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We're so excited to be back with season 2 of The Financial Confessions! Our first guest back in the (remotely-filmed) studio is Doug Boneparth, a millennial CFP, CNBC personality, founder of Bone Fide Wealth, and author of The Millennial Money Fix. He and Chelsea talk about GameStop, what people need to know about the stock market, and how social media and the internet has shaped the future of investing.

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Well, hello everyone.

This is such an exciting day. I don't know where you are, or what you're doing, or what time it is.

But where I am, I am in Manhattan, in the TFD offices, in the beloved Financial Confessions studio. It is very picturesque and snowy. It's like a Bob Ross painting in our little office garden out the window.

Things are feeling full of hope. Vaccines are now being administered to restaurant workers here in the city. It feels like we're really turning a corner.

And that's why it's such an exciting time to be launching the Financial Confessions, season two. We have so many exciting guests and topics coming at you this season. We are going to be talking to all kinds of people.

And now that we're no longer, for the time being, filming in person, due to COVID restraints, we are able to interview an even wider pool of guests. So do not forget to write us. You can talk here in the comments if you're on YouTube.

You can also hit us up on social media to let us know who you would want to see on the show, and what you want to hear us talk about. But today, for our very first episode back in the saddle, I wanted to welcome back a guest that you guys actually already know from season one of TFC. He is a CFP that I interviewed back in season one, all about how millennials should think about money, how they should manage their money, what they get wrong about money.

I highly recommend you check out that episode, which we'll link you guys to in the show notes and the description. But I specifically wanted to bring him back. Because since having him on the show, I've been a pretty avid follower of his on social media.

I'm actually also a big fan of his wife. I highly recommend you go follow her as well, if you follow my guests. And he is someone who has, I think, a very fresh and interesting take on a lot of financial news that you guys might have been hearing about in the media.

He's also something of an investment expert, and counsels all of his clients and his many followers every day on the ins and outs of how to invest, how to understand investing, and sort of the common misconceptions that a lot of us have on the topic. Obviously, most of you guys, if you're even peripherally aware of what's going on in the world of finance-- which, if you follow TFD, I hope you at least a little bit are-- you've probably been hearing about everything that's been happening with Reddit, and GameStop, and AMC, and these so-called meme stocks, and what that means for hedge funds, what even are hedge funds, Wall Street, regulation, basically the world of investing, in a way that you and I typically don't think about it. If you are someone who has been following TFD and taking our-- in my opinion-- very solid advice, you know that for the average individual investing is going to be primarily about thinking long term.

You're going to be talking about investing in broad, diversified funds. We're talking about funds which hold tiny, tiny percentages of hundreds, thousands, millions of types of stocks. So you're not actually following any one individual stock.

Because that's not really how you should be playing the game. You should be following the market long term. It's not sexy.

It's not fun. It's not very game of gamifiable. But it is the most sustainable way, and historically has proven to have the most steady returns.

And if, you should be, you're mostly focused on things like investing for retirement, and especially using things like tax advantaged retirement vehicles, the option of picking individual stocks really doesn't come into play. And it is, to be fair, something that we pretty actively discourage here at TFD. Because, as you guys might have heard recently-- and if you're watching the video, as you might see echoed in my playing card sweater that I work for the occasion-- playing individual stocks is a lot like treating the market like a bit of a Casino.

But what does that mean? And certainly, what does that mean in the context of all that you've been hearing about in the media, with these quote unquote meme stocks? I wanted to talk about all of those issues, but also talk about, more broadly, what is changing in the world of investing?

Maybe what isn't changing? Especially post pandemic, how should we all be going into how we're planning for our long term futures in a more adapted and thoughtful way? And I don't think there's anyone better to talk about this issue, in a way that we can all, quite frankly, relate to, then my first guess back on the season, Mr Doug Boneparth, CFP.

Hello, Doug. Hey, Chelsea how are you. I'm good.

I'm a little overwhelmed with all of this swirling financial news. How are you? Yeah, I think I've depleted all the dopamine out of my head over the last two weeks, with the meme stocks, and GameStop, and AMC.

It's been crazy. It's been absolutely crazy. But I'm good.

I'm good. So just to kind to dive right into it, so I think our readers, our listeners and viewers, have an understanding of everything that was happening on Reddit and within the world of investments more broadly, I think in a very superficial way. And I think a lot of us maybe understand the broad strokes of what is happening.

But could you give just a quick overview explainer of what's been happening in that specific regard, and how that kind of contrasts with the kind of investing that probably our viewers are doing, which like I mentioned earlier, is things like, they have their mutual funds, and therefore 401(k)s, and so forth? Explain that to us. Yeah.

And this is-- for me, as a professional who prescribes more to the long term investing, stay the course, low cost index funds approach, we agree on that wholeheartedly. And here comes this sensational story surrounding GameStop, and short squeezes of hedge funds, and the Wall Street Bets crowd from Reddit. And it's really kind of been a culmination of a number of things.

