 Think Tech Hawaii, civil engagement lives here. Hey guys, we're alive here. The Prince of Investing, which I'm your host, Prince Dice, coming all the way live from the beautiful state of Denver, Colorado, even though right now we're live in Hawaii, but you guys stay tuned. You guys keep it locked right here, right now. We're going into another amazing, great episode, and we're still having that cancelled. So this is the thing guys, as you guys are sitting in the description box, we have a very, very great topic today, but wherever you're catching us from, if you're catching the playback or you're catching the live feed, podcast, or whatever it may be, we're going to be talking about the next market crash. What is the next market crash? When is it possibly going to be happening? This is a big question on everybody's mind, so we're going to be talking about that. And I got a very, very special guest. If you're a fan of the show, and you've been following the show, you've seen them on here a couple of times. You know, of course, I had to bring in a very special guest, 40-year Wall Street veteran, James Fortland. He's called in. He's seen some great times, some bad times in his career, being an investment advisor, being a right there on Wall Street. So that's a lot of expertise we're going to come in with that topic, so you guys keep it locked. And it's always. I don't have a lot of time. I definitely know you guys and girls don't have a lot of time, so we're going to jump straight into it. So without further ado, let me introduce my guest. Mr. Fortland, how's it going, sir? How are you today? I'm doing outstanding, I'm doing outstanding. We know you all the way here in New Jersey, you know, right there, right there by Wall Street, you go on Wall Street all the time, spend so much time there. And I know you give amazing tours, because I took one there two years ago, myself, when I was on Wall Street. And you have a lot of history, a lot of knowledge on Wall Street. And I noticed that you were saying that the number one question you always ask is people saying, when is the next market crash, right? Because you give that financial crisis tour, people are wondering when is the next one? What do you have to say about that? I would say right now I hear that question more than any other time since I've had anything to do with the business. And I don't know whether it's because the media is so negative or whether it's because people see guys like Ray Diallo, who's a very famous investor, a billionaire, he's always on TV saying, this reminds him of 1938 and things like that. I think that scares a lot of people. I'm not sure the reason, but this is what I get all the time. And what I'm here tonight, really, to talk to you about is to tell people that, yeah, the market goes in cycles. And yeah, we're going to have a crash. And we're probably, you know, we've had, I remember 87, I remember 2000, I remember 2008, I've been through a bunch of them, and I've been through some minor ones. People even older than me can tell me stories about the 70s, like in the middle of the 70s, during the oil embargo and during Watergate, there are also sort of crashes or really bad markets. What a lot of people are worried about now is they hear, oh, we have a lot of debt. Interest rates are coming back up. I think mortgage rates hit a seven-year high. People are concerned that the Federal Reserve had been printing a lot of money for a while to get us out of the 2008 crisis. And now they're starting to sop up or sort of slow down their printing. I hear talk about the sort of an inverse yield curve where the short-term rates are higher than the long-term rates. But I'm here tonight, really, to try to reassure people. First of all, what you have to do is you got to look at any market declines as opportunities. In the long run, for most non-professional investors, if you just ride the market out and you keep a regular, regularly reinvesting or dollar-cost averaging like I hear you talk about all the time, I think you have very little to worry about. It's like, you know, you go to Macy's and that coffee pot you want is on sale. Well, it looks a lot better at $30 than it did at $150. And this is what, unfortunately, with the stock market, this is what people get scared and they don't act or they stop acting. I would say right now the way it looks to me is we're still working out the effects of 2008. A lot of people call it a credit crisis or a real estate crisis. I think more credit, I think it was just a credit crunch was more to some degree. It was like a breakdown in the entire credit system. And I think that we have a lot of hangover from that time that when President Obama came in at first, I think he was trying to reassure people and make people feel confident and make people feel safe. You know, as I do, safety often eliminates a lot of opportunities. And so we had a kind of a very flat market. Yeah, people will go, oh, well, from the low, it was up