Joseph Hogue (03:01):

One of my favorite strategies for investing, really putting together maybe, actually it’s about 60% of my own portfolio, 60% in just basic ETFs, funds that cover even the asset classes. So, I’ll have a dividend fund in there, I’ll have a stock market fund in there, a bond fund, a real estate fund. So, covering real estate stocks and REITs, really takes the stress off of investing, having a large part of your portfolio in those, just those core ETFs, those core funds. You’re going to get the market return on those assets and on those diversified funds. You don’t have to worry about it. There’s sometimes months before I’ll even look at that core fund part of my portfolio because I know they’re diversified. I know no news or no single stock is going to destroy that fund.

Joseph Hogue (03:42):

And then with the rest of the portfolio, with the 35, 40% of your portfolio, you can invest in a small handful of individual stocks, right, and since you are limited to how much money you have left over to put into those stocks, then you’re very limited to the number of stocks you can invest in, and the time it takes to follow those stocks, to analyze them, and to keep up with them. So, it’s a great way to get the market return, make sure you’re getting the market return on the core part of your portfolio, still give yourself a little bit of a upside potential on those individual stocks, but limit it in a sense that you don’t need to always be looking for that next hot stock to invest it. You’ve got maybe 10 or 20 stocks at the most, individual stocks that you can buy and hold forever.

Joseph Hogue (04:21):

And then finally for picking those individual stocks, I like to follow kind of a top-down approach, right, going with those macro trends, those long-term forces affecting the market, changing the world in which we live in, and really using that to drill down into those individual stocks.

Clay Finck (04:35):

Yeah, you’re definitely taking more of a diversified approach. You mentioned a number of different asset classes, and today, we’re going to be talking a lot about kind of your individual stock investing strategy. I’m curious, you mentioned looking at those long-term macro trends. Has your strategy changed at all over the past say six to 12 months with the higher inflation we’ve seen and just the overall stock market correction that’s come along with that?

Joseph Hogue (05:03):

I did position out of some of the bond portion I did have, or 10 to 15% of my portfolio in bonds for that safety, but as you start seeing the inflation creep up and you know the Fed is going to get aggressive at raising those interest rates, then it was just a recipe for disaster in bonds and in bond funds. So, I did reallocate some of that money towards a little bit more bond-like investments, like I said, tax liens, the I bonds which we could talk about as a great investment right now, as well as some of those more bond-like stocks, like consumer staples, utilities, things like that. So, I did position out of those. I will say now as we move further into 2022, it looks like interest rates on the long end of the curve have kind of stabilized a little bit. So, I think bonds are going back into a little bit more attractive investment, going to be providing a little bit more of that safety that you traditionally get from bonds.

Clay Finck (05:50):

You have a very popular YouTube channel. I had the opportunity to check out some of your videos, and you’ve mentioned that you expect the inflation rate to come down a little bit, maybe not down to the 2 or 3% range, maybe call it 5% going forward. How can we as investors benefit from that trend if we expect inflation to come down a little bit and stabilize a little bit higher than the 2 or 3%? Will that lead to some sort of sector rotation, say, benefiting value stocks from the growth, or how do you think about projecting that forward and maybe that trend in the future?

Joseph Hogue (06:25):

We did start seeing the consumer price index, so that CPI report, the main consumer inflation report, we did see that come down just very marginally there in April which was recorded here in May. We are expecting that to continue to come down just slightly over the next few months, and I think really that does provide some kind of a modest relief rally on stocks in general. It’s really been the main driver of higher interest rates of the Fed having to raise its rates by half a percent each meeting. So, if we do get that kind of continued moderation in inflation which is expected, then I think you do start to see a little bit less pressure, downward pressure on stocks. I think that plus just the overall fact that it is still a strong economy, the consumer is still spending, bank accounts are still rising, and consumer credit, consumer spending is still increasing. So, I do think we get some kind of a relief rally here in the summer.

