What the Knicks Can Teach Investors
by SGL Financial
Our 2 Cents – Episode #258
What the Knicks Can Teach Investors
We’re back with another episode of Our 2 Cents! This week, Steve and Gabriel continue their discussion about the surprising things to consider selling before retirement, explore investing lessons inspired by the Knicks’ championship run, and answer two thought-provoking listener questions.
- What to Sell Before You Retire Part 2:
- Retirement is an emotional transition as much as a financial one. Let go of things that no longer serve you to make room for a more fulfilling next chapter.
- Beyond downsizing your home, consider whether a second vehicle, financial support for adult children, or even your work identity still fit the retirement lifestyle you’re trying to create.
- Championship Investing:
- Don’t assume the hottest investment or highest-profile opportunity will automatically deliver the best long-term results.
- Great investing, like building a championship team, requires patience, diversification, and resisting the temptation to chase the “next big thing.”
- Listener Questions:
- “I consider myself a conservative investor, but sometimes I think I shouldn’t be quite so conservative. Should I loosen up and take a little more risk?” – Marie
- “I’m not as happy as I once was at my job. Now that I’m in my 50s, I’m thinking I want to leave my job and start my own business. Is it a terrible idea to take some money out of my retirement accounts to pay the bills while I get the business up and running?” – Ted
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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: Hello, hello everybody. You’ve got Gabriel Lewit and Steve Lewit, welcoming you here to Our 2 Cents. Wanted to mix up the intro here for you this morning.
Steve Lewit: Welcome, welcome.
Gabriel Lewit: Welcome. We have a great show lined up for you today. It’s a beautiful, cloudy day.
Steve Lewit: Yeah. We have a big problem though.
Gabriel Lewit: What’s that, Steve?
Steve Lewit: Well, I just came back from Nashville, and I got Country Western songs running through my head, and I can’t get them out.
Gabriel Lewit: I don’t know what you did in Nashville, but you’ve been very weird since you’ve come back.
Steve Lewit: Yeah. Well, that’s a great… I had so much fun. We did songwriting. I got songs going through my mind. I mean, it’s just like music in my head.
Gabriel Lewit: All right.
Steve Lewit: So, I’m going to-
Gabriel Lewit: Well, maybe it should stay up there.
Steve Lewit: No, I’m going to sing. I’m going to sing my way through this podcast.
Gabriel Lewit: Okay. Let’s not say we did.
Steve Lewit: All right. I’m singing a tune.
Gabriel Lewit: All right. We’ve got to get into the show, Steve. You good?
Steve Lewit: I’m good.
Gabriel Lewit: All right.
Steve Lewit: I’m back.
Gabriel Lewit: Well, we’ve got a great show lined up here for you.
Steve Lewit: Feet on the ground.
Gabriel Lewit: All right. We’re going to continue the conversation we had last time, which we were talking about a very popular YouTube video talking about the things that you should consider selling before you retire. And we had gotten through a couple of them, but we’re going to continue on that journey here today.
We’re also going to, because Steve is a diehard Knicks fan, we found a great article from Kiplinger.
Steve Lewit: 53 years, folks.
Gabriel Lewit: And the Knicks won the championship. So, there’s five investing lessons from the Knicks’ championship win that we’re going to share here with you today and talk about those.
Steve Lewit: And I could add on five more life lessons about disappointment after disappointment. Finally, finally turning into, yay, we won.
Gabriel Lewit: Yes. Okay. Well, we’re glad for you.
Steve Lewit: Thank you.
Gabriel Lewit: But we’ll see what lessons we can learn from that. And then to end up our show here today with a couple of listener questions, we’re going to focus on those because, well, they come on in. Well, actually, listener and client questions, we have a couple listener questions and a couple client questions. We’ll see how many we can get through here on today’s show. So, welcome. Hop on board the train here, we’re ready to get rolling.
Steve Lewit: Oh my God.
Gabriel Lewit: And we’re going to jump right on in here for you here.
Steve Lewit: Did you really just say that?
Gabriel Lewit: I sure did.
Steve Lewit: Okay.
Gabriel Lewit: Yes. All right, so last time-
Steve Lewit: Should I go, toot-toot, let’s go?
Gabriel Lewit: Please don’t.
Steve Lewit: Okay.
Gabriel Lewit: All right. Well, last time we had talked about, again, a YouTube video that had 3.7 million views.
Steve Lewit: Incredible.
Gabriel Lewit: And climbing.
Steve Lewit: Just incredible.
Gabriel Lewit: Okay, and basically the premise was, here’s what we think you might want to sell before retirement.
Steve Lewit: Yep.
Gabriel Lewit: All right. So, what we talked about last time was the oversized house, meaning if you have an oversized house that you no longer feel like maintaining, or you don’t need to have five bedrooms or six bedrooms and four baths. It’s just you and your spouse, or just you.
Steve Lewit: And you use the kitchen and maybe one other room in your six-room house.
