, there's going to be other times, or you may go below 60 or 60, 40 down to 50 50, something of that nature, but you don't just believe that by taking risk, you are good, you know, the returns for us.
2 (3m 45s):
And that's something that it's a difficult concept for people to understand, especially early on in their careers. But it's something that once you do when you're in a long haul
0 (3m 57s):
Fire nation, one thing that was critical to think about it is even when Greg is sharing this information and you know, he may be talking about a one or 2%, you know, have a, a higher return per year. It might, some people might kinda be like, ah, well, is that really that big of a deal? And the answer is it is a huge deal. Like it's a massive deal over the course of a 10, 20, 40 year portfolio. I mean, it literally can be the difference of millions and millions of dollars. So Paul what do you want to add to what Greg share? What do you want to riff on? Greg
2 (4m 26s):
Good points here. It's just a piece that would add all of this is diversification is to help people be comfortable. So when I think about risks, it's a lot of it's the behavioral. Everyone likes to chase the latest, hot ideas. We're certainly seeing that here in 2020. So when we have a market deterioration in a bar, what happens when you started selling? Because if you see other people selling and what have been happening since markets back, you know, quite nicely. So it is if you did nothing, you are often to Greg's point in a better spot. If you are properly allocated to begin with the market has always been a wonderful job of making the food for a lot of a majority of people.
2 (5m 13s):
And that's why having the right play and together is a really good strategy. And it's hard, right? Because if you, if you see other people making money, you want to make adjustments because no, no one wants to feel like they're not the smartest person in the room. So they want to go chase returns. And that's why you build out a plan and build out, you know, a target asset allocation sticking to it, like Greg mentioned is the most important thing they could do.
0 (5m 42s):
Now. I just want to be very clear fire nation that I'm not near the level of either Greg or Paul in the financial knowledge space. You know, I do spend a few years of John Hancock in corporate finance and I did my six three, six, six in my series seven as well. So I do kind of know the talk. I knew the lingo and understand somethings, although it has been a long time. And one thing that I really was thinking about when Paul was talking was there is a big, big difficulty when people churn when they come in and out of investments a lot, because there's just a lot of fight. This is a lot of fees and this is just a lot of expenses that go along when you are churning in and out of things. And that's why, you know, when Paul was going through and saying, Hey, like if you're actually properly allocated at the beginning and probably diversified at the beginning and you wait things out, you're oftentimes in a lot better situation because you know, over the last 78 plus years, the markets, you know, been nicely trending up.
0 (6m 34s):
But one thing I want to talk about and lets stick with you here at Paul on this one is how can an investor enter and exit a position properly? 'cause I know that we don't want to do this often, but you know, there's times when you do want to actually get in or get out of a specific position, how do they do that properly? Given their specific time horizon?
2 (6m 56s):
Oh, probably several different pathways. You can go down with this John but I mean, if you're talking about specific physicians, they usually mean someone's Investing with money that I'm going to call it is a disposable because they're are now making a calculated risk on when to get in and when to get out. So there is certain timing things and what we see, and especially for all your listeners, if there are working or they're busy during the day, then they're not making trades during core hours. So what's easy to do your sitting at home at night, you're on your iPad and your looking up stuff, you're doing your own research. You're like, Oh, I really liked this. So you go enter in an order, but now you're dealing with after market and trading hours.
2 (7m 39s):
So you need to be smart about when you are actually implementing your trade because a good traders know that people who don't do this as frequently will push the buttons at odd times of day. And so, especially if they don't understand the difference between what we call market orders versus limit orders, where you actually name your price, these people can be caught off guard. So we wanted to be careful with that. And you know, like getting in and out is, you know, I always advise against it because your just your you're guessing, I'd almost rather say, Hey, who do you like to bet on, on the football game? Because you probably have to have a chance to get that one right here.
0 (8m 16s):
And I really like your point also about disposable income. I've always been a believer in having your core and then your explore. So you have your core, you know, that it's going to be that rightly diversified, where you are in it for the long haul. And this is the long term time horizon. But you know, you can have that explore if you really want to, you know, test the waters in a few things, but it should be within that disposable income bracket. Now let's kind of move over to you. Greg and what would you share as far as correctly and properly entered and exited position? You know, given people's specific time horizon, you know, it's kind of
2 (8m 51s):
The old adage, you know, it's always easier to buy a stock, you know, it's
1 (8m 56s):
Difficult to sell, right? And I think for a lot of people, it may not affect early on, but later in life, you know, taxes really comes into play. So you really got to understand what is your hold period of periods are and what they, what are the taxes that are associated with that in the other thing that you found out, especially earlier this year is, you know, unfortunately, a game sometimes make decisions for people right there, or they want to avoid a game because now all of a sudden you have a taxable of that and what I've put it out to him, you really have to educate sometimes your client's and say, you know, look gains are a good thing because that means you are successful, right?
