The Taxes Game Plan
by SGL Financial
Our 2 Cents – Episode #203
The Taxes Game Plan
After a brief break, we’re excited to bring you a brand-new episode of Our 2 Cents! Today, Steve and Gabriel dive into smart tax strategies, share financial lessons from the Super Bowl, and tackle an interesting listener question. Listen in now using a link below!
- It’s Tax Season!:
- Discover top tax strategies to streamline your preparation and ensure a stress-free, organized tax season.
- Gabriel’s ‘Quick Hit’:
- Uncover a new scam involving unpaid tolls and learn about the dangers of smishing.
- Financial Insights from the Super Bowl:
- Explore insightful quotes from Coach Andy Reid, transformed into valuable lessons for achieving success in your retirement.
- Listener Question:
- “Given that I’m holding $350,000 in cash in my IRA, how long should I wait before reinvesting it if I’m anticipating a market crash?” – Marty
Request Your Free Consultation Today
847.499.3330
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: Welcome, everybody, back to Our 2 Cents. This is Gabriel Lewit here and Steve Lewit. Welcome to the show.
Steve Lewit: The other penny. Today, I’ll be the other penny.
Gabriel Lewit: Well, you’re always the other penny and yeah.
Steve Lewit: Yeah. What if I wanted to be the first penny, not the other penny?
Gabriel Lewit: We’re both other pennies. We’re neither first nor last.
Steve Lewit: All right.
Gabriel Lewit: We’re just two pennies sitting in a pod. Okay?
Steve Lewit: Pennies in a pod.
Gabriel Lewit: Yes.
Steve Lewit: We have to use that somewhere.
Gabriel Lewit: Now, speaking of pennies, apparently, and this isn’t, again, I always preface, this isn’t political in any way, shape, or form, but apparently Trump’s discussing getting rid of the pennies and only having nickels being the smallest denominated coin that we have left, so we would have to become Our Two Nickels.
Steve Lewit: Well, no. Or we can bring the historical past into the present and relish in it.
Gabriel Lewit: We’re not going to give ourselves an inflationary raise?
Steve Lewit: No, no, no, no, no. I like Our 2 Cents.
Gabriel Lewit: There we go.
Steve Lewit: Yeah, I like that.
Gabriel Lewit: All right. So yeah, to be determined on what happens there. But yeah, save your pennies. They might be worth something someday, and that would mean we’re worth more someday too.
Steve Lewit: Yeah. Imagine living in a society when you say to somebody save your pennies and they say to you-
Gabriel Lewit: What are you talking about?
Steve Lewit: What are you talking about?
Gabriel Lewit: Yeah. That will be weird. Okay, well let’s jump in here.
So I’ve got a handful, as I often say, a smorgasbord of topics here for us today. Good things, of course, as always.
Number one, just a couple of quick tips about getting organized for tax season. We are right in that time spot, that sweet time spot here where most of the custodians have delivered their documents to the online portals, although some are still a little bit delayed for some folks, and they can continue to be delayed with 1099s and other documents, sometimes even until March.
Steve Lewit: Yep.
Gabriel Lewit: Or even mid-March for some. But most people should have most of their W-4s. Am I having a little mind-blank?
Steve Lewit: W-2s.
Gabriel Lewit: W-2s, right. Sorry.
Steve Lewit: Their 1099s.
Gabriel Lewit: 1099s.
Steve Lewit: K-1s.
Gabriel Lewit: Yeah. K-1s.
Steve Lewit: And their X5s.
Gabriel Lewit: That’s a car.
Steve Lewit: Oh, that’s a car. Right.
Gabriel Lewit: Yeah. Right. Yeah. Their M&Ms.
Steve Lewit: Their M&Ms.
Gabriel Lewit: They should have all of these key things.
Steve Lewit: And their two cents.
Gabriel Lewit: Yes. And what do you do with those? Of course, well, here’s what I recommend. Everybody has their method. I had a client drop off their tax documents the other day in a folder that appeared to come from 1970s.
It was this really, really, really old faded folder. I’m like, “Where in the world did this folder come from?” I don’t know if she uses it every year, but I thought that was a hoot. And some people save things on their computers, some people throw it all in a box and bring in a box of items. Whatever your method is, start collecting your things and put them all in one place.