Gabriel Lewit: Yeah, you might want to consider downsizing and selling the oversized house. And just as a quick review of that, perhaps you have equity built into your current home. You can free up that equity, have a simpler life, less maintenance, less headaches, and perhaps that’s one good item to consider selling before your new retirement. Okay? Now, we also talked about you could sell that after retirement too. It doesn’t mean if you haven’t sold it and you’ve already retired that you can’t still downsize. It’s just the concept here is things you may want to consider for retirement. Okay?
All right. The other one we had talked about was expensive toys that may have become expensive burdens, such as a boat, perhaps a motorcycle, perhaps a 1964 Morgan. What do you got?
Steve Lewit: 1982.
Gabriel Lewit: A 1982 Morgan car that-
Steve Lewit: Costing me a fortune.
Gabriel Lewit: Is costing you a fortune.
Steve Lewit: It’s been in the shop for three months. I’m getting it this weekend, finally.
Gabriel Lewit: I know that’s what you had mentioned, right?
Steve Lewit: It’s crazy. It’s just crazy.
Gabriel Lewit: Maybe now that you fix it, you might want to sell it.
Steve Lewit: That’s what I was thinking. What do I need that thing for?
Gabriel Lewit: You had your fun, you lost some money, right? Put whatever you can back in your pocket, perhaps.
Steve Lewit: You’re reading my mind, son.
Gabriel Lewit: Now, ironically, the next item on that list, which isn’t necessarily an… In this case for you, this was an expensive toy, but the second car could be an item that you might want to consider selling in retirement. And I have, in fact, have had many clients say to me, “We might consider selling our other car because I think we can get away with just one.”
Steve Lewit: Sure. Especially now with the prices of gas, but it’s another thing to maintain. I think that’s a tough one, because I find most people want their independence. So if I want to go somewhere, I want to go.
Gabriel Lewit: Well, it’s definitely a lifestyle choice, right? If you and your spouse really have no problem sharing a car or maybe even like going places together.
Steve Lewit: Oh my gosh.
Gabriel Lewit: That would be crazy, but-
Steve Lewit: That would, yeah.
Gabriel Lewit: … you could potentially get away with a single car. I do agree with you, Steve, that would not be for me.
Steve Lewit: No.
Gabriel Lewit: But it is not for many people, but it might be for you and it’s something you can think of now, especially in the world of Ubers, in the gig economy and being able to get pretty much anywhere you want to on the tap of your phone.
Steve Lewit: It is easy to get anywhere, and it’s very efficient, and it’s cheaper than owning a car.
Gabriel Lewit: Sure, sure can be. Right? So again, these aren’t necessarily your go-tos, but they are options for you to consider.
All right. The next one would be, not thinking of anybody in particular here on this one, would be-
Steve Lewit: And you’re not looking at me.
Gabriel Lewit: Financially supporting your adult children. And I’m not referencing me here folks. Okay? My dad here has other children.
Steve Lewit: Wait a minute, wait a minute.
Gabriel Lewit: Okay, not named Gabriel. All right?
Steve Lewit: What?
Gabriel Lewit: I’m very financially self-sufficient, just putting that out and out the way.
Steve Lewit: I think you’re jealous.
Gabriel Lewit: No, no. But yes, if you’ve got children that are adults, they are no longer really children, right? They are adult children. You may not want to continue to support them financially, or you might want to decide how long you intend to support them financially before you let baby birds fly the nest. Okay?
Steve Lewit: I can’t remember the numbers, but we talked about an article about 35-year-olds moving back home.
Gabriel Lewit: We did, I think we did this on the show a while ago.
Steve Lewit: It was like 30% of 30-year-olds, or some ridiculously high number.
Gabriel Lewit: Yeah. I think I was talking about that with my wife and we had decided, yeah, our kids won’t be amongst that 30%.
Steve Lewit: Neither will mine.
Gabriel Lewit: We’ll see about that.
Steve Lewit: No way, Jose.
Gabriel Lewit: Yeah. Again, that’s very personal of a decision, right? We have zero context for whatever your child might be going through if they’re living at home with you. But the idea here is, it goes against parental instincts, right? Maybe they’re struggling and you really just want to help, but at some point you may want to consider getting those kids off the payroll, if you can. If you can.
Steve Lewit: Yeah. Well, I don’t want to get off-topic, but what parents say to me is that they say, “I’ve got to take them in. I got to support him or her. I just love them.” And I say, “Yeah, but you’re going to run out of money if you keep this up.” And it’s like they don’t want to hear that.
Gabriel Lewit: Well, yeah.
Steve Lewit: It’s a different topic, but.
Gabriel Lewit: It has a financial drain as well a-
Steve Lewit: Sure does.
Gabriel Lewit: … as it’s a challenging from a personal and a-
Steve Lewit: It is, it’s so hard.
Gabriel Lewit: … family perspective. So, that’s a tough one wrapped up all in one.
Steve Lewit: Let them suffer, man.
Gabriel Lewit: Yep. Now the other thing here is, what else could you get rid of before retirement? Well, you could, as if you were going to move, even if you didn’t move, I thought this was an interesting one. You could clean out your house. Okay?