1 (9m 42s):
So you can let those decisions drive, you know, whether or not, you know, you hold yourself because you can hold onto it. And all of a sudden the stock man, you know, depletes and you know, yeah, it's breakeven or a loss and you are excited that you have a loss and that doesn't make sense, but you know, we will do a lot of things during periods of time for people where we'll sometimes cultivate losses to offset gains. So we look at taxes that way, but you know, kind of back to your original decision, you know, what you originally pointing out, you know, when you're, when you're invested in a company, you kinda have to go in with the mantra is this is something I really want to hold on to, you know, and that's part of a core.
1 (10m 31s):
So I'm going to buy it on my own to hold onto my, write it out. And I'm going to take a look at it every so often. Or is it something where look, I think this is something that could take off or whatever that may be a current. And there's something to associate with the individual stocks, something associated with the industry, you know, whatever that might be. And then you really got a job. You really have to watch it. And yeah, so much to what Paul was saying, then it's kind of like, okay, that's something that I'm trading. So I need to understand that when I get in and maybe it moves up, I need to put in a stop limit of it or something of that nature. So I can make sure to capture the gains 'cause for the most part everybody's everybody works.
1 (11m 14s):
So this is what your, this isn't your full-time job. So, but you need to protect, you know, your assets over time. So you need to understand what that trading terminology is, how to achieve those goals.
0 (11m 29s):
We still have a lot of Value Bombs to drop and this whole topic and its going to be really good stuff. When we're talking about, you know, some really important Investment behavior that we should be avoiding and what we should be adhering to. As soon as we get back from thinking our Sponsors fire nation, we all want lifestyle and financial freedom, but where do you start? The passion of Carson Wells? Financial advisers is to help people from all walks of life, find their own vision of true wealth. That means helping to define what true wealth looks like for you. Putting a plan in place to help you pursue your vision. Then helping you maintain the true wealth you've achieved.
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0 (13m 36s):
So you can focus on growing your business, go to ziprecruiter.com/fire. ZipRecruiter the smartest way to hire Greg Paul we are back in, Greg ballistic with you on this one. What is an investment of behavior that we really need to avoid? And on the flip side also share something that you really love when investors actually do adhere to this specific.
1 (13m 60s):
I think it's more of a cocktail talk because we were referred to a get together with my friends and they start talking about some stock that they invested in. And now all of a sudden your MBA as a senior you're catching it is at the end. Now what you realized, you know, as you get older in life, nobody at these, you know, you know, when you have the cocktail talk that occurs, nobody talks about the ones that they got in and went the other direction and went South, right? So, you know, you have to understand that. So, you know, there's a theory out there and it's actually a factor. And sometimes we use it for, you know, a client's portfolios and it's called momentum.
1 (14m 42s):
And sometimes, you know, if you get into the stock at the tail end in a momentum, you know, and you can look at numerous examples, have, you know, a growth stock now on tech stocks that are just through the roof. And when you break down the fundamental analysis of those stocks right now, you know, you're starting to realize that they're really looking at a room for growth on the planet. I've heard that they're going to have to go to bars to capture more market share. So what I say to a lot of people is you have to avoid, you know, avoid that, you know, sense of him. The from what somebody else is saying or looking at the stock screen in saying, gosh, I should've bought that now.
1 (15m 26s):
And you really got to take a look and say, does it make sense to get into now? You know, but if you've done your homework that you've gotten it in, if you've done some research, you know, and there's a lot of tools that you have at your fingertips, you know, then, and then it's conviction and then you can get in and really take a hard look at something. But you know, that's a, that's one of the things that would challenge any new investor to try to avoid.
0 (15m 50s):
Will it be something that you really want them to adhere to
1 (15m 53s):
When you set a plan, stay to that plan, you know, and then review it, you know, set your timetables to review your portfolio, review that plan and see how you see how it's performing. But, you know, Warren Buffett obviously has been the alleged, you know, a long-term investor, right? And the whole thing in long term, it's more challenging now is as big as he is. But you know, there are, there's a lot are, there's a lot of rationale behind that. Now I think he's, he was very fortunate in a lot of the things that took place and a lot of things worked for them and so forth. But I would say in today's day and age, it's going to be more and more difficult, you know, to achieve some of those longterm goals, just what the nature of how the capital markets were.