Steve Lewit: Yes.
Gabriel Lewit: I do recommend, and I think your future self will thank you for this, creating a quick little Excel checklist or a Word document checklist, something where this year you could start it if you’ve never done this before. As you collect each document, write it on a line on a checklist, and then have another column says, “Done, done, done, done. Pending.” And then this way for future years, assuming you make any changes to your investment accounts, open new accounts, change things, you can add and update that list. And then you always have this little checklist to reference on future tax years to make collecting your documents easier.
Steve Lewit: It’s a great idea, Gabriel. Why do I feel nobody’s going to do it?
Gabriel Lewit: But they won’t. They won’t. We can always try.
Steve Lewit: We can try, right?
Gabriel Lewit: Yes. Okay.
Steve Lewit: Yeah. The box is a lot easier. I’ll just throw it in the box, or I’ll throw it in the bowl on my kitchen table and probably throw it out sooner or later.
Gabriel Lewit: The reason I mention that is because we do provide you, if you do taxes with us, with a tax checklist organizer, but it’s a little more general. Get your 1099s, get your W-2s, get any K-1s, but you might have many multiples of those. And actually we had one client once that 96 K-1s. Wow.
Steve Lewit: Yeah.
Gabriel Lewit: Anywho. But yeah, talk about you might want a master checklist for that many. Yeah, something to keep you organized I think is a great idea. Okay.
Steve Lewit: To stay out of panic mode. We have so many clients, so many people that come in last minute and say, “Do I have this? Do I have this?” And then they’re in a panic mode.
Gabriel Lewit: Yeah. If you do this sooner than later, it should be pretty easy. One of the things, when you do your taxes, you can of course review if you’re going to itemize or take the standard deduction. Keep in mind that most of the bigger ticket deductible items used to be property taxes, but that now has a cap of $10,000, so that’s really limited a lot of people from having the ability to itemize.
Steve Lewit: And the standard deduction is very high.
Gabriel Lewit: And the standard deduction is very high, but some people did have big medical expenses in a prior year and or have made charitable contributions and maybe have high property taxes. And you might be in that sweet spot where you can still itemize and save yourself some money. And you should be reviewing that with your preparer. But if not, just something to keep on your own personal radar. All right?
Steve Lewit: So where did the metaphor of sweet spot come from? In tennis, there’s a sweet spot on the racket that you hit the ball, but you’ve used it twice now, and I use it also. So where did that come from? Sweet spot.
Gabriel Lewit: I don’t know. It reminds me the other day my son asked me or my daughter, I can’t remember which, I forget. I said some word, and they said, “Dad, why is that word called that?” And I’m like-
Steve Lewit: Why is the word called the word?
Gabriel Lewit: I don’t know. Yeah. I mean, I guess-
Steve Lewit: Why is Apple called Apple?
Gabriel Lewit: A car could have been called a Moke.
Steve Lewit: It could have.
Gabriel Lewit: We’re all driving our Mokes to work. I don’t know. That’s a good question, son.
Steve Lewit: A Moke X5.
Gabriel Lewit: Yeah. Anyways, hold on here. We got Producer Gabby that gave us, oh, it’s believed to have been originated in the context of baseball, the optimal area on a bat where the ball generates the most power.
Steve Lewit: On the bat is the sweet spot. That makes a lot of sense because baseball was the national sport.
Gabriel Lewit: And you got to thank AI for this because now you Google anything, and you get a quick AI summary without having to click all the different articles. What a world.
Steve Lewit: What a world.
Gabriel Lewit: But here’s what’s interesting. I’m not paying any more for that feature because I was never paying for Google in the first place. So again, how they monetize that still remains to be seen. We’re going to talk a little bit about that in our market outlook tonight. And then most likely on one of our next podcasts, we’re going to give you some, as we typically do, recaps of our market outlook highlights to help you really know what’s going on in the world.