this much or whatever. But the reality is the market really didn't move a whole lot for probably really about 10 years. It didn't, it wasn't, it didn't move a whole lot. Now we have a new sort of a new regime in town with some new ideas. And we're trying to unwind a lot of the problems from 2008. And so there's a lot of deregulation. There's tax cuts. Yes, interest rates. The Fed is right now very concerned. This is another thing that I think scares people all the time. Every time they have a Fed governor on TV, the Fed governor says, well, the market, the economy is racing along and we have very low unemployment. And it's putting a lot of inflationary pressures and we're going to have to start raising interest rates to kind of slow things down. And I'm here tonight to kind of, like, dissuade a lot of these things. First of all, with unemployment, you have to remember we had a very big, we had a big level of non-participation in the workforce. Probably the highest level of non-participation since the 1970s. And now with a lot of millennials, because they grew up in kind of a recessionary environment, they're very slow to turn to the workforce. So what I might have done when I was 16 or younger, I had a paper route and I caught loans and eventually I was a kid and I worked a lot and did things. For a lot of millennials, they're doing that when they're 24 or 25 instead of 17 and 18. And I'm not trying to be negative on millennials, it's just a different time. And I think they're just going into the environment. I worked during the 70s, things were bad during the 70s. And probably a lot of my peers did not get involved and they were also late to go into the workforce because there weren't jobs. And it was like a hard time and it was, things weren't great. I grew up a little different because I kind of was in a situation where I had to have money, so I just needed to work. None of these things were really that relevant. So that's why. The other thing is interest rates, like we see them going up a bit. Let's face it, they were below the mean. They were very low for a very long time. Lower than the mean has been for probably the last 50 years. And by them raising now, we're only coming right back into the norm. And we're still really not there yet. So I'm not really sure the interest rate increase is going to have the impact. I also, you also see me hear a lot about the Fed unwinding its balance sheet, which is a really fancy way for to say that they're not going to print as much money anymore, basically. And I think that when you go through a period of a lot of pretty money like crazy because that was the only tool. They were basically pouring money at people and hoping people would spend it. Unfortunately, when they do that, the net cause usually is that the money goes into the stock market. It kind of inflates as financial assets go get inflated really. I think that that also is creating some unusual circumstances with the yield curve. A lot of people are very concerned about this inverse. So what does that mean? When long-term rates are lower, because in the long run they perceive a weaker economy coming. But in the short term, rates start to go off because they're trying to slow the cool off. The Fed always uses these euphemistic words and say, well, we're trying to cool off the economy. I just think that we went to a period of basically 10, 12 years where you had no growth in income for most people. In fact, you had a decline probably in the time from a- No, I'm not doing- Yeah. I had a one question. We used to be talking about the yield rates, right? The two-year to five-year to 10-year. Why did they advertise in everything? Why are the yield rates so important to the stock market? What? I didn't see this. In the long run, you've got to remember a lot of borrowing money and the ability to borrow money inexpensively, like, for example, if I'm short of money, now, this probably wouldn't happen too much. It happens- But it still happens once in a while. Something might happen. I'm a little short. What do I do? I say, hey, Mark, did I borrow some bucks? Right? But if General Motors needs money, they have to borrow money on a huge scale. And the price of that money, when it gets more expensive, it digs into their profits. And then it also may dig into their decision, because they may say, hey, at this level of interest rate, we can't make the return, so it's not worth reopening that- reopening that factory in Detroit, which would hire hundreds and hundreds of people. We're just not- we're going to put that off for another couple of years until it's ready. If the rates are low, there's this view that, hey, it's cheap to borrow, the risk premium is lower. It's much less risk for me to borrow that money and then open that factory up and start making cars then. And so it's often- I think a lot of novice investors get very wrapped up in this stuff because if you watch, like, CNBC and things, they harp on all this all the time. For