Joseph Hogue (07:16):

That said, now as you mentioned, I do expect inflation to be higher, not necessarily as high it is now, but still 4 or 5, 6% over the next year, and that’s just going to push the Fed to remain fairly aggressive, right? It’s still over its projections for the next year. I think the market is pricing in very much the likelihood of a recession over the next 12 or 18 months. I think that’s very likely the case. So, I do think after you get that, maybe that quick bounce here in the summer, get a little bit higher on some of your stock picks, I do think you should start looking towards stuff that is going to protect you in the event of recession, right, because I do think as we move into later into this year, into 2023, and we start looking at a little bit slower economic growth and eventually a recession, I do think the market adjusts back down for that.

Joseph Hogue (08:00):

I’ve actually been looking at a lot of research lately on the channel, looking at what stocks actually did in October 2007 through March 2009, so really the worst part of the last recession, and some really interesting results, right? The individual, the stocks auto parts actually did really well. So, you’ve got things like Advanced Auto Parts, you got O’Reilly that actually held up really well, and there’s some intuitive reasons for that. If people aren’t buying new cars, then they’re looking at fixing up their old cars. Drug makers, a little bit more obvious did well, Gilead sciences, Abbott Labs, obviously you have to buy your heart medication whether the market is higher or lower so those did well, and of course the discount stores, things like Dollar General, Ross Stores all did well as consumers shift their spending from the higher end stuff down into where they’re going to get more bang for their buck, right? I think you do start looking for stocks in the consumer staples, utilities, healthcare even to protect yourself a little bit from what we could see as another leg lower in the markets into 2023.

Clay Finck (08:58):

You mentioned a potential recession coming up, and we are seeing weakening consumer demand. Just this week, we saw Walmart and Target earnings, both stocks are down over 20%. So, it’s going to be just an interesting road ahead to watch as investors that are active in the market. The Investor’s Podcast Network was founded on studying Warren Buffett’s principles of value investing, and our flagship show, We Study Billionaires, they recently added William Green to the team, and he just interviewed some of these fantastic investors, Bill Miller, Joel Greenblatt, Ray Dalio, and the list goes on. So, I’m curious, you have this really balanced approach. Who are some investors that have had a profound impact on your development and how you developed your own approach?

Joseph Hogue (09:47):

Oh, well, obviously there’s the big ones, the Bill Millers and Peter Lynch, great book by Peter Lynch there, of course, but I tend to go on the site of economists a lot, Goldman Sachs, Abby Joseph Cohen, I follow her a lot. Moody’s, the Moody’s economist, Mark Zandi, a great economist, always had some really great insight on the market. And so, I tend to follow these economists with that big picture because I think it’s much easier to get that big picture, right, to see those overarching trends in the forces on the market, and then use that to drill down and make your own decisions really as far as what sectors are going to benefit from those large macroeconomic trends, and then what stocks and what industries within those sectors are going to do best. I tend to follow mostly the economists and that big picture idea.

Clay Finck (10:28):

I mentioned The Investor’s Podcast Network and We Study Billionaires, but this podcast is geared more towards millennials since the name of our show, Millennial Investing. How do you think millennials and maybe younger investors should think about their investments in preparing for retirement in this very difficult market environment?

Joseph Hogue (10:46):

Just thank god you’re not a late Gen Xer, right, that’s getting ready to retire right now. I think a lot of that success in retirement is really based on things that are beyond your control, like when you’re investing, that timing, whether the market crashes hard that year that you’re trying to invest and wipes out a lot of money right when you need it. The near-term people are kind of screwed, but the millennials actually have an opportunity, I think. For millennials, don’t get scared out of the market. Keep investing, although you do need a plan for how you’re going to invest your cash and how you’re going to take advantage if the market does continue to fall, but I always point to the example of Amazon, right? Amazon crashed, IPO’d in 1997, all the way up to something like $200 a share, crashed down to $5,60 in 2001, I believe it was really the bottom of the tech bubble, the bubble burst, and so $5,60 cents a share. Now recently it was up as high as 3,500. It’s still up, after falling down, it’s still up to $2,200 a share. So, imagine being able to get that stock at less than $6 a share. It’s something like a 5,000% return.

