#782: Two Cents 7/11 - Is The Stock Market Justified?; World Cup Final Prices; Are You Saving Enough?

Speaker A: If you are a D4 recent grad associate or any dentist who wants to feel more confident and organized with money Dentist Advisors is hosting the Dentist Money LaunchPad, an eight week course that will teach you everything you didn't learn about money in dental school. You'll learn from our dental specific CFP advisors and other dental professionals on topics around debt investing, career development, becoming a practice owner, taxes, and so much more. Whether you're just getting started or simply want more clarity and direction with your finances, learn Launchpad is for you. The next session starts September 17th. Go to DennisMoneyLaunchpad.com to learn more and sign up. On today's show, three questions. Number one, are current markets justified? Number two, how much would you pay to attend the World Cup Final? And number three, are you saving enough?

Speaker B: Consult an advisor or conduct your own due diligence when making financial decisions? General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor.

Speaker A: Welcome to Dennis Money's two Cents, where we help Dennis navigate all the noise. I'm Matt.

Speaker C: I'm, uh, Cody.

Speaker B: And I'm Robbie.

Speaker A: Yeah, you are. What's up, dream team?

Speaker C: Hello. How's everybody doing?

Speaker A: We got a great Friday. The sun is shining. We're going to hit triple digits today. We're not going to talk NBA draft. We've, we've been told there's no, We've exhausted that topic, guys. There' no more. There's no more. So we're going to talk another sport later. Um, but first of all, want to, um, remind everyone this show is brought to you by Dentist Advisors. Uh, we are, you can guess, dental specific financial planning, tax and accounting firm for dentists all over the country. And one of the things coming out, uh, September, we have our second cohort of LaunchPad we're super pumped about. We've made some, um, major improvements. We've condensed the class. It's going to be eight weeks now, but we'd love to have you come. If you are anything, if you're, if you're kind of in that space of. I just need to know more about money investing, debt, how much liquidity to have, how to grow dental practice, how to buy a dental practice. Uh, this is going to be for you. You can go to dennismoneylaunchpad. Com. Early bird special. How was that, Robby?

Speaker B: Amazing.

Speaker A: It was pretty good. Hey, I just went on. I just shot from the hip there. All right, uh, Robby, let's jump in. You claim this is going to be short I don't believe you. Uh, uh, let's talk about. Let's talk about our current market levels justified. You want to tease some earnings here?

Speaker B: I want to tease some earnings, but I, I want to really tie it into, uh, equity prices. Uh, this is mainly because you and Jake haven't committed with a prediction yet, and I really want to squeeze one out.

Speaker A: We're in July, so it's like, yeah, no, I think I did. Jake didn't commit. I'm pretty sure. I can't remember what I said. I, I said I think we were gonna end slightly negative, but that one's looking bad back.

Speaker B: Uh, so the whole idea for why we're looking at these is that the market has been hovering near an all time high, whether you're looking at the NASDAQ, the Dow Jones, or, uh, the S&P 500. And earnings season is coming up, you know, in the next couple of weeks. And actually, there's nothing else on the market's mind right now but this earnings season and the Federal reserve meeting in 18 days from now, like, this is it. Everyone's on vacation. I said it last week. You should be, too. Like, really? It's not Akbar, it's. This is not the time of the year when the market is exciting.

Speaker A: Hopefully you buy the tool. Sipping in my tie, listening to this. Yeah.

Speaker B: 100.

Speaker C: Yeah.

Speaker B: So if we just, uh, you know, look backwards and I know that past performance is not guaranteed future return. It's the, you know, very cliche disclosure. 2021, the S&P 500 had a, uh, 24% return in 2022. Uh, three. No. 20, 20. 20, 2023. Oh, wow. We're that far into this decade. 2023 had a 24% return. 2024 had a 23% return. 2025 had a 16% return. And then so far, in 2026, we've got a 10% return. The market has kind of doubled in five years. And a, uh, lot comes to mind, like, are those prices justified? Are those prices too high? Is the market due to a crash just so it can correct back to the levels? And I have data that says no. And I have data that says we could keep continuing this for a good foreseeable future. And that is because market return is composed of three main returns. That market return you see on the S and P can be decomposed into earnings, into dividends, into and into valuations. So let's start with the, uh, uglier one, the valuations. Valuations are measured by some ratios, such as the price to earnings ratio or the price to book ratio, which is the price investors pay to uh, as a multiple of the earnings for the company they're owning it. So when you are buying a Stock With a PE ratio, price to earning ratio of 20, it means that the current stock price is 20 times more than the earnings. So you're expecting to get 20 years of earnings equal to the current price. This is what the market places. The good thing about earnings is that if you look at historical graph all the way back to uh, like the early 1990s until today, it's fluctuated between a band where the high is around like 23 and the low when there's a, you know, dot com bubble COVID08, that ratio goes all the way down to 16. So if you look at it over a 30 year period, it fluctuates in a channel. It doesn't trend up or trend down like we see with prices. So on the long run valuations have not have really an impact on long term growth in equities. And they've only contributed like 0.3% out of the, you know, compounded growth rate of the stock market. That's around 9% that we see. Right? It's, it's out of that 9% that the market makes only like 0.3% comes from valuations.

Speaker A: So Robbie, I want to hit on that for a second because you hear, we hear a lot of, of talking points from talking heads like us. Are we talking, I think we're talking heads. Um, but we, there's a lot of talk around this market's expensive right now or the market's cheap like this. And what they're referring to, right, is valuation. So if I'm hearing you correctly, you're saying a lot of that is just talk show fodder. It's like it doesn't really, it's not as important as the other two things that you're going to be hitting here. Is that a fair summary of what you just said?