most of us, what's the issue, the real issue is to spend less money than we make and to take that difference and put it invested into our future. And for a lot of people, that means buying stocks. And for a lot of us, what do we do? We make a plan. Well, what really makes that successful or not successful is whether we follow through with that plan. If I say every month I'm going to put $100 in the stock market and buy an index fund, I need to stick with that rain or shine. Whether those interest rates go up or down. Go ahead. Now, now, James, I have a question I have before, a listener that's listening right now, they're like, okay, well, I'm a novice investor. I'm looking to invest, okay, this market is going to crash. So what if I just wait until the crash comes, then I'll just buy it. What do you have to say to that person? Well, first of all, like, when you hear guys, like, there's a lot of- like, I see these guys and I get very frustrated. Like, you've visited, you went to Berkshire and, you know, you see Warren Buffett and he's the man. But when a guy has a billion dollars, he can sit or he can- he looks at things a lot different than when you have $100 in your checking account. Like, I got to pay the rent at the end of every month. And so a lot of people, Warren Buffett, like, is kind of beyond that because he's made a certain amount of money. So he worries about, you know, whether to stake his medium rare, like, you know, he's got other issues. And so he gives a lot of advice based on the idea. I have so many people, when I was a broker, used to say, well, that's great for Warren Buffett. He has a billion dollars. He can hold his stock for 15 years. I got to pay college tuition for my kids in two years. What am I going to do? But I think for a smaller novice investor, right, when you start going at the beginning, the reality is, if you miss, like, a lot of people, you hear these things, oh, if you miss the 10 best days in 10 years, your return is greatly decreased. Well, when you're dealing with smaller amounts of money, a lot of that doesn't make a whole lot of difference. And I would postulate that if you miss- if you're a really bad timer and you miss the 10 best days and you miss the 10 worst days, it's all at the same time. You'll probably end up with a pretty decent return over the long run. It's not going to make a whole lot of difference. And a lot of the really good, like, when I looked back at the numbers and you humanize them, for example, after the 87 stock market crash in 87, what were the 10 best days in 87? Well, three of them came two weeks after the stock market crash in 87. OK? And then you were almost back. You weren't quite back to the lows on the Dow, but you were pretty low once again, even after the market drifted back down again because it recontrolinated before it finally got going. So I think for a lot of investors, like smaller investors, don't have to smart yourself. The game is in the plan. And you know what? If the market crashes tomorrow, things are a lot cheaper, that $100. I think I was telling you one time when I was on here, I had a stock that in 1987 was $177 to share. And it paid a huge, it paid about a 4.5%, 5% dividend. OK? I reinvested the dividend and I was in a stock purchase plan for that bank. When the market crash in 87, that stock went to $7. And the dividend was $4. It was huge. And guess what? I didn't know any better because it was too much of a hassle to pick up the phone and slow down the dividend reinvestment plan. I just left it. I didn't bother. I didn't even look at it. And you know what? When it paid those dividends, it bought a lot of shares. But within six months, that stock was all the way back up to $180 a share. And the time when it was way down, the amount of shares I added was confirmed. Me, at the time, was an enormous amount of leverage. And then that stock went up and up. And after that, it went up and up and up and up. And eventually, it got taken over by another bank. And it was like, you've got to be, when you're a new investor or an experienced investor, and some people always say it's time in the market. To me, it's even simpler than that. It's stick with the plan. Create a plan and stick to it. And don't let anything bring up. Sorry. And like you said, that's great. I definitely agree with that. Get in with the plan, even if you got with the index and just had the dividends reinvested. But the thing about it is, the person that you mentioned, beginning at Ray Dalio, people read Ray Dalio's latest book, Principles. And they say, wow, he's like one of the most successful hedge funders, managers of our time. The guy is a total genius. He's a genius. And you know, I'm reading his book Principles lately, as of now. But listen, he turned around, he says, hey, I got 40% of this market. I'm doing this great. People are like, well, I want those returned. That's what I think investors, who would you say to that guy? I would tell people that, what