Stepping Up to the Financial Plate
by SGL Financial
Our 2 Cents – Episode #268
Stepping Up to the Financial Plate
Batter up! It’s Our 2 Cents back with a grand-slam episode. Today’s show, we’re talking fall travel, the latest economic headlines, and the financial lessons we can learn from America’s favorite pastime, baseball. Don’t strike out on this one. Listen in now!
- 5 Fall Getaways Worth the Trip:
- Who says vacations are just for summer? From colorful fall foliage to crisp mountain escapes, discover five destinations worth adding to your travel list this fall.
- The State of the Economy:
- From inflation to interest rates, economic developments can have a ripple effect across the markets. We’re breaking down what’s currently moving the markets and what investors should know.
- Baseball Financial Lessons:
- Baseball may be all about balls, strikes, and playing the long game, but it has plenty to teach investors, too. Here’s what the ballpark can teach you about making smarter financial decisions.
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Podcast Transcript
Announcer: You’re 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: Well, hello everybody. Welcome back to Our 2 Cents. We took a quick break last week and we are excited to be back here with you. It is now officially, well, maybe not officially. I don’t know when fall is officially here. Is it officially fall?
Steve Lewit: Well, it feels-
Gabriel Lewit: I’m getting a lot of nods from Producer Gabby and Jon. Yes.
Steve Lewit: It feels like fall.
Gabriel Lewit: It is fall. It is fall season. We are excited to have you here.
Steve Lewit: Fall jacket on.
Gabriel Lewit: Yeah, it is baseball season. We’re going to do some baseball analogies here at some point.
Steve Lewit: Go ahead. Go ahead. Just gloat. Go ahead. I’m waiting. I’m waiting. Gloat. Go gloat. Go do it now.
Gabriel Lewit: Well, the White Sox of which is my-
Steve Lewit: Who? Who? Who?
Gabriel Lewit: The White Sox.
Steve Lewit: The White Sox.
Gabriel Lewit: Which is my number one team. I want to put that out there. I do like the Cubs. Cubs are my number two team. I’m allowed to like both, even though some people would disagree with that assessment.
Steve Lewit: Such a traitor, I’m telling you.
Gabriel Lewit: But my White Sox who were abysmally bad the last two years are up 2-0 in the current playoff series here that they’re in. And they just won last night and they’re coming back to Chicago tomorrow night to play for the victory of this current round.
Steve Lewit: Yes, yes.
Gabriel Lewit: Very exciting if you’re a Sox fan.
Steve Lewit: Very exciting. Not exciting if you’re a Yankee fan.
Gabriel Lewit: Which you are.
Steve Lewit: Which I am because I was brought up in New York and that doesn’t go away. And the Yankees do this every year. They get into the playoffs and they’re terrible. They can’t field, they can’t hit. They got great pitching. They got Cam Schlittler who’s going to be the MV Cy Young Award and they can’t win.
Gabriel Lewit: Well, what can you do?
Steve Lewit: I root for the White Sox, which is what I do. They’re my number two team.
Gabriel Lewit: Well, there you go. Yeah. Well, hey, baseball is in the air. If your team is no longer in the playoffs, well, hopefully there’s still some good baseball to watch and I’m wishing you good vibes. But yeah, if your team is in the playoffs, go team, whichever team you might be rooting for out there.
Steve Lewit: Yeah.
Gabriel Lewit: Yeah. Anyways, and amidst all the betting commercials, of course, maybe we’ll get some good baseball. So I was going to say some good football too.
Steve Lewit: Do you bet? Are you a better?
Gabriel Lewit: I am not a sports better.
Steve Lewit: I am not either. It’s like every commercial is you place a bet today.
Gabriel Lewit: Literally every single commercial I feel like.
Steve Lewit: “$5 and we’ll give you 520 back.” So yeah, really?
Gabriel Lewit: Yeah, exactly. Well, with fall in the year, we wanted to talk, before we get into the financial part of things here today, about some of the top fall trips. And I had to bring up this article because the top two, and I’m going to get to these and I didn’t make this up folks, but it says the number one fall trip that’s even better after you retire. Now I think these are good even if you’re not retired. The number one on the list is Vermont. And if you follow the show and know anything about my background, I grew up in Vermont and so I love to see it number one on the list.