You have-- ready? You have access to technology and free trading, the democratization of trading, through Robinhood and various applications. You have free flowing communication through Twitter and Reddit, to be able to build communities together, like an army.

And then thirdly, you have low interest rates, cheap money. And fourth, you have stimulus. You have actually giving people money.

So we've created this environment, since really the pandemic, over the last 12 months, where we now have a group of Redditers, this community, identifying which companies had the most short interest against them, meaning who was betting against those companies. And lo and behold, some hedge funds here were really shorting GameStop, to the tune of 140%. So they were shorting at 40% more than shares that even existed.

And this caught the attention of the Wall Street Bets crowd, and the retail trading crowd. So what they did is, they decided to buy as much GameStop as they could, bidding up the price, squeezing the hedge funds that were shorting it. And they were successful at doing that.

And it created the story. That started the whole thing. And then what happened is, they stopped trading GameStop, and AMC, and these meme stocks on the various exchanges.

Robinhood did it. Other brokerages did it. And now you have the David versus Goliath narrative kicking off here, right?

So the little guy, as soon as they start making money, optically, the rug gets pulled out. They stop the game. They change the rules.

People are piling into this narrative-- the Dave Portnoys of the world, to masks getting involved here. Everyone's jumping on. Really, this is a very tough narrative to beat or fight against, the whole Rocky Balboa, David versus Goliath thing.

So that's happening now. Almost done. And then all of a sudden, Robinhood, it turns its back on the very people that it was supplying the platform with, and the David versus Goliath narrative, it gets pulled into that.

And now it's just an utter mess. Now the one thing that no one's really talking about, because it's very esoteric, and it's very nuanced, is what was happening, I guess, in the plumbing of Wall Street, and how all of this trading really has a lot to do with how Wall Street is built, as far as transactions, and flows, and settlement of trades. And nobody wants to talk about this.

I'm not going to bore anyone in this. But basically, those pipes burst. And it's like they burst inside your wall and exploded, and now there's water everywhere.

So long story short, they tried to squeeze the hedge funds. They paused the game, because the pipes burst. Everyone's mad on the David versus Goliath populist narrative.

And here's the aftermath now. All those meme stocks are coming all the way back down. And it looks like a lot of people are fatootsed here.

So many things to unpack. So first of all, I would love if you could break down for our audience-- it's so funny. Two days before this happened, completely by chance, I was watching one of my favorite movies, which is not about the exact same subject, but has a lot of the same broad strokes, a movie called Margin Call, which I highly recommend anyone who's interested.

Very good. I find highly underrated. Usually, The Big Short gets all the love in 2008 crash movies.

But I think Margin Call is excellent. And it does have a lot of kind of similar broad STROKES in terms of the dynamics at Play and one of the sort of underlying dynamics. Obviously, Margin Call is about the 2008 crash, which is mortgage backed securities.

And we're talking about a slightly different situation there. But ultimately, what you're really talking about is these Wall Street firms, these hedge funds, et cetera-- in the case of Margin Call, it was clearly based on Goldman Sachs. But you're talking about these firms which have been playing the market, quote unquote like a Casino, for years and years, who are able to do so partially because they have the money to, partially because the regulation around a lot of this stuff is pretty favorable.

But when people talk about these firms like they've been playing the market like a Casino for years, and now that the individual wants to do that, now we're like let's hold on here-- what does that really mean in practical terms? What have these firms been doing that people are taking issue with, and that led to that sense of we got to get their asses, via Wall Street Bets, in the first place? Yeah, the stick it to the man type of thinking.

I think it's so you have these hedge funds that have been playing the game this way for a very long time, whether it's putting more short interest against a company that even exists, throwing their weight and dollars around, knowing that the retail trader doesn't have the same scale or capital to really play the same game. And all of a sudden, that got created, that level of scale, that level of power, through a community like Wall Street Bets, through the communication, and the things that I described earlier. And yeah, when all of a sudden-- again, nobody will-- when the narrative's already David versus Goliath, and the whole populist thing here, when that's already taken shape, good luck to you.

Put it in Robin-- let me back up. Put it in Robinhood's perspective here for a second. They literally had to stop trading, or there would not be a business, that Robin Hood wouldn't exist.

The costs were too high. They made the right business decision. But they communicated that very poorly, to where they eroded their entire brand loyalty to people who were using that platform to fight, so so-called fight against these hedge funds.

Because now, they were able to play the same game that the hedge funds were playing. And you have to wonder if there wasn't that plumbing issue, if they did not stop trading, how far would GameStop have gone? And I think that's their argument here.

If you didn't take the air out of the balloon in the middle of it, where would we have gone? You would never have done that on the institutional side of things. But it happened to us.

