Stock Picks and Slam Dunks
by SGL Financial
Our 2 Cents – Episode #206
Stock Picks and Slam Dunks
We’re excited to bring you another episode of Our 2 Cents! Today, the Lewits break down the latest stock market updates and uncover the surprising connections between March Madness and the world of finance. Listen in now using a link below!
- Stock Market Updates:
- Explore the current market conditions and the impact of new tariffs, understanding that fluctuations are inevitable and to avoid impulsive investment decisions.
- Gabriel’s ‘Quick Hit’:
- Learn about the newly created woolly mice and explore whether de-extinction is a breakthrough or a cause for concern.
- March Madness Money Lessons:
- Uncover the parallels between NCAA tournament and stock picking, along with the valuable investment lessons they offer.
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Podcast Transcript
Announcer: You are listening to Our 2 Cents with the team from SGL Financial, building wealth for life. Steve Lewit is the President of SGL Financial, and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies, and more.
Gabriel Lewit: All right. Welcome to Our 2 Cents, everybody. We’re ready to rock and roll here, so get your shoes laced up.
Steve Lewit: Oh, my.
Gabriel Lewit: Get your guitars ready.
Steve Lewit: We’re rocking and rolling like the stock market.
Gabriel Lewit: We are, indeed. And in fact, that’s what we’re going to start by talking about today is a little bit of what’s going on with the stock market in the last week, week and a half, or so. Quite frankly, there hasn’t been a lot to report on this for the last six months. It had gone up a little bit after Trump’s election. It had gone up and down a little bit, but yes, the last week in particular has been pretty rocky.
Steve Lewit: Yes. Volatile.
Gabriel Lewit: Very volatile. And so, there have been a uptick in numbers of questions from our listeners and from our clients about what precisely is causing this, and so we wanted to talk about that with you here today.
Steve Lewit: The concern is always what’s happening now, but the bigger concern in the questions we’re getting, folks, is what happens two months from now or six months from now or a year from now? Is this the beginning of a real downturn? Is it a beginning of a recession? What is really going on?
Gabriel Lewit: We thought we would give you some clarity, some background information, on what’s happening here. That can help you feel more informed, more empowered, and hopefully less stressed as a result of that. Let’s dig in a little bit. Now, we also sent out an email to clients of ours. If you’re not a client of ours yet, you’d like a copy of this email, please email us, info@sglfinancial.com, and we’re going to give you some of the key talking points that we covered in that email.
First and foremost, the probable … Obviously, you can’t directly pin the movements of the market on any one specific thing, but the most probable culprit here is tariffs.
Steve Lewit: Definitely.
Gabriel Lewit: And in particular, the uncertainty of tariffs. What do I mean by that? On March 4th, President Trump proposed a 25% or enacted a 25% tariff on Canadian and Mexican imports. That means that US companies that purchase goods or people that purchase goods from these countries pay an additional 25% tax. Then he also imposed an additional 10% tax on Chinese imports. And then he additionally recently announced an additional 25% tariff on Canadian steel and aluminum, resulting in a total 50% duty in response to Ontario’s government placing a 25% tax on electricity exports.
Now, when you start proposing tariffs or implementing tariffs, and another country starts implementing tariffs back-
Steve Lewit: That’s called a-
Gabriel Lewit: It is called a trade war.
Steve Lewit: … trade war.
Gabriel Lewit: And so now Trump has since backed off on a couple of little things here and is proposing other things there and threatening something here and there. And the question that’s really coming from all this is, where is all this headed? There’s a lot of uncertainty, and markets do not like uncertainty. Imagine for a second that you’re a business in steel or aluminum, and you’re trying to map out what you’re going to do. Right?
Steve Lewit: Well, that’s why he backed off on the automakers.
Gabriel Lewit: The automakers.
Steve Lewit: And still, that’s not enough. There’s still a lot of steel. There are different parts to a car. Some parts are coming in-
Gabriel Lewit: Are you sure?