Steve Lewit: And what’s so great about Vermont?
Gabriel Lewit: You’ve got colorful foliage, you’ve got mountain roads, small towns, covered bridges.
Steve Lewit: Beautiful.
Gabriel Lewit: You’ve got quaint villages; you’ve got wonderful cities on the lake in Burlington. You’ve got snowcapped mountains with frosty fall air.
Steve Lewit: Folks, having lived in New Hampshire as I did, which is close to Vermont, I agree with everything Gabriel said. New England is just a fabulous area to visit.
Gabriel Lewit: It is. Visit I think is to me the key word because I wouldn’t want to live there, but yeah, very, very beautiful and number one on the list here for this fall. Number two on the list happens to be where my mom lives and I also have visited very frequently there is Park City, Utah.
Steve Lewit: Magnificent place.
Gabriel Lewit: Okay. So quieter mountain getaway before ski season. You’ve got fall colors, historic Main Street shops, galleries, restaurants, wellness experiences, and pretty much anything you could think of in the great outdoors. A very, very beautiful place to visit.
Steve Lewit: And the future home for which year is the Olympics?
Gabriel Lewit: Good question.
Steve Lewit: I know they had an Olympics there and now it’s coming back.
Gabriel Lewit: I think it’s coming back to them. Yeah. Well, very expensive out there. Very expensive. So that’s the knock on Park City. Vermont is actually surprisingly expensive as well, but both places very, very beautiful. If you’re looking for a great fall trip here, these are not going to disappoint.
Steve Lewit: Nope.
Gabriel Lewit: Now third on the list, this was new to me, Asheville, North Carolina.
Steve Lewit: Very popular. Yeah.
Gabriel Lewit: Combining Blue Ridge Mountain scenery with great food, arts, culture, and history. You can drive the Blue Ridge Parkway and spend a full day at the Biltmore Estate and explore downtown Asheville.
Steve Lewit: Asheville has become a real retirement target community.
Gabriel Lewit: Yeah, North Carolina is very, very popular with retirees. Number four on the list is Boston, Massachusetts, a great fall destination for history, museums, delicious food and sightseeing without the summer heat. So if you’re going to be exploring a big city, nice to do it in a nice cool 60 or 70 degree day as opposed to in the boiling heat. And Boston, Massachusetts gives you all sorts of fun things that you can do.
Steve Lewit: Amazing. Amazing city. It’s amazing, Gabriel, how each city has a different flavor.
Gabriel Lewit: Of course.
Steve Lewit: And you walk through Boston; it’s like all history.
Gabriel Lewit: Yeah. Very, very different than Chicago.
Steve Lewit: For sure.
Gabriel Lewit: Yeah. Chicago’s got its terrific attractions as well. And then last on the list here is New Orleans, Louisiana. So best for a slower, more atmospheric fall trip centered around food. You’re sensing a theme here. Music, architecture, and culture. You’ve got some live jazz. You can get a St. Charles Avenue street car, get some great food and coffee, and have some fall festivals and events.
Steve Lewit: Now, is it New Orleans or New Orleans?
Gabriel Lewit: I said New Orleans.
Steve Lewit: Yes. I’m just-
Gabriel Lewit: Is it New Orleans?
Steve Lewit: I don’t know. I think it’s New Orleans. I don’t know. Let’s look that up. Okay. This is very important to have our grammar. We don’t want to insult anybody from New Orleans or New Orleans.
Gabriel Lewit: Whatever it’s called.
Steve Lewit: Wherever it’s called.
Gabriel Lewit: It’s down south.
Steve Lewit: Yeah. I’ve never been there. Have you been there?
Gabriel Lewit: I actually have not been to New Orleans.
Steve Lewit: Yeah. It’s one place I’ve never been.
Gabriel Lewit: Yes. It says right here on the AI overview, the city is pronounced New Orleans.
Steve Lewit: New Orleans. Good. Okay.