So go grab your pitchforks kind of thing, right? Right. So, I guess-- so let's take the Robinhood example.

When you say that it was the right business decision for them, explain that a little bit more for us. Sure. So in order to actually accommodate the trading of these stocks in the volume and which was taking place-- and granted, think about it like this.

There would probably not have been any issue if this was Microsoft, or Google, or your mega-cap company, where there's almost unlimited number of shares to facilitate transacting those shares on the back end, is really cheap for a broker to do. So there likely wouldn't have been an issue there. But with GameStop and AMC, these really beaten up stocks, where volume is nowhere near the size of your megacorporations, it all of a sudden became more and more and more expensive for Robinhood and brokers, or broker dealers, to trade the stock.

And as it kept piling in, at some point, they're like whoa. We can't keep filling these orders at this cost, or we don't really have a business model here. I mean, we do have to make money.

So that that's what happened, and really stopped the trading. So Robinhood make a right decision by saying, hey, we've got to take a step. Back we need liquidity.

Because you'll notice that they got a billion pretty much right away. They tapped all their credit lines, and then they raised another $2.4 billion almost overnight. And what's interesting is, they gained like 600,000 users.

So here we are, saying oh, Robinhood's the bad guy. They're losing, destroying their brand value, and all of that. They gained over half a million new customers across all of this.

But nonetheless, that was the issue there, the cost of doing this. And they made a great business decision. Optically, it looked terrible.

Yeah, because I think the majority of people who saw that Robinhood put a stop to that trading at its peak assumed that there was probably pressure on them to do it-- pressure from Wall Street, pressure from the White House, pressure from basically everyone who, in the instance of a hedge fund doing very similar things, would completely look the other way or encourage it, essentially. Yeah, 100%. You have to be silly to think that it wouldn't create the optics of, oh, there they go.

They're in bed with the hedge funds, with big Wall Street. And then they started looking at, follow the money then, right? Robinhood sells its order flow to Citadel.

Citadel was one of the people to throw a billion dollars at Melvin Capital, that's the first time I'm bringing-- that was the biggest of the hedge funds. They lost 53% of their fund in January, from getting squeezed on GameStop. So there's this narrative and story, and then plot line after plot line here that we can get into.

So if you're thinking about the hedge funds here, Melvin Capital, the suspect number one, in terms of who got attacked in the short squeeze-- here it is where, great. The people that Robinhood are selling their order flow to are the same people giving money to the hedge fund that just got hammered by the Wall Street Bets crowd, that they're all angry. And welcome to the incestuousness of Wall Street.

Same as it's ever been. I don't endorse Robinhood, and I wouldn't take money from them for TFD, primarily because I think that, well before all of this happened, this was the case. And I think mostly, what Robinhood model does is encourages that sort of video game perspective of stock trading, and encourages, obviously, individual stock trading.

And it really encourages people to look at it like a very short term game that they're playing. I was literally just reading comments about it today, where people were talking about oh, look at how much I got today, which is not, in my view, a sustainable or healthy way to look at investing. And also, individual stock trading is incredibly risky.

And the vast majority of us are really not qualified to do it. But even the people who have all the education in the world get it wrong an enormous amount of the time. So it's not something that I really support, in terms of its approach to investing in general, and what it encourages in people behavior wise.

And obviously, for an individual who's looking to use investing to take their savings long term to a new level, to really take advantage of compound interest, and to set themselves up for a solid retirement, the long and short of what investment really looks like is very boring, and very unsexy, and very uninteresting. It's just mostly putting money in, usually by automatic deposit, and not looking at it for years and years and years, especially when things are going bad. But it's very strange now, the way that this has sort of created an almost layer cake situation, where like you have the individual traders on Robinhood, many of whom probably don't even have a retirement account, who are just having some fun trading individual stocks.

Then you have the people who are sort of the middle class investors, who are probably going super long term with their 401(k), and maybe an ETF or what have you. And then at the top of it, you have Wall Street, who is basically just doing whatever the hell. And obviously, for them, the idea of just sort of slowly and quietly playing the market, that's not a sustainable business model for them.

It's not a growth model for them. It's not going to it's not going to edge out the competition for them. So you have this sort of multilayered system, where the people at the top are not behaving responsibly, and are not operating on good incentives.

And I think what you learn from a lot of these movies and books about things like the 2008 crash, is that ultimately, it's not really a question of evil people in these organizations. It's a question of bad incentives. It's a question of improper regulation.

And so my question is, when I'm thinking about education for our audience, how to get them to think of investing in the right way, how to get them to use it in the right way, how do you make the case to people that things like the Robinhood casino style investing is not a good idea, when the so-called experts at the top are often participating in that same kind of behavior? Yeah, it's an awesome question. For me, it's just taking a goal oriented approach to personal finance in general.