Steve Lewit: Yeah. There are some parts to it. There’s more than one part-
Gabriel Lewit: It’s one giant 3D-printed car.
Steve Lewit: I thought it was. But some parts … I think the steel is still a problem. I think some of the other parts that he’s had with these tariffs.
Gabriel Lewit: Well, here’s kind of the point. Nobody knows. Where is all this headed? Are they going up? Are they going down? Are they staying? Are they permanent? Are they temporary? What’s the objective? Us, as regular citizens, we’re not in the know to the ultimate objective of all this behind the scenes.
Steve Lewit: We don’t know what’s behind the curtain. Exactly.
Gabriel Lewit: And markets, of course … One of the number one things that they dislike is uncertainty. And so here’s what happened. Last week, the Dow dropped over 600 points. Nasdaq is pretty darn close to correction territory, which is minus 10% down from a prior high. And as of this morning when I checked, and today’s Wednesday, the S&P was down about 7.5%-
Steve Lewit: Getting close.
Gabriel Lewit: … from its high point of a little bit over 6,100. 7.5%, 8%. Maybe by the time you listen to this, maybe the market’s back up. Who knows? But there is, of course, this short-term volatility effect that’s creating uncertainty in our listeners’ eyes and in our clients’ eyes. And that’s really the goal of today is to talk through, what do you do about all this?
Steve Lewit: First you have to understand it, understand what happens when there’s a tariff, and there are mixed ideas on how useful … Economists argue about this all the time on how useful tariffs are. Now, the administration is taking a position that tariffs are really good, and it’s going to take time to work through the economy. Other folks are saying, “Nah, that’s not going to be the case. Tariffs mean you pay more for things.” When goods cross the border, they have to pay an extra fee. That’s what a tariff is. And that fee gets passed onto the consumer.
Will we see an uptick in inflation? Right now, the last number that came out, I believe, yesterday-
Gabriel Lewit: Just cooled, actually, this morning.
Steve Lewit: This morning was pretty solid, but there’s absolutely a good probability that inflation increases. And then what does the Fed do-
Gabriel Lewit: If there’s a protracted-
Steve Lewit: … in relation to that?
Gabriel Lewit: … trade war, you mean?
Steve Lewit: Exactly. As you said, Gabriel, all of these unknowns are very disconcerting. If you’re running a business, especially a business that depends on imports and exports, how do you run your business when you don’t know what supplies you can get? And add on top of that, you have a country like Canada that’s kind of hitting back. They supply most of the electricity to North America. They could cut … They have a lot of leverage.
Gabriel Lewit: Well, look, here’s … Today, the goal isn’t to get into the tit-for-tat of trade wars and imports, exports, tariffs, but to understand that these do have impacts on the market.
Steve Lewit: And they’re complex.
Gabriel Lewit: And they’re very complex. And questions you might be asking … You already hinted at this earlier, Dad. Are the markets going to go into a correction? Well, Nasdaq is basically there. S&P is close. Will the economy go back into a recession or go to a recession? We were on recession watch for a while. Should I change my portfolio allocation as a direct response to what’s happening in the market? And of course, the classic one is, is it time to sell because the market’s going down and move to cash? These are some of the questions that you commonly hear, whether it’s around the water cooler or your friend or neighbor down the street. Your dentist says he talks to you. Your brother and sister. Things you hear online that you read. You’re going to hear a lot of these questions, and it makes it hard to filter through all that confusing information and come up with a good, solid game plan.
Steve Lewit: How do you approach these kind of disturbances that are highly emotional? You said the market goes down. How do you react? It’s all reaction. And I would say the first thing is, if you are reacting to the market going down because of emotions, because of fear, because you think you’re going to lose everything, or the sky is falling, take a deep breath. You don’t want to do something emotionally reactive, especially when it comes to your money.
Gabriel Lewit: Well, it’s kind of … Look, let’s look at the thinking here of something like moving money to cash. The thought is, if you could make a change, that you’ll somehow avoid market turmoil, and then you just magically get back in when everything’s calm again. And of course, if you avoid the losses and get back into the good time to get the growth, you’ve won once, and you’ve won twice. There’s just one problem with that.
