Episode 30
Could Newton’s 4th Law Propel Your Finances Forward?
Episode Description
In Episode 30 of "The Big Bo $how," host Jason Blumstein, CFA® (aka Big Bo), CEO & Founder of Julius Wealth Advisors, dives headfirst into the wild world of finance, where:
Market corrections,
Political drama,
Sky-high housing prices, and
A shifting job market
...can make you want to hit the panic button.
But what if the smartest move is to do… absolutely nothing?
Join us as we explore Newton’s unofficial 4th Law—"An object not in motion can still stay in motion"—and how it could be the key to keeping your financial life on track. From navigating volatile markets to blocking out the noise of election year chaos, this episode will show you why sometimes the best way to move forward is by standing still.
Packed with relatable stories, a dash of humor, and practical tips, Episode 30 is a must-listen for anyone looking to keep their finances in motion during uncertain times.
Buckle up and tune in—you won’t want to miss this game-changing advice!
Episode Transcript
Welcome back. You're tuned into episode 30 of the Big Bo $how brought to you by Julius Wealth Advisors, where we tackle the financial world with the same grit and determination as an underdog team in the playoffs.
I'm your host as always, Jason Blumstein, aka Big Bo, CEO and founder of Julius Wealth Advisors. Today's episode, we're diving headfirst into the chaos of market corrections, the political circus, and more.
But before you reach for that panic button let me ask you a question: Could Newton's fourth law propel your finances forward?
Now I know what you're thinking Newton only had three laws, right?
Well, that's what they want you to believe But if Newton and I ever met at a Miami Dolphins tailgate You can bet we've come up with a fourth law over some burgers and a debate about investing. And here it is.
An object not in motion can still stay in motion.
Sounds wild, right? But here's the deal. In the unpredictable world of finance, sometimes the best way to move forward is by doing nothing at all.
-
Crazy, I know. But it works. Markets will rise and fall. Political drama will make you want to scream. Housing prices will soar. And the job market will shift. But reacting to every twist and turn? That's where most people trip up.
Today, I'm breaking down why sometimes the smartest move is to stand still, take a deep breath, and wait for the right moment to act.
So buckle up, because we're about to turn your financial panic into a game plan for success. Trust me, by the end of this episode, you'll be ready to go. You'll see that sometimes the best way to keep your financial life in motion is by staying right where you are. Ready? Let's go.
All right, let's dive into episode 30 of the Big Bo $how by tackling two hot topics. The recent market correction and the ever present political drama.
First up, the market correction. It's been a rollercoaster, hasn't it? Markets were down over 10 percent in just two and a half weeks, with a jaw dropping 1,500 point drop in a single Monday morning on the Dow Jones Industrial Average.
Your portfolio probably took a major hit. Now, the natural instinct in moments like these is to panic sell everything and retreat to cash to avoid further losses. But here's where Newton and Blumstein’s fourth law comes into play Stay put.
You see, market corrections are a normal part of the financial landscape happening on average every 1-2 years. In fact, the S&P 500 has dropped more than 10 percent off its highs and 71 percent of the years since 1990.
So these dips are more common than most people realize. Let's add some context to this. Before this correction, Global markets were up about 16 percent in just seven months. That's nearly double what you'd expect in a typical good year, which usually brings about 8 to 10 percent returns, historically speaking.
A pullback was almost inevitable after such rapid growth. It's like sprinting up a steep hill. Eventually you got to slow down and catch your breath. I know I do! These corrections are exactly why stocks offer higher returns over time they come with higher short-term risk.
It's the number one law in finance the higher the expected return, the higher the risk. When market corrections take place, it's easy to feel like you need to act fast, but sometimes the smartest move is to do nothing at all. By staying still, you give your portfolio the time it needs to recover and grow stronger.
Remember, these downturns are often temporary, but the gains from holding steady are long term. And as we've seen over the past two and a half weeks, markets have rallied back close to where they were previously.
Now, let's shift gears to politics. We're in election year and tensions are sky high with anxiety in overdrive.
It's easy to think that the political drama unfolding on your screen will have a direct impact on your finances. The temptation? To reallocate your investments based on the latest headlines or poll numbers, thinking you can outmaneuver the market depending on who might win, Trump or Harris. But let me tell you, That's a risky move.
This is where Newton and Blumstein's fourth law comes into play. Again, stand firm. Here's the truth politics in the grand scheme. Don't matter much to the stock market and businesses. Why? Because you own a business, and businesses and people tend to find a way to make things work and improve, no matter who's in charge.
Most people, regardless of the political landscape, want to live a better life and make progress. That's why the stock market has risen during nearly every president, regardless of which party held office. So why do people think politics matter to your portfolio? Who wants to scare you? The media, plain and simple.