Joseph Hogue (11:51):

Understand that with enough time, a lot of these growth stocks, these stocks that are changing our lives, changing their industry and how we live, those are still going to be great investments. And when you do get closer to retirement, still a little bit kind of a longer term planning, obviously for anyone that had 20, 20-plus years until they retire here, you really need to keep in the back of your mind what happened to people that were planning on retiring in 2008 and 2022 when those years came around, and understand that 10 years before you need that money, 10 years before you retire or you’re planning on retiring, then you do need to shift a little bit towards that capital preservation rather than growth.

Joseph Hogue (12:26):

Just don’t keep on following those growth stocks all the way up to your retirement day, right? You need to slowly shift your portfolio into a little bit more bonds, a little bit more the safety sectors like consumer staples, utilities, things like that, into other investments that don’t have that risk, and then as you go, even more aggressive into five years out. By the time you’re five years out of retirement, you cannot afford to have a market crash wipe out 20 or 30 or 40% of your portfolio, and because you just, you don’t have the time to let the market rebound from that.

Clay Finck (12:54):

It’s funny you mention the example of Amazon. I’ve been reading up and studying up on Bill Miller a lot, and he bought the Amazon IPO, split adjusted, it was $1.50 per share. He rode it all the way up and down the tech bubble, and he was buying a lot of it after the crash too. You mentioned below $6 a share, and today outside of Jeff Bezos and MacKenzie Scott, he’s the largest individual shareholder of Amazon which is just an incredible story of…

Joseph Hogue (13:20):

That’s amazing. It is. I think it’s a lesson too for investors, even investors just starting out. I’m always amazed that people love to buy stocks as the prices are going up, people that get exuberant over the last couple years. Millions of people have joined stock investing sites, love to keep pushing money in, but then when stocks start falling, they panic. They sell out and they leave the market, when in fact, that is the best time to buy, right? Stocks are now giving you a discount on those prices that you loved it at a hundred, why not at 80, right? Why not at 60? And I know it hurts to see that stock continue to fall, but just like that Amazon example, even if you had bought initially at that peak $200 a share, if you bought all the way down into $6 a share, it’s 2,000, $3,000 a share now. Don’t panic out of the market. Don’t get scared out of the market. Just keep on investing every month, every quarter, and take advantage of what will eventually be a great opportunity at these prices.

Clay Finck (14:13):

On the flip side, there’s compelling data that says that most active managers aren’t able to beat some simple index fund, like in an S&P 500 over a long enough period of time. So, with that, I’m curious, what brought you to the world of individual stocks? Is it just a love for the game and studying the markets, or why do you add that approach to your portfolio?

Joseph Hogue (14:35):

I think it’s a story a lot of people can relate to, right? It starts with stories of Peter Lynch and Bill Miller, that it is possible to beat the market over a long period of time. Even if it’s not likely, it is possible. Add in a bull market where everybody seems to be getting rich on picking stocks, and then maybe sprinkle in a little bit of that 20-something bravado that you can’t be wrong, and you’ve got all the makings of a stock picker, and even after some of those lessons in momentum investing, and growth stocks and market timing that we all have to learn the hard way by losing money, even after that, there’s still a sense of that risk taking and that addiction to stock picking that remains.

Joseph Hogue (15:11):

If Jack Bogle had his way, god rest his soul, we would all invest in a three or a five-fund portfolio, right, and never look at our stock funds and just ride the market up. I think investing has to be a little bit more interesting than watching paint dry, right, to keep people interested, right, to keep people investing their money and putting it to work because the payoff is decades out in the future, right? So, what kind of a motivation is that the possible promise of something in the future for that sacrifice right now? It has to be a little bit more interesting than watching paint dry which I think is a great way to do that is just to have a small portion of your portfolio in those stock picking idea while you have that core part maybe 60, 70% or whatever in those funds to get that market return.

Clay Finck (15:55):

It’s funny you mentioned earlier that a lot of people are running out the door right now with many of these stocks pulling back, and really, it’s just a really good opportunity to start researching those long-term trends because right now, no one’s excited about stocks. So, that’s when you should start to become excited, the Warren Buffett quote, be fearful when others are greedy and greedy when others are fearful. My next question for you was how do you balance that interest in stock picking with the goal for long-term market returns, given all the mistakes that active investing can bring with choosing the right company, choosing the right trend and such?

