Afternoon podcast 9-8-26

0:00Welcome to the afternoon Rob Blackshow podcast a guaranteed human podcast which can also be heard on AM-1220KDOW weekdays at 5 p.m. and on 860 a.m. the answer week nights at 11 p.m. The views and opinions expressed in the program are not necessarily those of this radio station or its sponsors and should not be construed as legal tax or investment advice You should always consult the appropriate advisor before making any financial decision all rights reserved Now, new focus on wealth, new focus on wealth, get a new focus on personal finance, wealth management, Wall Street and the economy. Now, Rob Black. It started with something kind of humorous. Following their Emmy win for outstanding anime and program South Park is making one big change. Creators Trap Parker and Matt Stone announced that quote inspired by the bravery and patriotism of Apple and Google we are changing the name of South Park to South America.

1:06I think that's kind of funny. When you see Trump wanting to change to New Mexico to New America, Lake Ontario to Lake America, the Gulf of Mexico to the Gulf of America. They took our yeah, they took our kid. I think humor is so important to balance the world. They went on to say we especially want to think our parent company Paramount, which is a Skydance, Impitulation Company. How do these guys not get fired? Skydance, Impitulation 29th Seasons of the Ward, winning series will premiere September 16th at 10 PM Eastern Pacific time on Common Essential New Episodes will be available on Paramount Plus around the world with the next day of availability in the United States, Canada and Australia. I have followed these guys very, very loosely in the last 15 years, but very religiously in the first 10. I was younger. The humor was always on point. It was a reflection of not politics, but when politics turns into mainstream conversation as it has today, I think they're genius.

2:22Every award that they went from here on, I will give them an applause for. So the major stock market average is finished lower today on Tuesday. It feels like Monday. I hate holiday shortening weekends, weeks. I love the weekend. Hate the weeks. Who do we blame? Well, we got to blame someone. Let's blame Mike the engineer. Nope, not going to blame Mike the engineer. We're going to blame oil today. Renew geopolitical tensions have created a different backdrop for equities to begin the holiday shortening week. SP 500 was on six tenths of 1% the Nasdaq down 3 tens of 1% the Dow Jones and dozens of average was down 1.2%. All negative territory. There's some pronounced healthcare weakness contributing to the blue chip averages under performance. The Russell 2000 down 1.5% of 1% the S&P mid cap 400 down 7 tens of percent tied towards interest rates.

3:29Crude oil remained a central influencer at the session. So the Russell 2000 is small cap companies. The S&P mid cap 400 mid size companies. They're not Apple. They're not Microsoft. They don't have billions and billions of dollars of revenue and profits to say, I could bankroll my own future. What they have to do is go down to the bank and go, hi, I'm Steve from the local company that does. Can I get alone? It's a little tougher and that's why interest rates are so important to small cap and mid cap companies. They're the companies, small cap companies that are biotech that are like, we have this plan where we've come up with this helmet that Rob can wear in a grow hair on his head. Plus we're going to sell the cream and the batteries to supply it. The power for the next couple of years after it runs out of the first set of batteries. And the bank would say, that's a pretty good business. People who are losing their hair, people want to spend money to keep their hair.

4:33I'm going to give you a loan. Well, a loan at 4.8% is way different than a loan at 4% or 3.5% or 3% or 3% or 2.5% or 2% which is where the small caps had the mortgage, not the mortgage rates, but the interest rates for a long period of time. So oil was hired today. It's in $93 and two cents a barrel. We're seeing an all time high on diesel. That's not good. $5.85 nationally over $7 in California. Truckers, and this comes back to smoking in the bear in Bert Reynolds. You know, he got a free Trans Am like for every year for like many, many years. And they finally said, nope, we're cutting you off. But it was probably worth it because every time you see Bert Reynolds, you go say, hey, who's that dude with a two-pay driving a fast car?

5:34Bert Reynolds had a two-pay. Bert Reynolds's two-pay was so bad it sparked my game that I play at airports. When I get on airport and I'm in a lounge or in a bar and I have to wait for another flight, it's two-pay or not two-pay. All right. All right. That's right. Money's involved. Where you bet on if someone has a two-pay or not two-pay. And it's pretty funny because you can see like a five-year-old kid with a like beautiful head hair and you say, two-pay. And your spouse or your friend or your business partner just laughs like you're an idiot. But yes, yes, daddy. I think I saw a crocodile. If you look back at those, smoking the man at my face, they were very good. Now maybe the first one to say it. And he wasn't a very good actor. I think he did one movie. It was a good actor. And that wasn't Boogie Nights. Boogie Nights was a pretty good film. It's my favorite.