1 (16m 42s):
So you need to review your portfolio, you need to say, does it make sense to have this capital allocated towards this company? Are there better opportunities out there? And if you need to look at that every several, you know, whenever that time period is annually every year or whatever the case may be, but those are the things that we would want to have for my clients, you know, adhere to, or a young investor.
0 (17m 7s):
So you are both very successful at what you do. So Paul, I wanted to direct this question to you about what specific personal advice that you give to a new investor that frankly, just the majority of the public doesn't normally here, or they're just not familiar with.
1 (17m 24s):
First of all, people don't get rich quick, so they need to understand that. And I think a lot of times that when they had to realize is it's the long-term that wins. And I think about this all the time that they build their right game plan a and start investing in, in, in systematically, right? Its simple for people in the 401k plans, profit sharing program, the state to do that systematic
2 (17m 50s):
Investing that we use to meet some of the wealthiest people as Greg and I get to go in our profession. It's the people that have been continuously executing and implementing a plan versus those that have been guessing along the way. And so what people don't realize is Hey, later in life, and if you're sitting there on the deathbed or are you talking about how great your performance was or how good of a stock bigger, you know, you actually to reminisce about all of the great times you had in life with your family, with your vacations, your trips, those types of things. And those are all things that you helped implement your goals, which are way more important than you than, you know, if you get lucky or write on individual stock things, what you can remember is I am so glad when I was 24 and I started putting $200 a month away from so glad that I made that decision to buy her first house because I'm so glad that I've paid off my college debt earlier or whatever those things were.
2 (18m 48s):
John those are the things that we find the people who follow those who have the most success.
0 (18m 55s):
So Greg one thing that I really struggle with personally right now, because I'm no longer in the industry is how do I actually discern between crappy news in good news? Meaning you see a lot of really interesting Investment media news, that's out there. And then you do hopefully see some quality and invest in news out there. But a lot of people, even including myself, have a hard time really understanding, which is wish like what's the Investment media crap news in what's the quality and Investment news. How can we discern that?
2 (19m 27s):
It's a really tough to really disseminate what's the difference between the two and that's something that I think everybody's got to have to pick up on your own. Right. And it's interesting because you know, I can look back and remember when.com started. We started seeing all of those different sources that they came available and what's really kinda interesting is now there's, you know, it is a plethora of information out there. So it's something where you really got to have to take a look and say, okay, who's advocating for the certain sites in this news, you know, and what makes sense. I mean, there's often there's an adage, you know, if you don't want to trade off the news, right.
2 (20m 10s):
Because you're going to get caught, you know, a lot of level-headed investors, I will try to understand, okay, what's really moving this and what is it? You know, because sometimes some of this is news and it might be bad. News has actually creates a better buying opportunity. So, you know, it's, it's something where it's tough to, it's tough to say, and people may not realize that and you may own a stock and all of a sudden something comes up and you just unsure what to do, you know? And that's something where I say to him, you know, I would say to a lot of people, well, okay, let's sit back and let's look at this, you know, what are your overall goals?
2 (20m 53s):
You know, do you already have gains in your worried that maybe take to have the position of off the table or, you know, if you still like the company and fundamentally and sound okay, let's add more to it and you can layer in your position. So it's kind of different at the end of the day. At the end of the day, it's still comes down to fundamental analysis, you know, and that's the end. That's something that will always be true with any public or private company, you know, understanding how those five Force's really effects this company and what the opportunity it looks like for the future.
0 (21m 37s):
Paul I know this is getting just a little in the weeds, but I think it's a really important topic. So I'd love to get specific on it because I really think it is going to help out a bunch of our listeners. So let's define the amounts of income and savings that individuals should be actually Investing based on their stage in life. Like, you know, for example, Investing as college students versus their first job, you know, maybe when they're 23, 24, 25, you know, versus 30 years down the road where they, you know, maybe see retirement on the horizon.
2 (22m 9s):
I love to use the phrase. And I heard this one time from a Colonel, you said, in order to be selfless, do you need to be selfish? And what do you mean by that? And I apply that to our world have providing wealth management valleys is you better make sure your taking care of yourself. So when you're younger, right, putting money into your retirement plans, as much as we possibly can, you may have a dream of your kids and paying for their college. So investing in that, and those are all taken up a lot of your disposable income or your maybe breaking even or worse yet you're in a significant debt. So it is figuring out each stage on what's important for you.