again, and I bring this up all the time, this has become, was sort of my mantra in the business. You get many people who get a very hot hand through certain market cycles. And you might get really smart guys like Ray Dalio, who might even go 20 years as a hot hand. When I first learned about the stock market, there was a guy named Robert Preckler. Robert Preckler made a chart in the 60s that charted the Dow all the way up to 1987. And he was within 20 points every single day, that whole entire period. I mean, that's a long run, that's over 20 years. And then the market crashed in 87, which he predicted, but then he never got on the horse again. He was never as good as he was before the crash. But so it's hard to find a guru. Yeah, you can find a guy like Buffett, but let's face it. I mean, when I look at Buffett, and I look at some of his companies, I say, wow, he's a brilliant guy. He's a very smart investor. There's a lot more going on than what he like this folksy sort of buying holes, and I own a lot of stock, and I just sit with it, and I buy things I know. Well, I know a few things, and I know when I see stocks, companies like Gillette, which he owns a lot of, they charge $30 for a razor blade. I'm not buying a $30 razor blade no matter what. So if I'm not buying it, I think a lot of other people aren't gonna buy it. And I can afford to buy a $30 razor blade, but there's no way I'm gonna buy it. It's not even in the realm of possibilities. And so, sometimes I see things, and I say, well, in the long run, that might end up being a problem. Maybe not in my lifetime, but eventually it might catch up to that, or it may not, they may adjust. Somebody at Gillette may say, hmm, these razor blades are really great, but they are kind of expensive. Maybe we need to, we gotta figure this out. This is, we might be pricing ourselves out of our own market. And not, because they're not great razor blades, because they are, they really are great razor blades. But it's just there, I can get one that's slightly, like a little, not quite as good, for one-tenth of the price. And so, what I see is what you really should look at is, well, it's hard to find somebody like Buffett that's almost always right in the long run, or right continuously for 20, 30 years. You can always, a lot of people who are wrong every single minute of every single day. And so for small investors, what I would do is I just watch what they knew. You see, if everybody says the market, first of all, markets don't crash and they get announced ahead of time on CNBC. There's a guy named Jim Rogers, who I often don't agree with stuff. He says, yeah, he's another very smart, long-term and been very successful. And he always says that the next catastrophe comes from someplace you totally don't expect. Like in 2008, what really triggered it? Iceland went bankrupt. Most people I know don't even know where Iceland is, let alone, they didn't know Iceland had a bank. They didn't know Iceland had a stock market. They didn't know Iceland, they don't know anything about it. They think there's a few volcanoes and it's a little cold, like in like this. They don't know anything about it. So, these things always come from places you don't expect. So instead of worrying about things that you have no control over, focus on things you have control over, which is regularly investing, I can put $100 a month everywhere, or $200 or $500 or whatever it is, right? And then also just recognize or look at the media. They're the perfect barometer for what not to do. What did they say on election night? Hillary Clinton was gonna win by a landslide. That didn't quite work out the way we expect it, right? Then they said Trump's gonna get elected, the market's gonna crash. It was up 6,000 points in 13 months. Another winning prediction. Like, and I'm not trying to promote Trump, I'm just saying like, look at the media, they're like your weather vane for what not to do. Like if they're telling you the market's gonna crash, I would probably be buying like crazy. Like, and to me, the more negative they are, the more positive I am. What my barometer right now is, what I watch every day is the day that CNN announces that they love Donald Trump is the day I'm gonna sell everything and leave the country. Then I know it's gonna crash. Then it's time, then the market really is gonna crash. But because they're so empty and they've just continually been wronged. So like they're wronged, their batting average is like 1,000%. Like we used to say on Wall Street, even a broken clock is right twice a day, they're not even right twice a day. They're never right. So as a small investor and you know another market's gonna crash, it's gonna happen. What would you do? What would you say, hey, if there's some ways I can prepare for it, would you recommend taking some money hiding it in bonds? Would you kind of like, hey, send them some cash in order to be able to take advantage of the down market? Is there anything that