So many of the things that you just mentioned are just out of one's control, out of your control, my control. You can't control what the hedge funds are doing. You can't control what your friend is doing over on Robinhood, whether or not they're turning a $600 stimulus check into $24,000 by trading stocks.

You can't control any of those things. The only thing you can control is your own behavior and your own actions, and how hard you want to work towards your own goals. I've yet to meet a retiree or someone who's met their goal in the time in which they've wanted to meet it, and say, after achieving it, man, I wish I took more risk and got here sooner.

Nobody says that, all right? Nobody says that. If anything, that's a joke, right?

Retirees, around the bridge table, being like, oh, I missed out on buying Airbnb at IPO! Ha ha ha ha. Yo, they're chilling.

They've made it. This is their victory lap. So instead of thinking about-- this is the noise.

So you're talking about noise. So this was the noisiest two weeks I've experienced in a long, long time. I mean, this whole thing, from just an insider, is a top five event.

I mean, that's up there with the recession, oil going negative, and all these other things that are like, holy cow. But the interesting thing is, from a client perspective, my clients were calling me about this. My mom saw the headline.

In our echo chamber of finance, or financial content and financial media, this was as loud as it gets. Outside of that, yeah, it was a cool story to put across news. But again, my litmus test is, are my clients calling me?

Is their actual interest to buy this stuff? No. They were focused on their lives, their work, their kids, or whatever, and working towards-- here it is again-- their goals.

So that's my advice here. If you want to be a justice warrior, and go down to Zuccotti Park again, and scream Occupy Wall Street, and get a movement going, I get it. I get a.

A lot of that frustration from 08 is how that happened here. People are saying we're going to do that again, in the wake of GameStop here. I don't know.

I don't see that happening. But I certainly understand the frustration that now exists. But again, my approach would be, what do you want for yourself?

What are your goals? And what are you doing to get there? And rolling the dice in a casino, or saying I'm going to get to my goals by getting lucky on a momentum stock, or a trend, you said it.

The risk one has to take to get it right once, let alone multiple times, to actually hit it big in a short period of time, most people aren't going to want to do that. They're going to want to look at a plan, do the right thing, systematically invest, have something that's achievable, and here's the key word, that's practical. It's got to be pragmatic, right?

So gold does it for me. No, I'm as interested in this as the theoretical audience member for whom I'm asking this. I am definitely one of those justice warriors of whom you speak.

I definitely-- I mean, weather permitting, I could definitely see myself down in Zuccotti Park. But at the same time, I do think that the way that kind of regulation is going to be-- because ultimately, a lot of this comes down to regulation, right? It comes down to the incentives that people are given, the barriers in which they must work, and the limits on the risks that you allow them to take, essentially.

Again, when you look at what happened in 2008, for the most part, they're making a ton of money on these really terrible mortgage backed securities for so long, was like a sensible thing to do. It was, quote unquote rational self-interest. So a lot of it does come down to regulation.

And I spend a lot of time thinking about, well, what are the ways that we could productively get to better regulation on Wall Street, that we could get to a better societal and cultural relationship with investment in the market, in a way that, like in its best and, I think, initial iteration, is an incredible vehicle for wealth generation for the middle class, that could be transferred that could be transformational to a society, and can also, in tandem, support American Enterprise? And I think, with each passing year, we've seen investing in the market get further and further away from that. We see it becoming something that's increasingly for a small, wealthy few.

People increasingly feel alienated by it. And it's also increasingly the value that these companies are generating are increasingly decoupled from the actual value that it's creating for the population that work for these companies. So I guess my big philosophical question, first and foremost, is, do you feel any long term anxieties about the market in the United States, from a pure sustainability perspective?

When you see some of these bad incentives, when you see some of these negative trends, do you have worries about the long term? Because quite frankly, we get questions all the time about like, OK. I'm down with my 401(k).

But is it going to be worth anything in 40 years? Look at how things are going. And then second on that question, if you do, or even if you don't see that anxiety, what do you see as a productive step to helping reform these systems in a positive way for people who feel impotent?

Yeah, yeah, that's a massive question, Chelsea. I know. I'll try and take it apart here from a number of angles.

I think, at the most macro level, the thing that pops into my mind is this passing a baton from an old guard to new guard here. This problem happened on old systems that weren't built for the internet. You have old ways of aligning incentives, the way it's always been getting in the way of the progressiveness that-- or the progress that needs to take place to get into whatever we want to define as the new era.

We saw what was supposed to be the democratization of access to the markets be met with a lack of knowledge, really, about the markets and personal finance. And those two things are colliding with each other and exploding in everyone's face. So really, I'd mentioned it right there.

So over the summer, I wrote a piece called Access Without Knowledge. There was a young man who committed suicide from seeing a margin balance displayed incorrectly on his Robinhood account. So he took his life, thinking he would never be able to financially recover from that.

