Evan and Jim join Paul on the show today to talk about how easy it is to start heading in the wrong direction with your finances. The industry is designed to confuse you and wear you down, and people’s instincts lead them to what feels exciting or safe. Paul shares an honest clip about NFTs and how millions were lost in the craze. Listen along as these advisors share why living with purpose and knowing your plan puts you in the driver’s seat of your finances and helps you relax about money.
Want to cut through the myths about retirement income and learn evidence-based strategies backed by over a century of data? Download our free Retirement Income Guide now at paulwinkler.com/relax and take the stress out of planning your retirement.
Paul Winkler: Welcome, this is “The Investor Coaching Show.” I am Paul Winkler, along here with not just one other financial planner — certified financial planners, in both of these guys’ cases. Jim Wood is here with us today. Jim, man, good to have you in here.
Jim Wood: It’s good to be here.
PW: And Evan Barnard. Evan, he’s a regular around here. I’m not going to say it’s not special, but it’s not as unusual to have you around here too.
Evan Barnard: I know. I know.
PW: So I’ll throw some stuff out there, but you guys get to respond to some of this stuff. Everybody can see the brilliance around this room. A lot of things to talk about this week. A lot of things are going on in the world of high finance.
I was out and about yesterday and having a conversation with somebody, and I might even talk a little bit about, “You’re going to be so proud what I did,” and how often people just don’t get the academic and the evidence-based approaches on investing, even when you teach them. So, it bears repeating constantly when we talk about how we approach this investing process, because it is very, very hard to stay disciplined and do the things that we’ve got to do.
If we look at the research on investor returns, I did a video this week, guys. I don’t think I even told you guys this, that I had done this this week. So, I did a video this week.
EB: We’re just mushrooms out in the video.
PW: I know, that’s it. “And Paul goes into hyperdrive, putting garbage together,” but I thought this was really, really good.
The idea is, I do have a video, for people who have 401(k) plans, profit-sharing plans, just retirement plans at their workplaces, and the idea that I wanted to have was just a video that people could watch on default choices in your 401(k) plans and why they’re the big thing, but going in and say, “Okay, here’s what a 401(k) may look like, if you’re signing up for your 401(k). This is a video for people who have just gotten a job where they’re now eligible for their 401(k), 403(b), 457 plans and plan, or whatever they’ve got.”
What I want to do is go, “This is what you’re going to be getting. You’re going to get a packet that looks like this, and it’s just a ton of paper, and you’ll have all these investment choices.”
People look at these investment choices and go, “This is daunting. I don’t even know what I’m looking at.” I said, “They will typically have this little check box as well that you can just use their default choices …”
EB: Right.
PW:
And then I’m going to warn you, though, I’m going to warn you about what these things look like.
PW: I took six different investment companies: Fidelity, Vanguard, Voya, American Funds, Capital Group, and State Street Investments, a big investment firm. I took all these different firms, and I said, “Okay. Here’s what this looks like,” and I showed what their portfolios look like on a style box — style boxes are nine boxes telling you which areas of the market — and you’ll see most of the money is in what?
EB: Large U.S.
PW: Exactly. Big U.S. companies. Then, what I did is I said, “Okay. Here’s where they are. This is the percentages in these area,” and then what I did is I showed what the DOW is, the S&P, and the NASDAQ, same exact area.
Then, what I did is I actually have how many years, historically going back to, I think I went back to 1970 maybe, 1970, 1980, and I have this really cool graphic that shows how many years the U.S. was the top performing area of the market, and it’s almost never.
EB: I was going to say one, that I recall.
PW: It’s just almost never. Yeah, it’s just very, very rarely. If you look at all the different countries in the U.S., it’s very rarely ever the top.
EB: And that was only like 14% or something when it did it, as I recall, not like a big number.
PW: I don’t even remember the number, but yeah, it wasn’t a big deal. But what I did was I showed that.
Then, what I did was I looked at the 1990 and 1999, and I showed how, from that period of time, U.S. was very admirable versus every other asset category you might hold in a portfolio. Then, I took the next decade. It was dead last, and I pointed out how it was the worst return.
