Should You Graduate From Index Funds to Individual Stocks? SB1899

You've done everything right. Emergency fund, employer match, maxed-out retirement account, boring diversified index funds quietly compounding in the background. And now some part of you is wondering: is there a next level? Financial educator Brian Feroldi joins Paula Pant and Jesse Cramer for a genuinely useful gut-check on whether picking individual stocks is a smart next step, a fun hobby, or a trap dressed up as ambition, and how to tell the difference before you put real money on the line. What You'll Walk Away With The single question that determines whether you're actually ready to buy individual stocks: do you have real interest in the process, not just the potential payoffWhy working in an industry doesn't automatically make you qualified to invest in itThe real statistics behind stock picking: roughly two-thirds of individual stocks underperform the market averageWhy losing money on your first few stock picks might be the best possible outcome, and why winning right away can be dangerousA clear framework for position sizing, so a stock-picking hobby never puts your actual financial plan at riskThe real opportunity cost of stock picking as a "side hustle," and why it competes with your time as much as your moneyWhy a great company and a great stock investment are often two completely different things Why This Matters Now There's a point in a lot of people's financial journeys where the basics start to feel almost too simple, and that itch to do something more advanced is worth taking seriously, not dismissing. But "more advanced" doesn't automatically mean "individual stocks," and jumping in without genuine interest or a clear framework can turn a healthy curiosity into an expensive mistake. Knowing honestly whether you're drawn to the actual process of researching and following businesses, not just the idea of beating the market, is the difference between a rewarding new hobby and a costly detour from a plan that was already working. From the Basement A tight, competitive trivia round on Bank of America's 1958 "Fresno Drop," the unsolicited mass credit card mailing that eventually led to the creation of Visa, shakes up the year-long standings in a genuinely dramatic way. Resources Mentioned Stock Simplifier https://stocksimplifier.com — Brian Feroldi's AI-powered stock research toolWhy Does The Stock Market Go Up? by Brian Feroldi https://www.brianferoldi.com — Brian's bestselling book on how the market worksAfford Anything podcast https://affordanything.com — Paula Pant's showPersonal Finance for Long-Term Investors podcast https://bestinterest.blog/personal-finance-for-long-term-investors/ — Jesse Cramer's show See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

• 0:00Speaker 00

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• 0:19Speaker 01

  You should look into the bond market. That's where the money is.

• 0:22Speaker 02

  Let's in junk bonds.

• 0:25Speaker 01

  Jules, it's high yield bonds. Do I tell people you're in junk waitressing?

• 0:34Speaker 03

  Live from the basement of the YouTube headquarters, it's the Stacking Benjamin Show.

• 0:49Speaker 03

  I'm Joe's mom's neighbor Doug and index funds. So boring, am I right? Is it time to graduate from index funds to literally anything else? We've got answers, but that's not all. We'll also answer who's scoring a point in our year-long trivia challenge. The race is heating up. We'll see which competitor can lock in today's question. And now a guy who we always question whether he should be allowed outside mom's basement. It's Joe Saul Sehhi.

• 1:28Speaker 04

  Hey there, stackers. And I just got to wonder, why is that Doug? Why do we, why do we wonder whether I should be let outside mom's basement? Of course I should be.

• 1:38Speaker 03

  Yeah, guy with a rap sheet as long as yours.

• 1:42Speaker 04

  How are you, man?

• 1:44Speaker 03

  You know, I'm not, I'm somewhere between majestic soaring eagle and shopping cart with one bad wheel. I'm somewhere.

• 1:51Speaker 04

  Oh, that's not good.

• 1:52Speaker 03

  Between those guardrails.

• 1:53Speaker 04

  It's good that it's Friday, so you're coming in hot. Time to relax and have some fun.

• 1:58Speaker 03

  Right on, let's do it.

• 1:59Speaker 04

  So what do we bring out to people we're having fun with? We'll start off in Manhattan where it's already sweater weather here in mid-September. Paula Pant is here, how are you?

• 2:09Speaker 05

  I'm great, how are you doing?

• 2:11Speaker 04

  I'm fantastic. You know, we're going to talk about graduation, Paula. Do you remember your graduation day?

• 2:17Speaker 05

  Yes, well, my most recent graduation was in 2023.

• 2:21Speaker 04

  Oh, see, it took her 47 seconds to mention her latest graduation.

• 2:25Speaker 05

  Yeah, well, I didn't mention where it was from. I just said my latest graduation.

• 2:29Speaker 03

  The whole stack of finger paintings that you had done throughout the year?

• 2:33Speaker 05

  Finger paintings, best nap time award.

• 2:36Speaker 03

  Right, maybe some pasta art?

• 2:38Speaker 05

  Yeah, runs with scissors. Yeah.

• 2:42Speaker 04

  Running with scissors is the scary one. Cause Paula, I've been around you for a number of years and Paula with scissors kind of scares me a little bit.

• 2:50Speaker 05

  Really?

• 2:53Speaker 05

  Podcasts with scissors.

• 2:55Speaker 04

  Everybody back away. It's going to be a fun episode. I'm glad you're here to help us talk about graduation. And a guy who is, I don't know how I talk graduation and Jesse Cramer at the same time. But Jesse, pretend I said something, I connected the dots well. Do you remember your vague, your day of graduation?