Okay. Last but not least, I always want to mention if you haven’t yet done so, you can maximize contributions for 2024 even though we’re in 2025. Make sure you bring that up with your tax preparers. If you miss a window, say to do a Roth contribution for last year, after you file your taxes for this year, you can’t go back retroactively and do that. And there’s a couple things in that similar vein. If this was your first year to take RMDs in 2024, and you missed it, you can also take those here in 2025 up to tax time.
Steve Lewit: So, you would take two this year.
Gabriel Lewit: You would. Yep. But that’s something to keep in mind. So again, just a couple little quick tips here. Not going to go into too much more depth here, but make sure you work with a quality, good, expertise oriented CPA firm.
Steve Lewit: Yeah. Where could they find one?
Gabriel Lewit: I don’t know.
Steve Lewit: I don’t know. Do you know where? Do know anybody?
Gabriel Lewit: SGL Financial.
Steve Lewit: I heard of them. Yes.
Gabriel Lewit: Someone that really cares about their clients and does a good job and works hard for you.
Steve Lewit: Well, trained. That’s a CPA, not just-
Gabriel Lewit: Exactly. Exactly.
Steve Lewit: They’re hard to find.
Gabriel Lewit: Yes. Okay.
Well, with that in mind, if you have any questions on that, I’m going to do an early call-in number here, (847) 499-3330, and you can go ahead and schedule your tax drop-off appointment anytime you’re ready.
Steve Lewit: Yes. Yes, sir. Good job.
Gabriel Lewit: All right.
Steve Lewit: Good job on taxes.
Gabriel Lewit: Thank you. Thank you.
Okay. I’m going to do a little quick hit here on a scam that’s kind of going around the world here. And funny enough, I know three out of the four people in this room have received this scam text. I don’t know if you have, Mr. Lewit, but I have and the other two, Gabby and Katie in the room here, have also received this. And many of you out there may have, and it just reminded me it’s a good thing to continue to bring up about scam awareness.
Steve Lewit: Well, I got a recent scam last night, but I won’t tell you what it was until I hear if it’s this one.
Gabriel Lewit: All right. Yeah. This is a fast track lane toll violation text.
Steve Lewit: Yes, yes.
Gabriel Lewit: Yeah.
Steve Lewit: Yes. You owe us money.
Gabriel Lewit: Yeah. It’s saying, here’s the text. It says, “Pay your FasTrak lane tolls by February 13th, 2025 to avoid a fine and keep your license. You can pay at this link, blah, blah, blah, blah.” Looks like easy drive something, something link.
Steve Lewit: We’re four out of four here.
Gabriel Lewit: Yeah. Please reply yes then exit the text message and open it again to activate the link or copy the link and do Safari browser and open it. Well, folks, please don’t do that is the quick.
Steve Lewit: Do not.
Gabriel Lewit: Do not do that. Yes. Okay. This is a scam text. They are trying to fear-monger you. First of all, if you miss a toll, you are not going to immediately lose your license. They are trying to scare you into clicking the link. Don’t do it. Okay? And first and foremost, if you’re in Illinois, it is not FasTrak. It is I-PASS. Okay. That’s another indicator.
Steve Lewit: By the way, yes.
Gabriel Lewit: Yep. Now also, most of the time, I’m not sure if I’ve ever gotten a legitimate miss lane toll violation text.
Steve Lewit: No, you’ve never.
Gabriel Lewit: But I don’t even know if they have my cell phone number to text me. Anywhos.
Steve Lewit: You get a letter in the mail.
Gabriel Lewit: Yeah. So here’s what was interesting. For me, I was on a trip in Austin, Texas, and I had just gotten a rental car, and I’m not joking about this, right? And the lady, when I’m checking out, she’s like, “Do you want the lane, the FasTrak?” Not FasTrak, but she’s like, “Do you want the-”
Steve Lewit: Pay your toll?
Gabriel Lewit: The toll thing, right? And I’m like, “No, I don’t need that. I don’t think I’m going through any tolls.” And it’s like five hours later I get this text.
Steve Lewit: You went through a toll.
Gabriel Lewit: And I’m like, I was about to click on it. I’m like, “Did I go through a toll?” And then I’m like, “Wait a second. I did not go through it. I purposely did not take any toll roads.” Not that there were any anyways on my route. And then I’m like, “This is a scam.” So I didn’t click it and then I realized what it was.