6:34Okay. Maybe Boogie Nights and one more. I think he was on call to heat or something like that. I got the name wrong, but he was like, cop and he was like, he was tough. Hollywood had a good summer. I had a chance to go see the Odyssey this week and I'm like, nah, I don't want to spend three hours of my life sitting there now. A way to come out on video and I'll watch a third of it and a third of it and a third of it. And make it like I'm acts. I'll get really, really close to the screen. I'll get one inch from it and I'll convince myself that it's really, truly an I'm acts and how great and glorious it is. I know, I know you're saying, didn't you have a 60-inch screener up? Yes, I do. But to make it I'm acting, I have to get within one inch of it. For the records, the FP chat version has 100 plus in screen. You know what I'm saying? Oh. You know what I'm saying? You pick it up and I want to put it down.

7:34I'm going to say, I'm very important. Something like that. Health care sector got rocked today down 2.6% finishing at the bottom of the returns. Ambient was the day's weakest. S&P 500 component down 10% after clinical trial setbacks at Novartis weight on related names. Novartis fell at 13.9%. Novartis has had not one, not two, but three straight disappointments on clinical trial failures. Down 12% day, three straight clinical trial failures within a week, 20 billion dollars is in wiped out. I don't do a lot of drug stock investing other than Lily. For the sole reason of when I look at a company's scientist, I go, I think I look like a scientist and could take Novartis, I think Lily could say, Merck or Pfizer. I'd be like, I'm pretty sure that guy, he looks like a scientist. He looks like he knows how to use a stethoscope when a microscope had a macro scoop and a telescope.

8:39He knows all the scopes. It's impossible for me to analyze medical device companies other than on reissuing prescriptions or reissuing devices. The biggest blow for Novartis came after Del Deserad. It's treatment for rare muscle wasting disorder. Failed a late-stage trial. The drug was a Serpice of Novartis 12-Bendeller acquisition of Evidity Biosciences. So whoops! You bought one for 12 billion and it doesn't work. Whoops! Shareholder said, these setbacks are now putting even more pressure on the company's future growth plans. The Treasuries. The 10-year notes that'll date 4.81% the two-year treasury sits at 4.4%. People are still buying our treasury, but it's getting thinner and thinner, fewer and fewer. The United States is going to have to show some fiscal discipline at some point in time, but not today.

9:40We are not growing out of our debt or growing more debt on top of our debt. The Dow Jones Industrial Average up 9.8% year-to-date, the S&P 500 up 12.1%. The NASDAQ composed up 13.7%. Yes, the S&P mid cap up 13.7%. Same as the NASDAQ, that's spooky and weird, and there are also 2,000-sub 19.3%. There's now a theory that Trump wants to go aggressively after Iran, after the midterms. This is being leaked out of the White House. Is it true or not? Who knows? Clearly, Iran doesn't want to settle with him before the midterms. They want to punish him for what he's done to their country. So Trump is starting to send the message out, but oh yeah, we're going to punish them after the midterms when it doesn't hurt my popularity anymore. I will tell you at the time, I'll keep you in suspense. I don't know what to think. My brain just started to melt with that conversation on Iran and the United States. When will we go escalate? When will we not? It's really, really tough out there.

