Transcription
Welcome back to numberscream. I'm Tom Ellsworth, the BISD doc. And last week we covered IPOs, why it happens, when it happens, what the bankers get, and we took it through you to tell you why it happens and [music] when it happens and how they work it. Many of you love that. Thank you for the comments. And now we're coming back one week later on the fly to give you how the system works. We have picked five items to talk about that.
First of all, autopilot. I'm going to tell you who they are. They have 1.3 billion under management now. Amazing. And you can participate. The cost to invest is only a dollar. I'm going to tell you what that means and how it changed in 2019 to help the average investor on the street get in the game regardless of what you're investing in.
Then Gen Z, 95% of them are Roth IAS. Why are they picking that? It's the smartest choice. And why just Gen Z?
Then fund managers. You read about this fund manager managing an international fund, a domestic equity fund, a fixed income fund. Why is it that 79% don't do as well as just this S&P 500 index? I'll tell you why and how to play it.
And lastly, you versus the index. You're going to go on Reddit and you're going to pick your stocks, find your memes, join with Roaring Kitty, and go GameStop to the wall or pick pick. But why are you versus the indexes like the S&P 500 4.6% per year worse than the index over 20 years? It's because the indexes always win. And I'm going to tell you how all of this comes together and how you can play the game this week.
>> [music] >> Before we get into these numbers and how to play the game on Wall Street, let's talk about the most important game for you, your business. Go to the link below. You'll find BetDavid Consulting. We partner with small businesses, medium-sized businesses just like you in a variety of ways, including the exciting Vault Conference that comes up in September of every year to help you reach your dreams and achieve your goals. That's what we do in partnership with you, Bet David Consulting.
[music]
First up, autopilot. What is autopilot? Autopilot helps a pilot fly the plane without controlling it. Think of it as full self-driving in your Teslas for airplanes. However, what does that have to do with the stock market? Well, a guy named Chris Josephs in 2023 started autopilot. What Autopilot does is let you pick portfolio styles and then autopilot will talk to your brokerage account such as Robin Hood and now Schwab and some others so that you can say take $10,000 and go on autopilot using this model. And some of the models they use is like the World War II model, the White House quantum computing model, or one of my favorites, the Pelosi stock tracker fund. That's right. autopilot with the amount of money that you say to trade in your Schwab or your Robin Hood account will then mix that 10,000 up to be trading just like Nancy Pelosi is trading. So the Pelosi stock tracker is now the U stock tracker and it goes on autopilot to do it. And check this out. They have almost half a billion dollars in the Pelosi stock tracker from people like you and me that opened an autopilot account, connected it to the brokerage account, and then let it go so you could benefit the way other people will benefit. By the way, the Pelosi stock Tracker over a number of years is up 189% give or take. Now, those returns to now doesn't mean the returns are going to be there tomorrow, but autopilot is one way you could play the game with an amount of money and have it trade in the framework of the many options you have on autopilot. You can examine autopilot for yourself and see what you think of it. What you can see is a company that started in 2023 is controlling over $1.3 billion in all those brokerage funds for people like you and me.
Next up, cost to invest $1. What does that mean? Well, in 2019, the game was open up so that people could invest only $1 on the street. How did that happen? Well, in October of 2019, I believe it was, Schwab announced no commissions. Others followed suit very quickly, including Vanguard. And what did that mean? You could put as little as a dollar in a brokerage account to open it. Before that, you had to have like a minimum 5,000 in a brokerage account, minimum 10,000 depending on the firm you were working with. They said, "Nope, there are no minimums and there are no commissions." When those things happened, 2019 to 2020, the game opened up. And what does that mean? Well, something else opened up called fractional shares. So rather than pay $700,000 for one share of Birkshshire Hathaway, which what you'd have to pay today here in early 2026, you could say, "I only want $50," and you would get a fractional shares. So fractional shares meant you could now start buying and investing according to whatever decisions you made, whatever formulas you wanted to follow in the market. And you didn't have to have 5,000 minimum to open an account, and you didn't have to pay a commission. It all came home together. Well, what does that mean? That means that you could start buying, say, $50 a month, buy into an index where maybe one share of the index would have been $2,000. Well, now say 50 bucks a month at the historical average. After 40 years, the S&P, guess what? That would be $174,000 with the growth. What it also showed that getting in early and being enabled by these new tools was important. If you waited 20 years, oh, that's only 29,000. So, you can see the compounding that effect. It also matters when you start to invest. And earlier is better, as you're about to see as we dive in to the rest of the numbers, showing how you can get in the game.
[music]
Next up, Gen Z and how 95% of Gen Z IAS are Roths. Now, why is that? Simple. It's the best for taxes. It's the best overall with the best features. But it wasn't available way back when the boomers started investing. It came later. So basically, Gen Z of all the choices are choosing the Roth IRA, which is the best formula, the best composition, the best framework for an IRA, and they're choosing it. And as you go back in time, a little bit less millennials, a little bit less Gen X. That's because of the availability of it. So Gen Z isn't just saying, "Yeah, open me. IRA at Schwab, you could do that. They're selecting Roth, so they're well informed. And there is never a better time to open a Roth IRA than today, unless you're past 60 years old and then some of the tax benefits go away. But the earlier the better to open it because the contributions are going into Roth framework, which has certain tax benefits. And I'll do a deep dive on what IRA is what in the future, but as right now, this is good news that Gen Z is opening it. If only 95% of all Gen Z were opening an IRA. That's a topic for another day. But you should be encouraging yourself, your brothers, your sisters, your nieces, your nephews. If you don't have an IRA, it's the one thing you can open today and it will grow tax-free. And if you're under 60, select Roth.