Gabriel Lewit: Let’s see. Rather than the rhyming New Orleans. Yeah, so New Orleans.
Steve Lewit: New Orleans. Good. Okay.
Gabriel Lewit: I think I had it correct.
Steve Lewit: I have to remember that and then forget it really quickly.
Gabriel Lewit: Just like it’s not Oregon. If you go out to the state of Oregon.
Steve Lewit: Oregon. I learned that by going to Oregon and saying Oregon, and the people look at me and said, “Where’s Oregon?” Because you’re in Oregon.
Gabriel Lewit: Oregon.
Steve Lewit: Oregon, yeah.
Gabriel Lewit: Yeah. Anyways, well, if those are at all inspiring for you and you have yet to follow your plan getaway, plan your fall getaway, sorry, mix those up. Follow your planned getaway. You talk enough on the microphone and you inadvertently will mix something up. It’s always like those blooper reels you see for the newscasters.
Steve Lewit: Yes, exactly.
Gabriel Lewit: Anyways, yeah, you get mixed up from time to time. But yeah, if you haven’t yet planned your fall getaway, try that one more time. Those are some great choices for you. And if you’re trying to figure out whether or not you should spend the money, give us a call and we’ll help you look at your plan. We’ll help you assess your free available cash flow. And if you’re jonesing for a trip, you should take one and we’ll figure out how to get you the money in your pocket.
Steve Lewit: I’m back over $100 in filling up my gas tank, Gabriel, 6.15 per gallon. So I was just thinking, I was just going to say to our listeners, guys, get in your car and take a week and just go driving through these magnificent places. And then I said to myself, that could be an expensive vacation.
Gabriel Lewit: Well, it’s going to be more expensive than when gas was cheaper.
Steve Lewit: Let me write that down. Words of wisdom from Gabriel when prices-
Gabriel Lewit: These are like Yogi Berra’s.
Steve Lewit: When prices go up, things cost more.
Gabriel Lewit: Yogi Berra. Was it Yogi Berra?
Steve Lewit: Yeah, Yogi Berra.
Gabriel Lewit: Yogi Berra. Well, you knew what I meant anyways. All right. Well, let’s talk a little more meat and potatoes here about the economy and a couple of quick updates here for you. If I can find-
Steve Lewit: If you can find what we want to talk about.
Gabriel Lewit: Yes, yeah. Some things are flying over here. Yeah. So fall 2026-
Steve Lewit: Folks, we’re just having a small organizational problem here.
Gabriel Lewit: State of the economy, what’s going on right now? Well, we’ve got rates up, markets high, midterms ahead. How do we make sense of it all-
Steve Lewit: We don’t.
Gabriel Lewit: Dad?
Steve Lewit: We don’t. Look, I try and make sense of the economy and interest rates because I was trained to do that. I’m an economist, I taught economics, and I’m supposed to understand all of this stuff. And I kind of do, but I kind of don’t. People say, “Well, what do you think the economy’s going to do?” It’s like, “I haven’t got a clue anymore.” It depends on what the politics says, what the president says, what the theme is, what the news is for the week. What is China going to do? What is the UK going to do? What is the bank going to do? What is the Fed going to do? And it’s mind-boggling, which is why, I know I’m tooting our own horn here, which is why you have to have a good plan and just stick to your plan. Just do your plan and let everything else fall into place.
Gabriel Lewit: Well, there’s some recent data here. Some of my clients even mentioned it that some people have found mortgage rates even above 7%.
Steve Lewit: 7%.
Gabriel Lewit: Okay, back over 7%. Inflation is climbing. We’ve had some higher and higher oil prices in gas prices as some examples.
Steve Lewit: Well, they want it at 2%. We haven’t come close to 2% in years.
Gabriel Lewit: Fed raised interest rates due to inflation. People are happy. Of course, the silver lining of that is their CDs and interest rates are paying north of 4%.
Steve Lewit: Absolutely.
Gabriel Lewit: So, people are happy about that, but that’s always kind of one that if you sit and think about it, you realize it’s not necessarily a good thing because when rates are paying that high, it’s usually because of high inflation. So it’s both good and bad at the same time. One analyst at CBS News described this as four burners all at high, all at once about the economy.