10:45You can always find me online at roblachshow.com. It's roblachshow.com. I have a big event coming up in essentially four days, Saturday, September 12, 10 to noon, Lafayette Library, the Don Tatson Library. A great park. You need to get too off the highway. It's my only and last appearance now in the East Coast of the year. You can sign up for the Wealth Preservation and Time Planning event. I'll bring some mortgage people. I'll bring some financial planners. I'll bring myself. All your questions will be answered. Show up early, stay late. Find out more information roblachshow.com. It's roblachshow.com. It's going up in four days. Few seats are left beside up today. These days, retirement planning is more complicated than ever. So set aside Saturday morning, September 12th and get ready to learn some strategies for a wealth preservation and retirement planning from Rob Black, Ryan Ignacio and Julie Channell Rork. This event will focus on retirement tax strategies, estate planning, alternatives and funding retirement. If you're at or near retirement with at least 500K in investable assets, this seminar is for you. You'll learn how to

11:49transition your portfolio from the accumulation phase to the income phase, which accounts to draw from first how to protect your estate from long-term care costs and much more. Learn how to invest during inflation and interest rate moves, social security strategies and managing IRAs and 401Ks in retirement. Rob Black will share market happenings and trends. That Saturday, September 12th, 10 to noon at the Dom Tatson Community Library in Lafayette. Space is limited so sign up today at roblachshow.com. That's roblachshow.com. Investments not if the ICNC shared best performance does not guarantee future results not on offer to sell or is a listentation to buy any security member Finder S.O.P.C. You're listening to new focus on wealth. You always have to be looking a little bit to the future as an investor, especially as a retail investor, institutional. You can always fall back on getting the trend right and sometimes timing is a little bit off. But as an individual, it's important to stay on top of where we're going. I saw a statistic today that troubled me on where we're going. Let me share it real quick. Teenagers more accustomed to smartphones and Shakespeare. They're reading at

12:52the worst level seen in the century, driving a broader decline in education. The organization for economic cooperation and developments 2020, 5 tests of 760,000, 15-year-olds across 91 countries, showed reading mathematics and science scores at the lowest levels since date of began to be collected in 2000. We all know that even for 2000, education, the United States and the world was declining, except for some quote-unquote Asian countries where we're like, oh boy, they care about math. To be cliche and almost a little bit, now shall we say, nationalist or racist and combined? It's not a great thing. It's not a great look for the United States and it's not a great look for the world to see education declining consistently. Now again, good news. AI is on to the rescue. I will say there is some positive there, yes. But free thinking, everything I ever learned I learned

13:52to book. I learned that I wanted to be a better person. I learned that I wanted to kiss a girl. I learned that I wanted to love with all my heart. I learned that I wanted to see the world all because of books. Everything I ever learned I learned in a book. A little bit for my brothers, but almost nothing for my father. What I learned from my father was what I didn't want to be. Someone needs therapy. I learned to have a lot of it. I saw this as an interesting blurb. Today let me share. Eternal, which is a health startup founded by the athletics Alex Meather. They launched a feature that turns your blood work, your sleep data and fitness stats into a personalized AI generated weekly podcast. I list a lot of podcasts because I have sleep app. I don't want to say sleep app because I don't have sleep app anymore. I had my UV light taken out, which I one time incorrectly mistaken as my vulva on a first date with a girl. I was like, yeah,

14:55yeah, I had my UV light. But this time I said my vulva and she's like, no, no. I need to leave. But eternal now is doing something I think is really, really cool. Taking all of the readings for my oral ring, which I talked about on Friday's strategy show is potentially hot sexy IPO coming up next year as well as my Apple Watch. It turns into a podcast. I I I waste a lot of time watching TV shows. Like I'm trying to get into dark matter. First season was okay. Second season, not working for me. So this is if they've softened or Hollywooded the characters too much. So if I could hear a podcast on how I can improve my life, like, hey, I see that you woke up three times last night. I woke up and middle the night because my dog was scratching to get out because there was an animal in my backyard that she wanted to go investigate and me being the dad that I

15:58am. I'm like, well, that could be a coyote. So it's probably not the best idea. Or could be a raccoon. That's probably not the best idea. Get where I'm going out with this bait. In my head ahead, I woke up this morning like, I'm that sucked. And I looked at my sleep score. My Apple Watch was 91. It's the highest score I've ever had in five plus years of kind of loosely tracking it. But in the last 18 months, I've been tightly tracking it 91. Oh, we and I had that interruption by the dog with the wild animal. If I were to be told this Friday, like, hey, don't forget you got a 91. Good for you. Big daddy. I'd be like, sweet. So when I want to pound here is or an apple, alpha bet, and any other companies pursuing healthcare data, I think it's important. Because I think there's a trend there elsewhere. US bond investors

17:00just posted their worst 10 year return in 223 years. I can go back 223 years and still this isn't the worst 10 like this is the worst 10 of the all 223. There's been nothing worse. The rolling 10 year return on the US Treasury bonds fell to 1.85% negative 1.85% as of August 2026. Anyone holding bonds for the last 10 years lost money even before counting inflation since 1793. 1793 feels like the last time I was young. It feels like last time I kissed a girl. Like 1793, the rolling return is averaged 5.4% by the last two years down 1.8%. I own no bonds. I've own no bonds. I'm adamant about there's a time and place when you see bond yields surge.