you would say to like, hey, well, is the way I can kind of move around my portfolio as an investor to prepare for another, you know, down. Well, I would owe this first of all as any, when you first start, you wanna build up an emergency fund. I think almost everybody will tell you that. So you wanna have that extra money, whether it's because you need new tires on your car or because the market crashes, that's an emergency. Some people would tell me going on a vacation or Hawaii would be an emergency. That sounds like a pretty good emergency to me, but I have a great pull to trigger on that one. But like, so unique, that's first. And what I would do is if you see these huge sell-offs, you might say, hey, this month, or you know what I'm gonna do? I'm gonna not buy, I'm not gonna, I'm not gonna have my Starbucks every day for a month. That's gonna save me what? A couple hundred bucks right there. So you can generate that money if you're really happy in the short run. Maybe I don't wanna give up Starbucks every day for the whole year, but for 60 days, I could not have my Starbucks, I could rough it. And I'll just go and I'll just make coffee at home and I'm not gonna have my fancy Starbucks and look at all the money I'd save, right? There's my extra 200 bucks to throw in a market or whatever. I think you have to just be convinced. For example, we all know that we're eventually gonna die, right? And what happens if you die tomorrow? Well, that would really be bad. I wouldn't want that to happen. I wouldn't wish it on anybody. But it could happen. But I'd say the probability is not that high. That's the same where you look at a market crash. Yeah, I'm sure we're gonna have another market crash. Is it gonna be tomorrow? I doubt it. Is it gonna be in the next eight years? Probably. Is it gonna be terrible? Is it gonna be like 87 where we're gonna recover from, be terrible and recover? Or is it gonna be like 2008 where it's gonna kind of drag and dragging it? I don't know, I'm not sure yet. But like, so as an investor, we have no control over that. So why worry about it? I can only look, what I can control is my long-term goals. I know what I want, I know that in 10 years, Hawaii is one of the only states I've never been to. So I'm gonna go to Hawaii within the next 10 years. That's one of my goals. It's not gonna happen tomorrow. It might even be the next time we do a show, I might be there. Or I might go to Colorado and visit you there. I was actually there last year at this time. So I was there, I was there before you were, yeah. I went on it, I was invited to a conference, I went to the conference. And I spent like a whole week in Denver. And so I was there. But hey, so, I just think you gotta look at it that way. Like, I had a friend who, a former business partner, he was probably pushing 70, but he was in a really good shape. He worked out, he ate right. He drank and did stuff, but always moderation. He was always very good. He was very health conscious his whole life. And what happened? The blue, he gets cancer and he dies like in two weeks. And, but he never, like, on the other hand, I know people who live to be over a hundred. And they smoke a cigar every day and they drink a martini every day. And yeah, they weren't okay health, but they really never gave too much thought about it. And they just lived their life and they did whatever they had to do with me. They did the best they could. And you know what? Like, I'm somebody, if you say, hey, tomorrow you're gonna lose a lot of your money and have much money. When I was younger, like there's been times in my life I haven't had any money. So I just, I just adapt. And then, and then there's other times when I have a lot more money. So, but I, like you just, you just have to be, you have to be brave. You have to, you have to have a little faith like that you're gonna live tomorrow. You have to have a little faith that your investments in the long run are gonna work out. And if you look at the numbers over a hundred years with all the ups and downs, the returns are pretty decent. I mean, there's no other way. And I just think trying to mark a time, especially when you're, you know, you're trying to match yourself against people like Radiollo, you're not, you're not needy. He's in, he's genius land. No, I'm just, we have this stuff to question. Well, if you're saying, hey, just take my money and throw it into the index. What's the purpose of an investment in that? Oh, that's a good question. Well, I actually, a lot of times a good investor advisor is the guy who calls you up and says, listen, the market's down. You need to buy more stocks. Don't be a fool. Don't chicken out. And when you call screaming, go, oh my God, my stock is down. I want to sell everything. I'm gonna run away. And I, he says, no, don't do it. That's his purpose. More than anything, his purpose is to hold your hand and think of it this way. When something goes wrong, you can blame it all on him. And