Steve Lewit: I love that.
Gabriel Lewit: Because you have Middle East tensions, high inflations, just high mortgage rates. There’s just a lot here that’s really impacting people. And then you’ve got the bond rate environment with treasury bonds at their highest yields, I think since-
Steve Lewit: 10-year yields.
Gabriel Lewit: Yeah. Well, 10 and 30-year yield I think as well. I don’t know where it is here. It said something about the-
Steve Lewit: 5.6.
Gabriel Lewit: Oh, highest level since 2004. Highest level.
Steve Lewit: Yep. 5.6, I think it was up to something like that.
Gabriel Lewit: Okay. And there’s concern around the bond market as well as concern about the stock market. Both are at very, very high points. So bond prices are very, very high. Why is that concerning, Mr. Economist?
Steve Lewit: Well, first I want to say they’ve been very, very high for five years and they keep getting higher. And it’s not being an economist, it’s just understanding gravity. Things that go up, unless they get into outer space, are going to come down because of gravity and finances and interest rates and stock markets have gravity that’s always pulling them down. And the question is is, when does that pull downwards overcome the pull upwards? And all you need is one of those four burners to go wacky, and then the whole thing begins to unravel. The question really is, for me, is it will unravel at some point, but how far down does it go? Does it go-
Gabriel Lewit: Well, when you say unravel, for our listeners, for the bond market, what does that mean?
Steve Lewit: Yeah. So look, bonds are relative to interest rates. Interest rates drive investment in businesses. The higher the long-term interest rates, the less the businesses invest long-term. Basically, high long-term interest rates are saying to businesses, “We don’t believe we want to lend you money long-term because we don’t know if you’re going to be successful or not. So if you want us to lend you money, you got to pay us a higher rate.” So there’s a lack of confidence the higher the interest rates go. When that translates into loss of jobs or slowing down of the economy, look at the billions and trillions of dollars going into AI today with no revenue coming back. At what point do the interest rates get to a point and people just say, “I don’t want to do that anymore.” And those stocks come plummeting down.
Gabriel Lewit: Yeah. Well, that’s the concern. There’s uncertainty as there always is, but there’s very high levels of uncertainty in both the bond market, the interest rate environment, the economy, of course, the midterms, the stock market. Everybody wants the stock market to keep going up. I think that’s really easy to state. It continues to surprise with how much it’s climbed. It continues to climb. It climbs again. But yeah, that lingering question is, when will it no longer climb? And as you said just a moment ago, when gravity will start to pull it back down, that’s what’s on everybody’s mind. And as you said earlier, a plan is going to be your greatest way to help give you peace of mind that this won’t impact you.
Steve Lewit: Yeah. Look, everything is cyclical, Gabriel. Everything goes through ups, downs, medium losses, big losses. I mean, it just happens in cycles. We don’t know when the cycle’s going to happen. So folks, if you have a good plan, what we call a good plan is an all-weather plan. It says, “Look, here’s a plan, but if the market tanks 30%, your plan still works.” Or here’s a plan. Look, if interest rates go up, the plan works. What if interest rates go back down to 2% or 1%? Will the plan work? Yeah, the plan will work. That’s what’s called an all-weather plan. So you are not negotiating with yourself every time you hear a piece of news saying, “What do I do now?” Because we don’t know what to do now. We just know what to do long term because long term, there’s a return to the mean, as you always say. Averages kick in, things work out. Long term, the market goes up. And if you can weather the storms, long term is where you have your peace of mind.
Gabriel Lewit: Amen.
Steve Lewit: Amen.
Gabriel Lewit: So, we didn’t want to get too deep into this world-
Steve Lewit: Can you say amen, Brother?
Gabriel Lewit: Amen, Brother.
Steve Lewit: Okay.
Gabriel Lewit: Or Father.
Steve Lewit: All right.
Gabriel Lewit: Well, we didn’t want to spend too much time in this world of economic… What would we call this?
Steve Lewit: So interesting. I don’t know why-
Gabriel Lewit: Uncertainty or concern, but just giving you the headlines.