They make money by selling ads, and they need your attention to do that. Sensationalism keeps you hooked, and the more you watch, the more ads they sell. It's a classic case of incentives. Politicians want to get elected, businesses want to maximize profit, and media companies want to sell ads. But what's your incentive?
Your incentive should be to make progress for you and your family. The lesson here, block out the political noise, stay focused on your long term goals, and keep moving forward. History has shown that none of it really matters to your portfolio. Reacting to every twist in the political arena can lead to impulsive decisions that derail your financial strategy.
No matter who wins, your portfolio loses if you overreact to anxiety and drama instead of understanding the facts. So let's take a quick break. And when we get back, we'll talk about two other money worries affecting people right now.
Now let's take a closer look at the housing market. Prices are through the roof and it's easy to feel the pressure to buy now before they climb even higher.
But here's the problem. Rushing to purchase a home in this market can stretch your finances to the limit, the temptation to act quickly is strong but remember Newton and Blumstein’s fourth law: hold your ground.
Sometimes the best way to move forward is by standing still if buying doesn't make financial sense right now consider renting or staying put in your current home. Especially if you've locked in a sub-three percent mortgage rate.
This strategy gives you breathing room allowing you to use the extra cash flow to grow your wealth and invest in other opportunities while you wait for the market to turn in your favor.
And here's something important to keep in mind. While the Fed might eventually cut interest rates, don’t expect that to magically make mortgages more affordable. Mortgage rates are tied to the 10-year Treasury, not just the Fed's decisions.
So there's no need to rush by waiting, positioning yourself to make a smarter more informed decision when market conditions are more favorable. Sometimes patience really is the best financial strategy.
Now, let's shift gears and talk about the job market. It's shifting and for many who entered the labor force in the past 10 to 15 years this is the first time you're experiencing a job market where the balance of power is tipping more toward employers than employees.
Well, I hate to break it to you, but this is reality. Welcome to the norm, not the exception. The temptation is to jump ship at the first sign of trouble or grab that first job offer that comes your way.
But here's the thing. Sometimes the best move is to stay in place. Newton and Blumstein's Fourth law remind us that standing still can actually help you move forward. When the job market tightens, it's easy to feel pressure to make a quick change, but often the smartest strategy is to stay in your current role, focus on building new skills, and strengthen your professional relationships.
And if you're in between jobs, resist the urge to take the first offer out of fear. Instead, use this time to reassess, upskill, and find the right fit, not just the fastest one. Staying in place, honing your skills, and waiting for the right opportunity can lead to better long term success.
So now, let's take a quick break, and when we come back, it's time for everyone's favorite segment, I'll be sharing some thoughts on the Olympic star you won't want to miss.
All right, folks, it's time for everyone's favorite segment. Bo Know$ where we take lessons from the world of sports and apply them to the world of finance. Today we're drawing inspiration from none other than the greatest female gymnast of all time. Simone Biles.
Remember the Tokyo 2020 Olympics? Simone Biles, the most decorated gymnast in history, shocked the world when she made the brave decision to step back during the competition.
At the height of her career, with the weight of the world's expectations on her shoulders, she chose to prioritize her mental and physical well-being over the pressure to perform. It was a move that left everyone talking. But here's the kicker. It was also a masterclass in understanding a Newton and Blumstein's fourth law, knowing when to stand still to keep moving forward.
Fast forward to the 2024 Paris Olympics and Biles returned to the sport she loves. Stronger more focused and ready to reclaim her throne. She reminded us why she's the best winning four medals including three golds and solidifying her legacy as a star. The goat. But, the incredible comeback was only possible because she had the wisdom to pause, reassess, and then make her move when the time was right.
And that's the takeaway for today. Sometimes in sports, and finance, the smartest move is to stand still, reassess and wait for the right moment to strike. Simone Biles $ showed us this on the world's biggest stage, and it's a lesson we can all apply to our financial lives.
So there you have it, folks. Episode 30 of the Big Bo $how is a wrap. We hit you with a powerful lesson from my imaginary meeting with Isaac Nguyen at a Miami Dolphins tailgate. The untold story of the Fourth law of motion. An object not in motion can still stay in motion.
Whether you're navigating market corrections, dealing with political noise, or making decisions in the housing and job markets. Sometimes the best move is to pause, take a deep breath, and wait for the right opportunity, just like Simone Biles showed us in the Summer Olympics.
If today's discussion resonated with you, and you're looking for a financial partner to help you navigate these turbulent times, Julius Wealth Advisors is here to guide you.
Whether it's managing your portfolio through market corrections, staying focused amidst political noise, or making the right decisions in the housing and job markets, we're in your corner. Remember, building wealth is by choice not chance. So reach out to Julius Wealth Advisors. Call us at 201-408-4644 email info@juliuswealth.com or visit www.Juliuswealthadvisors.com. And let's start making those smart moves together.