Steve Lewit: That’s so hard.
Gabriel Lewit: Everybody waits to do this for when they move, right? You’ve got your back room, you’ve got your closet, you’ve got your attic, you’ve got your garage, and it’s just stuffed with stuff.
Steve Lewit: It is.
Gabriel Lewit: And you say, “One day when I move, I’m going to clean all that stuff out.”
Steve Lewit: And one day, you will.
Gabriel Lewit: And that one day could be even before you move.
Steve Lewit: 20 years from now.
Gabriel Lewit: It could be today, right?
Steve Lewit: Yep.
Gabriel Lewit: It could be tomorrow. So you could have summer season, of course, the time of year for garage sales. I’ve driven past actually none of those yet this summer, but last summer, I did drive past quite a few.
Steve Lewit: Have you ever done one?
Gabriel Lewit: Have I done a garage sale? No. I get rid of clutter.
Steve Lewit: They’re a lot of fun.
Gabriel Lewit: But if you’re one of those-
Steve Lewit: I got rid of a lot of your stuff through garage sales.
Gabriel Lewit: So that’s where it went. I don’t know where it was, but that’s where it went.
Steve Lewit: I made a few bucks. That’s how I paid for your college.
Gabriel Lewit: Oh, okay. Yes. I don’t know what I would have had that you could have sold that would have helped make any material dollars for college.
Steve Lewit: Not much.
Gabriel Lewit: I hope you got a bunch of bucks out of it.
Steve Lewit: Not much.
Gabriel Lewit: I’ve got my son, it’s kind of funny. It was buried in a closet room in my basement, but I had a giant, giant bin of baseball cards from when I was a kid that I had collected. Now, I don’t know how long he’ll stay interested in this, but my son decided to go grab these and start AI Googling them. I don’t know what we’re going to call it now, because nobody Googles anymore, they just ChatGPT or Gemini stuff or whatever. But, Copilot, he’s just looking them all up to see how much they’re worth one at a time and saving the ones that are worth more than 10 bucks.
Steve Lewit: That’s great.
Gabriel Lewit: And I told him, “If you go through this and make like 1,000 bucks, I’ll split it with you.”
Steve Lewit: What? You’re going to split it with him?
Gabriel Lewit: I can just give him the… He’s got to learn.
Steve Lewit: He’s doing all the work.
Gabriel Lewit: The dad tax here.
Steve Lewit: He’s doing all the work.
Gabriel Lewit: He’s got to learn about taxes, okay?
Steve Lewit: Oh, folks, my son is-
Gabriel Lewit: I’m a business owner.
Steve Lewit: … raiding his child.
Gabriel Lewit: I should give him my baseball cards to sell, and he keeps the full profit?
Steve Lewit: Do you charge him rent for living in your house?
Gabriel Lewit: Maybe I should. 10 years old, get him going.
Steve Lewit: Yeah, right.
Gabriel Lewit: All right.
Steve Lewit: Learn the real world fast.
Gabriel Lewit: Yes. Yes. All right. Well, the last thing you might want to consider before you retire, whether it’s… You can’t sell this one, but you could get rid of it if you want, is your previous work identity. This is deep.
Steve Lewit: Ooh.
Gabriel Lewit: Okay? You may have spent many years. I just had a client that I’m working with that is about to retire, 35 years at the same company. Congrats.
Steve Lewit: Yeah, that’s who you are.
Gabriel Lewit: That’s where Producer Katie is headed. She’s what? 14?
Steve Lewit: 14.
Gabriel Lewit: 14 in?
Steve Lewit: 14.
Gabriel Lewit: You’re almost halfway there.
Steve Lewit: Halfway there, Kate.
Gabriel Lewit: That is impressive. Okay, but yeah, 35 years at the same company. Your identity can really get wrapped up in that. Right? That’s who you are, what you were, what you did, right? And that can be the big loss you feel when you retire, but you can also view it as a new beginning, right? An item to downsize and get rid of, move on, put behind you, previous chapter.
Steve Lewit: That’s another hard one, but I’m glad you brought that up because psychologically to really enjoy retirement, you got to get rid of that outfit and put yourself in a new out… it’s like redressing yourself. Those clothes don’t fit anymore and you’ve got to go find a new wardrobe.
Gabriel Lewit: Yeah, a new beginning, a new you.
Steve Lewit: A new beginning, and that’s fun. That’s like be inquisitive, be learning. What do you want to develop into or transform yourself into in this part of your life when you’re not running to the office every day or to the business?
Gabriel Lewit: Well, some people take that to the extreme and not only do they downsize, but they move to an entirely new part of the country.
Steve Lewit: Or the world, or the world.
Gabriel Lewit: Or the world, right?
Steve Lewit: Yeah.
Gabriel Lewit: It’s an entirely new story that they begin at retirement.
Steve Lewit: See, I’ll never retire, Gabriel, I think you know that. But if I retired, I just think that would be the most coolest thing.