Next up, fund managers versus the S&P. 79% lost in 2025. What do I mean by that? If you take a look at buying maybe SPY, that's one of the many indexes that covers the S&P 500. And I believe SPY is State Street. I'm not endorsing that one. I'm using it as an example. If you look up S&P 500 ETFs, it'll give you a whole list and you'll see SPY's on that list. So, say you buy one of those and you buy and hold or you run around like some of these fund managers with large cap funds and domestic funds and trying to go do it. Check it out. 79% of those that were large cap funds didn't do as well as the S&P 500 index funds. And 92% of those that were operating and managing domestic funds, they didn't beat it. Which means for better, for worse, for richer, for poor, in sickness and in health, the S&P 500 can't be beat. This reminds me of something that was in a movie. Now, movies usually take history and they bend it to make a story and a narrative in that particular movie. But in the original Wall Street by Oliver Stone, Michael Douglas portrayed Gordon Gecko. And Gordon Gecko was a villain. But he said something interesting. Ever wonder why fund managers can't beat the S&P 500? Because they're sheep. And sheep get slaughtered. And you know what? That may have been Hollywood. It may have been a quote from a movie, but it is shown to be historically accurate as we've looked back at this. And guess what? Don't be a sheep. Be careful. Be well researched. And look at the facts and data as you make your decisions.
[music]
Next up, you throwing darts at a board or listening to tips versus the index funds, you'll be 4.6% worse. Here's how that math works. The average index funds apparently over the last 10 years have been at 7.5%. The average throwing darts at the board, moving in, moving out. If you took your total return, it's 2.9%. The difference 4.6%. In other words, 4.6 is what you lost. Darts at the board, moving in and out, making a lot of trades, not on a strategy. And if you have a strategy, it turned out to not go so well versus picking the index funds. Take a look at this. We found that seven of the 10 best days fell within two weeks of the 10 worst days. Let's say that again. If you're moving in and out or throwing darts at the board, if you stayed fully invested with 10,000 in the S&P 500 from 2003 to 2022, about 20 years, you made 64. 10 became 64. But if you miss the 10 best days, you only make 29. Hey, I doubled my money. But look what you missed. It could have been 6x versus 3x, almost 3x. And seven of the 10 best days for ups. Big pop today on the S&P. Big jump in the market. Big reaction to the war being over. All of those days were those big pops. Seven of the 10 best days fell within two weeks of the 10 worst days. In other words, you thought things were going to hell, but it turns out they popped back. And when you stretch the line of time, you have a steady 7 and a half% gain going on the index funds. Now, I'm not saying that's the way it'll be tomorrow. And there's not going to be a market share that happens on your 59th birthday giving you very little time to retire. That's not what I'm saying. And I can't predict with accuracy as better than anybody else. But the facts show investing early, investing on index, and staying calm usually works. Are there great fund managers out there that may beat that? And your uncle happened to have one of them when he sold his lumber business when he was 40 years old. Yes. And there's examples everywhere because remember 79% of the fund managers lost which meant 21% of them are out there beating the index. So are those that beat. But on averages if you're not well researched and you're not really super intentional and super careful, this is where you can end up versus here. Again, I'm not an RAIA, registered investor advisor. are not giving you advice. I'm looking over the course of time and saying if you're going to be in the game and playing the game, you should be informed. And today's episode of Numbers Scream was just to run through these five elements of playing the game. I built a small chart to kind of tie all of this together. First of all, autopilot copy insiders. For only 100 bucks a year, you could get an account and copy with the insiders like the Nancy Pelosi stock tracker. Then fractional shares, no commissions, and no minimum like five grand to open account lets you get in the game or you can participate. And if you're young enough, a Roth IRA gives you 40 years or 25 years or even 10 years of benefits under a Roth IRA, which is far better than traditional IAS. Finally, remembering that the index funds beat the fund managers 92% of the time or 79% of the time if you're talking about domestic or large caps or things. Everybody seems to get beat. And lastly, not panic but staying invested. Now, you say, "I really want to play some meme stocks. I want to buy a little bit of crypto." How about set up stability in your IRA and set up a stable plan? Maybe tie it to some formats out there. There's some modern portfolio theory which says take your age and do some things. But if you tie index funds and put some things together, you're probably going to put yourself there's no promises of course probably put yourself in a good place and then say this over here maybe this is some play money. This is something I'm going to buy crypto or I'm going to do this. That is actually a diversified theory because you have low risk or things that have been historically low and then high risk or things that today are judged high risk and you put it all together and put most of your retirement here, a little bit here, a little bit here. That is diversified portfolio theory. Just make sure that you're well informed and smart every step of the way. That's this week's numbers scream. Five elements about playing the game on Wall Street. What do you want to hear about next week? Leave a comment down below. Let us know what you think of this episode or give us ideas. We'll watch and read all the comments. The good, the bad, the ugly, the snarky. We watch them all because we listen to you. Until next time, I'm Tom Ellsworth with the Bisdock and I hope I left you better than I found you.