• 3:16Speaker 06

  Well, yeah, they call it, they don't call it graduation. It's you achieve your freedom. They give you your stuff back and you get to go home. They have a different word for it.

• 3:26Speaker 03

  They dump the manila folder out upside down. Your watch falls out.

• 3:29Speaker 06

  You don't have to wear orange anymore. You get to wear something other than orange.

• 3:33Speaker 04

  I remember Jesse, early in my financial planning career, you know, we'd all had long days. We were all new advisors trying to grow their business. And so we went out to like a TGI Friday just to grab a beer together. And we, we settle on this topic, things your clients don't want to hear you say. And one of them was, so just as I'm getting bailed out.

• 3:54Speaker 06

  Yeah, I can't meet you there. It's a, well, nevermind, I will, I will go with that one.

• 3:59Speaker 03

  Too close to a.

• 4:01Speaker 04

  Right, and good news, a guy who got bailed out just soon enough that he could podcast with us today. Oh, that's horrible. He's the man who teaches the world how to invest in stocks on the internet. Oh my God, Brian Feroldi's back. How are you, brother?

• 4:18Speaker 06

  Doing great, Joe. How are you doing? The one and only guy that teaches people on the internet about stocks.

• 4:22Speaker 04

  You are the only guy. Yeah.

• 4:24Speaker 06

  That's right.

• 4:25Speaker 04

  And the good news, Brian, is none of your competition ever makes you roll your eyes, I'm sure.

• 4:29Speaker 06

  Absolutely not, nope, nor are they ever wrong.

• 4:33Speaker 04

  Exactly. Cause I've seen some of those TikTok channels that I'm like, really? That's what we're going with and calling it education these days.

• 4:39Speaker 06

  Absolutely, yes. TikTok is a fascinating place, but not, not a great place to get stock recommendations.

• 4:44Speaker 04

  Well, thanks for coming back. Do you remember your graduation day?

• 4:48Speaker 06

  Yeah, I graduated from three different schools and they got gradually less fun. High school, tons of fun. College, you know, at least I wore like a cap. Grad school, it was like, I got a letter in the mail. That was graduation.

• 5:02Speaker 06

  Thanks for the money.

• 5:04Speaker 04

  That's what I was going to say. It's in reverse order of the amount you paid too, I'm sure. Yeah, isn't that wild? Quick graduation story, Brian, about our family. They told the graduates at the University of Texas, when my son Nick graduated, they said, you know, some of the names in engineering are, I mean, they have a worldwide base of people that they pull from to go to an international school like the University of Texas at Austin. And they said, please, to help out the person, spell out your name phonetically. So Nick, instead of putting Sehhi, which people always butcher, he put C dash H I.

• 5:45Speaker 04

  So my son, when he got ready to walk across the stage, the person said Nicholas Chi.

• 5:56Speaker 04

  They were fooled by their, by their own device, so.

• 5:59Speaker 06

  That's amazing.

• 6:00Speaker 04

  Graduation's fun. Well, why do I keep bringing up graduation? The reason is in Doug's open, you know, we're told there's this progression with money, right? First you figure out how to save and then you get your emergency fund and then you start investing. And for most people, somebody smart eventually says, buy diversified low-cost index funds and get on with your life. Right? That's great. But then, as Brian, you know, as a guy who teaches this all the time, something weird happens. You get better with money. You start learning more, you become more confident. And eventually you start wondering, am I supposed to graduate from index funds? What's next? Is there something that's next? Well, Brian Feroldi's here.

• 6:41Speaker 04

  He teaches people, some people, what the next step is, or maybe they should put the brakes on. Paula Pants here, who talks about thinking about your thinking, right? Should we reexamine why we think? And, and Jesse, you're the guy that models everything, all of this, right? So I feel like we got three great unique points of view, plus Doug's point of view, which is always the wild card in any discussion. So we're going to hear from this phenomenal team today on, do we graduate? Should we graduate if we do? How do we do it? We're going to hear from them in just a second, but first we have some sponsors who help us bring this to you for the value price of free, three times a week. We're going to hear from them and then Brian, Jesse, Paula, Doug and I,

• 7:24Speaker 04

  we're going to dive into graduating in quotes with your money.

• 7:29Speaker 06

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• 8:32Speaker 04

  Well, you may know that chaos is the name of the game here in mom's basement. What with guests coming in and out, Cooper the cat getting in the way, Doug being, well, being Doug. The holidays make it even worse because it's all about food and big meals. And the problem is prepping for those takes forever. But what about those between meals, right? The meals between those huge, huge, huge bookends. Well, that's where Factor comes in. Factor is made with high-quality ingredients that you recognize and trust with over 175 banned ingredients. You always know you're eating something that's good for you, even when you don't have time. It's ready in two minutes, whether it's lunch between meetings or dinner after holiday shopping.

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• 10:01Speaker 04

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• 10:35Speaker 04

  All right, Brian, let's start with you, man, to kick this off. Index investing, you know, sometimes it just feels too easy, right? Is buying individual stocks, is that actually the advanced course? Or is it being smart enough to leave your index funds alone as the advanced course?