Not only did it not do well versus other areas of the market, it actually lost money, to just make the point, “Hey, you know what? You can go for a long period of time with no returns here.”
Then, what I did was I went all the way back to 1970 in the data I had on a large U.S. value, small U.S. value, international large value. I didn’t have an international small value going back, because that data only goes back to 1981.
PW: What I did is I showed how U.S. would have performed versus all those other asset categories, and go, “You missed out on a tremendous amount of return over that period of time if you only focused on that one area that these target date funds tend to focus you on.”
EB: Yes.
PW: And then, what I did was I said, “Okay. Now, this is why they give you other choices folks. They’ll give you other choices. You don’t have to do the default.”
EB: Right.
PW: Because they know we’re not lying.
JW: And I would say even then, those choices, I mean, they definitely give you that opportunity, like you’re saying, but they’re lacking.
PW: Oh. Yeah, yeah. No question.
So what we do is this, and I was just talking about, when somebody comes in with a 401(k), this is why we go and do an analysis, but we do the education so that you know why we’re choosing what we’re choosing in your 401(k) or your 403(b) or whatever. Then, at least you’ve got a fighting chance. Because the reality of it is, and I gave a time value money example of what just a 3% difference in return meant — and I did it over a 40-year period, and I did it putting a certain amount of money every year in — and it was almost triple.
EB: Triple? I was going to say.
PW: Almost. Almost a tripling, and then what I did is I showed the DALBAR research results, and I was being very, very kind in the rate of return that I chose.
EB: Oh, yeah.
PW: And so, it was actually much, much worse. That’s going to be a video coming out pretty soon. I think it’d be really good to have that out there.
PW: So, I thought this was a hoot. You guys remember this, the non-fungible tokens?
EB: Yeah.
PW: And of course, we’ve talked about non-fungible tokens. We’ve also talked about Bitcoin and these things. I want you to hear what this guy has to say.
EB: Bananas and duct tape.
PW: You know what drives me crazy? How many views this guy has on his videos and how many subscribers. It blows my mind, and yet this is the type of investment stuff that we have out there, and I’ll play it and let you guys comment, but check this out.
Clip: In 2021, over $25 billion worth of NFTs were traded, many for tens of millions of dollars. That was crazy, considering that just a few years earlier, in 2017, the technology didn’t even really exist at all. But by 2025, the majority, over 95%, of those NFTs were totally worthless.
Our story starts back in 2017 with a thing called CryptoKitties. It was a unique digital game, one of the first NFTs, that allowed people to develop, breed, and trade digital animals.
PW: CryptoKitties.
EB: I don’t remember that at all.
JW: I don’t either. There were the apes. There was something about apes, I remember, that was really big for a while.
PW: Yeah, yeah. CryptoKitties.
Clip: CryptoKitties even sold for $117,000 in December 2017, and the game was so popular that it even overwhelmed the Ethereum network for a period of time.
PW: It was so popular, it overwhelmed the network.
EB: Gosh.
PW: This is showing you what people get fired up about.
EB: Yeah. It makes you wonder where that money went.
PW: Yeah. I mean, good point.
EB: It’s almost like a Ponzi scheme. I mean, like, okay. Where’d it go?
PW: Yeah. What happened? Poof. It’s gone.
Clip: In March 2021, an artist named Beeple, who goes by the name Beeple, named Mike Winkelmann —
PW: Famous? I’m almost ashamed that his name’s, you know, Paul Winkler, Winkelmann. No, man.
Clip: They auctioned off some of his art at Sotheby’s for an astounding $69 million, the most ever paid for an NFT.
PW: Sixty-nine million dollars.
EB: Wow.
PW: Paid for air.
EB: For ones and zeros.
PW: When we talk about cryptos and those types of things, if you don’t think people won’t pay for nothing, an NFT, if you don’t know what it is, folks, it’s basically a picture.
JW: That’s right. It’s digital rights to a set of pixels.
PW: Yeah, yeah. And in essence, I could put that stinking picture on my website all day long. I could put it in a hundred places on my website with no restrictions.