Steve Lewit: Well, we were talking about this yesterday. When’s the best time to get into the market? When’s the best time to get out of the market?
Gabriel Lewit: Well, just look at today. Market’s hovering around … I think it was 55, 50, or something like that for the S&P. Do you sell today? What if it goes up in the next week? Well, then it was a bad time to sell. Do you not sell? What if it goes back down? We’ll never know the answers to these questions which is why trying to time the market is so much of a fool’s errand. Let’s say that you sell today, and the market does go down 5% more. Do you then buy back in there? Or what if it goes down further? Well, if you don’t buy back in, and it does recover, it’s the start of the new recovery. You’re even further behind than had you not sold.
Steve Lewit: And then you say, well, maybe that’s a temporary recovery, and it’s going to go down again.
Gabriel Lewit: You’re going to drive yourself nuts trying to do this, and the data does not show that it makes you more money. What we urge is patience. We had a analogy in our email talking about how investing is like planting a garden. And if you have a tomato plant, is what we wrote, and you have a bad rainstorm-
Steve Lewit: We did write this, folks.
Gabriel Lewit: Yes. Do you switch that to squash, right?
Steve Lewit: Apples.
Gabriel Lewit: Apples? You’re going to switch your tomato plant to an apple tree?
Steve Lewit: I guess you can’t do that.
Gabriel Lewit: I don’t think that works that way.
Steve Lewit: No. I’m not much of a gardener. You can tell.
Gabriel Lewit: You help them. You feed them. You nurture the soil. You put them in the right conditions to grow. And if you have some rainstorms, some cold weather, you wait for them to weather through these events and grow into healthy, fruitful tomato plants.
Steve Lewit: Oh, my. Can we stop on the fruit? I think you’re going to keep going down that road. I’m waiting for you to-
Gabriel Lewit: No, that was the end of the analogy.
Steve Lewit: That was the end of the analogy?
Gabriel Lewit: I don’t know why you’re-
Steve Lewit: Was that an analogy or metaphor?
Gabriel Lewit: Yes, it’s an analogy.
Steve Lewit: But here’s the important point, I think, about what you said, Gabriel. It’s the soil that determines everything. If you have good soil, you have a good possibility of having a successful plant to grow. The soil of investments is your investment philosophy. What is my investment philosophy? Is it to time the market, or is that just a reaction that’s not my philosophy? Is my philosophy that the market is a long-term investment? Now, if that’s your philosophy, if that’s the soil in which you planted your money seeds in, then you got to stick by that.
Gabriel Lewit: You’ve got to have a plan when you invest. You shouldn’t just chuck money into a stock and then figure it out as you go. That’s what we call your investment philosophy, and it is a very important guiding part of how you invest.
Now, last but not least, and then we’re going to move on here. We’ve got some great other topics for you today, is your plan could also be considered that healthy soil foundation for your growing tomato plant that is your investments. If you have a solid plan, that’s going to help ensure that you weather all the various storms and uncertain market conditions that come your way through good and bad years. And then hopefully you’ll sleep better at night knowing that you’ve got everything buckled down and in good condition without worry.
Steve Lewit: I’ll go down this road a little bit, and I’ll say, well, what’s a solid plan? Well, that’s having the watering of the soil right. Certain moisture. It’s having the vitamins added to the soil. It’s mixing and chopping the soil, whatever you do with soil, to make it air-floatable or-
Gabriel Lewit: I’ll have it be known that you were giving me a hard time about spending too much time on the analogy just to come back to it.
Steve Lewit: I thought you were going to congratulate me. Wait, wait, wait. I thought you were going to congratulate me on turning money into seeds.
Gabriel Lewit: Yes. There you go.
Steve Lewit: But you didn’t do it.