18:03When we are on the 10 year ago from maybe 1% to 5% 4.8 right now, you think the trend is going to be lower? That may be an opportunity on the yield. But let's talk about bonds one more time. I saw the statistic this morning and it bears repeating in case you know what's the morning podcast, which I assume 73.2% of you have not. Corporate net interest payments have fallen to 4.10% of GDP. Corporate bond net interest payments because firms locked in a record low fixed rates during the pandemic. The US government did not therefore the US government missed an opportunity to turn out their debt when interest rates were near zero. On this show, I did a lot of segments where I'm like, why did Apple just borrow 70 billion dollars? Like don't they have enough cash that they were born at 1.4% of 1.5% of 1% 3.4% of 1% it was the most genius thing they could do. The corporate tailwind is temporary because

19:08it will it will pass to. In the coming quarters, years, they'll have higher coupons, they'll have to be more for debt. Someone who's in debt that they took out five years ago to pay off dividend yields or to pay down debt or to issue more share. Like it's crazy how good corporate America did versus government. The transmission mechanism of monetary policy was delayed rather than switched off. And it works through the same channel as always the more debt you have, the more you are hurt by high interest rates, which is different way of saying that high quality companies low leverage and actual earnings are more attractive both from a debt and equity perspective. Tough blow for former icon and footwear athlete is Nike. They're being removed from the S&P 100 index. Of note American Eagle put Sydney, Sweden and jeans made one pun and the stocks like a mean coin in a mall. Would Nike benefit instead of coming up with a vision or a new shoe

20:13or a transition year? Would they benefit from 30 seconds of Sydney, Swini? Maybe some sort of bad pun on the swoosh? No. I would certainly be considering calling Sydney's agent at this point in time because what she did for American Eagle is she can do for Nike or a macro. Every man in America aged 25 to 50 will go out and buy a pair of Nike's. We'll personally rebuild the footlocker wall with our hands. We will do everything we can. If Sydney, Swini became the face of the swoosh, replaced Michael Jordan, Air Jordan, just do it, Sydney, just do it. My johns are blue. I love my flow. I'm actually being serious here. That would be a very wise move by Nike to spin something on a splashy higher to get it the brand noticed again.

21:17Coming up with something like Sydney, Swini has got great jeans, Swini, Swini likes to do the swoosh. It stinks but sex sells. How do you feel about that? Someone know anyone on the board of directors of Nike can give them my idea. Drive me an email rob at robblack.com. That's rob at robblack.com. Now back to new focus on wealth. Buy the mystery. Sell the history. This was on a research report that I got this morning. Ultimately, what does this mean? It's all about Apple tomorrow. They've got their big hardware announcement for the fall. New phones, new foldable phones, new iPods, new airpikes, it's coming tomorrow. And the phrase that pays again today is buy the mystery. Sell the history.

22:17I'm not big into looking back at the counter and saying, well, seven of the last 10 years when Apple reduced new product in the early September, the stock returned negative 3.15% the only month of a negative return in September, which is when they introduced new hardware. Sell the news. Okay, I get it. I have the feeling every time I would do that. I'd let go of a company I own, I would create a tax liability. And then we go higher. I like that. So the bubble market or the bubble argument on the stock market with AI stocks is getting harder to make. Suggesting that the AI bubble is an argument, I don't buy into. Global AI revenue has reached $229 billion annualized run rate.

