Hello, welcome to the Joe DeLisi Financial Advisor podcast. Joe DeLisi. This week I wanted to get into a little bit of, we'll call it recency bias. Actually, there's a lot of things that can throw you off as an investor. I mean, in 30 years of like looking through this stuff, I want to always go to data. I want to always look at returns and, but the more I do this, the more that I...

talk to you guys and the more that I talk to my colleagues, it just comes back to the fact that the numbers are the numbers. They really don't change. We know what the science tells us in terms of how to build portfolios, but it doesn't stop people from, you know, wishing they had something different or wishing that they were beating the market or wishing that they had gotten in to a certain stock at a certain time. It's just human nature. And we're going to battle that. And I'm going to battle that as an advisor until the time that I retire.

And you're going to battle that until the time that you no longer have money in the market. But, you know, for what it's worth, we're going to look through some. wrote some things down that I deal with a lot. you know, some of this actually comes from advisors. Most of it, I would say, as I look at my notes, most of it doesn't. Most of it comes from clients in the forms of emails or phone calls. And I really want to be sure I'm saying this the right way.

There's not a problem with this, meaning I don't, I don't feel bad about it when you send it to me. I don't get angry or upset or bored or any of it. It's just so normal. Like that's the point of having the advisor. really think anybody can use a Google search or an AI search now to look up the data and to look up the statistics and the science. Like anybody can do that. Information is a commodity that information is not going to solve your problem when you come, when it comes to investing.

What's going to help you, really think, is context. So as an example, when things get bad and I say, we're going to ride it out, I know from experience that's not enough. I can't just say ride it out. I have to explain to you, why am I saying that? There's got to be a good reason. It's got to be based in something. They can't just be a rote answer. Okay. And so that's why I will continue to spend time on podcasts. I'll continue to write articles about it. I'll continue to speak at conferences about it.

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And when I say it, I'm really talking about the behavioral part of it and the emotional part of investing. It's just the biggest part of it. So here are some things that happen and I've kind of titled them. One would be, and I want you to think about these in terms of yourself, right? So as I walk through these and you hear them, be honest with yourself. Is that you? Is all of it you? Have you been there at some point or another? And honestly, we all have. In fact, before I really learned the science of investing, I was in these categories.

As a young advisor, I was in some of these categories. Okay, so in no particular order, the performance chaser. Why am I not beating that benchmark? Why is the S &P 500 beating my portfolio? Why am I down this year? Why am I only up 30 % when somebody else is up 40? Right, the performance chaser, chase, chase, chase. Miserable experience. You're never going to be number one every year. How about everything is recent? Why don't I own that thing that just did really well?

You know, Joe, you should have put my portfolio in that that one, you know, Japanese micro emerging value widget company. Joe, you should have known that. By the way, had Joe known that, had I known those things ahead of time? I love you guys. I wouldn't be in this business. I would just have an island somewhere. I wouldn't call you up and say, hey, guaranteed 1000 % return next year on XYZ stock and and

Why would I do that? Why would anybody do that? They would just hold the information for themselves. The banks don't know. The experts don't know. The analysts don't know. Joe doesn't know. Nobody knows. Nobody knows ahead of time. There is no algorithm that will tell us that. The hindsight client. This we're going to talk about in some numerical detail in a minute. Why didn't we go all in on Nvidia? Now I'm hearing Palantir. There's a bunch of companies. And they kind of go through.

cycles. Tesla was a big one. Apple, course, know, the meta. Why didn't you buy crypto for me? Why didn't you have all my money in tech stocks? Why are we in bonds? You know, so it's funny. In a bull market, you'll say why are we in bonds? But in a bear market, you'll ask why are we in stocks? And when I again, when I say you, I mean the human animal. I'm not speaking about anybody in particular, everybody's guilty of it to some extent.