Gabriel Lewit: You’re funny because every couple years you’re like, “What do you think, Gabe? Should I think about retiring?” And I’m just like, “Why are we having this conversation?”
Steve Lewit: I don’t know.
Gabriel Lewit: Because we all know the answer to that.
Steve Lewit: Once in a while-
Gabriel Lewit: We all know.
Steve Lewit: Once in a while, I like to entertain the fact of doing nothing. But-
Gabriel Lewit: But then after about 10 seconds of entertaining it, you get bored even thinking about it-
Steve Lewit: Totally, because I cannot-
Gabriel Lewit: … and you’re like, okay.
Steve Lewit: I cannot do nothing. You know what I would do? I’d probably start another company.
Gabriel Lewit: Yeah, yeah.
Steve Lewit: That’s what I would do.
Gabriel Lewit: Well, that’s funny because one of the listener questions today when we get to them is actually related to that.
Steve Lewit: All right, yeah.
Gabriel Lewit: But I don’t want to steal the thunder-
Steve Lewit: Don’t thunder it, yep.
Gabriel Lewit: … of ourselves. Okay. Well, that’s the idea here. So here’s the framework, folks. There’s more than just these items. Right? The question as you go through various things in your life, does this still serve my new retirement life or was this part of my old life? Right? Do I still need this or can I shed this and move on?
Steve Lewit: Emotionally, I’m going to say this to you folks, emotionally making that turn, changing your emotional relationship to the world is really, really, it requires a lot of introspection, a lot of conversation with somebody or spouse or a therapist. Because those old emotions about your job and who you are and what you are and your value in the world and your meaning and purpose are all tied into your work, or not necessarily work, you could be a whole-
Gabriel Lewit: Well, this wasn’t just about work. It was about stuff, money, but this idea of letting things go-
Steve Lewit: Of letting things go, yeah.
Gabriel Lewit: … okay, that you no longer need. This clearly hit a vibe, right? I think 3.7, four million people have found something interesting in that topic, and-
Steve Lewit: Because the transition is so challenging that people want to know, how do I do this? How do I let go of all that stuff?
Gabriel Lewit: Yeah. Well, that’s the idea, that’s the idea. All right. Well, if that struck a nerve and there’s anything there we could help you with-
Steve Lewit: Or a note, than a nerve.
Gabriel Lewit: Struck a note, yeah.
Steve Lewit: Struck a note.
Gabriel Lewit: That’s a better one.
Steve Lewit: Yeah, yeah, struck a note.
Gabriel Lewit: I like that, yep. You can call us here, we can help guide you through any financial planning questions. I can’t help you with the garage sale, but we can help you with retirement planning transitions. Okay?
Steve Lewit: Definitely.
Gabriel Lewit: So, call us here (847) 499-3330. [inaudible 00:14:40].
Steve Lewit: I can help you with the garage sale.
Gabriel Lewit: Steve will be there.
Steve Lewit: I’ll be there.
Gabriel Lewit: He knows how to-
Steve Lewit: I know how to sell, man.
Gabriel Lewit: Mark them with the little tickets, $1.
Steve Lewit: Little tabs. Little tag. Here’s my problem-
Gabriel Lewit: Green tag, red tag, blue tag.
Steve Lewit: You know what my problem in the garage sale is? I have something marked $10, somebody will come over to me, “Will you take two?” “Yeah, go ahead. I’ll give you two.”
Gabriel Lewit: Well, that’s what people like about garage sales. They’re little hagglers.
Steve Lewit: Yeah, right. It’s like, give me whatever you want to give me. I just want to get rid of it.
Gabriel Lewit: What they don’t know is you would have given it away for free.
Steve Lewit: You’re absolutely right.
Gabriel Lewit: So, who really won?
Steve Lewit: Yeah, that’s true.
Gabriel Lewit: All right. All right, let’s move on. Okay, the Knicks. The Knicks, as I like to say.
Steve Lewit: This is such a story.
Gabriel Lewit: All right. What do they call them? The lovable Knicks? What were the-
Steve Lewit: I don’t know.
Gabriel Lewit: No, that’s the Lovable Bulls, I don’t know. They had a nickname, didn’t they, the Knicks? Don’t they have… I’m not a Knicks fan.
Steve Lewit: Pathetic. Pathetic.
Gabriel Lewit: You can’t say that anymore.
Steve Lewit: No, that was their nickname. Pathetic. Terrible, awful, low hope Knicks. This is 30 years of Knick suffering.
Gabriel Lewit: Okay, well-
Steve Lewit: And ended in one night.
Gabriel Lewit: There you go.
Steve Lewit: Over actually, five nights.
Gabriel Lewit: Well, yeah. So the Knicks, of course, if you’re not a basketball fan, you probably might have heard it, maybe. But yeah, they won the championship against the Spurs.
Steve Lewit: Against a really good team too, yeah.
Gabriel Lewit: Okay, and they had just a massive parade I think with two million.
Steve Lewit: Two million people.
Gabriel Lewit: Two million. I mean, if you saw pictures of this thing-
Steve Lewit: It’s unbelievable.