• 10:55Speaker 06

  Index funds are amazing. I mean, Jack Mogul is on my Mount Rushmore of biggest philanthropists of all time with how much money he transferred from Wall Street to ordinary people by inventing index funds. When people that have very little interest in the market or know nothing ask me, hey, what should I invest in? My answer is always the same thing, just stick with index funds. But there are some people out there that are really strange, like myself, that are just fascinated by all things market, business, formation, competitive advantage. And people like me enjoy the process of learning about business, following the markets, researching companies. So if you have the personality that is just naturally interested in business, then I say

• 11:40Speaker 06

  you can absolutely graduate to buying and holding and analyzing individual stock, which is like I view as a never ending fun puzzle to solve. And if you do solve it well, you can earn a big pile of money for doing so. But do you have to solve this puzzle? Do you have to graduate? Absolutely not, and most people shouldn't even bother.

• 11:59Speaker 04

  I think that's the good news. I mean, the last time you were on, I think you said something like 98% of people, Brian, shouldn't bother, like just please God, don't.

• 12:07Speaker 06

  Yeah, that's about right. And that's because in my experience, only 2% of people are interested in, are actually interested in the topic, right? Just some people have no interest at all, and that would make them completely normal, just like I personally have no interest at all in real estate. That's not a market that I should have anything to do with. It just doesn't interest me, but the stock market does interest me. So to me, that's, that's the only price of admission you have to pay, interest.

• 12:34Speaker 04

  Well, that's funny. Remember how I said early in my career, Brian, I went to this TGI Fridays and it was things people don't want to hear their advisor say? Something I'd love to hear Paula Pant say is, you know what, Brian? Real estate doesn't interest me either. That's two of us.

• 12:51Speaker 05

  But I think Brian is getting at something important, which is that often there's this idea out there that you might have a side hustle, such as, I don't know, selling candles on Etsy. And you might also invest, such as owning rental properties or buying individual stocks. But really, your investments to do well at them, you need to have the same level of interest, engagement, like the same level of being in it as you would if, if you had an Etsy store, or if you had a graphic design company that you ran on the side, like any, essentially, we're talking about the world of side hustles. We're talking about the world of multiple streams of income.

• 13:32Speaker 05

  It's just that when we get to investing, it's a, it's a subset of the side hustle universe that people don't think of as side hustles because it's an investment, but it requires the same level of engagement.

• 13:46Speaker 04

  So wait, are you saying that buying individual stocks could be a side hustle?

• 13:49Speaker 05

  Yeah.

• 13:51Speaker 04

  Interesting. Jesse, you've got to have some people that come in to see you and they're like, wait a minute, whoa, whoa, whoa, Mr. Financial Planner Guy, three index funds? That's going to do it? Like, where's the sexiness, right?

• 14:04Speaker 06

  Yeah, I mean, the sexiness, I guess, in most of my cases is sometimes there's a, sometimes we sprinkle in a little, you know, dimensional Levantis. Sometimes there's a little factor tilt in there on top of the index funds. But my personal philosophy and then the way I manage my own money doesn't involve any individual stocks. Okay, are there exceptions? Sure, there are exceptions. For example, I think one thing we could talk about today would just be like the sandbox. If someone really wants to scratch that itch and they're like, hey, I subscribe to everything that Brian does. I really appreciate his, his bottoms up approach to evaluating businesses. And I'm going to pick 20 stocks and I'm going to take like 5% of my portfolio, 5%.

• 14:47Speaker 06

  And within that 5%, I'm going to own 20 individual companies just to scratch my itch, to play around in the sandbox a little bit because it's something I find fun. I'm cool with that as long as we size that sandbox appropriately, as long as we build the financial plan, like as long as the financial plan still works even with the sandbox's existence, because for all I know, this person following Brian's rules is going to be great. And they might even, that sandbox might perform better than the rest of the portfolio. But a lot of people out there, they watch my Uncle Jim Cramer on CNBC for like eight minutes a week. And they're like, well, Jim Cramer told me to buy Starbucks, so I'm going to buy Starbucks.

• 15:29Speaker 06

  And that to me is a recipe for some sadness. So I think that's the way a lot of people approach buying individual stocks. And I think that's something that we probably want to avoid.

• 15:39Speaker 04

  Well, let's dive into that. I never thought about him being your Uncle Jim.

• 15:43Speaker 06

  Thanksgiving's really awkward.

• 15:45Speaker 04

  It is well, because it was right there this whole time we've been working together the last couple of years, Jesse. And I've never once had you say, sell, sell, sell. I want the button. We got to get the.

• 15:53Speaker 06

  I try to go down a different, I try to present myself differently than him. And then if you throw in there, as you can see right now, the listeners can't see, but Doug's my stepdad. So between me, Doug and Jim Cramer, I mean, just think of the holiday, just think of the holidays.