Steve Lewit: Well, you just look at the email or the text that, well no, the text doesn’t have, it just has a phone number.
Gabriel Lewit: Well, it had a website. Yeah. What are you?
Steve Lewit: No, I was saying in emails when we get a scam email, you can look at the address on the email where it came from, and it’s usually-
Gabriel Lewit: Gobbledygook.
Steve Lewit: Gobbledygook. Yeah.
Gabriel Lewit: Yeah. And here this is, of course, it was a very well-created one. A lot of people fell for it. Hopefully you didn’t. But again, just a reminder, keep your antennae out. Don’t click on things that you’re not sure of. If you get a text like this, what do you do? Don’t click it. Log into your I-PASS or wherever portal and see if it actually shows anything. Go directly there. Don’t click on links and emails sent to you. This was called smishing. Okay.
Steve Lewit: Is that that new?
Gabriel Lewit: No, we’ve talked about this on the show before. It’s called smishing.
Steve Lewit: Smishing?
Gabriel Lewit: SMS phishing, smishing.
Steve Lewit: Really? I don’t remember us talking about it.
Gabriel Lewit: SMS texts.
Steve Lewit: Oh, an SMS text. Smishing.
Gabriel Lewit: Smishing. Yep. So don’t fall for the Smishing, folks.
Steve Lewit: Yeah.
Gabriel Lewit: Okay. All right. Well, any course questions you have on that, we’re here to help you.
Steve Lewit: Are you going to give the phone number again?
Gabriel Lewit: I’m not, not for that one.
Steve Lewit: Okay, good. I’m glad you’re not.
Gabriel Lewit: That one’s not worthy of a phone number. They got the number here if they need it.
Steve Lewit: Yeah, yeah, yeah.
Gabriel Lewit: Okay. And a couple things. So we’ve had two big events that have recently transpired. One of those, hopefully you remembered, called Valentine’s Day. If you didn’t, that’s probably why your spouse is mad at you.
Steve Lewit: Did you remember?
Gabriel Lewit: Of course.
Steve Lewit: Or are you trying to tell us something?
Gabriel Lewit: No, no. I always remember.
Steve Lewit: Yeah, you do. Yeah. He’s a great hubby.
Gabriel Lewit: Producer Katie here got some giant floor-to-ceiling size balloon in her office.
Steve Lewit: It filled up her whole office. It was gigantic.
Gabriel Lewit: Her husband’s putting everybody else’s shame over here.
Steve Lewit: And flowers and roses. And man, this guy loves you, which is nice. It was nice.
Gabriel Lewit: Well, it reminded me, couples, of course, need to discuss money questions, and we’ve got a couple money questions here that we can talk about in the theme of creating peace and harmony we would want in Valentine’s Day season. The other recent event is the Super Bowl.
Steve Lewit: Do you remember that?
Gabriel Lewit: Do I remember the Super Bowl? From two weeks ago?
Steve Lewit: It’s not a memorable game, but there was a Super Bowl.
Gabriel Lewit: Yes. It wasn’t the world’s most exciting game. I’ll give you that. The prediction I had, or I guess the hope that I had came to fruition. I didn’t want the, I said anybody but the Chiefs, and that was the Eagles. And then of course the Eagles won.
Steve Lewit: Now, do you feel badly for the Chiefs? Because the Eagles won?
Gabriel Lewit: I feel a little bad. I put it out there, and it’s possible because I put it out there that that’s why they lost.
Steve Lewit: Yeah, I heard your voice in the ether, and I’m amazing.
Gabriel Lewit: I mean, I don’t want to say-
Steve Lewit: It’s all over the place.
Gabriel Lewit: I don’t want to take all the credit. I mean-
Steve Lewit: I think you should.
Gabriel Lewit: It definitely wasn’t the Eagles fans that wanted their team to win. It might’ve been me putting it out here on the podcast.
Steve Lewit: Yeah. And I know that’s not an ego thing.
Gabriel Lewit: Yeah, no. Exactly.
Steve Lewit: No, it has nothing to do with it.