Joseph Hogue (16:31):

Well, beyond that core satellite approach where you have most of your money in funds, and then the very small portion in individual stocks, within that small portion is just a very small, maybe 20 or 30% of that. So, really only 10 or maybe even 15% of all your portfolio in those individual stocks that you’re picking for growth or that you’re individually picking on. So, if I own 20, 25 stocks, then the majority of them, maybe 10 or so, or 15 will be good long-term dividend stocks, Warren Buffett type stocks, things like that, but then I will have a portion of my portfolio where I’m calling for those moonshot investments, investing on those growth trends. I’m trying to find the next Amazon. Even if I’m wrong on one of those stocks, they’re not a huge part of the portfolio, but if I’m right and they do anything like what we’ve seen in Amazon or Netflix or some of these other stocks, then they can still add significantly to the portfolio.

Joseph Hogue (17:22):

Again, I think it’s just a really great way to keep investing interesting for people, keep them motivated to invest, and keep them right time in the market, rather than trying to time the market. I think it’s a great way to do that without really pushing all your money, all your portfolio to that stock picking and the growth stocks idea.

Clay Finck (17:41):

Yeah, you hit on this idea of having some asymmetric bets in your portfolio where your downside’s limited to what you have invested, but your upside is multiples among multiples of whatever you have invested, and you told me that you are looking for those trends, starting with that kind of top-down approach is like finding, okay, what trends are we seeing today that are going to continue for many years to come. So, what are some of those trends that you’re really bullish on long-term?

Joseph Hogue (18:09):

I’m looking at a few, and really, it starts with look at where are the shortages right now, where are the hurdles and the roadblocks to our lives and what is really changing in our lives, and for those, you see things like virtual healthcare. There’s a massive nursing shortage out there, as well as just the overall demand for healthcare, and people are learning how to use that virtually and how to get those services virtually, not only to ease that demand shortage and the labor shortage, but also just the cost of it as well.

Joseph Hogue (18:34):

You’ve also got digital wallets. We are increasingly thinking about our money in terms of zeros and ones instead of dollar bills, right? It is increasingly going online. I think I saw a survey recently that something like 70, 80% of people now have a digital wallet or pay digitally to pay their bills digitally, that kind of thing. So, that is definitely a trend that’s increasing into the future. And then commercial self-driving, right, self-driving vehicles in the commercial space and trucking, huge supply shortage for truckers, for labor right now, as well as the increase in costs and wages that we’re seeing across all jobs. I think those are really the three largest trends that I’m following that are going to change our lives through the next 10 years.

Clay Finck (19:12):

Once you identify these trends, how do you think about selecting the companies that you believe will be the winners? Do you try and take more of a diversified approach, or are you trying to select maybe the one or two biggest names, or how do you think about that and does that differ between some of these trends?

Joseph Hogue (19:29):

Well, yeah, a lot of times, it will depend on the trend. If it’s something that’s going to affect the entire industry or a sector, then maybe I’ll go with a multiple companies, and that’s something like commercial trucking which I think if you look at these trucking companies, they pay upwards of 30 or 40% of their operating costs are for the truck drivers. If you take even a portion of that out of the mix, operating margins for the entire industry are just going to skyrocket. For something like that, I would go into a multiple companies, and you got to understand with this top-down type of investing, so where you’re starting at the macro forces, the economic forces, and then drilling down downward into stocks, there’s still a little bit of a top or a bottom-up stock picking as well.

Joseph Hogue (20:09):

So, once you’ve found that industry you want to invest in, you’re still looking for the best of the breed companies in those, the companies with the better operating margin, with the better sales growth. So, really trying to pick the better companies out of there. But within that, I would pick the top two or three companies, maybe like a Knight-Swift Transportation, maybe a J.B. Hunt. J.B. Hunt is also a good company in that space. In those other trends where there is a clear demonstrative leader in that space, something like, okay, so digital wallets in actually the same survey that I was reading that showed something like 80% of people use a digital wallet or pay digitally, it also showed which digital apps they use, and the top two was PayPal and the Cash App, right? It’s almost the top two at something like 60% of the respondents used a PayPal service. I think PayPal, beyond that digital wallet, it’s also has a lot of other great investments and great products. I think that’s a clear, competitive advantage in that space. So, I invested in that.