• 16:09Speaker 04

  Can we even keep podcasting after that horrible image? I don't know. Longtime listeners know how much we love games at Stacking Benjamins. And I want to play a game, which is, are you ready to graduate beyond index funds? Cause you guys talked about there might be a place. It might be, Paula said it might be a side hustle. Jesse said, size it up, you know, maybe, maybe not. Brian said, well, if you're the 2% of people. So let's go through some scenarios. Are you ready to graduate? So I'm going to ask all three of you, should this person graduate? Should they keep learning, right? Don't start investing yet, but maybe they're on the path, they're partway there, or is index and go live your life, like totally forget about this idea of graduation. All right, so those are the rules. So let's talk about student number one.

• 16:54Speaker 04

  I want to get each of your votes and then I'll come back to you. So don't give me any commentary, just give me your vote. Student number one is Sarah. Sarah's 28 years old. She maxes out her Roth IRA. She gets her employer match. She has an emergency fund. All of her investments are in index funds. She wants to start buying stocks because investing has become her favorite hobby. She just thinks that investing is a ton of fun, so she wants to do a little more. Brian, what's your vote?

• 17:25Speaker 06

  Yes.

• 17:26Speaker 04

  Graduate.

• 17:28Speaker 06

  Graduate.

• 17:28Speaker 04

  Yes, Paula?

• 17:30Speaker 05

  Yes, graduate.

• 17:31Speaker 04

  Jesse?

• 17:34Speaker 06

  Permission granted.

• 17:36Speaker 04

  Wow, three for three. Brian, what's going on here? Why do you think it's okay for Sarah to go to the next step?

• 17:44Speaker 06

  Sarah's got her financial life in order. She's mastered the art of making money, generating an income. She's mastered the art of setting aside a portion of it. She's got her retirement in a really good place. And you said the magic word to me, which was she's interested in the topic. That to me is the only thing that you need, plus a little bit of money to do it. That to me is the only criteria that I really care about because you have to have the interest to actually study businesses, to actually learn what's important, to learn how to analyze them, to go out and make buying, sell decisions, to follow the companies and to see how they're doing. That requires effort to do the right way. So if you're not willing to do that effort, no problem, just stick with index funds.

• 18:28Speaker 06

  But if you're interested enough to do that effort and you're like a weirdo like me that finds that topic endlessly fascinating, then absolutely go ahead and buy individual stocks.

• 18:37Speaker 04

  Jesse, I love what Brian's talking about because back when I was an advisor, I would have these clients that would buy them one off. Maybe they'd listen to your Uncle Jim and they'd go buy a couple of things. But to Brian's point, they didn't have enough interest to stay in it. And then it's, you know, five, six, seven years later, and I'm telling them the garden has weeds all over it. We got to start doing some heavy duty weeding. What was your thought process when you heard about Sarah, Jesse?

• 19:01Speaker 06

  Well, I think that she's doing a lot of the saving really, really well. And I think any long-term investor, especially as young as Sarah is at 28, I mean, saving is one of the biggest things that she can control. And so the idea that she's going to continue saving, that she's going to continue owning these index funds and then using some of her future savings, she's going to start investing in individual stocks. I say that's great. And like. Brian just alluded to, and I think there's probably something that's true for Brian, it's true for Sarah, and it's true for the people who take this seriously, that a year from now, if I look at Sarah's portfolio, and I'm like, Sarah, you own Costco, why do you own Costco? I bet you she could explain to me why.

• 19:43Speaker 04

  Hmm.

• 19:43Speaker 06

  Whereas, a lot of those clients that you just pointed out, Joe, who have all the weeds in their garden, if you say like, oh, you have some shares of Lockheed Martin here, why is that? They'd be like, I don't know, I think I bought it, you know, my neighbor mentioned it eight years ago.

• 19:56Speaker 04

  Right.

• 19:57Speaker 06

  It's like, man, what a terrible reason.

• 19:58Speaker 04

  Uncle Jim said it was good.

• 20:00Speaker 06

  Exactly, exactly. And I think that really matters. And I think anyone who goes, anyone who graduates down this path, needs to be constantly kind of refreshing and recycling their rationale to say, do I still want to own this? Is this still a company worth owning for the long run? And, and some people have that temperament, and some people don't.

• 20:20Speaker 04

  Paula, rather than ask for a me too on that one, let me start with you as student number two, all right? Mike, Mike is 42, he's a great saver, reads the Wall Street Journal every day, cannot explain the difference between an income statement and a balance sheet.

• 20:37Speaker 05

  Hmm. Well, is that the end of Mike's profile?

• 20:40Speaker 04

  That's it.

• 20:41Speaker 05

  Okay.

• 20:41Speaker 04

  That's it.

• 20:42Speaker 05

  Well, that's a solvable problem. So long as Mike is willing to learn, then yes, start the learning process so that he can better evaluate stocks.

• 20:53Speaker 04

  But should he? Should he?

• 20:55Speaker 05

  If he's willing to learn, then yes.

• 20:58Speaker 04

  Yeah. Brian, it seems to me that if he reads the Wall Street Journal every day, but he doesn't really care, is there any ROI there?