Gabriel Lewit: But anyways, there are lessons we can learn from, well, more so the losing team in the Super Bowl was the tact we were going to take here today. And the poor Andy Reid that didn’t get his three-peat, but-
Steve Lewit: Oh man, you’re mean.
Gabriel Lewit: Oh, they won two out of three.
Steve Lewit: You’re mean, you’re mean.
Gabriel Lewit: That’s pretty, I’m a Bears fan. We haven’t even gotten to the playoffs more than once in the last 10 years.
Steve Lewit: But you don’t have to take that out on poor Andy Reid.
Gabriel Lewit: I sure do. Got to make me feel better for being a Bears fan.
Steve Lewit: All right.
Gabriel Lewit: Anyways. Okay, so let’s start with-
Steve Lewit: Well, I’m a New York Giants fan. I feel worse than do.
Gabriel Lewit: Well, no, your team’s been better than mine.
Steve Lewit: At least you have a quarterback.
Gabriel Lewit: Yeah, you guys are going to be in pain for a while.
Steve Lewit: Yeah.
Gabriel Lewit: You lost Barkley to the Eagles too, didn’t you?
Steve Lewit: We did.
Gabriel Lewit: Yeah. That was a bad move.
Steve Lewit: We sold him out.
Gabriel Lewit: All right. Well, let’s start with the lessons from the Super Bowl. I figured we would start there.
Steve Lewit: The owner of the Giants on those football things where they do, where you see behind the scenes, what’s it called?
Gabriel Lewit: The Hard Knocks?
Steve Lewit: Hard Knocks.
Gabriel Lewit: Yeah.
Steve Lewit: So, the owner of the Giants on Hard Knocks says, “If we trade Barkley the last, if he goes to Philadelphia, I will never sleep again.” And they trade him to Philadelphia.
Gabriel Lewit: Yeah. Bad move. Bad move. Anywhos, hindsight, right? Yeah. That’s kind of like when the market finally goes down, you say, “I should have sold.” Right?
Steve Lewit: I should have sold.
Gabriel Lewit: Well, the hindsight is always helpful. Okay. Well let’s look at some phrases from the Andy Reid coach. Okay? Coach Andy Reid. His number one line here, “Every play is an opportunity. Make every snap count.” Okay. What can we learn from that from a finance perspective? Well, every dollar is an opportunity. Make every dollar count.
Steve Lewit: Yeah, and it doesn’t matter. Yeah. Well, here’s the deal I think that he’s saying is look, you could be behind 30 points. It really doesn’t matter. What matters is what you do is on that next snap. And it’s the same with investing. And the market could be down 30%. You could be losing, for some reason, the bad market, everybody loses. But the question is, what am I going to do now tomorrow with my investments on this snap that is a good play?
Gabriel Lewit: Yeah. It’s interesting that we’re talking about this today because, unrelated, I was just talking to a client last night who has multiple millions of dollars, so very fortunate there, and is going to have a pension that covers all their income. All right? And we were talking, he was like, “,I’m a very aggressive investor and you think that’s a good idea. Should I do that?” And I said, “I don’t know. Certainly you could because you’ve got the money to be able to afford that risk.” But I said also, “At the end of the day when the game is won-”
Steve Lewit: Why do you keep playing?
Gabriel Lewit: “Do you want to keep double down and risking? That’s of course your choice.” Right? So you look at the Eagles, they were up, I forget how much, right? 40 to, I don’t even know the final score, but they were up a lot. And usually, 9 out of 10 times, if a football team is run up the score and way ahead of their opponent, they’re not going to be throwing ultra deep risky passes. They’re not going to be doing things. They’re going to try to minimize their risk of losing the game.
Steve Lewit: Run the ball and eat the clock up.
Gabriel Lewit: Because they already have the game won. And I think that’s such a great parallel for financial planning is when you’ve got the game won, do you really want to be taking outsize risk? And I guess there’s 1 out of 10 coaches that probably would, and maybe there’s 1 out of 10 investors that would too, but I think 9 out of 10 get that and would rather dial it back a little bit, be a little bit more cautious. You can still run up the score even more, you’re just not going to do it by taking outside risks.
Steve Lewit: So some folks just hate the idea that I could have made this, and I only made that.
Gabriel Lewit: Fumble. I should have won 80 to 7.