Steve Lewit: So interesting. We could spend more time on economics.
Gabriel Lewit: We could and we would have, I think, fewer listeners.
Steve Lewit: Probably.
Gabriel Lewit: We just continue on.
Steve Lewit: Only the nerds will listen.
Gabriel Lewit: Should we talk about the subcategories of CPI inflation? Oh gosh. Yes. Let’s talk about currencies next. That’s how we really get our listeners excited. Well, you know what we’re going to talk about instead-
Steve Lewit: It’s actually pretty interesting.
Gabriel Lewit: There is some interest to that, yes. Well, we wanted to give some analogies as we often do about financial planning, retirement planning. In the spirit of fall and baseball, we had some baseball analogies teed up for you at the plate here today.
Steve Lewit: Why am I not surprised about this?
Gabriel Lewit: Because it’s what we do. It’s what we do, right?
Steve Lewit: Baseball.
Gabriel Lewit: We’ve got to find ways of keeping things fresh, okay? Got to throw a good pitch here for our listeners.
Steve Lewit: All right.
Gabriel Lewit: Right down the strike zone.
Steve Lewit: Oh my gosh.
Gabriel Lewit: All right. I should stop at some point here. So, yeah-
Steve Lewit: I’m with you.
Gabriel Lewit: Yeah. So we’ve got some lessons-
Steve Lewit: Wherever you go, I go.
Gabriel Lewit: Thank you. Well, we’ve got some lessons from baseball and I didn’t necessarily come up with these. As many as we talk about, many of these ideas come from articles we read, so I’ve got to thank somebody from Kiplinger here for some of these ideas. But here’s the first question, and baseball will help us to understand these a little bit better, which stock is better, one that returns 5% every year without fail or one that averages 8% a year, but is sometimes down 20%?
Steve Lewit: Do you want a home run hitter that strikes out a lot or a guy that hits singles?
Gabriel Lewit: Singles and doubles or home run hitter with some strikeouts.
Steve Lewit: That’s right.
Gabriel Lewit: Yeah. Well… Which do you want? Well, the answer-
Steve Lewit: I’d want a combination of both of them.
Gabriel Lewit: You want both?
Steve Lewit: I want both.
Gabriel Lewit: It’s a trick question.
Steve Lewit: It is a trick question.
Gabriel Lewit: Okay. Well, now some people might just want the singles and doubles, 5% a year, year in, year out. I have a client, I just met with one recently, just cannot stand anything that strikes out ever. So only wants fixed rates of return.
Steve Lewit: Yep.
Gabriel Lewit: Okay. And I have other clients that that would drive them nuts. They want to live for the home runs and they’re okay with an occasional strikeout and they will be buying a lot more stock inside of their portfolio. But on a baseball team, you’re going to want to have a blend of both. In fact, as we expand upon these analogies further, a good baseball team is typically going to have a wide range of different hitters. You’re going to have your power hitter at cleanup. You’re going to have your speed runner that can get on base and then steal bases. You’re going to have your guy that’s very consistent at various points in your lineup. You might put your weakest batter last in the lineup, just not at the… Someone’s got to be the weakest batter out of nine batters.
Steve Lewit: Well, that’s true. I’m trying to think of how that applies to a portfolio. Where do I put my weakest ETF?
Gabriel Lewit: Well, where I’m headed with this is diversification.
Steve Lewit: Diversification, yeah.
Gabriel Lewit: And in any given year, one, if you had nine ETFs, nine different asset classes on your portfolio lineup, one of those in a given year would be your worst batter.
Steve Lewit: Yes.
Gabriel Lewit: Now, let’s say the following season, he all of a sudden starts knocking it out of the park and he becomes your best batter, you’d probably move where he would be in your lineup.
Steve Lewit: Yeah, but here’s the deal. If he’s your worst batter, do you get rid of him or do you hold onto him?
Gabriel Lewit: Well, we’re going to talk a little bit here in just a moment about assessing fundamentals as well as whether or not if something is temporarily not doing good, do you just jump ship and fire that person from the team? So let’s take a batter that’s going through a slump.