Gabriel Lewit: Well, let’s talk about something different here. Move on. We don’t want to spend too much time, but here’s the bottom-line point. Try not to let some of the short-term volatility worry you if you know you have a solid plan. If you’re listening to our show here, you’re not yet a client of ours, you don’t have a plan, you need your plan reviewed, you want guidance on if you are or aren’t doing the right things, that’s when you should give us a call here at (847) 499-3330 or email us, info@sglfinancial.com, and let’s schedule a quick review call together with you.
Steve Lewit: I’ll just add one thing to that, Gabriel, and then we can move on, is that a solid plan has contingencies built into it for market reactions like this. That is in the plan.
Gabriel Lewit: Yes, it’s expected, right? The plan is designed to-
Steve Lewit: Be real.
Gabriel Lewit: … anticipate that this will have occurred because, look, folks, you all know this. Is this the first time we’ve ever seen market volatility? Oh, my gosh. What do we do? No, we just saw this two years ago. We saw it in 2020. We saw it in 2008. We saw it in 2000, right? This is not … Look, investment does carry some volatility risk to it, so try not to get too worried overall.
Steve Lewit: Amen.
Gabriel Lewit: With that in mind, I’m going to shift to the … If you haven’t heard, they’ve now created a woolly mammoth mouse.
How about that to 180?
Steve Lewit: I have no comment.
Gabriel Lewit: You have no comment. I thought this was really cool.
Steve Lewit: Not yet.
Gabriel Lewit: I’ll explain why, right?
Steve Lewit: Not yet.
Gabriel Lewit: Listen to this. After an intense study of the mammoth’s genetic code, scientists have engineered woolly mice with altered fur thickness, color, and texture to recreate the extinct elephant’s adaptations to the cold. All right?
Now, if you’re curious, the US biotechnology and genetic engineering company that did this is called Colossal Biosciences, and I believe they’re still a private company, so I don’t think you can go and invest in them. But they’re very cute. We’ve got them pulled up on the screen here, folks. Just Google woolly mice, and they look like a really snuggly rodent infestation just waiting to happen, but they’re very cute.
Steve Lewit: They need a haircut. They look like mice that need a haircut.
Gabriel Lewit: They’re woolly mice.
Steve Lewit: I’ve never seen anything so funny in my life.
Gabriel Lewit: Well, here’s what they said, okay?
Steve Lewit: Somebody actually did this for a living. Is doing this to make money? Why are they doing this?
Gabriel Lewit: It’s the company, okay? The CEO says, “It marks a watershed moment in our de-extinction mission.” Here’s the point, folks. Keep this on your radar when this company goes public before the next Jurassic Park comes out. You’re looking at maybe something big here down the road in the future, okay? This is just the beginning.
Steve Lewit: These are live mice, by the way. They’re not toys.
Gabriel Lewit: No, of course. What do you mean toy mice?
Steve Lewit: Are you going to buy a fish tank and put a couple of woolly-
Gabriel Lewit: I don’t think they’re for sale yet.
Steve Lewit: They’re not for sale?
Gabriel Lewit: No, they just … They’re part of-
Steve Lewit: They need a special diet.
Gabriel Lewit: Well, I don’t know about that.
Steve Lewit: They need woolly rabbits or …
Gabriel Lewit: Mice don’t eat-
Steve Lewit: What are mice-
Gabriel Lewit: … rabbits, Mr. Lewit.
Steve Lewit: They need woolly nuts? I don’t know. What do mice eat? Seed. Woolly seeds.
Gabriel Lewit: Something seriously wrong with you sometimes.
Steve Lewit: Sometimes.
Gabriel Lewit: Well, there you hear it, folks. Steve? Good with finance. Not good with understanding-
Steve Lewit: What is that … Katie-
Gabriel Lewit: … mice.
Steve Lewit: What do mice eat?
Gabriel Lewit: I think they eat grass and seeds and little tiny, I don’t know, you know, whatevers, but I don’t think they eat rabbit. Let’s put it that way.
Anyway, I just thought that was a nice little tidbit for you there.
Steve Lewit: New York mice eat rabbit. You ever see a New York mouse? I want to tell you something. Those are rats.