Joseph Hogue (21:07):

Within virtual healthcare, it’s obviously Teladoc is a large and commanding lead, as well as the size and the scope advantage over any other company in virtual healthcare. I would go with something like that, if there’s a clear leader with a competitive advantage over all others.

Clay Finck (21:23):

I’m particularly interested in the digital wallet space. Do you think it’s the data that these companies own that they’re going to be able to benefit from this trend, or what do you think will be the driver of profitability going forward?

Joseph Hogue (21:37):

Well, I think in digital wallets itself, so there’s a lot of other drivers. Within the digital wallet space though, I think it’s really the cross-promotion of different services and products within that. So, right now, both Venmo and Cash App, they don’t really monetize those users very well. Basically, they’re just offering the service for people to use. In the future, I think they move on to much more of an integrated financial services idea where that Cash App or where that service is much more of a financial institution, right? So, they’re offering brokerage, they’re offering insurance, they’re offering all those related services, even loans, right, within that.

Joseph Hogue (22:09):

So, I think it’s, in terms of the digital wallets, much more into a traditional bank or a financial institution, and if you look at the monetization potential in that, what they can get off of the margins on each of those services, it’s just insane, right? You look at the hundreds of millions of people using those digital wallets, and basically you have a conglomerate of financial services in each of those, being able to sell to each of those people, and really integrate all those services and all those products into the one. I mean, you could see both of those, in fact, PayPal and Square, I like PayPal, because I think it’s a little bit more focused on financial services and payment rather than Square, whereas it’s a little bit further into the blockchain and Bitcoin and all that kind of stuff.

Clay Finck (22:52):

Yeah, I think it’s interesting to talk about some of these long-term growth trends because you just look at any growth stock. It had that massive run up post-COVID going through 2021 and now essentially all of them are backed down to around where it was like call it pre-COVID. Like PayPal, I just checked was in the $80 range. I think in the March 2020 crash, it was around that same point. If you dig into some of these trends and find one that you believe could be a long-term winner, then I think you could really find some really good long-term opportunities when everyone else is worried about oh, the growth sector’s really down. Yeah, so I just think there’s a really good opportunity in some of these sectors.

Joseph Hogue (23:34):

Oh definitely, absolutely. And it’s another thing, it’s another behavior, I guess, of investors that always amazes me. They’ll look at a stock chart and see that, yeah, PayPal’s down 60, 70, 80%. Teladoc is down. SoFi is down, another great financial services stock, but they’ll automatically assume it’s a bad investment. Well, yeah, a year ago, it was a bad investment because it was trading for 20 and 30 and 40 times the price of sales, just ungodly price valuations.

Joseph Hogue (23:58):

But now, you cannot just look at the past stock price on that chart to see whether it’s a good investment or not. We really do have to analyze it from going forward, and this goes for people that invested in these stocks a year ago at these peaks. I know it sucks to look at your portfolio and see red and wonder if these stocks are ever going to get it back up to that point, but that money’s in the past, right? Even if it’s just a paper loss right now, that money is in the past. You have to look at what is expected of these stocks, of these companies in the future. The valuation right now, you’ve got stocks that were trading at, like I said, 30 and 40 times price to sales valuation last year are now down to four and five times price to sales and still growing their revenue, still growing their sales at 20 and 30% a year as we sit here today.

Joseph Hogue (24:41):

Yes, sucks to be down 80% on some of these if you’ve already invested them in them, but if they produce that 15 or 20% annualized return over the next 10 years even, that’s still going to be a great investment. So, you really need to look at these in the current market, in the current price, and not worry about what’s in the past.

Clay Finck (24:58):

Switching gears a little bit, you’ve recently had a video that really piqued my interest. It was a video that covered I savings bonds, and this was something that I’ve never really dug into. So, I’d really like to chat about it during our conversation today. Today, an I savings bond is a bond that is offered by the US government, and I believe the interest rate now is around 9% which seems absurd given that I’m a younger investor and kind of used to this low interest rate environment where you can’t really get any guaranteed interest. Could you give our audience a rundown on what these I savings bonds are?

