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The first and highest-performing portfolio activity were people who had purchased stocks and then died

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Welcome to the Jim Seekers podcast where you talk about how to get more customers how to make more per customer and how to keep them longer

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And the many failures and lessons that we have learned along the way. I hope you enjoy and subscribe

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What's going on everyone? My name is Alex Ramozy and I am the host of the show owner of

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Allen prestige labs Jim launch done 120 million in sales in 44 45 months

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So what I want to talk about today is something that I think is really important I get a lot of questions about

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And it's about long-term short-term investing and

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Some big pitfalls and I just want to share with you some of the mistakes that I've made in this kind of transition that I've been through

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going from kind of CEO to kind of investor slash capital allocator, right and

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And

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So the first thing is I want to share some some stats with you that I found really interesting

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I think it was fidelity did a study was either fidelity or Charles Schwab did a study on

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Which investor profiles and activity?

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yielded the best returns in terms of total portfolio value, right and this was in stocks and they found that they were two

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two categories

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That far out far outpaced everyone else

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Let me tell you what they were

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the first and highest-performing

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Portfolio activity where people who had purchased stocks and then died and

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So as a result there was no more activity in their account and their accounts outperformed everyone else

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The second highest were people who purchased

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Account or purchase stocks of the account and then had forgotten their passwords and as a result had not done any trading

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And so for me

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I think this is hilarious because it shows the the incredible flaws in human judgment and

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It also shows the power of compounding growth when buying businesses in general because then you just get exposure because if you think about this from across

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All of the accounts that they have then across all of the accounts that they have equal exposure to ups and downs

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Etc. So across all of those accounts, which is just like taking index of the market

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The people who do the least amount have the most money in the account now what I want to do is explain to you a mistake that I made

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Probably like two weeks ago that cost me

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Sure, I have to do the math probably cost me

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200 grid yeah, it's also 200 grand all right, so here's a two two hundred thousand mistake that you don't have to make

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I'm gonna walk you through the math all right

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So what I was doing is I have in my quote portfolio. I guess it's not a quote portfolio. It's my portfolio

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I have three to five percent of it in

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Investible assets that I

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Candidly I just play around with and it scratches my entrepreneur itch and

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Just me being a human being 95 percent. It's actually 97 percent of my

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Worth is in really really stable stuff all right, but I want to talk to you about the five percent so

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Here's the difference between holding versus trading all right, and this is something that is massively under looked and

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I'm hoping to at least convince one person who's listening to this that if you look at the math you you see how quickly

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You shouldn't do you shouldn't try and you shouldn't try and beat the market

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By by trading all right, and so here's here's the first reality is that there's huge quantitative firms that have

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Hundreds of analysts who are trying to beat you and they they make their money doing that

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But the second one is a simple hundred dollar example. All right, so let's say you have a hundred dollars

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All right, so this is our this is our initial capital

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All right, I'm gonna give you two scenarios that we're gonna walk through

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So in scenario number one, we're gonna have our day trading example and let's say that over X period of time

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You do really well now. I'm just gonna ignore the fact that most people are just gonna lose money all right

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So that's that's probably like 75% of all of us are gonna mess up somehow and think we're gonna be didn't it

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You know, I'm gonna cool it by the dip and then it just goes down by another 50% right?

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But let's just assume you double your money. All right, so your one hundred dollars becomes two hundred dollars

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All right, everyone's cool. So let's just say that happens over a five-year time line. Whatever. All right now

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The point here is that it doesn't really matter because if you're in this

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As soon as you are doing this through trading then the capital gains treatment gets thrown out the window and it becomes regular income

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All right, so your tax differently. So this hundred dollar gain, right that you have here

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From one hundred to two hundred

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gets taxed at

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45 you know 43% whatever it is and so you have a

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An additional let's see here. So then that means that after this whole period of time you're gonna be left with

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a hundred

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and

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40

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Shit, sorry. Well, a hundred and fifty five dollars. All right. Sorry about that

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155 dollars which are left after tax. All right post tax

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Modulation real quick if you are a business owner that has a big old business and wants to get to a much bigger business