Speaker B: On the long run, valuations will not matter unless you are buying at a point where they are very, very elevated. So just to give you some more data, the last, over the last 1330 years, the average PE ratio for the S&P 500 was 17. Okay. Uh, that doesn't mean that the market is only fairly valued when the PE ratio is 17. It fluctuates more than that. It's more probabilistic. So we start looking at like one standard deviation above it, one standard deviation below it, which within that range The PE ratio should exist like 68% of the time. Right. The lower end of that range where 68% of the time is going to be in it is between 14, is at 14 and the upper range is around 20. So if the PE ratio is between 14 and 20, well 68% of the time it should be there. When does it become like extreme? And that is really where, uh, investing will be impacted by valuations and valuations are going to hurt you is when you are talking in the 2 standard deviation range. At a 2 standard deviation range channel, it means that on the lower end, uh, the PE ratio is around 11. That is where it was in 2008. Like if you 2008 is the best time to buy PE ratio was at 11, but that is two standard deviations away from the long term average. If you look at the upper end like what is two standard deviations to the upside? What is this PE level that if I invest at? Yes. Valuations are going to erode my other portions of my return and probably the market's not going to do well to me for me. Well, two standard deviations above from the 17 puts you at uh, a 24 or a 23 point something. Um, at a PE ratio we're currently at 20. So for the market to move from a 20 PE to a 23 PE, probably the market could rally another 20% before we get there at current earnings. But what we know is that earnings every single year increase. So that ratio maintained. So to just a short answer after this long ramble, only when the PE is very elevated 23 and above does

Speaker A: uh, it become a concern.

Speaker B: It becomes a concern. And these earnings are not the earnings that have happened. It's the expected earnings over the next 12 months which, which are usually higher.

Speaker A: Got it. And to that point there's two parts of the equation. There's the prices and then that. So that ratio could also be decreased rather quickly if the company's. If the earnings come up higher than expected and it supports that price like it. I think most people think of that ratio, they're just looking at the price. A hundred percent usually. Yeah, but it's earnings supporting it also impact that number big time.

Speaker B: Exactly. Because let's say prices stay where they are, but earnings come in and they come in really well, then this ratio drops, the denominator in the equation drops and suddenly the market has become cheaper relatively. So now we're saying what are valuations? Well, we're not at the average, we're slightly above it. But that magnitude by how much uh, we are above it is still almost half until we get to the point where we say, oh, it's ah, overvalued from a big valuation standpoint. So if it's not a valuation, what are the stuff that are contributing to that 9% growth that we've seen, you know, over the last like 30%, 30 years in the market, 9% uh, return on the S&P 500. And that brings us to the other two elephants in the room which are dividends and earnings per share growth. So what we have is we have here based on the time period that I looked at, which started in 2001, that's why the annual return is slower. But looking from 2001 until 2026, uh, S&P 500 total return, you're assuming you're investing your dividends, uh, based on this data, I have uh, compounded annual growth rate. The COGR for that period for the data that I have is 8.82%. We said that the valuation was only 0.3. So how do we broke down the rest? The rest are dividends and earnings per share. Surprisingly, the dividends only come or account for 2% out of that 8% just because companies are issuing dividends, which means that all the remaining returns, 6.5% of the return is coming from earnings. So it has to be that earnings are growing so well for the market to reflect it. So let's look at earnings for the past couple of years and see whether they match with the uh, you know, double digit return we saw in the market for the last couple of years for the stock. If the earnings are growing as much as the stock is growing, then the stock is justified to be growing that much and markets are not as elevated. So if we look at the earnings for the last couple of years for the s and P 500, uh, 2020, uh, three, they did not grow the United 0 2020, uh, four, they grew 10%. 2025, they grew 13%, uh, and then 2026, we're expecting them to grow 2020 at 24%. So in all three years we, we had positive double digit earning growth. Well, you tell me the market went up 20% but earnings only went 10%. That is totally normal. The companies are all, they all have debt, they all have fixed expenses, they are leveraged, whether they are operationally leveraged or financially leveraged. So a small amount of earning reflects in a bigger magnitude in stocks and a small drop in earnings reflects in a small bigger magnitude on the downside in stocks. So what we're saying is that the market has gone up, uh, double digits for the last five years, backed by the fact that earnings have been growing up by double digits for the last five years. The profitability of companies on the S&P 500 has never been higher in its history. Companies are making more money more efficiently than they ever did, which justifies prices for the last five years. Are there smaller bubbles here and there, whether it's semiconductors or oil or problems with private credit, AI total normal. But when you take the 10,000 level view, we're in a very healthy position and we can churn into this macroeconomic environment for a really good foreseeable future.

Speaker A: I feel good, Cody. You feel good?

Speaker C: Uh, yeah. Couldn't have said it better myself.

Speaker A: Our massive portfolios that we have, uh, my personal wealth, uh, feels good. I'll get Cody in here if you have any follow up or questions.

Speaker C: No, yeah, I mean I was just thinking to, I guess to try and summarize this in plain English for the average person. That's not Robby for if someone is looking at like why has the market grown so much over the last few years? It sounds like the main reason is because of the high earnings. Right. Like there's a few different factors we can look at, but if you were to summarize it, it'd just be like the earnings have increased, I mean pretty rapidly. And so because of that, that is what has moved the market so much compared to all the other factors.

Speaker B: 100% companies are healthy, comedy is unhealthy. And if it keeps going up, we should not be as worried. Because earnings for example in Q4, 2025 grew at 14% but uh, 2026 they grew at 30%. And this earning season that's going to be starting this month is expected for earnings to be growing at 24% and for the rest of the year, also in the 26% range. Those are very big earning projections. And if they materialize, the market has to follow or else the market becomes too cheap. And at that point this means we expect prices to be higher by the end of the year. And that uh, should not be a source of worry just because it's fundamentally sound.