EB: With that definition, I could just picture seeing your wife on your anniversary is like, “Here, honey. I have all these pixels for you that I just bought the rights for.”
PW: You mean your last anniversary?
EB: That’s right. Your last. That’s right.
JW: There was actually a really cute cartoon that I saw. It was like some guy talking to Gollum from Lord of the Rings and saying, “You don’t really get to hold the precious, but you get the digital rights to say that you have the precious.”
PW: That’s terrible.
Clip: You can imagine what happens next. Suddenly, the press sees this happening, articles happening, people start to see the thing, they want to pilot, and see if they can make some money too.
PW: So, the press gets fired up. They start talking about it, and of course, a critical mass, a tipping point occurs, where so many people are talking about something that becomes, “You got to do this. You’re missing out.”
EB: Yeah.
Clip: Paris Hilton and Jimmy Fallon casually talking about their NFTs, and how they’d spend hundreds of thousands of dollars.
PW: Did you see that, Jim?
JW: Yeah, no. That’s where I was going. When I mentioned the apes, it took me a second to come up, but it was the Bored Ape Yacht Club, and Fallon, that’s one of the ones that he purchased, along with other celebrities, which is what kind of gave it some prestige. Some people thought, Oh, all these famous basketball players get this, and they get to use that little picture of a cartoon ape as their icon for all their social media for thousands of thousands of dollars.
PW: There you go. It’s a halo effect.
JW: Yeah.
PW: People believe that, we talked about that, it’s the idea that somebody is good-looking, so we perceive them as being smarter. If somebody is famous, we perceive them as being smarter, and that’s exactly it.
Clip: On their board, eight yacht club NFTs. And it was insane to see digital pictures of a goofy monkey selling for more than a house, but things like that seem crazy in retrospect, but at the time, it felt perfectly normal.
PW: “It felt perfectly normal.” I mean, isn’t that wild, that that just feels normal?
EB: Well, and I think part of it is that most people — maybe all of us are wired that way — are wired to focus on the short term. We’re not really wired to focus on the long term, ultimately.
PW: Oh, sure.
EB: I mean, it takes tremendous skill and discipline to look five years out and ten years out and plan. When he was saying, “You spent more for this ape picture than buying a house” —
PW: A house, yeah.
EB: — what immediately came to mind was the guy who paid $600 grand for the digital house next door to Snoop Dogg in the digital world somewhere, wherever that thing was. They paid like $600 grand for the lot next to Snoop Dogg’s computer house.
PW: Exactly. Exactly. It’s insane.
Clip: It was a classic gold rush moment when everybody thought, well, they could get rich, and we’ve seen these before. If you remember Beanie Babies, it happened with Beanie Babies. The gold rush in the 1800s, meme stocks in the 2020s, the dot com boom in the 1990s. Man, this tree doesn’t repeat, but it sure does rhyme.
PW: One of my favorite lines.
Clip: Eventually, you run out of buyers for whatever the mania is creating.
PW: That’s the problem.
EB: It’s kind of like socialism. It’s great until you run out of other people’s money.
PW: Well, eventually. People say, “Well, why does it go up?” Because somebody’s willing to pay.
And you may say, “Well, there are limited numbers to them.” Well, that’s the idea behind commodities. They are limited. I’ve heard people say that, “Well, you just don’t understand Bitcoin. Paul, you just don’t understand it.”
I’m like, “What do you mean I don’t understand it? I probably get a little bit more than you think I do regarding this.” It goes up, but not like in the case of stocks, where earnings go up.
EB: Right. There are no fundamentals.
PW: Yeah, there’s nothing behind it. There’s nothing there.
Clip: And then there’s a crash, and some people get rich, but most people, they lose money.
PW: And this is the key. Now, listen to what he says, carefully, next.
Clip: And by the way, I traded some NFTs too. It was fun. Guess what I did? Yeah, I lost money.
PW: And that’s it. “It was fun. I lost money.”
How much fun can that be? I don’t know. I don’t get that. That doesn’t make sense to me.