Thanks for tuning in. As always, I'll end this $how by reminding you to live a life of integrity, seek knowledge, and pursue your passions. Until next time, all the best. Thank you for tuning into the Big Bo $how.
Now, don't worry, I'm not saying we're all doomed, but knowing what to do in times like this is crucial. The key figure that defines today's market is the HOAM Index, H-O-A-M Index, or Home Ownership Affordability Monitor, produced by the Atlanta Fed. As its name implies, this index measures the ability for a median income household to absorb the estimated annual cost associated with owning a median priced home.
Sitting at historically low levels at the moment, not seen since 2006, we can see that most Americans are having trouble affording homes. Even for those who managed to put a down payment on a home, they're facing historically high costs. This means that not only is it harder for many to enter the housing market, but those who do are paying far more relative to their income than in previous decades.
Let me give you an example of this. I personally was fortunate to buy my home in 2019 and take advantage of the historically low interest rates during COVID-19. With my mortgage rate currently being at 2.75% today, Zillow states that my home is worth about 53% more than I bought it for. And a 30-year mortgage rate is around 7%.
This means that if someone were to buy my home, with the traditional 20% down payment needed for a mortgage, their monthly payment will be almost two and a half times higher than mine. Think about that for a second. They would need to come up with two and a half times more money every single month for the next 30 years than I do. That stat embodies what's taking place today in the housing market. The price to rent ratio is another crucial metric to understand the current market.
So, what does this ratio mean? It's calculated by dividing the median home price in the area you're looking to buy, by the average dollar amount of renting a comparable home in the same neighborhood. A high ratio suggests that renting is more attractive than buying and vice versa. This stat averaged 101.8 nationwide from 1970 to 2023. In the second quarter of 2022 this ratio reached an all-time high of 141.2. And the last reading in Q4 2023, this ratio is a still high 135 - closely mirroring the peak ratio reached in 2006 prior to the housing collapse. In other words, right now for many, renting is not only the more affordable but also a more prudent choice compared to buying in today's environment.
I hear you saying, “But Big Bo, I eventually want to own a home.”
Don't worry. This should become achievable at some point. Let's see how. There are three things that need to happen for the market to correct itself and for it to be affordable for you to buy a home. First, number one, housing prices obviously need to come down. However, in my opinion, this isn't likely to happen anytime soon because many homeowners have substantial equity in their homes today. Meaning that they actually own a large portion of their home relative to what they owe the bank. Unlike during the financial crisis, there's little incentive for people to walk away from their homes and sell their homes especially given the fact that 60% of Americans have a mortgage rate of 4% or less - which is substantially lower than today's prevailing rates. On the flip side, this is also good news, though, for current homeowners, where a forecast in the drop of your housing is not expected.
Second, interest rates need to decrease. While this can eventually happen, it's anyone's guess when. Despite people telling you that interest rates are high and mortgage rates are high, mainly due to our brains anchoring to the last 15 years of low interest rate environment and COVID years of unprecedented low mortgage rates, current 30 year mortgage rates are actually below the 50 year average and where they were in the early 2000s.
Third incomes need to go up. Historically this happens over time, but it's a slow, gradual process. The key takeaway here is that none of these factors are in the control of the average person. They are macroeconomic trends that we can't influence directly, but they significantly affect our financial decisions. But there is one thing you can control, and that is your mindset and your strategy. So let's take a quick break, step back and discuss what's in your control. We'll be right back.
All right. Welcome back. Now let's talk about your mindset. This is what's in your control. The way I see it, there are three types of mindsets in this market. The quitter, the patient saver, and the opportunity taker.
Let's talk about the quitter. This person has thrown their hands up in frustration, lamenting about how unfair the market is, and deciding to bow out entirely. They have succumbed to the overwhelming challenges and decided that the dream of home ownership is just out of reach. By exiting the housing game, they miss out on potential opportunities and growth, letting the market's volatility dictate their financial future.
Then we have the patient saver. This individual diligently saves every penny, patiently waiting and hoping for a market miracle. The dream of the day when housing prices will plummet or interest rates will drop, making ownership more affordable. While their perseverance is commendable, their focus on saving can sometimes come in the expense of other financial opportunities. They might miss out on investments or experiences that can contribute to their overall financial health and happiness.
Then we have the opportunity taker. This person tunes out the market noise and seeks out qualified help to achieve their goals. They understand the importance of making informed decisions based on data rather than emotions. By working with experts, they navigate the complexities of the market, identifying strategic opportunities that others might overlook. They balance patience with proactive steps, positioning themselves to succeed regardless of market conditions. If you identify as the opportunity taker, then you're already ahead of the curve. You understand the importance of seeking qualified help and making informed decisions based on data rather than emotions.