Gabriel Lewit: They’re called rats.
Steve Lewit: Years ago, I grew up in New York, and a lot of restaurants in New York … They have their kitchen and storage supplies downstairs down from the sidewalk. You have to go down to the cellar. And I’m walking by one restaurant, and I’m telling you I thought they were tigers or something. These things were huge. I had no idea.
Gabriel Lewit: You know how big a tiger is, right?
Steve Lewit: Yeah, but-
Gabriel Lewit: You mean a cat?
Steve Lewit: I might be exaggerating. Bigger than … I mean, they’re huge. Bigger than a cat. And there are lots of them that we don’t see. And it kind of weirded me out.
Gabriel Lewit: A tiger mouse. There we go. Interesting. Did it have stripes?
Steve Lewit: I told you this. I wanted to buy a cat which is called a tiger cat. And the problem with a tiger cat is you can’t leave it alone. It would be alone most of the day. But they’re beautiful. They’re magnificent cats.
Gabriel Lewit: Can you google this Producer Katie? Tiger cat? Is this a thing?
Steve Lewit: And they’re hypoallergenic.
Gabriel Lewit: I’m not sure I believe this yet. Tiger cat. Let’s see here.
Steve Lewit: Dad speak with straight tongue.
Gabriel Lewit: Seven facts about … What’s it called?
Steve Lewit: Tiger. Tiger.
Gabriel Lewit: Hold on here. Katie’s not clicking the link. A Toyger. It’s literally called a Toyger. It’s a breed of domestic cat. The result of breeding domestic short-haired tabbies to make them resemble a toy tiger. You didn’t call her … It was a Toyger.
Steve Lewit: I know it as a Toyger cat.
Gabriel Lewit: Interesting. Maybe they’re going to chase after the woolly mice.
Steve Lewit: Aren’t they beautiful, though?
Gabriel Lewit: No, they’re cute. Let’s move on.
All right. Well, we have something very important to share with you. It’s called the March Madness Tournament that’s coming up here shortly. And if you haven’t filled out your bracket challenge, make sure you do so because some of these places will allow you to win up to $1 million, all right? Now, why are we talking about this? Well, I think we’ve talked about this in the past on the show, but there’s some very good parallels between picking your brackets and some investment concepts here that we want to draw some connection points to.
Let me explain what I mean. Well, first and foremost, did you know that with the increase in legal betting, an estimated $2.7 billion was wagered on the March Madness Tournaments last year in 2024?
Steve Lewit: Amazing.
Gabriel Lewit: $2.7 billion, okay? Right. Let’s see here. A couple of things. Did you know that there’s a one in $120 billion chance of getting a perfect bracket?
Steve Lewit: No. 120.2 billion, not billion dollars.
Gabriel Lewit: Correct. No, the chance of you properly guessing-
Steve Lewit: Winning is one in 120-
Gabriel Lewit: No, not winning. You could win with an imperfect bracket, but the likelihood of you-
Steve Lewit: Getting a perfect bracket.
Gabriel Lewit: Yes, guessing a perfect bracket-
Steve Lewit: That means you guessed all the winners.
Gabriel Lewit: Yes. For you non-sports fans out there, there’s what? 64 teams? I forget. Something like that. And there’s four quadrants. And you have the teams all pitted against each other. Then you get to the final four, and then eventually you got a top two, and then you get a winner, right?
Steve Lewit: 120 billion to one that you will get them all correct?
Gabriel Lewit: Correct.
Steve Lewit: That means nobody does that.
Gabriel Lewit: I’m not sure it’s ever happened. In fact, it says here so far it’s never happened. But it could be your year, so don’t let it stop you from trying.
Steve Lewit: What’s the odds on a lottery ticket? Do you recall?
Gabriel Lewit: Less than that.
Steve Lewit: Less than that.
Gabriel Lewit: I think it’s one in 300 million to win the mega millions or something. I think it’s pretty low also.
Now, here’s the thing. Is it easy to pick a portfolio of all winning stocks? Let’s say you had 64 stocks. Is every one of them going to be a winner?