Joseph Hogue (25:34):

Sure. Well, these things really came out of nowhere, right? And again, I think this is probably one of the best investments for investors right now, not only for the interest rate, but also for the safety. It’s really kind of a matter of right time, the right place for these things. But basically these are savings bonds. So, they are backed by the full faith and credit of the treasury, right, and I know there’s a lot of eye rolls happening out there right now with full faith and credit of the government, but if the government ever stops paying on its treasury bonds or savings bonds, we’ve got a lot more bigger problems than just money, okay?

Joseph Hogue (26:04):

These things are safe, pretty much the safest investments you’re going to have right now. They are offering 9.6% over the next six months, and that’s the thing about these things. When you buy them, they have a fixed component of the interest rate and an inflation component, right? So, every six months, they go into the consumer price index, they look at what inflation is like, and they adjust the interest rate for these bonds or for these I bonds, and in the past with inflation so low, they’ve never really paid it a whole lot, but now they’re paying 9.6% over the next six months. Even if inflation comes down, they’re only going to come down a little bit. So, you’re looking at probably 9% next six months, maybe seven, 7%, six months after that, if inflation comes down, something like that.

Joseph Hogue (26:41):

Now, you do have to hold these for at least a year. As savings bonds, you have a lockup period. So, you hold them for a year, but I think with the Fed expected to raise interest rates well through even 2024, we’re going to have stock market weakness, volatility, all this well over a year. So. I think investors are going to need at least a year of that protection. So, you hold them for more than a year. If you sell within five years, then you lose like three months of interest, right, which really, 10% interest a year, it’s really not that significant. So, you lose a little bit of the interest, but it’s only three months. You hold them for 18 months, 24 months, whatever. You still got a great interest rate.

Joseph Hogue (27:17):

Like I said, I think it’s just the right place at the right time with the right thing, with the right investment. You’ve got almost a 10% interest rate backed and guaranteed by the government. So, it’s completely safe, and it’s going to protect you from really any kind of stock market swings we see over the next year. Now, it is limited to $10,000 per person. It doesn’t help quite as much for those higher portfolios where you need to protect a large part of your portfolio, but it’s still going to protect 10% or $10,000 of your money. You’re going to get 10% return on it for probably about the next year I’d say.

Clay Finck (27:47):

Yeah, the $10,000 limit is the big kicker I think for a lot of people wanting that guaranteed income. It reminds me a lot of TIPS where they offer this sort of inflation protection. What’s the difference between an I savings bonds and TIPS, and why is there even two different kind of inflation protected securities issued by the government?

Joseph Hogue (28:09):

Well, I think the government, they just started the I bonds I think at 1996 or 1998, right? So, they’re relatively new, and I think they were made to specifically address that inflation and give a little bit higher return than some of these other, like TIPS or some of these other bonds. So, you do get a little bit higher return on I bonds, especially when inflation is higher. There are other subtle differences though. I bonds don’t make interest payments. They basically, they just put that interest into the value of your bond. So, you get more back when you do sell them, whereas TIPS pay that coupon every six months, but they’re quite a bit heavier tax burden on the TIPS. So, you’re paying that interest every year that you’re collecting those coupon payments. They do have a little bit of an inflation adjustment within the principle. So, they do add a little bit to your principle amount, but a lot of it is going to be from that coupon payment.

Joseph Hogue (28:57):

TIPS have a secondary market, so you can buy and sell those and there’s no lock up period and no limit. So, those are a little bit better for the higher portfolio owners that need to protect a little bit more of their portfolio for that, but I’d say have both. I think I prefer I bonds. I think that’s obviously the higher interest rate or the higher yield. So, you have 10,000 in that, and if you want to protect more of your money, you have some TIPS as well

Clay Finck (29:19):

For those investors wanting more safety in whatever portion of their portfolio, you have the I bonds, you have the TIPS, you have other bonds, what are some other relatively safe investment vehicles that investors can use that don’t have much downside to them?