EB: Yeah. And it speaks to the value people place on money.
If your money isn’t tied to a purpose, if it’s not tied to something you’re wanting to accomplish or achieve, it’s very easy to say, “Oh, I lost money,” as opposed to, “Holy crap. I lost money. That was a car payment. That was college tuition for my kid.”
PW: Yeah. Speak more about the value there, because I think you just hit on something that’s super, super important. Most people, basically what Evan is saying, is they have never really thought about their values, what they value, and that money is just a tool to express what you value.
EB: Yeah.
PW: And how do you come up with that?
EB:
The phrase I use a lot of times in the office, I don’t know how you explain it, Jim, but it’s like, “Why are you playing the game in the first place?” It could be that family is your purpose. It could be that love is your purpose.
PW: Connection.
EB: For Cindy and I, a lot of times it was hospitality, when we’d go through the exercise. If you’re disconnected and money is just ones and zeros, it’s just a number on your phone that you’re checking in traffic. It loses some connection to the real world of what’s the purchasing power of this thing and what goal won’t I achieve because I underperformed, lost money, got taken, whatever?
PW: Yeah, yeah. And purpose, you talk about how purpose might be connection. Well, how do we connect with people? Sometimes it’s by giving.
Sometimes it’s by helping others. That might be a purpose that we have. Let’s say if helping others is a huge thing for me, let’s say that that’s a big purpose thing, to make a difference in the world, make a difference for people, if now we lose money, now we can’t help people and we can’t make a difference as much, and now the impact is much greater than “I just lost some money.”
EB: Yeah, it hurts.
PW: Because it’s purpose-driven now, so I think that’s hugely, hugely important.
JW: Well, I mean, our clients, most of them, go through something at the very beginning of our relationships, called “True Purpose for Money,” to examine this very question. It’s an exercise that we’ve all done multiple times.
And for me, it was freedom. It was just freedom to be able to make the choices I want to make, and freedom not only for myself and my family, but for my clients. Helping them have that freedom to make those kinds of choices, but that’s really coming to that conclusion of what that purpose is. I think there are so many people who have never given a second thought, other than, I’m not comfortable about the amount of money I have, but I don’t really know why.
PW: Right, and that is just it.
So taking it for granted and being, there’s a word that escapes me, and I’m thinking, cavalier about it.
JW: Yes, yes.
PW: I think it’s the word that hits me. Being cavalier about it, it can be really, really detrimental in the long run for purpose, but long run for everybody, not just you.
Because your purpose isn’t just for you. You also want your purpose for other people. Whatever your purpose happens to be, whether it’s connection or whatever, whether it’s love, you don’t just want it for you; you want it for everybody.
EB: Yeah.
PW: It’s what you want to share with the world, so I think, yeah, deep, a little bit. Sometimes people aren’t comfortable with these types of conversations, but I think it’s really important, because it’s what we’re here for.
EB: Well, and this time of year, Christmas and New Year’s —
PW: Yeah. That’s a good point.
EB: People are thinking about it.
PW: That is a good point. Paul Winkler, Evan Barnard, Jim Wood, we’re going to be right back after this.
PW: Back to the investing thing.
I often talk about, if you go do an AI search on investing, and somebody did this, one of the guys that actually used to be at TN was our old producer, Matt, actually had made a comment, so Matt, shout out to you, buddy. So, he actually put something out there, where he had AI analyze the show and say, “Okay, so what should you do based on what these guys are talking about?”
EB: Analyze your show?
PW: Yes.
EB: Oh, fun.
PW: Yeah, so he had AI analyze our show, and they came up with these conclusions that were just, they were sort of close in a couple of ways, but they were far enough off that I was just shaking my head. They came up with the conclusion that the investment portfolios that we were talking about, and how to design a portfolio in general, because we never really get into specifics on that, because it’s just too complicated.
There are too many variables for people out there, based on your time horizons and those types of things. Your eyes would glaze over if we started talking about market caps and talking price to book, price-to-earnings ratios.
EB: Drawdowns.