23:18So that's the annualized revenue run rate. $229 billion. That's up three and a half times in a year. That growth rate is accelerating. The obvious response would be, but the hyper scalers are spending 600 billion. So they're spending 600 billion to get 229 billion in annualized run rate. Probably 600 billion plus. And you probably say plus plus plus. So revenue doesn't cover all the new revenue that's coming in. No, no, no, no, I said that wrong. Spending on CapEx doesn't cover all the revenue that's good. The revenue doesn't, that doesn't do enough. So we're missing the bigger picture though. Let's step back. There's a group called Expansional View. AI generated about $140 billion in actual revenue over the past 12 months, putting the current annualized run rate at $229 billion. Okay, we're good at that. This gap matters because it's a just AI revenue is still accelerating.

24:20And here's the really interesting part. The hyper scaler capital spending is growing 36% this year. While AI revenue has grown roughly 250% in other words, revenue has grown dramatically faster than spending. This analysis also suggests AI revenue is now large enough to cover depreciation on the computing infrastructure being built. That directly addresses one of the biggest arguments from AI skeptics about companies are spending billions of dollars on chips and data centers, but those assets could become obsolete before they generated enough revenue. So far though, the revenue growth is starting to catch up. We now have debt and corporate spending funding the AI building. And increasingly large revenues are coming back through the other side. That's why I think the AI bubble argument is getting harder to make. I'm positioned across the AI infrastructure stack with compute, memory, and power because I think we're still in the early stages of this build out. And if you want to see how top analysts are

25:23positioning for it, you really got to get it on some top tier analyst research and portfolios. The next AI trade, according to data, the next AI trade may have arms and legs in a face. I just saw a prototype of an AI financial platter. And basically, they've never seen some of those old college desk lamps where it was largely a large plastic base. And then there was a tube going up to the light. And the tube was flexible so that you could move it to make sure your roommate doesn't have to stay up with you, steady, and so you're only getting light on your paper. You know, hear of that stuff? I saw an AI advisor for financial and it did a pretty nice job in conversation. The advice wasn't quite there. And trust me, when the advice is there, I will be the

26:27first one to tell you. I work with the CFP. I'm bringing some CFP's to my event on Saturday. That's coming up on the 12th, 10th and noon in Lafayette. Sign up for the Wealth Preservation Retirement Planning Amendment at Roblachio.com. So the next AI trade may have arms, legs, and a face. By the companies making the chips, of course, by the companies building the data centers, of course, by the cloud companies, renting all that computing power, by the companies providing electricity, but but AI is about to get a lot more physical. AI is leaving the computer screen and walking into the real world. Humanoid robots are moving from science fiction and trade show demonstrations towards actual commercial deployments and factories, warehouses, logistics, healthcare, and other industries. That could create a completely new investment, opportunity. The interesting part isn't necessarily figuring out which robot company becomes an extended video. It may be figuring out who sells the picks and shovels to every robot company.

27:30EBS, that's the research they're pounding on today. The bank calls the next phase physical AI where machines that don't simply generate text or images, but they can actually see, understand and manipulate the physical world. EBS as robotics is approaching a transitional way from traditional pre-programmed automation towards machines capable of learning from observation and adapting to new situations. And the numbers suggest this isn't just a PowerPoint presentation anymore. This is impressive. Counterpoint research says global humanoid robot ship. It's top 22,000 units in the first half of 2026. That's nearly triple the level from a year earlier. The firm expects more than 50,000 humanoid robots shipped globally in 2026. That's still tiny compared with the number of cars, computers, or smartphones produced every year. But that's how technology usually begins. The question is, what happens to these machines work?

28:33Think about what a robot needs. A humanoid robot, it's not just a computer with arms legs. It needs motors, it needs gears, it needs actuators. Cameras, sensors, processors, batteries, power management, connectivity software. More artificial intelligence. In other words, there are a lot of ways to invest in the robot without actually owning the robot. That's the pick and shovels approach. During the gold rush, you didn't have to find gold to make money. You could sell the miners, the equipment they need it. Same idea applies across robotics. Let's talk about the actuators and precision gears. A robot needs to move its arm. Legs, its fingers, it's showing it needs to be strong enough to lift something but precise enough to pick up something fragile. That requires actuators and highly specialized gears. If you see a robot crush like an egg with its fingers, are you going to put your baby's head in the arms? Probably not. UBS describes these components as critical to

29:39the dexterity of humanoid robots. Everything from moving a finger with a millimeter precision to keeping a robot balanced on an uneven surface. This is one of the areas I find particularly interesting because it is easy to overlook. Everyone wants to talk about the robot's brain, but the brain doesn't matter if the robot can move. The two companies you should be looking at. Rockwell Automation and ABB. They provide exposure to industrial automation or robotics infrastructure. They're not pure play humanoid robots pets, but they're part of the appeal. Didn't you got to look at the eyes and the skin of the robot, which will have sensors? Perception. For a robot it has to see the world around it. It has to know where a table ends. It has to recognize a box. It has to distinguish a person from a fork lift. And eventually it had to understand something as simple as that's an egg. Don't crush it.