Speaker A: Yeah, I love this stuff Robbie, because I think it just gives such, uh, it gives really good context to something that seems like uh, so we talk about like prices. I think that's really common for people to be like, we've been on this terror, this, this incredible like three year tear, four year tear of Mark, you know, of um, the stock Market. I think people immediately think, well, we had that in 0809. Like lead preceding 0809, we had that preceding the dot com bubble. So they look at one factor which is rising prices. And I think it's just easy to be like, oh, well this, this is starting to feel like that. But I like what you're doing. You're lifted. You're kind of looking under the hood and saying, no, this is not the same thing. Like you can have rising pricing, a rising price environment, uh, in two different scenarios. The, what preceded 0809 was completely fake, as we saw. What's happening now is not fake. It's, it's the same thing in the housing market. What we've seen like again, same thing, uh, with what's happened with housing prices over the last several years compared to again, what preceded 08 09, that this was simply a supply and demand, fundamentally supply and demand with housing. We're not, it's not like all of a sudden because prices went up, there's some crash. So I just think it's really so good that you're kind of showing the context here that it's not like what goes up must come down. It's not that simple.

Speaker C: Uh, I think something too, it's important to note is I think a lot of our clients and just people in general, when they talk about the market or trying to pick specific stocks, they're like, well, I want to, you know, this is going up. I want to put my money into this. And I think it's important to ask why, like, what's your reasoning behind that? And most of the time I'm just like, well, it looks like it's trending upwards, but they don't exactly know like what that means or why it's trending upwards. And this is helpful where you can kind of back it with some data and say, well, the earnings are going up. That's what's affecting this. For a lot of people it's more of just like a vibe thing where they're like, hey, it looks like it's going to be good. Let me just put some money into it. Kind of more like betting in Vegas where they're like, I'm just going to bet on this. I don't know why, but I hope it does well, versus there really is some analysis that goes into this as to like, why the market's going up

Speaker A: or down for sure. Robby, anything else you want to add on this?

Speaker B: No. So awaiting earnings season and whatever guidance companies will say about their Future earnings, whether they expect us to keep spending like we do or whether they're seeing a certain pullback that will determine the path of the market prices. So it's not the vibe, as Cody said, it's really how much money is being made, uh, for these companies.

Speaker A: Yeah. And I think it's like in practicality for the actual investor. I mean we've seen this Robbie, recently with specific client cases or you know, new dentists coming on board with us. And we've heard this seems to be a theme right now with dentists, um, and, or their spouse's partners. It always seems to be maybe the partner that's, that's like no, we've, it's been too good. We're like something's happening. Like we're going to have a downturn here and we've seen sitting Dennis sitting on a ton of cash, kind of like waiting. So I think, well, I think what we're highlighting here is A, you can't outguess uh, this B, maybe most importantly to what Cody's re emphasized here is there's room to grow, there's still room to run here. And if you're sitting on cash kind of waiting for something that, that could erode your wealth faster than anything, um,

Speaker B: that's worse than, you know, a 10% correction. So what if it drops?

Speaker A: We're here to help. Yeah, exactly. Especially if you have, you know, our typical listener and client is in their mid career. You've got a, a long Runway in front of you, you know, trying to out guess this thing is going to be um, much more detrimental to you. So. Awesome. Robbie, that was great telling us. I think you just guaranteed that the market's going up for a while. So. That's, that's, that's what I heard. That's what I heard.

Speaker B: I said we have to hear from the guidance.

Speaker A: Oh yeah, that's what it is. That's what it is. Um, right now our content team is freaking out. But I said guaranteed. That was sarcastic. Everyone. Okay, let's jump in, uh, Cody, to the World Cup. Like I said, we have been told. I, I think we can still talk sports. We just cannot talk NBA draft. Yeah, we've shifted to a different sport. World cup is going on right now.

Speaker C: Mhm. I'm not a huge NBA fan, so you don't have to worry about talking NBA draft with me. I probably won't even know what you're talking about.

Speaker A: Yeah, Hockey. You're. You're hockey and soccer, right?

Speaker C: Yeah, yeah, mostly hockey. Soccer right now. Just because the World Cup's going on, but I feel like that's how everybody is.

Speaker A: Yeah, for sure.

Speaker C: But, uh, I. I woke up this morning and I thought the World cup finals coming up in a couple weeks, if I were to just decide, like, I'm just going to pull the trigger and go, how much would it actually cost? Right. And so I ran some numbers and I looked at flight, like flying out of Utah to New York. What are the ticket prices? What would the hotel cost? I mean, with this. There's been a lot of controversy with FIFA and how they've done their pricing. They're like, doing dynamic pricing for the first time ever. And anyways, it's just. There's been a lot of controversy.

Speaker A: What does that mean? I don't. I've never. I haven't heard this.

Speaker C: Dynamic pricing is where FIFA themselves, they change the prices as, like, demand fluctuates versus in previous years.

Speaker A: They just set the price.

Speaker C: They would just set the price. People would buy the tickets. And then in the secondary market, obviously those fluctuate. Um, but I think FIFA, they're trying to, you know, capitalize on some of the potential profits.

Speaker A: So it's like surge pricing for Uber.

Speaker C: Yeah, exactly. It's same exact thing. So just in previous years, they've never done this, and now they are. And, like, some people are pretty upset about it. I'm not a big enough fan of soccer to have, like, paid a lot of attention to it, but. Yeah, but it's been a big thing and kind of a big controversy, but. So I thought, what does a ticket price actually cost now? So we went online and looked for the cheapest ticket. The highest seat with the worst view, if you want to go to the final, is seven grand. Whoa, $7,000. Now, some people would say that's worth it. For me personally, it probably wouldn't be. But if you include the ticket price, the flights and the hotel, this is excluding food, excluding, if you want to buy a jersey, all the other stuff that's involved, just the basics. It's $10,600 up to $11,000. So pretty expensive trip just to do on a whim.

Speaker A: Yeah.