• 21:07Speaker 06

  Well, to me, the question you're really asking is, does he have the green light from us to graduate and beyond this thing? So Paula just said, to me, green light, absolutely. In fact, the fact that he doesn't know how to read an income statement or a balance sheet, might be because he's just not motivated to do so. I liken the stock market or individual stocks to a lot like a seventh grade Little League baseball game. It's like, I don't care about Little League at all, but if my kid was in the game, boy, would I pay attention and be rooting for them. So sometimes putting a little bit of money into a stock that you're interested in, generates the interest to actually follow about and to learn about accounting. Because when that stock falls, and you're like, why is this happening? That

• 21:51Speaker 06

  can be the actual impetus to actually learn about, well, how to read an income statement? What is a balance sheet? How do those things work? And I think as long as you position size correctly, so that if that investment goes to zero, it doesn't really impact your financial life at all, I say go for it.

• 22:08Speaker 04

  Based on that analogy, you, I would think, don't like the stock simulators where you don't have any money invested.

• 22:16Speaker 06

  They're fine for learning and for starting out and for learning the, the mechanics, but to me, skin in the game is how you actually really learn something.

• 22:24Speaker 04

  I do. I think, man, the difference in my investing style, when I had skin in the game versus using one of those stock simulators was night and day, Brian. Like, my decision making became so much more emotional at that point.

• 22:37Speaker 06

  Okay. Well, that's how you learn about yourself. And if you have the temperament to actually, and be a real investor, right? It's one thing to do it theoretically and to simulate a loss. It's an entirely different thing to have your net worth actually go down in front of you.

• 22:49Speaker 04

  All right, Jesse, here's another fun one. Amanda, let's talk about Amanda. Amanda is an engineer in the semiconductor industry. She knows the industry up and down. She sees products and trends long before most consumers do. Should she be investing in individual stocks that have to do with semiconductors?

• 23:13Speaker 06

  Uh, no. Well, I don't know, is red herring the right, the right term here, where it's, she knows the industry and she sees the trends before anyone else? That immediately, I thought there of like, well, as long as she's not insider trading, then, then what she's doing at least isn't illegal. Just because she works as an engineer in the industry, does she understand the financial statements of these businesses? Does she actually understand that the risks that some of these businesses are facing in terms of the competitive moats, you know, them versus their competitors and that kind of thing? And, okay, what, why do I hesitate here? Well, I was an engineer, not in the semi industry, I was an engineer

• 23:53Speaker 06

  in the aerospace industry. And from my little chair in Rochester, did I have the capability to determine L3 Harris versus Northrop Grumman versus Lockheed Martin versus Boeing? Not really. I mean, I knew the one little thing that I was working on at my defense contractor, but I didn't know nearly enough, at least from my point of view. I don't think I knew nearly enough to accurately try to predict which of those companies would end up on top. So that I, yeah, I would hesitate for Amanda here.

• 24:22Speaker 04

  Yeah, Brian, I saw you nodding your head.

• 24:25Speaker 06

  Yeah, just because you work in an industry, if you are hyper specialized into one thing, when, when you're buying an individual stock, the thing that you're trying to learn is business analysis and capital allocation. Those are skills that you can learn and develop yourself, but they are not skills that most people at companies possess. I myself have worked at companies and talked to executives at companies. So people that are in the C suite, and when I was working there, they knew that I was interested in, in stocks and business and stuff like that. And they would ask me extremely basic accounting questions that I would answer for them. So these are people that were extremely accomplished at say, sales and marketing, or human resources, or engineering. And that's what they knew

• 25:10Speaker 06

  really well, but they did not understand the fundamentals of accounting. And to me, it's like, that, that is like table stakes for analyzing if a business is good or not. So to Jesse's point, yeah, just because you work in an industry, doesn't mean that you necessarily have the skillset to analyze, to analyze your industry the way that an analyst would.

• 25:28Speaker 04

  But that also should give a lot of our stackers hope, Brian, that you know what? People think that Amanda has a leg up because she works there. You're saying not necessarily so. Even if I'm an outsider in the industry, I can grasp the financials enough to make a yes, no, buy decision.

• 25:44Speaker 06

  Yeah, but just because she might not be extremely knowledgeable about analyzing semiconductor stocks, I guarantee you she can analyze Domino's versus Chipotle, right? Like, there are things that we all know as consumers, that businesses that are much easier to analyze, so much simpler. And we can tell the difference as a consumer between, well, that's a product that I like to buy versus that one, because you're on the consumer end of things. Whereas you can get extremely detailed and technical on, when you get into like the semiconductor space, or the cybersecurity space, or the biotechnology space. So just, some industries are way easier to analyze than others are. And if you're just dipping your toe into the water, it's much better to stick to simple businesses than complex ones.

• 26:25Speaker 04

  Even I know the difference between Domino's and Chipotle. I mean, one's a food company, one's a weight loss company, right?

• 26:31Speaker 06

  You got it. That's exactly right.

• 26:33Speaker 04

  Was that too long ago? I don't know. Paula, it's interesting, you hear this all the time, right? I mean, I hear this all the time. I think you hear it all the time, that, hey, I work in the industry, why wouldn't I invest in companies like mine?