30:39Sometimes I confuse my spouse with being a fork lift. That's unacceptable if I was a robot. It's kind of funny though if I'm in a failed marriage that's bound to burn out because I have a sense of humor and she doesn't. So you need sensors. Cameras are one part of the question, but robots also need technologies that measure distance, pressure, force, friction, and movement. Think of it as giving a robot eyes ears and eventually a sense of touch. EBS highlights sensors, players. There's three of them. Synaptics, Aleister, and Lewin R. This can become an enormous data opportunity. Every time a robot moves, it clicks information. Every time it touches something, it learns something. Every time it makes a mistake, the next robot gets better. Robots not just executed instruction is learning from the physical world. Then you need to find the brain of the robot. Where are you going to invest in that?

31:40Computing power. A row that can't send every decision back to a giant data center to wait for an answer. You can't have a robot down on the factory floor waiting. Hang on, let me call the cloud. It needs to react immediately. EBS specifically identifies edge computing and power infrastructure as a third major investment area of physical AI. In video, his already position itself as a major player in robotics. In video, partnerships across robotics industry with names. Every time I hear the dog I write down, ABB robotics figure agility. Fnuke, FAN UC. KULA, KUKA, KUKA, KUKA, KUKA, KUKA. In video, it's supplying not only the chips, but the simulation tools, robotics software, and AI models designed to help robots learn and operate in the physical world. So let's just buy the robot. This is where I think investors need to be careful. The obvious trait is the coolest humanoid robot. And buy the company behind it. No.

32:44So there's your fail. Some will succeed. Some will get acquired. Some will become irrelevant. I like the pixel-level approach. It's the same reason investors gravitated towards semiconductor equipment, memory, and networking during the broader AI buildout. You don't have to know which application becomes the killer app. You have to know. And thus have to own the infrastructure underneath it. So look at the brains of video AMD, ARM, look at the muscles, rock wall automation, ABB. Look at their eyes and senses, synaptics, austro and others. We got a lot to talk about in the future. Stay with me. Don't forget to have a big event coming up Saturday, the 12th from 10 a.m. to noon in Lafayette at the Don Tadson Library. It's a wealth preservation retirement planning event. Anyone who signs up, we'll get a free consultation with a financial planner from EP wealth that will do a full financial diagnostic for you on where you are, what you're doing right, what you're doing wrong in your financial planning and wealth preservation attempts to get through this world. Sign up for

33:47the event at roblexhow.com. Get there early, I'll stay late. You'll get a one-on-one with me if you want. Find me at roblexhow.com. This is New Focus On Well. Target funds. You might know them as fidelity freedom funds. You might have found some other ones that are out there. It's typically tied towards your age when you're going to retire specifically. There was a time when saving free retirement required a spreadsheet calculator. Maybe an avocass and probably a conversation with someone who knew what a sharp ratio was. The target date funds came along. You picked the fund with a year closest to when you expect to retire. You put your money in it and you let the fund do the rest. As you get closer retirement, the fund gradually shifts from stocks towards bonds and other less volatile investments. It's simple. It's automatic and for millions of Americans, it's been a huge improvement over due nothing. But there's a problem with making your retirement strategy revolve around one number

34:52your retirement date. A target date fund knows your age, knows roughly when you expect to retire. It doesn't know your spending needs. Your other assets, your social security income, your health, your tax situation, your tolerance for market clients, and whether you actually need to sell stocks when you retire. That distinction matters. Target date fund machine. It has become huge. Target date funds have become one of their biggest forces in retirement investing overall. Morningstar says assets and target date funds have reached $4.8 trillion in 2025. That's up more than 20% for the prior year. It's kind of like putting it on on on self-park and letting it in self-park, putting it on drive and letting it drive. Vanguard account for roughly $1.8 trillion of that $4.8 trillion in target date funds. For the average 401k investor, the biggest problem is it necessarily picking