Speaker C: Um, so I started thinking, obviously this is a little bit more subjective, but at what point does the cost become not worth it to you? Right. Like, I was trying to think, is there actually some evidence, some type of data where there's a tipping point where. Where the experience just isn't worth it? And because it is so subjective, I couldn't find a study where it showed an actual Number like an actual tipping point. But as I was doing some research, I did find some things that I thought were pretty interesting. Now when I was researching this, I started to compare those that are in a higher wealth class compared to those that are in a lower wealth class. Who would actually enjoy this experience more? I want to hear your thoughts on this. Who do you guys think would actually enjoy these tickets and this experience more? Like a wealthier person or someone on the lower end?

Speaker A: Robbie, you want to go?

Speaker B: I, I'm not 100% confident in my answer, but I would say if, let's say it's a seven grand ticket, maybe like not the lowest income, because why would you spend seven grand on it, but someone who is, uh, being upsold. Like, I usually spend a thousand bucks, but this time I'm spending seven. It has a special meaning to it more than someone who can throw a seven grand everywhere. It's why clothing brands keep upselling us. And you always go, you know, the ones who buy the expensive brands are the ones who are slightly below its affordability. So I think the same psychology works here. That's my opinion of it.

Speaker A: My instinct was very similar, which was I would imagine the lower end of the income. Like I've been. I just am visualizing someone who like, saved up a bunch of money who can't technically afford it, but they're a mega soccer fan and they're like splurging for the first time in their life and it's like the only thing they're going to do for the next five years outside of, you know, like, uh, like it's like their big thing. I would imagine my instinct would be like, that person would get more joy out of it than some rich dude who goes to things like this all the time. But I have known if that's right.

Speaker B: Yeah. If you're listening to them and they're saying, oh, this only happens once every four years and I'm only going to do it once in my life, those are the people who are enjoying it more.

Speaker A: That's what I would think. Yeah. But, uh, but Cody's giving me a wry smile. I think.

Speaker C: No, that. Honestly, that's what I thought too. And again, there is some subjectivity to this. And so I'm sure there are some people that if they intentionally saved up for it, then I think they probably would enjoy it a little bit more. But I was reading this study that was done a few years ago, and it actually said that those in higher financial classes actually enjoy experiences over material purchases more than Someone in a lower financial class, which I thought was interesting. Like, we talk a lot about. And there's so many studies that have been done that show us that experiences give us more happiness than buying material things. Like, if you buy a ticket to a concert for a band you really love, that's going to give you more happiness than buying, like, a cool car that you want or something like that. Right. So. But I just thought that this was interesting because. And it makes sense. It kind of goes back to the hierarchy of needs. Right. Once your needs are met, then you start to enjoy these experiences more. And this. Robbie, you were right on this. Like, someone who really can't afford it. Yeah, it. They're not going to enjoy it as someone as much as someone who. It's just like, extra change for them. Um, but what I found is that those that are paying for experiences they can't afford the price actually triggers the same part of your brain that registers pain, which I thought was so interesting. Like, for someone who. They can afford it, they're really enjoying this experience. For someone that can't afford it but still decide to pay for it anyway, they're registering pain in their brain because they know some of my other needs are actually being taken away for me to have this experience.

Speaker A: Yeah, that's interesting.

Speaker C: So, again, I mean, there are some super soccer fans, and if they've been saving for four years and they have the money and they've intentionally saved it and spent it, I'm sure it would mean a little bit more to them. But I just think it goes to show when it comes to financial planning and one of my first meetings with my clients, I always say that, um, half of financial planning is figuring out what your goals and needs are. And we need to plan for those first.

Speaker A: Yeah.

Speaker C: Once those are taken care of, like, by all means, go buy the ticket and you're going to enjoy it a little bit more because you're not so stressed about it.

Speaker A: Yeah. Yeah. That's interesting. There's obviously nuance here, and I think. I think one of the most underrated things that we don't talk about enough with all of this stuff is simply personality. Like, personality. And that maybe seems obvious, but I just don't think we put enough emphasis on that, that we talk about these income brackets and spending brackets and all this data. But it's like this could just simply come down to literally personality, because I think there's personalities out there that, uh. Like, so, for example, Bill Perkins talks about this and Die with Zero, his roommate when he Was growing up or he was in college. Put, he went to Europe, couldn't afford it, put it on a credit card or. No, he went to a loan shark. He went to a loan shark and uh, took like $10,000, this is back like 30 years ago or longer. And went on a trip totally on debt and loved it and like never stressed about it and was like this is my, you know, I'm just experiencing life and I'll regret this if I don't do it. But to your point Cody, like, like for me that would have, there's no way I would, I would have like I couldn't have enjoyed the trip because I would have been too. I would have registered that pain. So I think part of this is just personality. The other thing I want to mention is I'm curious from your guys perspective when you talk about the higher income people enjoying experiences more than material goods. And it sounds like you're saying Cody, the lower income don't get as much joy out of experiences according to this study.

Speaker C: Right.

Speaker A: Yeah, I uh, wonder if that could simply become. And maybe it mentions this but my, the first thing that I thought of was well yeah, the quality of experiences when you have money is way higher. Like just taking like uh, for example a flight, like someone flying first class. They're both on a plane but someone flying first class versus in the back with the crying baby. That's a different, that's actually you're on the same plane but it's a very different experience.

Speaker C: Yeah, 100%. And I think, I mean it just goes back to this study. Part of what it's saying too is that if you, the people that have a lower class income, they value material things a little bit more. Which makes sense because when they're buying it they're like I need this. There also is a possible resale value to this versus paying for an experience. It's just like I'm paying for this, I'm going to enjoy it. But once it's over, it's over. Yeah, there's like no material thing to hold on to. And so yeah, again it's just everyone has a little bit of a different experience like you're saying. And personality like you said, that can make a big difference. But yeah, I just thought, I thought it was interesting the different wealth classes enjoy experiences differently which I hadn't really thought about before.