• 26:47Speaker 05

  Hmm. Well, to answer that, and also to piggyback off of what Brian just said, here's an example from the world of real estate that I think has parallels and carries over. When I first started investing in real estate, I remember my best friend called me, and she was like, there are all of these real estate agents and general contractors who are not able to make good money as rental property investors. What makes you think that you could do it if all of these real estate agents can't? And that really got to me. I was 27 years old, I, and I was like, oh, man, that's a great point. What makes me think I can? And so I went out and got a real estate agent license, largely driven by that imposter

• 27:31Speaker 05

  syndrome, and driven by the idea that like, maybe if I got a license, I would know more about real estate, and that would help me be a better investor. And what I found was, eh, it didn't do that at all. Agent training is extremely specific, and you learn about this very, very narrow subset, you learn an extremely narrow subset of skills. Essentially, you learn how to fill in the blanks on a bunch of pre-printed legal forms. That's really what the training is. There is nothing inside of that training that teaches you how to analyze a property for its investment potential. Like, that's not it.

• 28:07Speaker 04

  It's much more the business of the transaction than the actual asset.

• 28:11Speaker 05

  Exactly. So there's absolutely nothing within that training that would give you the knowledge or the judgment to be able to say, hey, I think that property is going to, property A is going to be a better investment than property B. That was something that had to be completely self-learned. And I wouldn't have known that had I not gone through agent training and gotten a license and come out the other end of it being like, wow, that didn't help me at all.

• 28:36Speaker 04

  That's it?

• 28:36Speaker 05

  Yeah.

• 28:37Speaker 04

  Yeah.

• 28:38Speaker 05

  You know, I think that has parallels here. Oftentimes, when you learn a skillset that allows you to work inside of an industry, what you know often is a highly specialized, very specific skillset about some narrow component of the industry, which is totally different than being an industry analyst.

• 29:01Speaker 04

  I've got one more scenario. Jesse, we'll start with you on this one, because this is another one that I see fairly often. Dave has $1.2 million invested, all in index funds. He's 57 years old, wants to retire 64, 65, and he's bored. He's bored. He thinks, shouldn't there be something more than this?

• 29:28Speaker 04

  Graduate to individual stocks?

• 29:30Speaker 06

  Uh, because he's bored.

• 29:35Speaker 06

  I don't think so. I mean, nothing, I don't know enough about Dave, I guess. Based on your description, I think nothing from that description makes me go, oh yeah, Dave's ready. Dave's ready. He's bored enough, right? He's bored enough to do it.

• 29:46Speaker 03

  Buy a Corvette, Dave.

• 29:48Speaker 06

  Right. I think maybe Dave's a step away and going back to, um, I forget actually who, what was it? Mike? Was that like, was that the individual? Going back to Mike, who's reading the Wall Street Journal where I didn't answer for Mike, but my thought was, well, Mike, go off and learn how to tell the difference between a balance sheet and an income statement and then dive in.

• 30:09Speaker 04

  If there were only somebody online that taught that stuff.

• 30:11Speaker 06

  Exactly. Exactly. And that's where I think for Dave, it's like, all right, Dave, good for you. Go out there and put in some work and granted, maybe, and then I'll pass off the baton. I could see anyone and maybe this is where Brian's answer from before comes in, which is like, Dave, absolutely. You're ready. Get some skin in the game first and then you will feel incentivized to learn. And I just, I just would flip those around. I'd be like, Dave, why don't you learn first and then put some money on the line? But yeah, that's the thought.

• 30:41Speaker 04

  Yeah. So maybe, maybe keep going and see if he's interested. Keep learning, but not investing yet. Yeah. Brian, I was clearly referring to your channel because I love all the lessons on these things that you dive into. If only there were somebody like Brian Feroldi teaching this online. Does Dave just need a hobby?

• 30:59Speaker 06

  Yes. That's exactly what Dave needs, right? Investing is a great activity. It's a lot of thinking. It's a lot of studying. If that's like your, your, again, it's a subject that that just interests you, but Dave sounds like maybe he should take up pickleball, maybe some golf, maybe fishing, maybe going on a hike, maybe playing tennis. I hear that's really a lot of fun. Um, but uh, again, if he's not naturally interested, if he's not naturally drawn to the markets, don't just try and fill boredom by picking individual stocks. Although if he does choose to do that, just make sure you size it correctly. If he's worth $1 million or whatever, and he takes five grand and puts it in and he loses it all, great. You learned a lesson about yourself. So if you are going to do it, uh, position size, I've been online long

• 31:44Speaker 06

  enough to see some people that are in their 50s that start picking stocks as a side hustle and they go all in because they're so convinced of some, some stock like right from, from the get go. Absolutely. And then they don't know anything about analysis. The first stock that comes along, they're like, yeah, that's the one. How could, how could I lose? If that's you, please don't, please don't do that. That's a horrible idea. You don't want to put your nest egg into individual stocks as a brand new beginner, just because you have money, right? So if you are going to get into it, there's no rush. Position sizing is everything. Just do an amount of money that is there to, um, that you care, but that if, if it goes completely south, your life won't be impacted.

• 32:28Speaker 04

  So Brian brought this up a few times that apparently size matters. So we're going to talk about how do you position size?

• 32:33Speaker 03

  I knew he couldn't resist.