Joseph Hogue (29:36):

Well, I think, I mean, you can go out into alternative investments, like tax liens, big part of my portfolio right now as a kind of an alternative to bonds, right? So, tax liens, basically, every county assesses property taxes against the real estate. If those taxes aren’t paid, then if they put a lien against the property and then sell that lien to an investor, right? You can get all the way upwards of 2% a month on these liens, right? It ends up being closer to right around 15, 18% annualized on a lot of times because these are generally paid off pretty quickly actually by either the mortgage owners, the banks, or the real estate owners themselves, the property owners, because they are backed by the property. You buy these at a county auction, and if they’re not paid off within a certain amount of time, usually a couple years, then that property goes to those lien holders.

Joseph Hogue (30:20):

So, it’s actually a way to build a real estate portfolio as well if you end up getting some of these liens satisfied through the property. But in the meantime, it is backed by the property. It’s relatively safer, and you’re pretty sure going to get the interest because nobody wants to lose their property to just the property taxes. So, those are a great choice, actually high yield on those as well.

Joseph Hogue (30:42):

I would actually even start looking at the shorter term bonds. Like I said at the beginning, I think a lot of the interest rate increase that we’ve seen is really worked its way through. We’re actually starting to see longer term interest rates come down a little bit on those fears of a recession. So, I think the bonds are attractively priced here.

Joseph Hogue (30:58):

I would stick with maybe the shorter term bond funds like the Vanguard BSV which is the Vanguard Short-Term Bond Fund. It’s not going to lose its value quite as fast if interest rates keep on going higher, but it is still to provide something like a, I want to say like a two and a half percent dividend yield, as well as that safety, that preservation, even with the sell off in bonds this year. If you compare what the BSV has done compared to stocks or even compared to longer term bonds, I think it’s down maybe 6%, 7% against a stock sell off of 17, 18% or 30% in the NASDAQ tech stocks. So, still some of that capital preservation, still some dividend yield and income, and I think a little bit stronger going forward.

Joseph Hogue (31:38):

Beyond that, you can get into some hedging with option strategies if you’re doing any kind of options investing, and obviously, I would warn people against the speculative kind of options investing that people have been doing over the last couple of years, really trying to get those leveraged bets, but there are a lot of ways to use options where you can actually lower your risk, things like covered calls, things like protective puts. Maybe you’re selling a call option against a stock you own that gives you a little bit of income on that stock. It does limit your upside a little bit, but it also hedges the downside in that stock. Great way to lower your risk just marginally in some of the stocks that you want to keep on holding.

Clay Finck (32:15):

Yeah, related to the short-term bond fund, I just pulled that up and it definitely looks like something that’s definitely stable. There’s going to be a lot of downside protection for you there, assuming you don’t need it. There might be like, if there’s a sharp recessionary-type scenario, there could be a sharp drawdown, but historically, it’s always recovered pretty fast once it happens. Joseph, that’s all I had for you today. I really, really appreciate you coming onto the show. Before I let you go, I’d like to give you a handoff to the audience on where they can get connected with you and what you’re up to.

Joseph Hogue (32:47):

Sure. Well, I appreciate it, Clay. It was a pleasure to be here. Yeah, love seeing people over at the channel, Let’s Talk Money! there on YouTube. Love seeing people as a part of the community there. If you’re the reader, the blog reader, you can always visit me at mystockmarketbasics.com. It’s the blog where I really share what I learned and what my experience as a venture capital analyst, private wealth management, and really bringing that experience into the stock basics and regular investors.

Clay Finck (33:12):

Awesome. I’ll be sure to link all of those in the show notes for the audience. Thanks, Joseph.

Joseph Hogue (33:17):

I appreciate it. Thanks, Clay.

Clay Finck (33:19):

All right. I hope you enjoyed today’s episode. Please go ahead and follow us on your favorite podcast app so you can get these episodes delivered automatically. If you’ve been enjoying the podcast, we would really appreciate it if you left us a rating or review on the podcast app you’re on. This will really help us in the search algorithm so others can discover the show as well, and if you haven’t already done so, be sure to check out our website, theinvestorspodcast.com. There you’ll find all of our episodes, some educational resources, as well as our TIP finance tool that Robert and I use to manage our own stock portfolios. And with that, we’ll see you again next time.

Outro (33:55):

Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday, We Study Billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.