Speaker A: Yeah, it's interesting. Robbie, let's get you in here. You got thoughts?

Speaker B: Uh, I do, but they're gonna get too nerdy.

Speaker A: Get them freaking get nerdy. Dude, nerd out.

Speaker B: What this is, uh, this is a very well studied theory, uh, utility theory in microeconomics. I told you it's going to get nerdy. But it's all about how much utility you're getting from the experience. And uh, you think of it marginally as in for the next dollar I spend or for the next 10 bucks I spend, how much do I get closer to maximizing the full experience? So let's say enjoying the whole experience gets you to a score of 100%. Well, let's say the first hundred bucks I spent is probably, I don't know, going out to a pub, a sports bar and watching the game with a couple of friends. You know, you splurge on a couple of beers, you're watching the experience, you're watching the final. You probably got 60% of the experience just by spending the first hundred dollars, you spend the second hundred dollars. Let's say you guys all dressed up and had paintings and you were in a soccer party, et cetera, while you got probably not. You didn't jump from 0 to 60, you probably jumped from 60, 65. So when you get to that, the difference between spending a thousand dollars versus seven thousand dollars on that experience is going to get you closer to the a hundred percent score between probably a 92 to a 96. Because even there probably, uh, another fan spilled their beer on you and you and it's kind of ruined your experience. So the whole idea is you don't just look at the experience in terms of like, how much fun am I getting? But it's more marginal for an extra dollar that I'm spending. How much does the utility or the enjoyment from the experience increases? And what the theory tells us is that that relationship between the extra dollar versus the extra fun or utility is a very personal, just like Matt said, is a very personal personality based type of situation. And this, you know, personality, it's translated mathematically through this utility theory, but it's also uh, translated mathematically through risks preference. So um, when you know, you guys are going through the financial planning process with dentists and you're talking about their risk aptitude and their risk capacity, well, what determines how much risk they can take and how they emotionally and behaviorally react to that risk is very similarly related to how much pain or reward they get from uh, instead of a dollar spend a market return of 1% or a market drawdown of 5%, etc. So sorry, I went on a ramble.

Speaker A: I love when you give your. They've, they've done the same. Very well studied, same concept, Robbie. Around, like, income levels. It's the exact same thing where it's like the satisfaction or joy or fulfillment you get out of your life from $0 to 50 grand, then 50 grand to 100 grand, and then a hunt. Like, those incremental increases, at some point, it also, you know, diminishes. The other thing I thought of when you were getting nerdy, and I loved it, um, when you said, like, the friend spills a beer on you or whatever, like, there's like. I also was thinking the pressure, depending on your personality.

Speaker B: Yes.

Speaker A: The pressure that is increased on the experience for you to enjoy it incrementally goes up as that number goes up as well. I would imagine some personalities. That's just a lot of pressure. I spent 10,000, $11,000 on this experience. I dang well better enjoy it. And you're maybe you're, like, hyper aware of things because the expectations are so elevated. I. I'd imagine that could change it too.

Speaker C: Yeah. It's like, what if it's not the best experience you've ever had in your whole life? And that's what you're expecting like that. Yeah. That can be a factor in it too, for sure.

Speaker A: Yeah. All right. That's awesome. Robbie, any other. Or, Cody, any other thoughts on this?

Speaker B: Who are you guys rooting for for the finals? Who's going to win? Prediction?

Speaker A: I genuinely don't even know who's still in it. I think. I mean, I know. I do. I know a couple of teams. Like, I know Argentina, uh, is one of the favorites. I know France, right?

Speaker C: Uh-huh. Yeah. I think France.

Speaker A: I think France. I think France is the ultimate favorite. Don't they play Morocco soon today?

Speaker B: They did yesterday, and they beat Morocco.

Speaker A: Oh, they beat Morocco. Okay. I'm not even following yesterday. Did they. Did they. Did they beat him, like, soundly? Was it, like, pretty easy?

Speaker B: Win two, zero, do zero.

Speaker A: Okay. All right.

Speaker B: That's a solid score in soccer. Yeah.

Speaker A: Yeah, yeah, yeah. So I know France is the ultimate favorite, right? I'm gonna go with the favorite. I'm gonna go with Mbappe in France.

Speaker B: Okay.

Speaker C: Yeah, I don't have. I honestly don't have any predictions. I think the games are fun to watch, but I don't know, like, enough about soccer to really give a good prediction. I think it'd be cool if Messi

Speaker A: won, but that would be cool. Wait, how about the freaking, um, my family, you know, I have heritage and my. My Norwegian heritage. And I know, like, the I know the. The guy. Um. What's his name?

Speaker B: Erling Holland.

Speaker A: Haaland. Yeah. They're still in it. Yeah.

Speaker B: Yes. Yes.

Speaker A: Okay.

Speaker B: I don't know. In the next couple of days, they should be playing to see whether they make it to the semifinals.

Speaker A: Okay. I'm kind of rooting for them because that dude's a homie. I know. He's kind of been like, the darling of the. Of the tournament. Right. With all the videos that have come out, so he's got that long hair, maybe. Norway is my team. I think France is going to win, but I'm cheering for Norway.

Speaker B: Interesting.

Speaker A: We'll go there. What about you, Robbie?

Speaker B: Uh, um, m. I love both Argentinian and French team, but I want them both to get. So I want you eliminated, Matt. I want both France and Argentina to be in the final. Because two World cups ago, in 2018, held in Russia, it was France versus Argentina in the final, and France won it. And the last World cup in Qatar, it was France versus Argentina in the final, and Argentina won it. So it's, you know, the best of three. I want a rematch to see which. Yeah, I. I really want to watch.

Speaker A: Okay. So this is like, uh. This is World cup rivalry. This is like the cavs warriors from 10 years ago.

Speaker B: Yes. But it takes eight years to unfold.