Steve Lewit: Yeah, I only won 40 to 22. I should have won 70 to 22.
Gabriel Lewit: Right, exactly.
Steve Lewit: What a disappointing game.
Gabriel Lewit: And it’s trying to go for that that causes you to end up losing 41-40. Right?
Steve Lewit: Exactly. Exactly.
Gabriel Lewit: And so that’s something to keep in mind. Every snap counts. Now, if you are behind, it’s important to try to recognize that sooner and really make your place count.
Steve Lewit: Wait, wait. Even if you’re ahead, the game, like you just said, if you’re ahead in the game, every snap still counts too.
Gabriel Lewit: Yeah.
Steve Lewit: Yeah.
Gabriel Lewit: That’s true. But at the end of the day, you could finally tell in the fourth quarter, with five minutes to go being down 35 points or whatever it was, they got some garbage down touchdown, garbage time touchdowns, but-
Steve Lewit: They didn’t stop playing.
Gabriel Lewit: No.
Steve Lewit: They didn’t take the cash.
Gabriel Lewit: They couldn’t because it’s the Super Bowl, but they knew that the game was over.
Steve Lewit: But look, when the market’s down, you could cash out because the market’s down. They didn’t cash out.
Gabriel Lewit: True.
Steve Lewit: They played the game because that’s what you do. If you’re in the field, play the game the right way.
Gabriel Lewit: But I think where I was headed with that analogy is if you’re in the halftime, right, you see you’re behind, the sooner you recognize you’re not where you want to be, the sooner you can make adjustments. Okay? The better off you’re going to be. And that’s really a parallel for starting your planning sooner than later. In fact, just another example, I had a new couple, 41 and 42 years old the other day. They came to me and said, “We want to make sure we’re on track for retirement.” I was like, “That’s great. That’s the perfect time to start doing it.” I mean, even sooner, quite frankly.
Steve Lewit: The earlier the better.
Gabriel Lewit: Yeah. They’re not waiting until 62 when they’re trying to retire 65.
Steve Lewit: Like the folks that come in and say, “Well, we’re thinking of retiring.” And you say, “When?” “Well, maybe early next year.”
Gabriel Lewit: Yeah. I just want to make sure I have enough saved up. Well, hopefully they do. But yeah, there’s not a lot of time to make changes if you don’t. All right. Another quote from Andy Reid here, “There’s always something to learn even from a loss.” Agreed? Disagreed?
Steve Lewit: Well, I-
Gabriel Lewit: I hope you agree with that.
Steve Lewit: Well, the reason I’m-
Gabriel Lewit: This is an easy one.
Steve Lewit: The reason I’m hesitating is that, well, I won’t get into it, but philosophically, you don’t want me to go here. Philosophically, the only thing you learn from losing is how to lose. You really don’t learn from a loss, you learn from what not to do to lose.
Gabriel Lewit: I don’t know what you’re saying, but folks out there, yes, you can learn things from a loss.
Steve Lewit: That’s me. That’s me going into my philosophical outlook of the world.
Gabriel Lewit: Okay, that’s great.
Steve Lewit: That’s a deeper discussion we’re not going to have today.
Gabriel Lewit: No, no.
Steve Lewit: But you can give the phone number to the folks that want to have that discussion with me.
Gabriel Lewit: If you do something that doesn’t give you the desired outcome that you were hoping for, yes, you should do a retrospective on that and try to learn from something that didn’t go the way you wanted to do. And that’s exactly what the chiefs are probably doing right now. Right? They’re retooling, they’re having meetings, they’re saying, “Where did we fail?” And it’s very clear, if you look at the game tape, their offensive line did not play well. That’s why they lost the game.
Steve Lewit: They were awful.
Gabriel Lewit: Eagles were rushing four, and if you’re not a sports fan, that’s okay, but they were getting past every single offensive lineman in sacking Patrick Mahomes over and over. What’s the retrospective to take from that? Yes, they lost the game. Well, they neglected their offensive line. To me, it’s pretty black and white. They got to shore that up.