At this point you're probably wondering why you've never heard of somebody encouraging you to rent. Well, the truth is many people think they need to buy a home as soon as they can to get their life started. It's easy to get caught up in this mindset because a home is a tangible thing. It feels like a solid step towards adulthood and stability. But let's take a step back and reevaluate this notion. As I always tell people number one answer in finance is “It depends”.
Buying a home is a significant financial commitment, and rushing into it without considering all factors can lead to financial strain. Renting, on the other hand, isn't a bad option. In fact, in the current market, we've seen why it could be a better choice. Renting provides flexibility, less financial burden, and the opportunity to save and invest money that would otherwise be tied up in a mortgage and home care.
By renting, you're putting yourself in a better position to buy a home in the future when the market conditions are more favorable. You'll have more savings, potentially better credit, and a clearer understanding of what you truly want in a home. The goal is to build wealth for the long game through well informed strategic decisions rather than rushing into home ownership just because it seems like the thing to do.
Remember, Building wealth is by choice not chance.
All right. It's back. Everyone's favorite segment. “Bo Knows” it took a couple episode hiatus and now we're back. Here on this segment we draw a parallel between the current housing market and the world of sports. While I love football, the truth is my first love was the game of baseball.
My son and I made a pact to see every single baseball stadium together while he is a kid. Recently, while also visiting clients on the West coast, we went to see the Dodgers, Angels, Padres, and Giants Stadiums - an amazing time that I’m sure we'll remember for the rest of our lives.
So let's talk some baseball taking on the current housing market is like stepping up to the plate in an MLB game. Let's look how the three stars would address such market challenges in our three examples of housing market mindsets.
The first approach is swinging for the fences. In this analysis, I think of Kyle Schwarber on the Philadelphia Phillies. Kyle Schwarber focuses on hitting home runs despite having a low batting average and limited fielding abilities. Like Schwarber, the quitter has given up on other parts of their game.O nly aiming for a home run in the housing market, they get frustrated at high prices and interest rates, deciding to give up entirely. This high-risk move driven by a single-minded goal often leads to missed opportunities and growth, allowing the market's volatility to dictate their financial future.
Then we have stealing bases. Known for his speed and agility, Jose Altuve of the Houston Astros, often attempts to steal bases, looking for a shortcut to the plate. You might get on base, but you're at risk of getting thrown out if the timing isn't perfect. This mirrors the approach of being a patient saver, saving all your cash until you find the quickest way to buy a home. At the end of the day, much like his and the Houston Astros cheating scandal in 2017, this person can cheat themselves out of true success.
Then you have the person who reads the pitcher. And here, as I'm sure my son will get upset with me, I'm going to talk about Aaron Judge. With his high batting average, many home runs and many skills, he works with his coaches to study the pitcher’s tendencies. He waits for the right pitch and makes calculated swings. The exact approach of an opportunity taker. With the right strategy and timing, you can hit solid singles and doubles, steadily advancing, and eventually getting that proper fat pitch for a home run.
Just like in baseball, where the best players rely on strategy, discipline, and patience, in the housing market, you need a solid plan, patience, and the right guidance to succeed.
So where do you stand today? Are you the quitter, the patient saver, or the opportunity taker? If you're feeling overwhelmed by the housing market, now is the perfect time to consider getting help from a trusted wealth advisor. Someone who can guide you, educate you, and help you make the right financial decisions.
Buying a home is just one part of the bigger journey to financial success. All it takes to start is a single step, a step that can be as simple as a no obligation call to discuss your situation and goals. At Julius Wealth Advisors, we're here to help you build wealth by choice not chance. So, what are you waiting for?
Visit JuliusWealthAdvisors.com. Send an email to info@JuliusWealth.com or give us a call at 201-408-4644. Let's take that first step together. So, thank you for joining me today on the Big Bo $how. If you enjoyed this $how, please subscribe to the podcast on YouTube, Spotify, or Apple. Remember, always live a life of integrity, obtain as much knowledge as possible, and always live a life that you're passionate about. Until next time, all the best.
Disclosure:The content is developed from sources believed to be providing accurate information. The information in this podcast is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Julius Wealth Advisors, LLC (“JWA”) is a registered investment adviser located in Englewood, NJ. Registration as an investment adviser does not imply a certain level of skill or training. The publication of The Big Bo $how should not be construed by any consumer or prospective client as JWA’s solicitation or attempt to effect transactions in securities, or the rendering of personalized investment advice over the Internet. A copy of JWA’s current written disclosure statement as set forth on Form ADV, discussing JWA’s business operations, services, and fees is available from JWA upon written request. JWA does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. JWA is neither your attorneys nor your accountants and no portion of this podcast should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.