Gabriel Lewit: … there was people like 100 rows deep just smashed in with other people to attend this celebratory parade. Well, everyone was getting in on the action, apparently there was some big wig business lady that tried to steal a Knicks themed trash can or something.
Steve Lewit: Oh, from Morgan Stanley.
Gabriel Lewit: And dumped all the trash on the street.
Steve Lewit: I heard about that.
Gabriel Lewit: And she got fired from her job. So, people were really getting crazy. All right, but that’s not the point of this lesson here.
All right, we wanted to talk about investing lessons. What would possibly be learned about investing from the Knicks’ championship win? Well, that’s the fun of our show. How do we take these financial concepts and make them relatable to you? And so if you’re a Knicks fan, you might gravitate to this. If you’re a basketball fan, you might gravitate to these investing lessons that we’re going to cover here with you shortly.
Steve Lewit: I’m curious to what you came up with here.
Gabriel Lewit: Well, I didn’t come up with them, actually. This was from Alexandra Svokos with Kiplinger.
Steve Lewit: Well, curious what-
Gabriel Lewit: I can’t take credit for coming up with these ones today. This is all Alexandra’s, but I did like them.
Steve Lewit: Okay.
Gabriel Lewit: And so, we are going to talk about them.
Steve Lewit: Okay.
Gabriel Lewit: Does that sound like a game plan?
Steve Lewit: It is a game plan.
Gabriel Lewit: All right. So, this is in the theme of recent IPOs, which we have been talking about. A hot IPO doesn’t mean an immediate win.
Steve Lewit: Whoa, whoa.
Gabriel Lewit: No.
Steve Lewit: What did SpaceX do?
Gabriel Lewit: Well, SpaceX is going up and down.
Steve Lewit: Very up and very down.
Gabriel Lewit: Yeah, as IPOs do. Well, what does that have to do with basketball? Well, the Spurs had selected Victor Wembanyama-
Steve Lewit: Amazing.
Gabriel Lewit: … right as the number one pick in the 2023 draft. Meanwhile, the Knicks’ Brunson, Jalen Brunson?
Steve Lewit: Jalen Brunson.
Gabriel Lewit: Yes, meanwhile, was undrafted after the first round in 2018 and didn’t end up making the team’s cut until pick number 33. Okay? Anyways, the point is, is sometimes the hot IPO, in this case, Victor Wembanyama, doesn’t immediately guarantee success.
Steve Lewit: No, it doesn’t. Folks, if you know, this guy is 7’5″ and he’s as agile as a-
Gabriel Lewit: He’s 100 feet tall. He’s fast.
Steve Lewit: Yeah, I mean, they call him an alien. He looks like an alien. He doesn’t look like an alien. I mean, it’s unbelievable. He’ll be the best basketball. He could be, folks, the best basketball player that ever live. And Jalen Brunson, you have to understand, is 6’1″.
Gabriel Lewit: Jordan might have a thing or two to say about what you just said there.
Steve Lewit: What Jordan?
Gabriel Lewit: Okay, just going to put that out there.
Steve Lewit: That’s why I say, he might be. He’s got a long way to go. But Jalen Brunson is 6’1″. So, two things. This guy’s 7’5″, everybody says he’s going to be a winner. Everybody said Jalen Brunson couldn’t possibly win a championship at 6.1 playing against the giant guys.
Gabriel Lewit: Well, yeah, the takeaway here that Alexandra so eloquently put is that it doesn’t mean an IPO won’t be a winner in the future. Right? The next number one draft pick might be a winner in the future, but sometimes you need time, character growth, skill, training, development, a little patience. Right? And that can be more important than the hot IPO.
Steve Lewit: Yeah. The eye candy isn’t always the winner.
Gabriel Lewit: Yeah, no, not necessarily. Okay, and there have been number one draft picks that have fizzled out.
Steve Lewit: A lot.
Gabriel Lewit: Right? They’ve gone bust, gone boom.
Steve Lewit: Lots of them.
Gabriel Lewit: Just like many IPOs have. So that’s our number one takeaway here from the Knicks championship win.
Number two, be mindful of your portfolio allocation. And in the spirit of June’s financial planning month topic where we had recently talked about your portfolio’s allocation. I thought this was a good one, because the team allocation in basketball matters a lot, right?
Steve Lewit: No, explain allocation on a basketball team.
Gabriel Lewit: Absolutely. So basketball, if you’re not a basketball fan, has five positions, right? You’ve got your center, you’ve got a power forward, you’ve got a point guard, you’ve got a shooting guard, and you’ve got your… Oh man, shooting forward? I can’t remember, I should know that. I’m blanking at the moment. Okay? But yeah, those five positions are very, very important. You can’t really win in the NBA by playing five point guards. Okay?
Steve Lewit: Impossible.
Gabriel Lewit: Or five centers. Right? You need a really good-
Steve Lewit: Each one serves a different purpose-
Gabriel Lewit: Yes, each one has-
Steve Lewit: … in the game.