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Going to 50 hundred million dollars plus we would love to talk to you

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And if you like that, we'd like to hear more about it go to acquisition.com and you can plan anywhere on the page and

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Talk to one of our team and see if we can help you get there

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Now don't worry. I'm gonna show you a third scenario to second the second scenario is you do it and you instead of trading that whole time you just

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earn the same amount

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$200 your hundred turns to $200 and candidly the

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My all my passive stuff is out has outperform my active stuff, which is hilarious, but

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Which just confirms this for me, which is why I'm making this video. All right, so let's just say that you still you make the same hundred dollars

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All right, we're good there hundred dollars, but now it's capital gains. All right, so instead of being left with

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155 dollars, we're now left with a hundred and eighty dollars. Wow. Well, that's bigger

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But let me show you and this is the thing that kind of blew my mind

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Because that's why I love looking at the math so much

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Is well then how much would I have to gain from day trading or trading on shorter terms or swing trades or whatever

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For this to be worth it, right? How how much extra money would I have to make

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To outpace the fact that I'm getting this regular income tax treatment on my income. All right

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So here's what's crazy

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So in order for me to get to net $80, right?

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I would have to take that hundred dollar investment

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And turn it into I did the math earlier. It's a two hundred and forty five dollars

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All right, so that means that I would have to

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My my growth here would have to be 50 you know 45% higher, right?

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Isn't that crazy in order to yield

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Because that times the regular tax treatment gets me to hundred and eighty dollars. All right

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So if I'm comparing the two things if I want to be left with a hundred eighty dollars

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Option one is I buy something and I forget about it and then later if I you know five years later

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I'm I sell it for whatever reason and I

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Am left with a hundred and eighty because I only had to pay capital gains on it

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In scenario in order for me to to just match that not even beat it

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I would have to take my hundred dollars and turn it into two hundred and forty five dollars

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And then sell it and this is obviously this whole time

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You're continuing to flip things and buy things and buy things right and then after the regular income tax

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I'd be left with a hundred and eighty dollars. All right, and so when I saw that illustration it became so obvious to me because

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I had had some decent gains in something

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And so I decided to sell it and

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I actually ended up selling it at a good time

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Because it ended up going down because I felt like it was getting overvalued

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Um, and so I thought I felt pretty good about myself, right

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and

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What ended up happening is

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The thing ended up coming back up to exactly where I had sold it

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Again, and so if I had literally just done nothing

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Then I would have more money because now I have to pay

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I have to pay

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Taxes on regular income because I sold it within a year and mind you again guys

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This is on my three to five percent. I don't touch anything that's that's not that all right

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So I'm just being very clear and candid here nor do I recommend you do that

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So if you need the look if you need the itch

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Then I would say put your put three percent aside

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For pure speculation, which is just like I'm which is basically just saying I'm a human being and I'm an idiot

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And this is how I can manage my idiocy

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Um, but but when you see the math spelled out like this between this is what smart people do

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And this is what dumb people who don't make as much money do then I it makes me so much more inclined to just do what smart people do

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And take all of that extra time and just do something else or just make money with my extra time

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Um, what are my good friends? He uh, I've known him for 20

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25 years

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And when I met him he was I think he was he was managing

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I mean, maybe five million dollars like not which in the finance world is not a lot for management

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Um, and now 25 years later

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Uh, I think you may have just 3.5 billion

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So he's very good at what he does

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And he's one of the most stable people that I know and when I talk to him about this stuff

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He's like you need a hobby and so I guess the message that I have for everyone is

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Maybe get a hobby

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And just let the money grow and pretend you're a dead person

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And if you can't pretend you're a dead person then throw away your password

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Or give it to somebody that you would be ashamed to ask for your password back

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Uh, so that you just don't touch your stuff

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Because ultimately you'll probably be you'll probably end up getting higher gains

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A, and B, you'll get tax less on those gains

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So I hope that was valuable for you. I hope this makes sense

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I hope you get a laugh out of my

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$200,000 mistake that I just made in the last two weeks

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Um, keeping awesome lots of love

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You