Steve Lewit: So I was reading a book, I can’t remember, this is some great entrepreneur and for the life of me, I can’t remember his name, but one of the things that struck me, Gabriel, was that he said, “Every time I make a move or I start a new program and it doesn’t work out, everything I do, I do an autopsy on it.”
In other words, just like, and he used the visuals of a regular, I open the heart and I look in there and I weigh this and I do that. And I love that idea. And I’ve often thought of it, especially in sales because in some sense, we’re in the sales business, or we’re in the client-pleasing business. Or if a client is unhappy or potential clients come in, and I don’t handle them well, I’ll sit back and do an autopsy and say, “What can I learn from this?” And it’s the same with your finances. If you sit back and say, “Okay, this is what happened. Now let’s open this thing up and look at all the different sides of it and see what really happened that caused this thing.”
Gabriel Lewit: Well, according to your philosophical approach, you can’t do that, right?
Steve Lewit: You see, this is what you do. This is what you do. You say it, we’re not going, this is ridiculous. We’re not going to talk about-
Gabriel Lewit: Well, I don’t want to talk, but I’m giving you a hard time.
Steve Lewit: Bring it up again.
Gabriel Lewit: Because now you’re speaking my language. You’re right. You can learn from things that don’t go the optimal way, and it’s a smart thing to do. Okay, that’s all we’re going to talk about, about the Chiefs. But yeah, again, if things don’t go the way you want them to go with your finances, and hopefully if you’re working with SGL Financial, that’s never going to happen, but if things aren’t going the way that you want them to go, call us. We can help you assess what’s not working the way you want it to work. How do we course correct and get you on track with where you want to be? Let’s do an assessment of review and let’s get you onto the winning road to a championship this upcoming year.
Steve Lewit: Yeah. I’m not going to let this go quite yet, Gabriel, because I love your comment down here that adjustments are not a sign of weakness. A lot of people won’t change their strategy because they’re so invested. Their egos are so invested in being right, in winning, that they feel like, “If I change my strategy, it’s a sign of weakness. It means I’m not sticking to my guns. I’m not committed.” And that’s like, no, that’s not right.
Gabriel Lewit: Well, nobody likes to admit that they did something wrong or that didn’t work, and it’s hard for them to face those things, so you can avoid them. But yes, ultimately that’s going to be a losing strategy. I mean, if the GM of the Chiefs doubles down, so, “No, definitely not the offensive line. I put together the best offensive line. You just didn’t coach them right.” Eh, tape don’t lie on that one. Right? So yeah, that’s not going to do them too many favors.
Steve Lewit: Now I’m willing to move on. I just-
Gabriel Lewit: All right. Perfect.
Steve Lewit: Now’s the time.
Gabriel Lewit: We’ve got the approval. Okay before we run out of time, and we might end up not getting to our Valentine’s Day special topics, we could always pick those up on a later show.
Steve Lewit: Yeah, let’s do the listener question because we promised that last time.
Gabriel Lewit: We did, yeah. So Marty, Marty, we are finally going to talk about your question here. Let me just get to the right page here of my notes. Hold on, pretty please, Marty. All right. Okay, here we go. All right, so Marty, you mentioned that you think there’s going to be a market crash any day now, and you have a bunch of money in cash, about 350,000 in cash. And even though you think there’s a market crash, it’s bothering you that you’re not making really any money on your cash, and you just don’t want to leave it in cash for too long. What should you do?
Okay, your actual question was how long should I wait before I reinvest it? Okay. Well Marty, I mean I think you’re answering your own question potentially, but we can talk about it. If you do truly believe there’s a market crash, well, you probably wouldn’t invest your money in a heavily risky investment.
Steve Lewit: Well, I have a different question from Marty is like, how did you get all that cash? So Marty might have been thinking there’s been going to be a market crash for the past 10 years and won’t invest his money, which is why he’s accumulated so much cash.
Gabriel Lewit: Could be. Yeah, we don’t know that specific there, but your question, what can you do with it or how long should you wait till you reinvest? I often approach that question, there are things that you can invest in that don’t lose you money if the market goes down but still makes you money if it goes up. Notably buffered strategies, other types of approaches. You could look at a fixed rate. But it sounds like the essence I’m getting, Marty, is you don’t want to miss high upside potential if the markets go up.