Steve Lewit: Yes.
Gabriel Lewit: Do you fire him off the team, or do you hold onto that batter?
Steve Lewit: Because we believe at some point he’s going to come out from the slump and be productive. So if you were talking about asset classes, I remember back in, well, it was 2008. Which was it? The worst asset class in 2008 was, I’m thinking my memory is going through, its… It was… Oh my gosh.
Gabriel Lewit: I couldn’t tell you definitively off the top of my head.
Steve Lewit: It might have been small caps. It might have been international. It was just terrible. And then the next year it was the number one asset class. So everybody that sold because it was in a slump missed the upside and then everybody bought there two years later is back in a slump again. So those are the cyclical parts of investing that we have to understand. Otherwise, we’re trading away good players that have contributions to make just because they go through cycles.
Gabriel Lewit: Yeah. And I think that’s the idea behind diversification. That’s really the underlying theme here with these examples, but diversification says you’re going to have a wide range of batters with different skills, a wide range of funds with different tilts and purposes. I had a client just recently ask me, “Why don’t you just use three all cap funds in your portfolio? Why do you have all these various factor tilts and sub-asset classes and all these different funds in the portfolio?” And we ended up having a discussion about something very similar to this, where each one of them serves a purpose in the portfolio design in the research. If you just have three broad asset class funds, you start to, it’s like having three generally good hitters or nine generally good hitters on your team, you start to lose some of the flavor and some of the customization and some of the things that can really be important for your portfolio over time. Yes, Producer Jon’s swatting out a bug over here.
Steve Lewit: I didn’t know what he was doing.
Gabriel Lewit: He got distracted.
Steve Lewit: I thought maybe he got nervous.
Gabriel Lewit: He’s like, “Squirrel.”
Steve Lewit: “Oh my God. There’s a bug here.”
Gabriel Lewit: But yeah, that’s I think the key here is understanding in a good lineup, you’re going to have a wide range of hitters for different batters, or sorry, different pitchers that you face for different situations. In a portfolio, you’re going to have the same.
Steve Lewit: Yeah. Every part of a portfolio needs to have a reason for being there. The number eight hitter might be not a great hitter, but might be super defensive. There’s a reason for that person to be in the lineup. And most people just buy stuff hoping it’ll grow.
Gabriel Lewit: Yep. And then the other analogies here which we think are very relevant is the fact that baseball seasons are often long seasons. So you have to be able to give somebody, a player in this example, a long enough of a runway to really get a sense if they’re going to turn around a slump or not. Sometimes players go through a slump and then they have a phenomenal rest of the season and they average out to be great. So in the world of investments, you could have something that has a really bad down period, and we have had clients that have called us. One comes to mind, and we’ve worked through this since, but if new client came on board, we put into a new portfolio, and some of you listening might laugh at this, but it does happen and some people think this way, but I think a week went by and the portfolio, the market was down about 1.2% one day, and he called me and said, “Why are we down right now?”
Steve Lewit: “Why are we down?” Why don’t I have just winners in my portfolio?”
Gabriel Lewit: I said, “Okay, let’s get on a call and talk about this.” Because that was a couple of flashing lights at me saying, “Hey, we’re not on the same page.” Because we got on the conversation and the first thing I said is, “Well, Mr. Smith, you do understand markets do go up and down, right?” We had to go back to some basics here about portfolios and investing. And of course he did understand this and we realigned and said, “I can’t just promise you that within one week of us starting your portfolio, it’s only going to be up.” I said, “The market was down, your portfolio was down. In fact, your portfolio was down less than the market. So by all accounts, that’s a good thing.” So we ended up working through that. But yeah, you’ve got to have a long time horizon or a target time horizon.
Steve Lewit: Well, the market is a long-term investment, and if you want short-term satisfaction, that is what gambling is about. If you’re a short-term investor and you’re buying options or you’re trading stocks, I mean, that’s great stuff, and some people do it very well, but that’s not investing. That’s more towards gambling and probability. Investing is more long-term betting on the wealth and the earnings of companies, the long-term productivity of the country and productivity. So long-term, if you look at the chart of the market long-term, it’s always going up.