2 (22m 50s):
So maybe your goal isn't to pay for your kids to college. So you don't need to make that. So it's hard to put an actual number on it, so you understand what their goals are. But what I would tell you is, is you should never sacrifice your own personal plan to be taken care of other things, because there's so much actual evidence behind this is consumers have a fear of no one wants to be 85 years old, full of life and financially dependent on anyone else. So no. Or does anybody want to be working at that standpoint? So that's why they have two as each stage goes along, make sure that what they've contributed at, at the beginning, the middle and end all matches up to how they want to live out their life there.
0 (23m 35s):
So Paul, you shared a lot of knowledge, a lot of value throughout this entire interview. What would it be? Just one key takeaway if there's just one thing out of all the things you today that you would really want our listeners to really walk away with, what would that thing be?
1 (23m 51s):
I call it a void recency bias. When what I mean by that is when you went out to eat last John or Greg, what do you do? Do you remember that meal and tell him that was a really good steak dinner. This is a good, this is so you make your next decision, not based on what you did lab. So maybe you get a great stock pick up and it turned out to be a good decision, or maybe you had a bad one. So you don't like investing or maybe you bought a bond. And now all of a sudden they're paying out 2% less than they used to be. So what is the good lesser is R I want him to hear and I'm sure they're all great listeners for your John is that if they don't stick to not, not just their plan, but to figure out, Hey, Lights all about what we call the money, moments and money.
1 (24m 35s):
Memory's all of us, you know, those ones, right? And we all have kids. When do you remember what you did with them and how you felt? So in order for good investors to feel good, they have to have a true understanding of what their goals are. And I don't actually like those commercials. I won't name the name when they say, Hey, my retirement number is 2 million, 457,232. That's a number that doesn't mean its going to help you to fill out life the way you want to. And we find the people that actually implement a written plan related to their goals. Those are the one's that are going to feel fantastic.
0 (25m 14s):
So Greg, over to you, what is the one thing that you really want to make sure our listeners walk away from everything that both you and Paul share today?
1 (25m 22s):
So look for new investors, it's a longterm process. I think we talked about it early on that there are no quick fixes in anything in life. Once you have to learn from, you know, you have to learn from your mistakes. You know, we've talked about that. We talked about that with our children and you know, you're going to have these along the way. And I think Paul kind of put it best. I mean, you want to, if you want to have a short memory on certain items, but you want to gain knowledge along the way. And they think, you know, when it's going to be really interesting for a lot of these kids, because, and it shouldn't say young adults, I apologize.
1 (26m 2s):
There are going to be a lot of changes coming up in the future and it's going to be very interesting for people to navigate through those. And it's an exciting time. I mean, you're seeing now, but just how important technology is and your going to see, you know, Take advantage of mega trends through time, you know, and try to identify what those are and then align portions of your portfolio to take advantage of those. But you know, as, as Paul pointed out, the other thing that you are going to look back in life and you know, and you can't, you can take your money with you when you, you know, so it's the other experiences you had.
1 (26m 48s):
And I think it's something for everybody to keep in mind
0 (26m 52s):
Advantage of mega trends over time, love that phrase and fire nation. Remember this year, the average of the five people you spend the most time with, you've been hanging out with some pretty smart Financial guys Today GJ, PW and JLD. So keep up that heat and head over to EOfire.com and type Greg or Paul. And the search bar in their shows page will pop-up with everything we talked about today. And I just want to say Greg and Paul big. Thank you. On behalf of myself and fire nation for sharing your truth, your knowledge, your value with fire nation today, for that we salute you and will catch you on the flip side. Thank you. All right. Thank you.
0 (27m 33s):
Hey, fire nation today's at Value Bombs content was brought to you by Greg and Paul and Creighton. And one thing that I have identified over the years is that successful entrepreneurs are productive. They're disciplined, they are focused. That's why I created the mastery journal. It is a gorgeous full of a journal that will ensure you master productivity, discipline and focus in 100 days is my best work ever visit the mastery journal.com use promo code podcast for a $15 discount. And thank you for listening to my podcast and I'll catch you there, or I'll catch you on the flip side. Loyalty and trust are both traits you would want when it comes to financial advice and support and the passion of Carson Wealth financial advisers is to help people from all walks of life, find their own vision of true wealth visit Carsonwealth.com.
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