PW: What deciles we ought to be holding in the investment portfolio and percentiles and things like that.
EB: And our attorney would hate us.
PW: Yeah, exactly. So, we just don’t do that.
Well, it came to the conclusion that the portfolios were riskier, which goes against the academic research. I mean, when you’re putting things together that maybe add something that appears to be risky, what happens to the risk of the portfolio? Because of dissimilar price movement?
JW: Riskier than what?
PW: So, riskier than not being diversified, I guess, is a good point, Jim. So, if I’m diversified, the idea behind diversification is having things that don’t move with each other, the whole concept of it.
When I throw something like international small companies, you think about like year-to-date, whenever you happen to listen to this episode, but so far, year-to-date, if you look at the investment world right now, large U.S. companies have done fairly well, but nowhere near what international small, distressed companies have done, which are up over 45%. You just go, “Okay, so over 45% return,” and if you have something like a period of time, like 2000 to 2009, where large U.S. stocks lost money, but that area tripled, is that a reduction in risk? I think.
EB: Absolutely. Yeah.
PW: Yeah. Something is telling me.
PW: But anyway, AI just kind of messed it up, and they did not get that right.
So they’ll often tell you that a recession is coming, let’s say, for example, or the economy is softening, or maybe that the labor market is softening, and that’s what you’re hearing a little bit right now. They’re saying, “Well, that labor market hasn’t softened yet. We’re not losing the jobs yet, but it’s coming.”
I don’t know if you guys saw the articles out there that said that, that this is coming, that jobs are going to be going away, it’s going to be getting really, really bad. Well, they don’t get the idea that, when you reduce jobs — I hate it, yes, it’s terrible if you’re the person whose job is cut back. No question.
But as an investor, when you’re talking about owning a company, if I can get more productivity with fewer people, then eventually the economy adjusts — and this is going to be a topic for the coming weeks; I don’t want to get into it right now — but what happens is we can reduce costs for a company, and we can increase profitability even if you have, let’s say, waning sales or waning output, as far as not output, but just, let’s say that you have waning, the company’s not growing as much from a fiscal standpoint as far as sales of whatever it is that they sell. You can actually cause it to go up in different ways.
So, they have this little thing, and they’re talking about Trump, going, “Hey, you know what? We can do something here to help out the auto industry,” and the media doesn’t quite get the effect that it could have, but check this out.
Andrew Ross Sorkin: In the meantime, President Trump rolling back Biden-era fuel economy standards. Phil LeBeau joins us now with Transportation Secretary Sean Duffy. Phil.
Phil LeBeau: Thank you, Andrew. Mr. Secretary, thank you for having us here in the office, no less.
Sean Duffy: Welcome to DOT.
PL: Let’s talk about the announcement yesterday. A dramatic cut, in terms of fuel economy, miles per gallon. I think by 2031, the current standard under the Biden administration, 51 miles per gallon.
You guys are saying, “Nope, 34 and a half.” That’s more than a 40% cut by 2031.
PW: But that’s a pretty big difference.
EB: It is. It is.
PW: Fifty-one down to 34. Yeah, but they’re saying we’re going to cut it back. Now, I guess that would be an average possibility. But there was no way, with gas engines, to reach 51, unless you’re basically driving what some of these people drive in Europe, these little mini, super, super mini cars. They look like motorcycles.
EB: An electric smart car.
PW: Yeah. They look like motorcycles with a kind of a shell around them, right?
PL: Critics are looking at this and saying, “Why not just do it a little more gradually, and did you go too far?”
SD: Well, so no, the last administration went too far. So, the law was very clear. This is about combustion engines, and so the Biden-Buttigieg administration, they calculated EVs, they calculated hybrids in the calculus, and so they gave you a standard that a combustion engine could never meet. And so, we brought it back to what the law actually says we should do, looking at combustion engines, making slow, gradual increases in efficiency.
PW: So, in essence, what was happening is they were trying to set standards at the government level to drive behavior, so it would force everybody to go to an electric car, a completely electric car. I mean, almost completely electric.