Gabriel Lewit: Yeah. Now that can’t be said for every baseball player.
Steve Lewit: No, that cannot be said for… Or manager.
Gabriel Lewit: Or manager. No, they don’t always go up. That is very, very true. Okay. We mentioned this just a few moments ago, but fundamentals matter. So you brought up the example of a player going through a slump and how you should perhaps hold onto that player. There are times where you perhaps shouldn’t.
Steve Lewit: That’s right.
Gabriel Lewit: And that’s where the data can really come into play. You can look at fundamentals and you can look at how is the stock performing relative to its peer group? How’s the fund performing relative to its peer group?
Steve Lewit: Yeah. What’s the turnover inside the fund? Is it a new management team that most people don’t know who manages the fund?
Gabriel Lewit: Is it down a lot, but the broader market is up?
Steve Lewit: Yes.
Gabriel Lewit: So, there are obviously times where you want to look at that data and give something more time and more patience. There are times where you look at something and you say, “Nope, it’s time to let this one go.” The trick is being able to know what to do when, which makes more sense, and that’s really the art and science of portfolio design.
Steve Lewit: And being objective rather than emotional. It’s not like, “I can’t stand this fund.” That’s not a determining factor is your feelings about it. The determining factor is, “What does the data say about it?”
Gabriel Lewit: Yeah. I actually think the baseball analogy and the baseball lineup here is a good example of something else that just popped into my head. I wasn’t even thinking about this originally, but when you have players that are doing well, sometimes clients want you to just swap those players out in the hopes that other players do even better.
Steve Lewit: Yes.
Gabriel Lewit: Okay?
Steve Lewit: Yeah.
Gabriel Lewit: And in the world of investments, this is, “Well, what else could I buy that could do even better? Why aren’t we trading and churning the portfolio because you’re not doing anything?” Well, sometimes the best thing to do is to stick with something that’s working well instead of chasing after something that might work better, which oftentimes backfires and actually does worse.
Steve Lewit: If a machine is well-built and it’s running well, you don’t replace major parts. What you do is you tweak it. Tighten a nut, you pull a lever, you put oil over here, you do little things on it.
Gabriel Lewit: I can’t picture you fixing any machines.
Steve Lewit: I was just thinking of Jon here, because Jon is a car guy and I just had this image of him under the hood with tools flying all over the place.
Gabriel Lewit: And I do not have a picture of you doing that.
Steve Lewit: I’m not, but tweaking it, but I love the analogy. It’s really a good one, right, Gabriel?
Gabriel Lewit: Yeah, it was a good one.
Steve Lewit: It was a great one. Yeah. So good machines, you let them run.
Gabriel Lewit: Although we’re talking about baseball.
Steve Lewit: But a good baseball team, you let it run, you do tweaks, you don’t do major changes.
Gabriel Lewit: Yeah, you don’t want to just chuck the entire lineup out that’s doing well to put in a new one and hope that it does better.
Steve Lewit: That might do well.
Gabriel Lewit: Yeah. So that’s the challenge there. The allure is that you’ve got something doing good and you could find something even better, but chasing after that may actually backfire sometimes substantially. Okay.
Steve Lewit: It’s allure by the way, not allure.
Gabriel Lewit: Allure.
Steve Lewit: Allure.
Gabriel Lewit: Whatever you want to Call it.
Steve Lewit: A-L-L-U-R, Allure.
Gabriel Lewit: Last but not least, you’ve got the stories.
Steve Lewit: He ignored me.
Gabriel Lewit: The storylines.
Steve Lewit: He ignored me, folks.
Gabriel Lewit: Okay. Baseball has many stories, a clutch player, a last minute play, a last minute grand slam or home run, a stolen base, momentum. It was funny, in the show last night, the game last night, one of the announcers who, they weren’t very good, but they were like, “It’s so quiet here in the stadium and the momentum has all shifted to the White Sox, and it feels like they’re playing like they know they can’t lose.” Is what one of the announcers says. And what is that vibe, right? There is sometimes this unquantifiable, intangible vibe that a team just has this belief that they’re going to win and then you just feel it. Those are those stories and those narratives that make baseball sometimes so compelling to watch even more than other sports.