Speaker C: It'll take another four years for it to actually be a best of seven series.

Speaker A: There you go.

Speaker C: It's like 16 years in the making.

Speaker A: Messi's going to have to play till he's 60 for them to finish off the best of seven series. I like it. Uh, uh, okay, that's awesome. Uh, all right, last thing. We'll keep this quick, but are you saving enough? So I saw, um, they released some data. They tracked this. Robby, do you know how often. I actually don't know this. How often they're tracking. The most recent was May. Is this a quarterly figure? Do you know.

Speaker B: Let me pull this up. I was just up, uh, monthly.

Speaker A: Monthly. Okay. Well, the most recent, maybe they haven't released from what I saw was the most recent data they had was May. Maybe they're late on June, but, um. So in May, uh, the, uh. The savings rate of the average American dropped to 3% from 4.4%. So to highlight the first kind of, I think, maybe obvious, uh, part of that is. I don't know if you would. Robbie. I don't know if you'd say, like, a weakening of the economy, like a, uh. Uh, would you consider that a forward indicator, a leading indicator of Weakening or could this. My first thought was just like, well, yeah, gas prices are up and inflation's ticked a little bit higher. So it's not like that crazy to think, but what's the overarching kind of surface level take of this, of seeing that drop?

Speaker B: I don't think it's weakening because if they're saving less, it means they're spending more. And when they spend, that economy gets lifted up. The problem with this number, just looking at the data, how it's collected, it's calculated as a residual. Like, there's no survey out there where they go to people and tell them, hey, how much did you save at the end of the month? Dude, we know it from our clients. People do not know how much they're saving. We need to be able to track the numbers. So what ends up happening is that they see how much they made from payroll tax, etc. They see how much companies, uh, have made on a quarterly basis by sales, and they kind of estimate how much was left in people's pockets. So because it's a residual number, it doesn't really have big predictive powers, unfortunately.

Speaker A: Yeah, that's. I'm glad you brought that up. And I'm, I'm. You led right into what I wanted to talk about, which, uh, it's really difficult to know this, but what I did, because it's. I think it's really hard to say, like the average savings rate. And to your point, is it really a savings rate? It's like the average surplus, the average income surplus. Really what it is, is 3% right now. Does that mean it's actually being saved? I don't know if we can. That'd be impossible to determine. Um, but to go even deeper, uh, averages don't tell us much. Like, the average American doesn't really exist. Right. It's just like that's a culmination of all these numbers. So we broke it down by income quintile. And I think there's more of a nuanced take here. So if you look at the lowest 20% Americans, uh, they're not saving money. They just aren't making enough money. Um, and even really the bottom, if you really look at the bottom 40%, there's no saving of money. Like, we know all of the data that's come out, all the clickbaity, uh, articles that have, like, you know, most Americans wouldn't be able to, uh, if they had a 400. It was a $400 emergency, they wouldn't be able to cover it with cash, the bottom 40% aren't saving any money. The middle 20% is right around that 2 to 3% surplus. If you look above that though, the top, the top 40% of Americans. So this is the kind of that fourth 20% quintile, their surplus according to the labor, the Bureau of Labor Statistics, they have a surplus of about 16%. And if you look at the highest income earning Americans, they're showing a surplus. This is net of taxes by the way. Robbie and I, we were running the numbers prior net of taxes is about 29%. If you look at gross figures, that's about 20%. But either way there's a wide, wide spread here. Widespread around lowest income Americans simply not making enough money to have a surplus. But if you look at the highest, so let's be honest who we're talking to, dentists are always in the highest quintile, um, for the most part at least on average they uh, have a surplus here of let's say 15 to 20%. Could be even up in the 30% depending on what you make. Because right now the highest quintile, uh, for Americans, for pre tax income is $264,000. So I think the nuanced, the kind of, the, the more detailed take here is that if you're not saving enough money, it's one of two things. For a lot of people, if we're just talking general Americans, it is a simple income issue. You just don't make enough money. But for the dentist that we're working with, that we talk to, and I think majority of dentists out there, it's usually that you are, you're making plenty of money. I think that's where it becomes, when you get into those upper quintile areas, we can point more to a spending problem. And so I think I want to throw it to you guys, get your thoughts. But I just wanted to take this a little bit further than just like here's the average American. First of all, we're not talking to the average American. And for the average dentist that we're talking to, let's say making four or five hundred thousand dollars if you're not saving enough money, I is just too controversial to say, like it's most likely gonna be that you have a spending problem. Yeah, any, any thoughts that you guys

Speaker B: have, I think the data teaches us something like if it's for the lower quantile, uh, they don't have any surplus, uh, surplus. But then the second, was it quantile, was it in terms of tens or twenties, whatever twenties in twenties, the next group, uh, actually has a surplus. So the previous, the first group doesn't have a surplus. The second group does have a surplus. This means if we make the assumption that people are only spending on needs, not wants, it means that in between those two income levels, this is the number that you need to survive in the US if you just want to live, you're not splurging. Maybe you have a Netflix restriction. I do not know, like, how much splurging you're doing, but you're just living based off necessities. Where you draw. The cutoff is there. The cutoff is in between the first group and the second group. The cutoff isn't in the middle or at the top end. So knowing that, oh, I'm in the second group and upwards means I, on paper, have enough money to survive, then it really directs the conversation to be a spending problem. Like you did you, uh, just said. Matt?

Speaker A: Yeah, yeah. Cody, any thoughts on this?

Speaker C: Yeah, and I agree with you, Robby. I think it's important that we just understand that it's not about how much money you make, which, I mean, that is an important piece. But do you make enough to fund your lifestyle? So if you are making enough to fund the average person's lifestyle and you still aren't saving anything, then we need to look at, like, you're saying this is a spending problem. Like, are there things in my lifestyle that are hindering me from being able to put money away to save, to invest for my future?