Gabriel Lewit: … a very important role in how basketball is played. If you watch basketball, it’s very much like a harmony, the way that all these parts move and work together. And that’s like portfolio diversification. Right? You don’t just want to have five high-flying tech stocks as your sole portfolio. That doesn’t provide you with any diversification and is probably going to result in you losing perhaps long term, versus a better, more well diversified portfolio. And if you can get really good portfolio construction just like you have really good team construction, you might be able to also win the investing championship.
Steve Lewit: Definitely. While you were talking, I was thinking, also there’s a time allocation for each player. Like certain players get certain times and certain times on the floor and certain times off the floor, depending on the situation. A good portfolio has different kinds of positions or asset classes in it that are performing at different times as well.
Gabriel Lewit: Yeah. I mean, people at different stages of development, you’ve got to get it all to pull together at the right time. Sometimes international’s hotter, sometimes international’s cooler, sometimes large caps US is better, sometimes it’s cooler. So having that right mix, putting it all together, that’s of course the challenge, but that’s also the objective of good portfolio design.
Steve Lewit: So be it.
Gabriel Lewit: All right. So the third item here from this article is, make sure you play the whole game, not two quarters, not three quarters. See it through till you’ve won the game, right? Don’t start getting lazy and phoning things in. Not saying that the Knicks got lazy, or sorry, the Spurs got lazy or phoned it in by any chance, but you can’t take leads for granted. You’ve got to be smart with your leads. You got to stay diligent and thorough. So, what does that have to do with investing, you might be asking. Well, if you’re ahead of the game, if you’re… I have clients just yesterday that we ran their plan based on how much money they have today and they’ve got retirement in the bag. All their money, all their-
Steve Lewit: They won the game.
Gabriel Lewit: The game has been won.
Steve Lewit: They’re in the locker room.
Gabriel Lewit: But all their money is very aggressive.
Steve Lewit: Yes. And why are they still playing the game?
Gabriel Lewit: And they do not, they are hesitating at wanting to de-risk any of their money right now. Right?
Steve Lewit: And what was the reason they gave for that?
Gabriel Lewit: Well, they want to make more.
Steve Lewit: Yeah. For what reason?
Gabriel Lewit: Because they want to.
Steve Lewit: Exactly.
Gabriel Lewit: But that could backfire on them. Okay? They could potentially risk the game that they’ve already won. And we’ve used this in football analogies, but it applies to basketball too, right? Where, is you want to play a little more conservative in football, you don’t want to be risking interceptions and gigantic throws when the game’s already won. In basketball, you can’t let your foot off the gas pedal either. But the key is, is when you’re in a winning position you got to play smart, and you got to make sure you do what you need to do to maintain the edge you’ve got and not go the other way and let momentum swing to the other side.
Steve Lewit: So, Gabriel, in one of the championship games, the San Antonio going into the third quarter was ahead 29 points. Speaking of not playing the game, guess what I did?
Gabriel Lewit: You went and got a snack?
Steve Lewit: No, I turned it off. Folks, I turned it off.
Gabriel Lewit: You got bored and went and got a snack.
Steve Lewit: I’m meeting my heart out and said, “they’re going to lose it.” I didn’t play the game to the end. And then I’m climbing into bed and I say, “I wonder what the final score was.” And I’m looking at my phone not wearing my glasses and it looks like one of… I said, “It looks like they won.” They couldn’t have won, they were down 29 points. So I missed the whole thing by not playing in the game.
Gabriel Lewit: Well, and I’m going to make this our fourth point, which actually wasn’t from the article, but I like it better, no offense, Alexandra, because I love your article, than your fourth point, I’m going to create our own fourth point, which is, if you are behind, don’t give up.
Steve Lewit: Absolutely.
Gabriel Lewit: Okay. If you feel like you’re behind on your preparations for retirement, you can’t do it, you can’t make it there. Don’t despair, don’t give in, don’t go see an advisor because you think you’re not there. Come see us. Let us help ensure we can coach you to a victory. Right?
Steve Lewit: Well-
Gabriel Lewit: There are things you can do, there’s actions you can take. It’s not too late. Double down, be smart. Right? We can help you get to where you want to be. Just like if the Knicks were down 29 points, you can’t give up.
Steve Lewit: Everybody thought they were going to lose except them. They had this belief that they never gave up. It was just incredible. And it’s such a story about not only investing, Gabriel, it’s about life, because we get knocked down and we get pulled up and we get knocked down and get pulled up. And it’s like it’s just part of what happens, but this idea is, I’m going to see my way through it. So folks, if you run into hard times, if you run it to medical expenses, if you run into all of this, I mean, that’s just part of the game. And folks like us are here to help guide you through that, if you need it.
Gabriel Lewit: Yeah. And the last lesson was patience. Patience, okay? It is an underrated part of building a championship basketball team. It’s an underrated part of investing. I mean, look, when your team drafts your number one draft pick every year, everybody can just, they’re itching for the championship. Every team wants to win the championship. The Knicks had to wait a few years.