Steve Lewit: I bet the odds are somewhere the same.
Gabriel Lewit: Right. Here’s what’s interesting. People tend to view people that believe that they can pick stocks, for whatever reason, tend to have this idea that they are only going to pick winners because why would you buy it if you thought it was a loser, right?
Steve Lewit: Well, somebody’s selling-
Gabriel Lewit: I’m buying this unless you’re selling short.
Steve Lewit: But wait, wait, wait. If you are buying a stock you think is a winner, what is somebody else doing?
Gabriel Lewit: Well, generally, at any point in time while you’re buying, someone’s probably selling.
Steve Lewit: Because they think it’s a loser. Exactly.
Gabriel Lewit: That’s what’s interesting about this, right? People tend to understand this when it comes to betting, but for whatever reason, they don’t view investing the same way as speculatively as they would view betting on, say, the March Madness brackets. All right? Just something that’s, I think, kind of interesting there.
Now, just in case you were curious, since the NCAA tournament began in 1939, only five schools have made tournament appearances to more than half of those tournaments. The teams being Kentucky, North Carolina, Kansas, UCLA, and Duke. It’s not a tournament that has every single school in it. You still have to qualify to get into the tournament. How you do that I actually don’t really know, but it’s something to keep in mind that, as you look back over the last 98 years of the same timeframe here, only 31 stocks out of 29,000 existed over that same 98-year period.
Steve Lewit: Where did all those companies go? What happened to them? They don’t exist. I don’t know the exact statistic, but there was a statistic like if you take the top 10 mutual funds this year, how many of those top 10 remained in the top 10, let’s say, three years later? And the percentage was very, very low. These things are always moving around. We don’t know what … Good companies close down. New companies show up. Stocks move around. You can’t tell.
Gabriel Lewit: It’s interesting. Well, let me talk to the next one first. Then I’ll mention this story. Very few repeatedly win. In the NCAA tournament, only one is declared a winner, of course. And 67 of the 68 teams … Sorry, it was 68 teams go home empty-handed. UCLA being the most successful by winning 11 championships during this timeframe.
Now, in the same timeframe, as we talked about before, most of those companies, 51.6% of them, had negative cumulative returns, meaning many or most individual stocks or the majority of individual stocks, destroy value rather than create it.
Steve Lewit: Long run.
Gabriel Lewit: Over the long run. Right? If you hold onto them for the long run.
Steve Lewit: We don’t have the list, but if you look at the top stocks in the S&P 20 years ago, and they’re not there today.
Gabriel Lewit: Exactly, right?
Steve Lewit: In the video, it was UCLA? Is it that-
Gabriel Lewit: Mm-hmm.
Steve Lewit: And UCLA doesn’t win every year.
Gabriel Lewit: No. No. Well, and the other thing too is, is it a good idea if you went to an alma mater, let’s say, or mater? Alma mater?
Steve Lewit: You didn’t say alma mater.
Gabriel Lewit: I was thinking of the Cars 3 movie with Mater. Tomater. That’s his name.
Steve Lewit: No. If you can do that, I can talk about woolly mice.
Gabriel Lewit: Woolly. Anyway. Anywho.
Steve Lewit: Alma mater.
Gabriel Lewit: Alma mater, res. I self-corrected here, folks.
Steve Lewit: You did. You did real quick.
Gabriel Lewit: I was thinking Cars 3 with Mater. Anywho, if you went to, say … Jeez, who’s in there that’s not one of the top teams? Creighton. Creighton.
Steve Lewit: St. John’s.
Gabriel Lewit: St. John’s. One of these. Should you pick that team to win at all just because it’s your alma mater?
Steve Lewit: Definitely. Of course. There’s no other reason. Of course.