• 32:34Speaker 04

  In the second half of today's discussion, if I didn't bring it up, Doug was going to, it was going to happen. I also want to ask some more specific and pointed questions about if you're going to graduate, graduating to, how do you study these things? We've got so much more to talk about, but at the halfway point of every Stack of Benjamins Friday episode, we have this year-long competition going on between our three Freco contributors, Paula, Jesse and OG. And Brian, today you're playing for team OG and that means some good news and some bad news, my friend. You want the good news or the bad news?

• 33:10Speaker 06

  Give me the bad news first.

• 33:11Speaker 04

  The bad news is you are in first. Actually, I will give you the first bad news, which is you are first, which sadly, and I hate this when somebody joins us just from time to time, a few times a year, like you do, Brian, that you're going to have to guess first. So that kind of sucks, but you've got a nice lead. Uh, Doug, what's the score right now?

• 33:29Speaker 03

  No, he does not, Joe. He has anything, anything but a comfortable lead. The 2026 trivia season is one you're going to tell your grandkids about because it is getting all hot up in here. We've got OG and today Brian with 10 points in the lead, but nipping at the heels. Both Jesse and Paula have nine points. This is as good as it gets.

• 33:54Speaker 04

  10, 9, 9. Right now. Wow. No pressure, Brian, to keep the lead. No pressure at all today.

• 34:02Speaker 06

  Don't worry. I feel none.

• 34:04Speaker 04

  Right. So Brian's going to go first because Jesse beat Paula last year. That means Paula still is the advantage and gets to guess last. We call it an advantage, but Paula.

• 34:14Speaker 03

  Pity.

• 34:14Speaker 04

  Is it really?

• 34:14Speaker 03

  It's really pity.

• 34:17Speaker 04

  We still wonder. We need a question. Doug, you've got the question. What are we talking about today?

• 34:24Speaker 03

  Hey there, stackers. I'm Joe's mom's neighbor Doug, and today was a wild one in financial history. It was on this day back in 1958 when Bank of America did something that at the time was almost unthinkable. In an experiment called the Fresno Drop, they mailed live pre-approved credit cards to people in and around Fresno, California. The Fresno Drop reminds me of what happens to my credit score every time the Sizzler introduces a new rewards program. Anyway, think about this. One day you walk out to the mailbox expecting the electric bill and the new Sears catalog with a spicy little underwear section. And instead there's a bank saying, hey, here's some money we haven't

• 35:07Speaker 03

  discussed. Try not to ruin your life. What could possibly go wrong? Turns out quite a bit. The launch was a mess, but that little experiment eventually evolved into the credit card network we know today as Visa. So that's today's question. Just how many unsolicited credit cards did Bank of America send out during the Fresno Drop? I'll be back right after I see if Joe's mom can extend me a line of credit for happy hour at the Sizzler. It's two for one shrimp night, but unfortunately my wallet is like zero for zero on money.

• 35:40Speaker 04

  Oh, that's not good. You gotta get that solved. While he's solving that problem, Brian, the Fresno Drop Visa, Bank of America at the time, sending out all kinds of unsolicited credit cards. How many?

• 35:53Speaker 06

  Hmm. Well, Fresno is a city that I've heard of, which means its population is probably a couple hundred thousand. But I know that when credit cards first came out, they were highly selective with who they gave them to. So I'm going to go with 25,000.

• 36:08Speaker 04

  25,000 people kicks it off. Jesse, what do you think about that? That too high or too low?

• 36:14Speaker 06

  My initial instinct was much lower than that, but partially it's maybe because I don't know how big Fresno is. And also this was 1958 and was it smaller then? I'm just going to go with a smaller number in general. I'm going to say, uh, 3,500.

• 36:33Speaker 04

  35,000. So big, big difference. Boy, Paula, you got 25,000 and 3,500.

• 36:43Speaker 05

  Wow. Okay. So the answer would relate to how big is Fresno in 1958 and of the Fresno inhabitant, how many would qualify? Well, and I don't know the answers to any of those.

• 37:01Speaker 05

  I've got two options. I think I've got two good options. One is I could just aim for the middle, take the average and aim for the middle. The other is that I could capture the upside. I'm a little tempted to capture the upside because that gives me more numbers.

• 37:18Speaker 04

  You think they're going crazy with the credit cards?

• 37:20Speaker 05

  I mean, if it developed its own nickname, the Fresno Drop, if it developed a nickname that persisted throughout history, then it was probably a big launch that went nowhere. So yeah, I'm going to go 25,001.

• 37:37Speaker 04

  25,001. Well, this is interesting. Brian at 25,000, Jesse at 3,500, way different. Paula at 25,001. Who's going to capture it? Are we going to have a tie for first place? Is OG slash Brian going to pull ahead? We're about to find out. We'll be right back.