Steve Lewit: This team was three years in the making.
Gabriel Lewit: Since your last championship.
Steve Lewit: 53 years ago, but this team was three years in the making.
Gabriel Lewit: Yeah, yeah. I mean, it doesn’t transform overnight. You’ve got to have patients, know that you’re on the right track, and then stick with what you’re trying to build and you will see the results come. And that’s better than teams that tend to try to win now. Right? A lot of teams, they try to throw all their chips right into the table here. They try to-
Steve Lewit: Well, they’ll buy the hot player.
Gabriel Lewit: Buy the hottest free agent, spend all this money.
Steve Lewit: Spend all that money, but those guys don’t fit into the team and the team doesn’t work together. And to win in basketball-
Gabriel Lewit: Pretty rare.
Steve Lewit: … the team has to work together.
Gabriel Lewit: Exactly. So those are our lessons, folks, and I hope that you found them maybe a little bit interesting.
Steve Lewit: Or a lot.
Gabriel Lewit: Or a lot.
Steve Lewit: Yeah.
Gabriel Lewit: Perhaps.
Steve Lewit: Perhaps.
Gabriel Lewit: And we’ve got just a couple listener questions here for you before we wrap up our show here for today. But yeah, I thought that was interesting. And congrats to your Knicks-
Steve Lewit: Thank you.
Gabriel Lewit: … on a well-earned championship victory.
Steve Lewit: I’ve worked so hard to get there.
Gabriel Lewit: You did. You did so good, Steve.
Steve Lewit: But I did persevere.
Gabriel Lewit: How many Knicks games have you watched in the last 10 years?
Steve Lewit: Well, here’s what would happen, I do watch the games. About the first quarter and I say, “They are terrible.” And it was no fun to watch it. I mean, just awful there.
Gabriel Lewit: Yeah, I feel you there.
Steve Lewit: Look at when’s the last Bulls game you watched?
Gabriel Lewit: Bulls were good for the first half of the season, then they sold everybody.
Steve Lewit: That’s right, yeah.
Gabriel Lewit: I didn’t watch the second.
Steve Lewit: And then you don’t watch. Right.
Gabriel Lewit: But now this year I will, because it’s going to be a great team. Be a great team.
Steve Lewit: Yeah. I think they’ll be a good team.
Gabriel Lewit: All right. So listener questions. Marie, this is an interesting one. Marie has asked, she’s a conservative investor but she thinks she… Let me try that again. She’s a conservative investor, but she thinks that she sometimes shouldn’t be conservative, as conservative.
Steve Lewit: Yes.
Gabriel Lewit: Okay?
Steve Lewit: Yes.
Gabriel Lewit: That was a hard one to say.
Steve Lewit: Could you repeat that question?
Gabriel Lewit: No, I’m not going to.
Steve Lewit: I didn’t think you would.
Gabriel Lewit: The question is, should she potentially, “Loosen up a little bit,” in her words, and take a little bit more risk?
Steve Lewit: Well, I would say, “Marie, why? Why would you want to do that?”
Gabriel Lewit: Well, there is sometimes truth to people being too conservative. I’ve seen it, I know you’ve seen it.
Steve Lewit: Yeah, but here’s-
Gabriel Lewit: Clients that have very little to no income need, 60 years old, 30-year time horizons, all their money in CDs.
Steve Lewit: Hey, so what? Some people like to walk, some people like to run, I feel.
Gabriel Lewit: Well, I’m going to politely disagree with you, Steve.
Steve Lewit: No, there’s no, she should be more aggressive. You are who you are. If she doesn’t need-
Gabriel Lewit: Well, I’m not saying… I don’t deal in absolutes, I’m not going to say she absolutely should. There’s always a personal preference, but let’s just use an example, Maria, because we have no idea how much money you have.
Steve Lewit: That’s the problem. How much money do you have?
Gabriel Lewit: Let’s say that you don’t need this money and you’ve got it all in CDs, and you’re 60 years old.
Steve Lewit: Good for you.
Gabriel Lewit: And that’s going to earn 2.5% for the next 30 years and stocks would earn 10% for the next 30 years.
Steve Lewit: Yeah.
Gabriel Lewit: You’ve done this. We talk about it all the time. You know how many probably tens of millions of dollars this person will leave on the table?
Steve Lewit: Yeah, but they’re happy. They’re happy.
Gabriel Lewit: Yeah.
Steve Lewit: How many people do we meet that have lousy portfolios that do it themselves or have all their money in CDs?
Gabriel Lewit: You know you’re trying to provide advice, right?
Steve Lewit: I’m telling people to be happy.
Gabriel Lewit: Okay.
Steve Lewit: Don’t chase something that’s not in your nature to chase. But to Gabriel’s point, folks, from a financial perspective, all right, I’ll come down to your level.
Gabriel Lewit: Thank you. I appreciate that, because I know you know this because we talk about this a lot.