Gabriel Lewit: Yes. Well, some people do. In other words, some people buy individual stocks. I use my mother sometimes as an example on this show. And I do love her. And if she’s listening, I don’t mean anything bad by this, but I remember a call distinctly. It was 10 years ago where I was asking her how things were going with her portfolio. Because I’ve said this before on the show. She doesn’t let me do anything for her. She’s very independent. And she said, “I recently bought some Starbucks stock because I went in the store, and I really thought I had a good time there.”
Steve Lewit: Yes.
Gabriel Lewit: I really liked my coffee.
Steve Lewit: Yes.
Gabriel Lewit: I said, “Uh-huh. Okay.”
Steve Lewit: And you said yes.
Gabriel Lewit: I said, “That could be a reason to buy the stock,” but is that the sole decider if you, one person, has a good experience at a company? Then-
Steve Lewit: Or you pick a school-
Gabriel Lewit: … will it be a successful stock?
Steve Lewit: You pick a winning school because you like the name of the school.
Gabriel Lewit: What’s the lesson here, Mr. Lewit? What’s the lesson here?
Steve Lewit: The lesson-
Gabriel Lewit: You know where we’re getting at with all this.
Steve Lewit: I think I know where we’re getting at. The lesson here is you can’t pick winners?
Gabriel Lewit: You can’t pick winners in the stock market.
Steve Lewit: Yes.
Gabriel Lewit: The odds, folks, are stacked against you. And it’s interesting because I have had many clients come to me with big portfolios of Apple, Amazon, and most of those said, “I did such a great job picking Apple and Amazon.” I had one guy once say to me, “I got really lucky by picking this Amazon.”
Steve Lewit: And he’s the honest type-
Gabriel Lewit: He understood it. And I said to the other ones … I didn’t actually say this. In my head, I’m thinking, if you went back 20 years ago, you’re telling me, “I know this is the winner. 100% no chance of it failing. I’m going to pick it,”?
Steve Lewit: We’re going to clean up on this-
Gabriel Lewit: Because if it’s that simple, tell me today which is the next Amazon, Apple, and people will say Nvidia. It’s a big gainer. Is it? Who knows? If you truly believe that, you would take every dollar you own and chuck it into that stock, which of course is not a recommendation that we would make.
Steve Lewit: And the other lesson, I think, in here, Gabriel, is that things do not repeat. Kansas City tried to get three Super Bowls, right? No one’s ever done it, and they couldn’t do it either. Everything has a cycle. And if you look at the Magnificent Seven now in this recent downturn of the market, there are hints of all of these tech stocks still producing profits but less profits than they did in the past. Slowing down. And that’s a cycle that all of these very dominant stocks, all of them, have gone through in history.
Gabriel Lewit: Well, similar to you, I can’t recall the exact study, but the general gist of it is, once a stock enters into the top of the list in performance over the last 10 years-
Steve Lewit: Then it slows down. Yes.
Gabriel Lewit: … the projected performance of that stock over the next 10 years is substantially lower.
Steve Lewit: I know what article you’re referring to.
Gabriel Lewit: It’s interesting. Right? We’ve talked about, should you try to time the market because markets are down? No, that’s not a very good idea. Should you buy a lot of individual stocks? Not a great idea. Very hard to pick winners. Does that mean you should own no stocks individually, Mr. Lewit?
Steve Lewit: Well, I can’t … Well, look, investing is like buying ice cream. It has different tastes and flavors. Some people love trying to pick the way-
Gabriel Lewit: They love the game.
Steve Lewit: They love the game. They love the challenge. They love the highs. They don’t love the lows, but they really do.
Gabriel Lewit: And then they say the lows never happened, and they only have the winners.
Steve Lewit: “I only pick winners. I got Apple,” but you don’t know the 100 other stocks that didn’t make money. That’s fun. It’s fun. It’s like going to the casino and putting your chips on red and saying-
Gabriel Lewit: It’s like filling out 20 brackets for … Because you can go to all the different places and fill out as many brackets as you want, and one of them will end up being the winner.
Steve Lewit: If you want to have that kind of fun, and you can afford losing, or you might win, but it’s fun. If you have a tolerance for that, and that’s your thing, if that’s your jam, then go for it.