Steve Lewit: That’s how I’m getting that too.
Gabriel Lewit: But you’re also worried that it’s going to go down and you’re really struggling with what to do. That’s the takeaway that I’m hearing.
Steve Lewit: And it’s a tough position to be in because there’s never a right time to go in the market. If the market’s down, you say, “Well, it might go down further.” If the market’s up, you say, “It might go down.” If the market is neutral, you say, “Why bother?” So there’s never a right time. That’s the problem with people that sell out of the market, go to cash. Getting out is easy. When to get back in is not easy.
Gabriel Lewit: Well, technically when to get back in is actually easy. If you just wait long enough for the next market crash, okay, I’m in cash today, as long as I wait until the market’s down 30%, then yes, at some point I’d be buying in at a discount. The problem is if the market goes up for the next three years before it crashes, yeah, you might have actually lost out and be quite further behind.
Market timing is generally not a wise decision. It usually ends up losing in the long run. But in the current market environment, I don’t necessarily blame you, Marty, for being concerned because by all statistical metrics, which we’re going to talk a little bit about on our Market Outlook and probably on the next week’s podcast, the market is overvalued, and the risk or probability of a market decline happening is much higher at this stage of altitude than it would be more traditionally.
Steve Lewit: So Marty, think of it this way. There are three categories you can be in. You can be in the stock market where you have unlimited gains and unlimited losses. You can be in an insurance product where you have zero losses and limited gains, or you can be in a structured or buffered product, which is midway between both of those.
Gabriel Lewit: And not necessarily buffered. Some buffered and structured products have a hundred percent downside protection as well as the-
Steve Lewit: As well, yeah, you could elect that too. And some of those track directly the S&P 500. So it’s like being in the market. It’s like bowling with guardrails.
Gabriel Lewit: Yeah.
Steve Lewit: Yeah. So there are options.
Gabriel Lewit: You can get strikes, but you can’t ever go into the gutter.
Steve Lewit: That’s correct. So Marty, there are options and what Gabriel’s going to do now, he’s going to say, “If you want to discuss this with us further, here’s the phone number.”
Gabriel Lewit: Yes, yes. I was going to. I was going to make one more analogy that I just thought of that I really like a lot though. Markets keep going up. They keep going up. It’s kind of like an airplane with at least the old propellers, but I guess even probably the modern day jets, they can keep going up in altitude further and further and further, but at some point, the higher they go, they will eventually stall out because there’s not enough oxygen in the air I think-
Steve Lewit: There’s a limit.
Gabriel Lewit: For the engines to keep working and then they come falling back down, and the market’s kind of like that. It can keep going. There’s oxygen there, it’s fueling it, it keeps going, it keeps going. But at some point when it gets to these stratospheric highs, it does have to have a pullback. Okay? It’s not a rocket engine that just can go permanently to the outer space and to Mars.
Steve Lewit: Well, the higher the market gets, the more sensitive it is to a Black Swan event, something coming out of nowhere that no one can predict. It becomes very sensitive as soon as it sees a Black Swan event, then it crashes very quickly. So I suspect that some Black Swan event is going to show up in the next year or two, let’s say, but that the decline in the market, maybe 20, 25% will be rather fast.
Gabriel Lewit: Could be, yeah. That’s where we just don’t know.
Steve Lewit: Well, I’m going to add my name of predictors to our list of the 500 other predictors we have who never agree with each other.
Gabriel Lewit: There you go. And yours is probably not going to be any more accurate than theirs.
Steve Lewit: Mine is going to be like your all-pervading voice, and it will send the market where it’s supposed to go.
Gabriel Lewit: There you go. It’ll follow what you say. All right, well that’s our show for today, folks. If you’ve got questions, give us a call anytime here, (847) 499-3330. Or go to sglfinancial.com, click contact us. Or of course, don’t forget, you can email us info@sglfinancial.com with your questions, and we will have endeavored to answer those on the very next show that we can.
Thank you so much again for tuning in. Please share the show with your friends. We appreciate your listenership and have yourself a wonderful day.
Steve Lewit: Stay well, everybody. Bye now.
Gabriel Lewit: Bye-bye.
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