Speaker A: Yeah, for sure. Well, and I think that the. The simple kind of summary here is at certain points, like, let's just even take a dentist specifically, because that's obviously who you work with. There's a phase of your life where it truly is like, the, the. The focus is, like, you have to earn more money. Like, that's just the fact you have to earn more money. And Dennis might be out there listening, maybe yelling at us right now, being like, we have way more debt than the average American. Which is totally true. And so, and far too, way more complexity than the average American. Like, we know this. We've done this for a long time. Like, our business is built on this. So we totally get that. But I think the summary here that we want to take away or we want to add here is at certain phases, m. The focus is you just have to earn more. But I think the difficulty is at some point, at some point, the challenge and the focus then shifts, um, from you have to earn more to, hey, your lifestyle is creeping up far too fast with your income. And now you've got a spending problem. And I think that that sounds simple, but it's a really difficult focus and mindset shift when it's like you shift out of like. Or you think, I just got to earn more, got to earn more, I got to earn more. It's like, yes, that is an answer for a while. And you got to make sure that your, your spending is not tracking, uh, uh, upwards with your, you know, endlessly with your, with your income. So yeah, go ahead, Cody.

Speaker C: Oh, yeah, you're talking about spending creep. And we hear this all the time about living within your means. Now everyone's means are a little bit different. A dentist is a little bit higher because they have student loans, right. They have business loans. Living within their means just means if they have higher needs, they need to make a little bit more. But you are right, it does come to a point where you need to make sure your means are not continually increasing with your increased income. Like, uh, can we keep track of what my means are as my income goes up? Yes, there's some more luxuries that you can afford, but we always have to keep in check. Am I still like, consciously living within my means so that I can also plan for the future?

Speaker A: Yeah. And if we talk about what that. What means mean, right? Cody, I think there's, I, um, think there's an important part here that we can. We, we talk about this all the time. What we would consider your means is, especially for a dentist, once they get to a level of income, right. That's far above the average American. What that is, what that means is, is everything that's left over after you've established your intentional savings rate and then you can spend on whatever you want. But I think the issue is a people aren't. Dentists aren't getting organized around this. They're not actually thinking about this. They just are living their life like all of us. And then if. And all of a sudden they're like, holy cow, I've. I'm spending X number of dollars. I didn't even know it. And now I'm. What I. You're telling me that I have to decrease that spending like that, that becomes a challenge. So this has gotta be something you're tracking on a regular basis. You're getting organized around and knowing again, what that means is, is for you. How are you defining that for yourself? Robby, any thoughts on this?

Speaker B: Yeah, I like this because, uh, it's uh, two sides of the same coin. They usually Say when you start making money, money changes you. Like, right? We hear that a lot. And it does change you because the type of person that you need to be to solve an income problem probably is someone who's hustling, who's trying not to be lazy, who's being very ready for every opportunity, who's sacrificing leisure just to get their income level to a certain point. But once you're in a territory where it's not a spend, uh, income, uh, problem but a spending problem, then the type of person that you should change to be, uh, is probably someone who's more intentional with their spending. Someone who has a long term view, someone who's patient to learn how compounding can take care of them for a bigger financial picture. And those are, I don't know, skill sets or values or behavioral attributes that actually need practicing to develop. So when they say money changes you, it's not in the, you know, the cliche way. We know money changes you. But money, if you want to be successful across the whole spectrum of income and spending, you got to change how you approach it and your mindset to it before the spreadsheet. Answer. And this is, I learned this with, you know, hanging out with advisors with it Smart, Will Taylor, Jake, Cody. Right. Because I just look at the spreadsheets like it's right there in front of me. But the behavioral aspect and knowing how to change with the money is, you know, 80% of the way really.

Speaker A: Yeah, it is. It truly is. And it comes back to what we were saying earlier, which again, personality is so critical. I think the classic 2000 year old uh, advice of know thyself. Right? Like you really do have to know your, your personality and how you like. There's some work to be done around that and knowing what you want, knowing how you approach money. Um, because to your point, Robbie, I don't think it changes you. I think it exposes who you are. Money, you know, it's just a reflection of who you are. Um, so I think one of the biggest takeaways I would, I would give on this one when it comes to spending is if you're going to be careful with anything, it's going to be your fixed commitments. Meaning the, the two that I think get people the most in trouble are houses and cars. In my opinion, uh, the occasional vacation. You know, I mean, ah, a lot of things get people in trouble. But if I'm going to boil it down to two, it's overpaying for a house and, and cars. It's Those things that, like, you get that. That burst of, you know, dopamine when you buy the house, and it's like, oh, I've got a $15,000 payment now for 30 years. Like, I think that's what actually ends up getting people in trouble. What would you guys agree with that? What would you say?

Speaker C: Yeah, I'd agree with that. Like, we. We've talked before, just in our meetings, about the things that, uh. Like you're saying, Matt, the things that affect people's budgets the most. And we'll talk to people, and they're like, I need to stop eating out so much, or maybe I should cancel my Hulu subscription or, I'm not going to get guac on my Chipotle burrito or whatever, you know, like, those are kind of small, incremental things, when the big things that are actually affecting them the most are the big purchases, the houses, the cars, things like that.

Speaker A: So. And I will put vacations in there

Speaker C: actually now, because, yeah, I would agree with that. I think vacations are a big one.

Speaker A: I think that's a huge one. Um, because we, Taylor and I did that, uh, podcast a while back on vacations, and from 1950 to today, we spend eight times on vacations than we used to, inflation adjusted. So the average American today is spending eight times what the average American did in 1950. So vacations are definitely a big one, too. So I also think it's always interesting when we have this conversation, uh, with Dennis, and we talk to people almost always, no matter what, I don't care what your spending is. Almost always, people will be like, I'm not a big spender, whether they are or not, but most of the time they are. And they're just always like, we don't. We're not spending lavishly. We just, like, go on five vacations a year and have a $20,000 payment on our house. But, like, we don't spend that much. It's like, no, you objectively do. That's okay. But you actually do. Robby, you got thoughts? Let's get you in here.