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even if you don't ask me the question is probably in your mind a little bit. What about the worrier? Now what's interesting about this is as we all get older, myself included, we just tend to worry more. I've seen it. I've seen clients of mine who are now in their seventies that never worried and now they're worried all the time. And yet they've got the most wisdom and experience. That's, that's kind of a weird dichotomy there. So the worrier is government debts too high, systems going under, everything's crashing, everything's going down.

Biden's president, it's over. Trump's president, it's over. Did you see what happened in the Middle East this week? Did you see what, you know, so it's just constant. It never ends. And the 24-7 news cycle is just destroying our minds with that kind of stuff. So the worrier is really getting crushed. Irrational confidence. Look, just Joe, I don't want to deal with it. You just pick the best stuff for me. You just do it. I do want 12 percent a year, linear and guaranteed. That's what I expect. But you, Joe, you just do it. You do your thing.

You know, just move me in and out of the best asset classes. I actually have people saying this to me. Usually it's newer clients and I'll explain that's not me and we'll go through it and I'll even tell them like, I may not be your guy. They'll talk me into becoming their advisor and within six months I'm getting emails about rotating them in to different asset categories. Again, there's no science around it, right? It's not logical. It's emotional. And so we're all there.

For us not to comment on it and to make light of it a little bit and maybe joke around a little bit, that's okay. I want you to know you're not the only one. So if you're out there thinking these things, this is a universal issue that we deal with. It's my biggest job. My biggest job is not designing exit strategies for my clients. It's not doing the math and running the spreadsheets and any of that. My biggest job is really twofold. One is making sure portfolios are operating the way they're meant to.

you know, we're rebalancing them and they're moving in the directions that they should be. number two, really, and this is one A, is dealing with emotion, scary times, over-exuberant times, et cetera. Now, let's go back to Nvidia. I'm going go to my notes here. All of these numbers come from Yahoo Finance. OK, so that's kind of where I got all the data. And it got me thinking. So Nvidia specifically, AI is the topic of everything.

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And I read a lot and I pay attention to it and I really want to know for multiple reasons. One is I'm my own business owner. I want to understand how artificial intelligence is going to help me adapt and become a better advisor and a better business owner. And so I really am studying that. But I want to know also how might this impact markets? How is this time different or not? And, you know, hint, it's really not. And I picked Nvidia.

Not because I got anything for against Nvidia. Like we use Tesla sometimes. These stocks are just used because they're in the news and Nvidia is in the news right now. And I was wondering, I'm like, you know, it's 2025. Why didn't we pick Nvidia in 2015? I had to go back and think and I want you to do the same. Where were you in 2015? I do remember 2016 vividly because I mean, a lot of stuff happened. I had Achilles surgery. I was like on my back, you know, recovering from that. We had the

Clinton Trump election, the Cubs won the World Series for the first time in a bazillion years. Like lots of stuff happened. I just remember 2016. So close enough. It's a decade ago. And so I went in and I wanted to look, okay, Nvidia essentially is a chip making company specifically for artificial intelligence. Why didn't we buy it in 2015? Could we have bought it in 2015? Yeah, we could have. was a publicly traded stock.

But they weren't even in the top five or six companies in that business at the time. Here were the companies back then. I'm going to give you the company and I'm going to give you their 10 year total return from Yahoo Finance. Okay. So we've got Intel. Intel was actually the number one. And this is just by revenue, not by return. This is by revenue. So back in 2015, they were the number one chip maker. Their 10 year total return is negative 15%. I'm rounding it. It's like 14, negative 14.8 something.

So they lost money. Qualcomm. Qualcomm's up for 10 years 207%. Micron up 528%. Texas Instruments up 374%. Samsung up 150%. And Toshiba's delisted. They had some accounting scandals and they had problems. They had problems in their business model. They had problems with scandals.

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So I don't have a return for them, but likely not great. So if you look at the S &P 500 during that period of time, by the way, there's 10 years, the S &P was up about 251%. So again, Intel was negative, Qualcomm was under the S &P, Micron was about double the S &P, Texas instruments a little higher, Toshiba, Daedalus, and Samsung underperformed the S &P. Notice Nvidia is not even in those top, what is that, six stocks? They weren't even in the top 10 when I went and looked.