And it's the most extreme outcome possible from the gamification of investing. And it just-- I couldn't, for days, weeks, stop thinking about, well, yeah. Everyone's applauding access to the market.

This is good for the little guy, the common man, to be able to play a game that traditionally has been played by wealthy people. But at the same time, you see the absolute danger in going to play that game or participate in this environment, when you just don't have any fundamental understanding of personal finance or investing in general. And that's an issue.

I think that's an issue that permeates across all of Wall Street and Main Street, specifically Main Street, as it comes to wrapping their hands around getting into the game. And that brings out reform. That brings out, do we need to change the way that institutions behave?

Is this really all just bad behavior? A lot of it is, on all sides, right? Bad behavior out of the people being taken advantage of by the folks who want them to gamify investing, and all of that.

Now you asked me if I'm nervous about the future, specific to the markets and Wall Street and investing. I'm actually-- I've never been more bullish about where we're going. Because I'm an optimist.

I'm an optimist, in that eventually, the baton will be passed. I love our generation, and younger generation as well, as a millennial, even Gen Z. I love the creativity, and the willingness to work, and the smarts that come out of here.

I think we're not oblivious to the challenges that we face and the heavy lifting that's going to need to be done. I'm frustrated that power shift hasn't happened already. It requires collaboration with older generations and ourselves.

It's just seeing them hang on to it, and not want to let go, and squeeze every last dollar out of the coffers before they hand it over to us. That makes me mad. Sure, it does.

But does it outweigh the optimism I have for when things inevitably change? Because demographics, and the shifting of demographics, is probably the strongest force there is, when we think about economic forces. So that's a lot.

But again, kind of bullish about where we're going. Even though the bad stuff tends to sting the most or is the loudest, turn our attention to positive things. Here we are, on an extremely popular and successful financial piece of content, doing this, educating people.

Multiply that by how many other people doing the same. I mean, this is the golden age of good financial education content and financial literacy. So we should probably spend more time thinking about those things, so we can make sure that our generation and future generations are approaching investment, personal finance in general, in the way that's going to allow them to change their life for the better.

I strongly and wholeheartedly feel that one of the most powerful things you can do to change your life for the better is to learn about the stuff we're talking about here-- just budgeting, cash flow, taking responsibility, setting goals. Just that, not even getting into investments, that's the majority of the things that allow us to have good behavior as individuals. So we can look at things like GameStop, or trading on Robinhood, which looks like gambling, and say, yeah, I know.

That right there, that's excessive risk taking. That's gambling. And by the way, there's even a way to take that and incorporate it into all the good behavior that we do.

There's nothing wrong with a client wanting to take, or an individual wanting to-- I always think about it in the context of clients-- but an individual taking 5%, maybe 10% of their investable net worth, and going investing in individual companies that they either use in their everyday life, have a strong conviction, think are going to be the next Google, or the next Amazon. And you can plan around that. So once you get the foundation, once you get built up, once you have the knowledge, you can start using these tools in the way that will benefit you, as opposed to all the stuff we're hearing about of just recklessly throwing darts at various ticker symbols, in hopes that you're going to hit it big.

Boomers, economically, really have that energy of like one Pharaohs would die, and they would get buried with all of their slaves alive. They literally are the most-- They think they can take it with them here. I don't-- I don't know.

I don't know why it's so hard, just to be like, you're up, guys. We're here. We've got all this knowledge and experience to help you carry the ball forward.

Let's hear your ideas. Let's help you implement them. We did what we did.

It's your turn to do what you want to do. Average age of a politician is like 70 something years long. It's like oh my God.

Oh my God. Like, yeah, every politician is like the crypt keeper. It's unbelievable.

It's unbelievable. I have to-- I'm going to-- I have to drop my boomer theory on you. Go for it.

So basically, boomers grew up in a level of prosperity that I think is actually-- because when you look at it in terms of the economic indices, obviously a time of insane prosperity. You literally were like, I started out being a janitor. And then I went to college for $10.

And now I'm like the CEO of the company, that level of sort of upward mobility. And you could have a family of four, and a suburban house on a fast food worker's earnings, and all of that stuff. So economically-- Daycare cost a penny.

Yeah, exactly. Truly just the golden goose era, in terms of upward mobility. But then on top of it-- and I think this is what truly broke boomers brains in an irreparable way-- is that at the time that boomers were coming of age, America in particular had a level of cultural and economic hedge money in the world that is likely to never be replicated, probably in human history.

I mean, maybe like hundreds of years down the road, they'll be a different empire. But the extent to which America was like the capital of the world during that time, calling all the shots-- also, everyone was like watching their movies, and eating their food, and drinking their drinks, and speaking their language. If you grow up essentially at the top of an empire that is likely to never be recreated in exactly the same way, how do you not, for the rest of your life, have a feeling of, like that meme of Dave Chappelle, with the cash all over.