35:57the perfect mutual fund. It's getting started, contributing consistently, and staying invested. So I like target date funds overall, but I know you could do better. But you could do a lot worse too by doing nothing. Target date funds solve the problem of making decisions beautifully. You don't have to decide if you're 70% or 80% in stocks. You don't have to rebalance. You don't have to figure out when to reduce risk. The fund does it for you. It's a feature. It's not a bug, but it can also create a false sense that retirement planning has become completely solved. It has not. Bill Bingen is the research we developed as become known as the 4% role. That's the famous retirement income guideline suggesting that a retiree could initially withdraw roughly 4% of a portfolio and then adjust withdrawals for inflation. Bingen himself says the original research has evolved. His current work puts the figure

36:59close to 4.7% under certain assumptions. Although he also notes that people with much longer retirement horizons should use more conservative assumptions. His broader argument is important. Retirement investing shouldn't automatically become extremely conservative simply because someone has reached a certain birthday. He's argued for maintaining an substantial stock allocation even in retirement. His current framework calls for 65% stocks, 30% bonds, and 5% cash as retirement approaches. Well, investors more than five years from retirement, depending on how much more equity exposure his criticism of target funds is essentially this. Why should your portfolio automatically change simply because the calendar says you're getting older? I think that's a legit question. Or as my friend, MC Hammer would say, too legit to quit question. Retirement is not a date. It's a period of your life.

38:00Someone retiring at 65 might need their money for 10 years. Another 65 year old might live another 30 years. Another person may have a pension, social security, and rental income covering most of their expenses. Meaning they don't have to sell investments at all. Those three people should not necessarily have the same portfolio based on your birthday. So let's say I was born in 1970. What did I give us? 30 years, 55 years. Probably retire 20, 35. So what I did for the one, for one K that I had that didn't really give a lot of great options. They had a lot of crap product with high fees. But they had some fidelity funds. So instead of saying I'm going to retire in 2035, fidelity, I said I'm going to retire in 2555 or 2060. So I got more stocks with less bonds. Because it gave me more time to grow.

39:02The target date fund knows my age. It doesn't know my life. What percentage of my portfolio should be in stocks because I'm 60? Probably nothing. I got enough money to live till the day I die. How much money am I actually going to need for my portfolio? I'll settle for five times my income even though I want you to do 10 to 20 times your income because I've saved more than you. One of the biggest dangers in retirement isn't simply a market crash. It's a market crash or early retirement. This is something you're going to learn at upcoming 12th Preservation Retirement Planning Seminar. Imagine two investors retire with $1 million as both are in the same average return over 20 years. But investor A gets several bad market years immediately after retirement. Investor B gets those bad years later. They can end up dramatically different outcomes because investor A is withdrawing money while the portfolio is falling. That's called a sequence of returns risk. It's one of the reasons I don't think investors think of

40:05retirement as one giant portfolio with one giant stock bond allocation. How much think about in buckets? Bucket number one is money you need soon. Bucket number two is money you'll need eventually. Bucket number three is money you may not need for decades. So not saying throw out your target eight funds. This is where the conversation gets kind of extreme. I don't know you. They may be working for you. Target eight funds aren't bad. In fact, they've done something incredibly valuable. They've made retirement investing dramatically easier for the masses. They encourage regular contributions. They automatically rebalance. They prevent investors from having to make dozens of decisions. Morningstar's research shows that target eight funds have delivered solid results for many investors. The problem is not that target date funds exist. The problem is when investors assume the target date is a substitute for retirement plan. It's not. Investors strategy built around an expected retirement date. That's different. So I think there's three

41:09questions that every investor should ask before blindly accepting a target date allocation. First is how much risk can I actually afford to take? That's different from how much risk I can emotionally tolerate. The second question is when will I actually need this money? And the third question is what happens if markets fall 30% because they could right when you're ready to retire? And you may need to sell stocks in order to fund your retirement. That is less than ideal. Sign up for my events at roblachshow.com. That's roblachshow.com. Have a question? Do not meet me now. Robb at roblach.com.