Speaker B: Yeah, no, I agree with, like, what ruins you. And it is a house, uh, car, and probably a vacation, like, the rule for it. It's not just the frequency, like, Starbucks every single day. And it's not just the magnitude, one big vacation a year. It's both together. So if you have a high frequency of expenses and a high magnitude of it, then that's what ruins you. And if you're taking over three vacations a year, then now that you have a higher frequency of a high magnitude expense, just like a big mortgage payment. So look at your expenses, categorize them and see which ones rank high on magnitude and frequency. And those are the ones that your financial future depends on.

Speaker A: Yeah. And to that point, Robbie, it's, it's a really good point. The scary thing is that can feed on itself and build a really destructive cycle with like this idea of hedonic adaptation. So the more frequently you take a vacation and the bigger, like, uh, oftentimes what'll happen is you become used to it. So when you grew up as a kid and you're like camping and going to California once a year was like, felt like a huge splurge. As you make more money and you start to do that more frequently, all of a sudden you're traveling once every six weeks. Well, you have to maintain that to continue the, with the novelty. Like the novelty is now harder to achieve. And that's where it becomes an issue. I actually would argue we underrate like this whole idea of like the typical latte advice, like cut your daily latte. I actually think we underrated how the power of like little spending things in our life, like how much satisfaction we actually can get from those things. I think that to me it's the opposite advice in most cases to Cody, you said it earlier, we gotta be careful with the big stuff. Enjoy your freaking coffee. Like you're not gonna become a millionaire off of coffee. I don't care what anyone says. Um, it's the big stuff that, that I think is, is really what hurts a lot of people and just not being intentional about it. So go ahead, Cody.

Speaker C: Yeah, you keep using this word intentional. Like we've said it a few times and it is so important and we're not here. Like obviously there is a spreadsheet answer. Like Robbie said, you know, we can always look at the spreadsheet and be like, hey, you are spending too much. At the same time, we're not robots. Like we unders. We're human beings. We understand as advisors, like we have things that we want too. Right? It is nice to live in a comfortable, comfortable home. It is nice to drive a nice car. Like it's great to be able to take your family on these nice vacations. And so we're not saying that those things aren't, you know, a uh, draw for all of us and that they're not nice to have. But it is important to be extremely intentional about it. So if you do want to do a bigger vacation, like let's say you want to go to Hawaii. It's like, yeah, let's be intentional and plan we're going to go to Hawaii this year and we're not going to plan on, um, any other vacations compared to other years. Maybe they're like, we're going to do Hawaii and Disneyland and Florida. You know what I mean? So just intention, I think is so.

Speaker A: Yeah, I'm glad you said that. Cody. Money is meant to be spent. Ultimately it's going to be spent by you or someone else. That's the whole point of all of this. So we don't want that to get lost. Just within the bounds of a intentional plan and structure and understanding the trade offs of it all I think is critical. So Robby, also, we're going to finish this up. Uh, Cody just mentioned a car. Uh, I was on a client call yesterday and we were finishing up and he said, wait, I never heard what car, uh, Robbie ended up getting. So you got to share with, I think you got to share with the people because we. He was like, he was, he was like. So he's like. I was so into listening to Robbie's plan and strategy and everything he went through, but he's like, he never told us what car he ended up getting. So do you want to share with the good people?

Speaker B: Yes. I ended up getting a 20, 24 infinity QX50. Uh, specs wise, not the best car out there. But from my perspective, it was on the dealer's lot. It was the car that the dealer lends out as fleet when someone comes in to get servicing for their car. It was two years old with only like 6,000 miles on it. And it's been on their lot for a long time and they wanted to sell it. So from my perspective, it's like a car is a car. I have more cards to play against this dealer versus the other one. And I really enjoy that game. I negotiated for an hour and a half. I shaved like 8% of the price of the car for I was so happy with the price I got and not the call that I got which will.

Speaker A: I love it. I already, I told my client, uh, who I talked to about it. I was like, and I'm going to. I said, I think on the show, but I'm going to repeat it. That next, uh, time I buy a car, I'm taking you with me. I'm going to fire you.

Speaker B: I'll gladly do it.

Speaker A: Personal car buyer. You should do that as a little like side hustle.

Speaker C: Robbie's got to start. He could start a new business.

Speaker A: He really could. Like, you need help buying a car? I'm with you. I will.

Speaker B: I can see the lawsuits flying in.

Speaker A: Uh, so. Great. Awesome. Okay, guys, well, this was great. Hopefully, uh, we, there's a couple of nuggets here for people to take away. So if, uh, you're out there listening and you need help with anything to do with money, taxes, investing debt, we are here to help. You can go to DennisAdvisors.com book on the, uh, click on the book free consultation button. If you get lucky, you're going to get Cody. If you get lucky, um, you'll talk to one of our friendly advisors. We'll listen to your story, you know, understand your concerns and be able to help you, uh, you know, get on the path to work being optional. So for now, Cody, Robbie, thanks for being here, sharing your words of wisdom. Everyone, thanks for listening. That was our 2 cents. Until next time. Have a good weekend.

Speaker C: Bye.

Speaker A: Bye.

Speaker B: Hey, Dennis Taylor here, financial advisor at Dentist Advisors. If you're part of a dental study

Speaker A: club, we'd love to present at, uh, your next meeting.

Speaker B: We offer CE approved presentations that tackle real financial issues. Dentists face things like managing cash flow, investing wisely and preparing for practice transitions. Whether it's in person or virtual, we make it easy to bring high quality financial education to your group. Visit DennisAdvisors.comstudy to learn more.

Speaker C: M.