Yes, it's just have such a feeling of ownership over what it means to be a person, and what you're entitled to, and what you deserve, and what you think is normal. That's my boomer theory. I mean, that that's American exceptionalism, post-world War II.

We're in the catbird seat. We have the power, the nukes, the money, the land. And you are a generation coming in as the children of those who had to fight fascists and Nazis to get there.

And look, not to downplay folks who went to Vietnam, or fought in Korea, and this notion that you have to fight a general war, just dad did in World War II. The generation's very tricky. But your theory touches on a lot of things.

And I think there's a lot of accuracy to that. And that's a lot of what creates this idea of American exceptionalism that we're seeing play out in the pandemic era, right? So how do you not wear a mask?

How do you not be safe? It's like well, those themes, they kind of show up there, the unwillingness to pass the baton, the raiding of the coffers of America one last time, just to make sure that you can go off into the sunset and maintain that level of life or lifestyle, which has now gotten more expensive. Thank you, social media, for making everyone and everything a keeping up with the Joneses type stuff.

So I kind of agree with you here. And I think it's even bigger than that. What would you say, in terms of-- so you were talking also about-- when you look at-- so let's take the pandemic, for example.

Because you touched on, how could you not wear a mask? Which, by the way, anyone listening to this or watching this who doesn't wear a mask, get out. You are not welcome in this club.

Be gone with you. Anyway, so taking the pandemic, for example, I think it would probably be naive to say that the pandemic, and people being stuck in their homes, and bored to tears, and probably lightly going insane over the past year, like in pretty tangible ways. Doug here has two children under the age of six.

So I can only imagine the toll that his brain has been under. But it's hard. You would have to be naive not to think that the pandemic played into, why now, for the Wall Street Bets stuff to an extent and obviously-- That was a big part of it.

You-- number one, backstopped the entire financial markets with trillions upon trillions of in stimulus. You had a 33 and 1/2% draw down in the S&P 500 from February, from the bottom, in March 12th or 19th. Slipping on the date here.

And then Fed comes in. We got-- we got you, fam. Boom.

The rally from March of last year to all time highs, almost on a daily basis here in the beginning of 2021. All these things created fertile soil for what we experienced here. So yeah, it shaped a lot of opinions, especially with young investors.

Stocks only go up. I mean, you got some charlatan voices out there, genius marketers out there, pushing that narrative, in knowing that people are bored. They have stimulus checks.

They got the platforms to do it. There's no sports. There's no gambling.

So you got the financial markets that's open every day, or five days a week, except for federal holidays. Let's go play that. Let's go do that.

But more importantly, from a psychological perspective, is that notion that stocks go up. In a very short period of time, you couldn't have got it wrong. I mean, if you just bought the S&P 500 in March, or the NASDAQ, you crushed it.

You absolutely killed it. If you bought individual stocks, if you hit the Zoom, and the Peloton, and the pandemic stocks, you're not only crushed if, you went hyperbolic, right? three, four, or five x your money. So if you're a first time investor, your opinion of the stock market is like, this is easy.

I'm making a ton of money. Anyone can do it. It's free.

They gave me free money. They're going to give me more. Let's keep going.

Oh, all my homies here on this forum say we should go attack the institutions that have suppressed and oppressed us for years, hailing back to 2008 and 2009. I'm grabbing that banner. I'm grabbing my stimulus check, and we're going to go play that damn game over there.

And oh my God, it's working. So yeah, all a catalyst, right? Not just in the short term of the past year, but over the last 12 years.

This is all kind of been in the making here for an event like this to happen. And I'd be remiss-- you created parallels to 2008 and 2009, specific to the types of products that were being manufactured and sold, whether they be the mortgage obligations, or the credit default swaps, that the banks were using as insurance against these junk type securities. So that makes me kind of think about regulation a little bit here.

So there was a show back in 2008 and 2009-- any time there's these dark corners of the market, or these holes, or little ways around rules and things like that-- so unregulated was issuing the insurance of the credit default swap. There's no regulation of that. So you can how that all panned out.

And here, we have, in 2021, the hole in the market was this short squeeze, and taking the other side of it. OK, so hedge funds forever have been allowed to short a company greater than shares outstanding. Well, is that going to be the regulatory thing we talk about in the next year or two?

Is that the hole that's going to get closed up? Is that the-- are they going to regulate that away, and say, look, you can't short a company more than 100%? Cynical Doug says, doubt it.

I just read, someone from the Fed was like-- or it was either the Fed or the SEC that says, we don't anticipate any regulation or changes being made to the current system. Great. In the wake of GameStop.

Listen, it just simply wouldn't be the American government, at this point, if it allowed itself to learn from its financial mistakes at this point. It's beyond that. My really good friend Jamie Catherwood runs a site called Investor Amnesia.