Now, Nvidia, since 2015, is up a little bit better than the S &P 500. They're up 35,277%. 35,000%. What about AMD? Nobody really talks about AMD. AMD is right there with Nvidia in terms of chip making for AI. They're up almost 5,600%. So some of those returns I gave you like Micron, it's great, up 528%.

It pales in comparison to Nvidia. It pales in comparison to AMD, which very few of you probably have even heard of. I'll tell you this. Nobody is emailing me saying, why aren't we in AMD? No, I get that on Tesla, Apple, Nvidia. I get them on the Mag7. The Magnificent 7 typically is what I'll get that on, or some weird asset category somewhere like that. What about, what is this ticker? CELH. C-E-L-H. C-E-L-H.

They're up 5,291%. Now, what chips do they make? Well, they don't. That's an energy drink company. what's my point on this? My point is, whether you're a worrier, whether you're a recency bias person, whether you're a why didn't you pick it for me, doesn't matter where you are. If you just look back, know, 10 years is both a long time and not a long time at the same time. If you look 10 years ago,

and the obvious choice, oh my gosh, we should have been in XYZ company, Nvidia would not have even been on our radar, nor would AMD have been on our radar. It would have been companies like Intel and Qualcomm and Samsung and Tishi, but that would have, those would have been the companies. If we were really, if we were really forward looking and saying, well, obviously artificial intelligence is going to be a thing. And nobody was talking about it in 2015. In fact, in 2020, I believe that was when AI was kind of first introduced publicly.

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And nobody really talked about it. It was 2023, 2024, and now it's everywhere. And so this is going to happen ad nauseam. It does not matter the industry we're talking about. doesn't matter the companies we're talking about. This time is not different because it's human nature. It's emotion. We want to chase the hot stuff. We want to get in before it spikes. It's the lottery ticket if I only had X amount of dollars mentality.

That's not how investing works. Now you can speculate and you can gamble and we did a whole podcast on that. You can go back and you can pull that one up because my point on that was, yeah, you can do that, but how much are you willing to gamble? How much are you willing to speculate? Because even if you got a hundred percent rate of return and you were right on something, unless you put your entire net worth in it, it probably didn't move the needle for you. You know, for most of my clients, for most of you listening to this

Podcast, if you put $10,000 into a stock and you are right and it doubled, it's 20 grand, that doesn't fix anything. That doesn't change your world. For most of my clients, it doesn't. So what would change your world? Two million going to four million or four million going to eight or seven going to 14? Yeah, that probably does change the world for you. Are you willing to gamble that much of your money? I'm not. I won't do it for you. That's not what I'm here to do. I'm here to build

portfolios that are based in math and science and we're not going to get emotional. I'm not going to be the weak link. You know, I'm not going to be the one that takes down your portfolio trying to chase something because some other advisor or some radio talk show host or some, you know, golf buddy told you about something. I'm not going to let you do it. I will not let you destroy your balance sheet. I will not let you destroy your investment portfolio. We know the point of your investments is not to speculate.

It's to fully fund your financial plan. And when we do your financial planning and we look at those numbers, whether it's me or somebody on my team, we're not running it on 20 % annual rates of return linearly, you know, to make it work. What are we using? Think about it. When we sit down, it's what sixes and sevens and eights. Not that we think that's all you're going to get, but we build everything on very conservative rates of return.

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And we let your risk tolerance, your ability for movement in handling that movement dictate where we're going to put your money in terms of how much equity and how much in high quality short term fixed income. And then we rebalance it. We're not going to chase anything. Again, moral of the story, we can go back 10 years and even if we're looking at the top six or seven, Nvidia wouldn't have even been on your radar. So rest easy.

We own markets globally. We tilt towards where we know risk premiums have existed in the past, things like small cap and value, and that's true internationally as well as domestic. We'll stick with the course, and everything's going to be fine. And you don't need to be emotional about it, even though you will be. We will talk to you next time.