EB: Which the grid can’t support anyway.
PW: Exactly, and they were trying to force that, and they said, “This is insanity.”
JW: I always think the government trying to force things always turns out well.
PW: Yeah. Exactly, exactly.
SD: The problem was as you had the car makers, they were investing billions in technology to try to meet a standard that was never attainable. So, it was driving up the cost of a car, and then if they didn’t meet the standard, they had to buy carbon credits or efficiency credits. The Big Beautiful Bill took those away, but this is real savings for the American family, bringing down the cost of a car, and I think bringing more freedom and choice to the consumers, because car companies are going to make cars that the consumers want to buy.
PW: And that was it.
Just a lot of things.
PW: Now, the question is this: What will happen now that these changes have taken place? And this is where the media just doesn’t quite get how capitalism works, but listen to this part of the conversation.
PL: The cynic will look at this and say, “Yes, the automakers will save about $109 billion.” That’s your guys’ estimate. And that’s fantastic for the automakers.
PW: That’s it. The automaker’s the only one that’s going to benefit from this. Those evil automakers.
JW: The evil corporations. Right.
PW: Yeah, that’s right.
PL: About $1,000 per car, theoretically, that should be saved for consumers. You and I both know it’s tough to say —
PW: “You and I both know.”
EB: And that was Secretary Duffy, right? Not Phil?
PW: Yeah, that’s Phil speaking.
EB: Oh, okay.
PW: “You and I both know.” This is the media saying this, Evan. So his “You and I both know,” it reminds me of a guy I used to work with many, many years ago, and he would try to shame people into buying life insurance as an investment.
Somebody would be balking at the idea of buying this life insurance policy off him, going, “Well, I don’t know that this is a really good idea for my family and myself.” He would go, “Oh. Come on, Mike. You’re smarter than that.”
In other words, it’s like, well, what’s your answer? “No, I’m not smarter than that?” Or they just back you into a corner.
JW: A version of that I heard was, “Well, isn’t there anybody that you love?”
PW: That’s right. That’s right, or a guy I used to work with, “You’re going to be living under a bridge one of these days in a box.”
PL: “Prices will go down.” Do you honestly believe that the auto industry will lower their prices?
PW: “Do you honestly believe that they’ll lower their prices?”
SD: Listen, the auto industry is very competitive, right? We see that. We see offers all the time, whether it’s on interest rates or on incentives to buy. So yeah, listen, this is market-driven, and so yeah, lower prices mean more sales.
By the way, if we bring prices down, and we get newer cars on American roads, newer cars are way safer. We save lives with these new cars, which is fantastic. So no.
And also, I think if you’re building a car, developing a car that Joe Biden or Pete Buttigieg wanted you to build, that’s different than market demand. I want the market to decide what kind of EV I should offer, what kind of vehicles do the American consumers want to buy. This rule will actually allow you to bring back the 1970s station wagon, maybe a little wood paneling on the side.
PW: I don’t know about that.
EB: “I want big fins on the back of a sedan, man. That’s what I’m looking for.”
PW: I think it’s just interesting that so often we turn to people in the media, we turn to people that are on the financial channels, and go, “Wow. Let’s just listen to what they have to say, because they really get this thing called investing or they really get this thing called capitalism or how markets work,” and we’re here to tell you that they just really aren’t, so often.
JW: Yeah.
Well, you and I both know, “Oh, yeah. You’re right. This guy makes sense,” until the guy shuts him down with some excellent bullet points about how competition really works.
PW: Yeah, and how companies will adjust. Will prices come down? You and I both know, and I’m going to say this, you and I both know that TVs will never come down from $4,000 per TV for a flat screen.
EB: To $279 for a 65-inch screen.
PW: Thank you.
Advisory services offered through Paul Winkler, Inc an SEC registered investment advisor. The opinions voiced and information provided in this material are for general informational purposes only and not intended to provide specific advice or recommendations for any individual. To determine what investments are appropriate for you, please consult with a financial advisor. PWI does not provide tax or legal advice. Please consult your tax or legal advisor regarding your particular situation.
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