He deserves a shout out. Because he's basically a historian at this point. And all he does is cover the repetitive behavior.

Again, think of it. It's investor amnesia. We keep forgetting the same mistakes that we have made, not just-- I mean, this goes back to the early markets of England, and Amsterdam, bubbles, and tulips, and all of these things that we do over and over and over again.

Human behavior does this every single time. Two questions vis-a-vis the pandemic, and one's money. Number one, is the market living on borrowed time right now?

And number two-- and what can we anticipate in terms of the wake up call? And number two, should people be meaningfully changing how they approach money, and even how they form their own goals, post pandemic? Awesome question.

How do you how do you come up with such good questions? Listen, it's my job, and it's my gift. This is what you do, huh?

It's just what I do. I should have known from the first time. When does the music stop, is what I heard in the first question.

Which is actually a line from Margin Call. Yeah. It always starts.

I think people have been calling this thing a bubble since 2010 and QE1. And here we are, 11 years later, extending the longest bull run in history. And I think people are having a tough time believing, they did 5 to 10 years ago, that this will continue on.

I think people are going to have trouble believing that it could continue for a few more years, two, three years. And my thinking on that is, I can maybe create more of a bull case for the market to continue to move upward than I can a bear case. Because there's $1.9 trillion in additional stimulus just passed the other day in the Senate that will come through, putting more checks in American hands.

We're in a zero interest rate environment, pretty much forever, as far as I can see. And you have a new administration that's not anti-Wall Street by any stretch of the imagination, and isn't crazy progressive to do the types of reforms that would really shake up the way the game is being played. Add all of those things together, and that's some fertile soil for equities to continue going up.

Valuations and fundamentals seem to have gone out the window over the last year or two, with certain companies that are now huge components of the broader markets. So that's my thesis right now. I have no idea what the thing what that-- nobody knows with the black swan thing is that comes along, like the credit crisis of 08, pandemic in 2020-- which, just as much as it shock the system, it was met with an equal and bigger bazooka of the Fed, and their open market operations, to get us back into the swing of things here.

Someone would say, but we're printing all of this money. We're going to experience inflation, or hyper inflation. You've heard that before.

Are we going to be back in the 70s, when inflation was running rampant? You now how decentralized finance, and the whole crypto community. It's wild stuff going here.

And if you're telling me that you can predict how things are going to be in the next 12 months, let alone the next 36 months, I will tell you you're full of it, because you cannot. So one thing's for sure. It will stop.

I don't know what it is, or what will bring it down, or what will bring that big correction. But it will be there. I think that's just encouragement to have a plan, get knowledged up, have that emergency fund.

So if this is your second wake up call, as a young professional or a young investor, and you did 2008 and 2009, you did 2020 here, do you really want to wait for a third one, not to get it together, as far as your financial life is concerned? This would be the last and final wake up call you need to focus on things. I've ran my mouth so much on the first question.

You're going to have to remind me of the second question. You sort of answered it. Because it was, how should people realign how they approach their finances post pandemic?

And I think you answered it. Yeah, it's a wake up call. Again, I got so-- 2008 and 2009 shaped Heather and I so much, from how we view our finances, and how we view money.

What were you, 30 back then? I'm kidding. Sorry.

Oh no! Did I completely derail you? Sorry.

No, you're good. So if 2008 and 2009 did that for you there, I can only imagine what 2020 did for you. If that's your first like wake up call, don't wake for a second.

Yeah, now's the time to get focused on really fundamentals. So much of the investment stuff we talked about here today is a distraction from the stuff that allows you to build the foundation, so any time a strong wind comes or a shock to the system comes, that you can withstand that, not blow up your entire financial life due to something that was outside of your control. In all seriousness, though, so in 2008 and 2009, were you like in college?

Getting out of college? I got off the plane at JFK in October 2008, to start my career in New York City as a financial advisor. And Lehman collapsed that day.

OK, so definitely in the belly of the beast. Right. It was baptism by fire, as far as starting my career in New York City and finance was concerned.

Heather was halfway through law school, expecting to get a nice summer internship. That was gone. And it was just-- it was just this event.

I was watching people literally lose their shirts. It was crazy. It was crazy.

We have a lot of-- our audience, I don't know what the actual largest tranche is, in terms of the age. But I would say a plurality of them, probably, or close to it, are people who were in just before or just after college, in the 08, 09 period. And I think a lot of them felt, and still feel to this day, that the life that they would have had otherwise, had they not literally been at the entry door to the workforce at that time, was kind of taken from them, to an extent.

And you obviously add to that student debt, and you add to that cost of living that is not met by wages. And I think amongst a lot of millennials, even a lot of millennials who are middle class, who have every reason to be optimistic about their ability to reclaim their financial life, I think there is often a feeling of bitterness and resentment and anger at what they feel a system outside of their control took from them, and also what it told them to do, which ended up not being a good decision for them financially. So in terms of just a pure mental health, emotional health, and sort of mindset oriented approach, how do you recommend people like that, if they were your client, if you were working with them, how did they start to move beyond that?