Steve Lewit: From a financial perspective, being overly conservative for irrational reasons, and I think that’s the point, Gabel. If you’re being irrational about it, like you think you can’t afford to lose, but you do give away or run the possibility of giving away hundreds of thousands, if not millions of dollars that you could spend or give to your kids or give to charity. And I think that’s what you’re trying to say.
Gabriel Lewit: Yeah. And so that’s, I think what Maria might be asking. She’s thinking she perhaps shouldn’t be as conservative and the answer might be, maybe there’s a blend. Right?
Steve Lewit: Maybe there’s a halfway point. Right.
Gabriel Lewit: Maybe there’s a halfway point. So we call that bucket planning, and we might be able to help you with that. But yes, if you have too much money sitting too conservatively for too long, you are going to lose a boatload of compound growth over time. That’s just a proven fact. Whether you’re okay with that or not is a different story.
Steve Lewit: It is.
Gabriel Lewit: But it will financially cost you.
Steve Lewit: I submit to your take on this.
Gabriel Lewit: Thank you so much, Sir Steve.
Steve Lewit: Yes.
Gabriel Lewit: All right. The last question-
Steve Lewit: I don’t think we helped Marie a lot, though.
Gabriel Lewit: Maybe we did.
Steve Lewit: Well, we don’t know how much money she has. We don’t know how old she is or income is, and all that.
Gabriel Lewit: We know.
Steve Lewit: Okay.
Gabriel Lewit: We know, we said that. Okay, so-
Steve Lewit: Okay. You want to move on, okay.
Gabriel Lewit: Yes. We’re running close to our time limit here and I wanted to get to Ted’s question. Ted was asking about should he, he’s early 50s, okay? He wants to quit his job and start a new business, and he’s asking if it’s a bad idea to take money out of his retirement accounts with a penalty to be able to fund his new business because that’s all he has access to. Ted, okay. And he’s not happy in his job and wants to try his hand at starting a new business.
Steve Lewit: Well, Ted, how confident are you that your business is going to succeed?
Gabriel Lewit: This is one we could talk about for a long time.
Steve Lewit: For a long time, because if you need the money to start a business and you got a hot business and you’re confident, well, you got to get the money from somewhere. But if you’re not sure and you say, “Hey, I’m going to take a stab at photography and see if I can make it.” No, leave your money in the 401k or wherever it is. Don’t take it out.
Gabriel Lewit: Yeah. I had one client try this and I’m not trying to discourage you, Ted, and the business did not succeed and they did lose a good chunk of money.
Steve Lewit: A lot of money, yeah.
Gabriel Lewit: Okay. Others, of course, starting a business, you’ve probably read… If you haven’t, you should, but you’ve probably read the statistics on how many small businesses succeed and fail. I’m not trying to discourage you, but the key to success is having a great idea, a strong business plan, find mentors, consultants, really strategize. And if you really, really, really, to Steve’s point, feel confident in your business potentially succeeding or making you enough money to get you to where you’re comfortable, then that investment could pay off even if you have to take a penalty to do it. Okay? You could explore loans, but if the business goes under, you’re going to owe debt. Those are risky in different ways. So yeah, we could have a whole discussion about what goes into running or starting a business, that would be an interesting podcast article. We could work on that.
Steve Lewit: Actually, that would be great.
Gabriel Lewit: I don’t think we’ve ever done that. But yeah-
Steve Lewit: Let’s make sure we do that, because-
Gabriel Lewit: Yeah, Ted, that’s a good question.
Steve Lewit: On the surface, starting a business is easy, but maintaining and running it and making it profitable is really another story.
Gabriel Lewit: No, we don’t generally become full-fledged business starting consultants, but we can give you some general guidance on these.
Steve Lewit: We do help people.
Gabriel Lewit: We do. Can we afford it? But yes, you’ve got to think through your business plan, your costs, your expenses, your revenues, proforma projections, how you’re going to fund it, what’s the backup plan, the business plan?
Steve Lewit: Competition.
Gabriel Lewit: Competition. Yeah, the list-
Steve Lewit: Website development, social media. I mean, it requires a lot of skills, not just the fact that maybe you’re a good photographer.
Gabriel Lewit: But Ted, that sounds exciting. It’s whatever venture you’re pursuing, I mean, that’s how dreams are made.
Steve Lewit: Exactly, just-
Gabriel Lewit: But it comes with a little bit of risk.
Steve Lewit: … be careful.
Gabriel Lewit: Yep. Well, folks, that’s our show for you. We of course have so much fun with you here on every single show and episode that we have. Thank you for tuning in. Thanks for your feedback and comments about being entertained and informed by our show. We continue to get those. Please share with anybody else that you think might find these valuable or educational. As always, we’re here to help you with your financial and retirement planning with any questions you might have. Call us, email us, contact us anytime. You can reach us, (847) 499-3330, or go to sglfinancial.com, click contact us. We are going to bid you adieu.
Steve Lewit: Adieu, everybody.
Gabriel Lewit: And we’ll see you on the next show.
Steve Lewit: Be well.
Gabriel Lewit: Bye now.
Steve Lewit: Bye now.
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