then they go, right, you can say, look how smart I am. I'm gonna be like, we're about there, right? Like, right? Exactly. You've got a very important role there. But a good investment advisor is going to be somebody who's gonna grab your hand and pull you in those tough times and say, listen, don't give up the ship. We can do this. And you, like, I can tell you in 87, people were calling me up, telling me they were gonna kill me. They were ready to go for it. Wow. And yet we survived. And then six months later, those same people were hugging me and buying me boxes of cigars because suddenly everything was back up. And like, there was love everywhere. There was so much love, I couldn't take it. What's your favorite state? My favorite state. Oh, boy. Oh, yeah. Yes, yes, your favorite cigar. Oh, my favorite cigar. Well, I'm like, I'm kind of a wimpy cigar smoker. So I generally air towards the mild stuff. So usually things with a Connecticut rapper that are kind of mild, like those mac and noodles are great. I mean, yeah, I've smoked Cuban cigars and I swear, like, before they were lit. But I used to have a cigar company at the client. And so that, you know, I used to smoke a lot of hand-rolled stuff. I don't do it as much anymore, but you can still find those places in New York and it's really cool to see somebody make your cigar for you and then you smoke it. Like, that's like one of the coolest things. And I like the socializing is if you go and smoke a cigar anywhere in the world, whether I'm in Hawaii, I'm in Colorado, I'm in New Jersey, I'm in New York, you can go into a cigar place, light up a cigar and guys will bond with everybody in there. Like, it's this weird, like, we all smoke cigars and especially nowadays it's kind of evil. So you're kind of like in this little club, like giggling about how you're smoking cigars and everybody in the world. It's your terrible people or stuff that's gonna, you know, it's, you know, it's like anything else. Like, if I thought I was gonna smoke the cigar and die tomorrow, yeah, I wouldn't do it. But in the long run, I smoke one or two a month, it's not really that big of a deal. At least it doesn't appear to be a big deal. Now, of course, if I get sick, I mean, it's a double one. Right? As an investor, it's the same thing. You got it. Before we get out of here, we got to get rolling because at that time again, but what is something that you would like to leave with everyone out there? Or what is something that, you know, to that person or the people that's gonna come and, you know, take the tour on Wall Street, the financial crisis tour, that's asking you that question. What is something you want to reiterate to them that you want them to take away? Oh, they come to visit me and they do the tour, right? What you need to do is you study old crises, and then it helps you deal with the present day crisis. The crisis from 2008 is not gonna be repeated, it's gonna be a different crisis. But if you know a lot about it, it's the same things happened in 2008 as with two of bulbs in the 1780s. It was the same thing. And interesting enough, there was actually a banking crisis in 1792 and Alexander Hamilton led the first bank bailout and it was very much done the same way that we handled 2008. And so, once in a while, you do get a repeat, but not that often. And I think for most people, if you learn, then you say, okay, I know what's gonna happen. Too much speculation over investment, things gonna blow up. That's bound to happen. When it happens, this is how I'm gonna, I'm gonna skip my head cool, I'm gonna put my head down and I'm gonna just buy right through this and just stick to the plan and I'm gonna come out of this thing, smell like a rose. If I panic and get out like in 87, you only lost money if you sold the stock, right? If you didn't sell the stock and you waited six months, you were like nothing ever happened. In fact, you were probably ahead of where you were at the top. You're already a new high. So, I think my point is like, again, I'm gonna go back to this thing. We don't think we're gonna die tomorrow. The same goes for investing. We don't think the market's gonna crash tomorrow. It might, but I doubt it. So we have to just, we have to take every day on faith. We can only control what we can control. I can only control what I can put in the market every week. I can only control what goals I have. I can focus on your career, make more money, invest more money. Like, focus on your life. Take care of your wife, your girlfriend, your kids. Like, focus on that stuff. That's, investing gives you the opportunity to do more of those things. So, James, as always, thanks for having you on. Thanks for you coming in. As always, guys, this is the Investing Show. I'm your host, Prince Dice. Coming all the way live for the viewers of the Democratic Rotto. Until the next video podcast of Cartoon, or whatever you see me do, praise the round the globe. Peace, be safe, I'm out, and thank you.