Gabriel Lewit: I had a-
Steve Lewit: But if you’re investing … I’m sorry to interrupt. But if you are investing to build wealth, that’s not the way to do it.
Gabriel Lewit: Well, this reminds me. One last story. I had a potential client. He ended up not being a good fit for us. And no idea if he listens to this podcast and if he’ll recognize his own story. But he had mentioned that at one point he had lost hundreds and hundreds of thousands of dollars on … I think it was Tesla stock and one or two others, but I think Tesla was his go-to. And he was buying leaps. Multi-year options. Very, very risky from an investment perspective. And I remember he’d come to me, and he said, “I’m getting close to retirement. I think it’s time to de-risk my portfolio,” because he had done pretty well for the last few years, and Tesla had been going up, and he had recovered all that he had lost and then some.
Steve Lewit: Which is amazing.
Gabriel Lewit: And we spent a couple meetings talking about it. I said, “I think this would be a good time to do it.” And he said, “I don’t know. I don’t know. Let me think about this.”
Steve Lewit: Couldn’t leap-
Gabriel Lewit: Couldn’t pull the trigger on it.
Steve Lewit: Couldn’t leap out of the leaps.
Gabriel Lewit: And then he called me a year later, and he said, “I’m down $300,000.” And I said, “Well, what do you want to do now? Are you going to double down?”
“Well,” and, “No, I think I got to leave things. I think it’s definitely coming back this time.” And look, it did come back. And Tesla’s now down, though, since, what, six months ago almost 50%?
Steve Lewit: Amazing.
Gabriel Lewit: What a ride, right?
Steve Lewit: Yep.
Gabriel Lewit: I hope he made money, and I hope he de-risked, but I just don’t know.
Steve Lewit: But here’s the deal. He loves the ride.
Gabriel Lewit: He did. He loved the ride.
Steve Lewit: He’s not trying … He says he’s trying to pick winners and build wealth, but that’s really not what’s driving him. What’s driving him is he loves the game. He loves the challenge.
Gabriel Lewit: I think so. And-
Steve Lewit: And he wants to be able to tell his friends at the party, “Look what I did.”
Gabriel Lewit: I forexed my money in the last two years.
Steve Lewit: Exactly.
Gabriel Lewit: Exactly. Well, folks, that’s our show for you today. We covered quite a bit of grounds. Make sure you look up pictures of the woolly mouse and the Toyger so you can see exactly what we were referencing on the show. And if you happen to own a pet cat tiger, let us know. I’d love to get some pictures.
Steve Lewit: I have one question for you, Gabriel. Are you going to help me fill out the company brackets this weekend? Because I know nothing-
Gabriel Lewit: Is my crystal ball … Just literally just flip a coin, and heads is the top one, and tails is the bottom on the bracket. And then pick which one, and then do that for everyone. You’ll probably have the best bracket in the-
Steve Lewit: I never win. I’ve been doing-
Gabriel Lewit: Nobody wins.
Steve Lewit: Somebody wins.
Gabriel Lewit: Last year, I was very close, if I recall.
Steve Lewit: You were close. You were close.
Gabriel Lewit: I was very, very close. And I literally went through the whole thing in about two minutes and just randomly picked things.
Steve Lewit: You were good. You have that-
Gabriel Lewit: Terrific.
Steve Lewit: … Midas touch.
Gabriel Lewit: Obviously, I knew what I was doing. I mean, obviously.
Steve Lewit: Obviously.
Gabriel Lewit: Folks. All right. Well, if you have questions, call us, (847) 499-3330, or go to sglfinancial.com. Or for questions or to let us know who your bracket pick will be, email us, info@sglfinancial.com, and we can’t wait to hear from you.
Steve Lewit: Everybody out there, stay well. Enjoy this great weather and the sunshine.
Gabriel Lewit: Have a good one. Talk to you soon.
Steve Lewit: Bye now.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at (847) 499-3330. Or visit us on the web at sglfinancial.com. And be sure to subscribe to join us on next week’s episode.
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