Steve Lewit: And to see a shift from one team to the other in the matter of an inning or half an inning.
Gabriel Lewit: It’s so neat. And so just like baseball has its stories, markets have its stories, it has its storylines. We’re talking about compelling narratives for why the market’s high and the economy’s not doing great and inflation’s up and everybody likes to jump to conclusions there that that means the market’s about to crash, except for that storyline and that narrative could switch just as fast as it could in baseball.
Steve Lewit: Absolutely. Absolutely. And it does.
Gabriel Lewit: And it does.
Steve Lewit: Markets crash and guess what they do then? They turn around and come back. Some come back pretty quickly. Like in ’22, the market was down 20 some odd percent, came back in less than 12 months.
Gabriel Lewit: Indeed, indeed. So that’s what baseball can teach you about investing. So when you’re at your playoff watch party here-
Steve Lewit: Yeah, you’ve got some more material.
Gabriel Lewit: You’ve got some great talking points here right up at the plate for you to take advantage of. And anything that this brings up for you, if you have questions about portfolio design, if you have questions about baseball, I would not be your main point of contact, but portfolio design, investing, allocations, how to build this into your plan, whether to stay consistent, whether or not you should jettison funds, when to buy, when not to buy, all of these things that go into building a terrific investment lineup, that’s what we are here for to help you with at SGL Financial.
Steve Lewit: We are.
Gabriel Lewit: And especially in light of the challenging marketplace that we’re in, the economy being uncertain, the midterms being uncertain. You mentioned the word earlier, we talk about it all the time, you’ve got to have a plan.
Steve Lewit: Yes.
Gabriel Lewit: And a good baseball manager is going to have a plan for how to approach the playoff series. A good financial investor and advisor are going to have a plan that they need to be aligned on. And if you follow that plan, you should get to where you want to get.
Steve Lewit: Well, yeah. I mean, the probability goes way up. All the research says people that plan accomplish more with higher probability and steadiness than those that don’t. Imagine the manager of a baseball team, Gabriel, pulling out his card and saying, “Well, I think I’ll put Joe in for fourth this time and Mac.” And there’s no plan. It doesn’t make sense. Yet most people do not have a plan.
Gabriel Lewit: They do not. And that’s why we’re here.
Steve Lewit: That’s why we’re here. Yeah.
Gabriel Lewit: So, if we have the ability to help you in any way, big or small, you can give us a call anytime here at (847) 499-3330. Set up a complimentary consultation in person for an hour or a phone call, whatever you prefer, so we can talk to you about your goals and your plans and how we might be able to help you achieve them.
Steve Lewit: Absolutely.
Gabriel Lewit: And if you want to email us, you can email us here at info@sglfinancial.com or you can go to our website, sglfinancial.com and click Contact Us.
Steve Lewit: Well said. As always.
Gabriel Lewit: Well, our friends, we are wishing you a wonderful start to the fall season. Get out there, get to some cornfields, get some pumpkins, get some… I had a pumpkin spice latte.
Steve Lewit: Why would you want to go to a cornfield?
Gabriel Lewit: You get a corn maze. I love corn mazes.
Steve Lewit: Well, corn mazes are fun.
Gabriel Lewit: Yes. You can get a pumpkin spice latte at your favorite coffee shop.
Steve Lewit: That I like.
Gabriel Lewit: Put on your fall sweater and have a great time.
Steve Lewit: Go White Sox.
Gabriel Lewit: Go whatever team is your favorite team so I don’t offend anybody.
Steve Lewit: Exactly. Well, I’ll say it. Go White Sox.
Gabriel Lewit: There we go. There we go. Well, have a wonderful rest of your week and weekend, everybody. We will talk to you on the next show.
Steve Lewit: Be well. See you.
Gabriel Lewit: Bye-bye.
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.
Disclosure: Investment Advisory services are offered through SGL Financial LLC, an SEC registered investment advisor. Insurance and other financial products are offered separately through individually licensed and appointed agents.