And how do they start to think differently, especially if that period hit them so hard, in so many ways? Yeah, another awesome question. I think, if you're talking about my clients, I've built a practice around really, really hard working now older millennials.

I mean, when we started, we were in our late 20s, feeling the way that you described, kind of disenfranchised. Kind of, go take out the loans. Go educate yourself.

There's going to be a great job waiting for you. And then you do that, and now you're a bag holder of student loan debt. There's no jobs.

Wages aren't growing, and everything's expensive. I think that if you're my client, and you and you've fought your way through that, and you're in a better position today, or even five, six years out from 2008, 2009-- so now you're in the mid tens, I think you have to kind of focus on the positive stuff, and how hard you worked to get, despite those financial challenges, or those economic challenges-- if you didn't give up, you were likely able to find your way back on that path. You got you got back up.

And I think you just need to take some-- you need to take some level of pride in your ability to overcome that obstacle, and use that to structure your mindset around. Again, there's a big piece of this you can-- so I've asked this. Harboring resentment or anger and frustration towards something that was largely out of your control, what does that actually-- as far as financially and in your life, what is that actually accomplishing for you?

Is that a good use of your energy and your time? Now if you are that angry, and that upset, and you're not becoming someone who can change policy, someone who can lobby, someone who is becoming a politician or creating non-profits around that, I mean, that would be a demonstration of, hey, I'm taking my anger and frustration around these very specific things that happened, and I'm going to try and make a change for the better, at a very big level. Otherwise, you go micro, and say, all right.

What am I going to do personally in my own financial life, to make sure that I'm protected, that it doesn't happen again, that my family is going to be OK, that I can get to my goals? Again, your behavior-- we're talking a lot about behavior today. Your behavior will dictate ultimately how you handle that.

So the last thing in the world I want anyone to say is, oh, he's pointing fingers at the people who were victims. Not at all. Not at all.

What I'm trying to say here is that at the end of the day-- and this is cynical-- no one cares. It is your financial life. It is your responsibility.

It is very frustrating, and anger, some things that have happened, or the lack of financial education, or the education you were denied, or never given, and how you got here. But that's not stopping you from grabbing the reins today and doing something about it. And I love to just encourage that for anyone.

I worked with people-- not just well-to-do young professionals. Plenty of-- I take 30 minute calls from anyone looking to become an advisor, or really needs help. I'll get them help.

I create the content to do that, at scale. So it's very important to me. And I know one of my main goals in life is to leave this world a more financially literate place than when I found it, because of the very things that my generation, myself, my family has experienced in starting their adult lives in the 08, 09 era.

Totally agree. And I would say that's something I definitely would encourage anyone who feels a bit aimless in that regard to do is find one local issue, specifically, that you care a lot about. Because state, or God forbid, national politics, can feel like such an overwhelming mess.

And it is very difficult, on an individual level, provided you're not insanely rich, to enact a ton of influence there. But trust me. You pick a local issue.

And you, and-- it will just be you and three other people, in a veterans hall, screaming at each other. But you guys will be able to really enact change. And having at least one issue outside of yourself that you feel genuine motivation and drive about really helps ebb away at that sense of hopelessness, which is the ultimate killer.

Despair and hopelessness are the two things you can never allow yourself to engage in. Where should people go to find you, Doug? Where are you?

Head over to Twitter. Find Doug Boneparth, if you need a break from your day and a chuckle. That's a good place to go get it.

The firm website's Bonifide Wealth. That'll do it. I mean, you hit up either one of those.

You'll find me. Yes, and his wife is Heather Boneparth. His Twitter, you can take or leave.

But definitely go follow the wife's Twitter. His wife has a great Twitter. Yeah, she's the best.

And I might as well throw in here, Heather and I do a podcast together called We Should be Sleeping, so weshouldbesleeping.com, if you want to hear a nice little intro of what goes on, it's some 30 something year olds who can't figure out how to sleep, and are always taking on new projects, and what we're thinking about, as far as current events go. That's awesome, and we had some great guests. We're wrapping up our first season.

We had some really cool guests. It's not a financial podcast. We just wanted to really tap into hardworking millennials who are doing it differently.

So check that out as well. They recently had on as a guest the founder of the Miniature Cupcake Company Baked by Melissa, who is our marketing director's cousin! Look at this 6 degrees of Kevin Bacon.

Melissa's Fantastic! Yeah, she's awesome. Anyway, please go follow Doug, in all seriousness.

Go follow everything he does. Get his financial words of wisdom and his wonderful memes. And I will see you guys next week, next Monday, to be precise, on the next episode of The Financial Confessions.

See you guys soon.