• 37:58Speaker 04

  Well, you may know the chaos is the name of the game here in mom's basement. What with guests coming in and out, Cooper, the cat getting in the way, Doug being, well, being Doug. The holidays make it even worse because it's all about food and big meals. And the problem is prepping for those takes forever. But what about those between meals, right? The meals between those huge, huge, huge bookends. Well, that's where factor comes in. Factor is made with high quality ingredients that you recognize and trust with over 175 banned ingredients. You always know you're eating something that's good for you, even when you don't have time. It's ready in two minutes, whether it's lunch

• 38:38Speaker 04

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• 39:24Speaker 04

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• 39:53Speaker 04

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• 40:38Speaker 04

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• 43:09Speaker 04

  All right, Brian, you opened this at 25,000, but Paula took the upside. Maybe not bad news. You still got a lot of room below 25,000. Feeling good?

• 43:18Speaker 06

  Uh, no, no, I'm not feeling good.

• 43:22Speaker 04

  That's very honest. That's why, that's why we like Brian. Jesse, you're, you're down there at 3,500 bucks. Paula made a point, said, would they call it the Fresno drop if it was a small number?

• 43:33Speaker 06

  I mean, the logic makes a lot of sense, but as soon as, soon as Paula said that, you know, something insider made her think that, my odds shot up. So I'm feeling great.

• 43:47Speaker 04

  And by the way, for people who are new to Stacking Benjamins, that is not a rip on the fine Paula Pant. That is a rip on Paula Pant's track record of gut feelings and the fact that they rarely pay off. So yeah, the Kelsey bet on this, Jesse, just changed completely. Paula, you've got the upside feeling good?

• 44:07Speaker 05

  I got scissors. I got scissors, Joe.

• 44:11Speaker 04

  Well, does Paula have to cut somebody? Or are we going to have a new champion, a new tight champion? We don't know. Doug knows. Doug, who's taking this thing home?

• 44:24Speaker 03

  Hey there, stackers. I'm happy hour shrimp lover and guy who just got the green light from Joe's mom that she's buying Joe's mom's neighbor Doug. What's better than a line of credit? Free money. At least that's how I understand credit cards. And Joe keeps telling me that's not how they work. But explain this. I hand the waiter a piece of plastic, he gives it back to me, and I leave with two beers and a shrimp appetizer. If that's not free money, I don't know what is. Sure, apparently, once a month, somebody sends you a letter asking for some of it back, but that's a problem for future Doug. And that guy's not near as much fun as present Doug. He's always trying to ruin present Doug's Friday. Speaking of great Fridays, which one of our contributors is about to have

• 45:05Speaker 03

  one? Let's find out. Before the break, I told you about Bank of America's 1958 experiment that eventually helped give birth to what we know today as Visa. In what's now called the Fresno drop, the bank mailed unsolicited credit cards to a whole bunch of unsuspecting people in and around Fresno, California. So how many people suddenly opened their mailbox and discovered that Bank of America decided they needed a credit card? Well, the correct answer was 56,500 more than what Jesse guessed.

• 45:41Speaker 04

  No way.

• 45:41Speaker 03

  35,000 more than what Brian guessed.

• 45:45Speaker 04

  You don't say.

• 45:45Speaker 03

  And just 34,999 more than what Paula guessed, which means Paula is today's winner because Bank of America sent out 60,000 cards. Congratulations, Paula. It's happening, people. It's happening.

• 46:00Speaker 04

  What is going on here?

• 46:01Speaker 05

  That means I'm tied with OG for first. For first.

• 46:05Speaker 04

  For people that are new to the Stacking Benjamin Show, this only happens on January 1st of each year. That she and OG are tied.

• 46:13Speaker 05

  When the score is 000.

• 46:15Speaker 04

  I can't remember a time, Paula, when you've been tied for first. This late in the year.

• 46:19Speaker 05

  Yeah. Tied for first.

• 46:21Speaker 04

  What the hell is happening here? Unbelievable.

• 46:23Speaker 05

  If I ever tie, it's always tie for last.

• 46:26Speaker 04

  Exactly. And you're excited when you're tied for last.

• 46:29Speaker 05

  I am. Yeah. That's a promotion because usually I'm firmly last. No tie. So if I get promoted up to a tie for last, that's a huge promotion. Tied for first.

• 46:39Speaker 04

  Unbelievable. And Paula, last year's champion, Jesse Cramer, in last by himself.

• 46:45Speaker 05

  Wow.

• 46:46Speaker 04

  What's going on there?

• 46:47Speaker 06

  Lonely back here.

• 46:48Speaker 04

  Flash in the pan.

• 46:50Speaker 06

  It's quiet. It's cozy, though. It's cozy. Paula has really done up the place. I mean, the surroundings are terrific.

• 46:58Speaker 04

  She's had a lot of time to decorate.

• 46:59Speaker 05

  The coalition to defeat OG, which Jesse and I formed last year.

• 47:03Speaker 06

  It's true.

• 47:04Speaker 05

  That could still stand. Like Jesse, between, between your score and my score, that's like firmly first.

• 47:10Speaker 06

  Correct. And, and the, I mean, we've got two great contenders this year. We're about to enter the home stretch, the fourth quarter.

• 47:17Speaker 05

  Yeah.

• 47:17Speaker 06

  With the coalition having two opportunities to defeat Darth Vader. Things are feeling pretty good.

• 47:24Speaker 04

  Two weeks away from the fourth quarter. We'll find out. Right now, though, we're going to find out about graduating from index funds. Paula, let's, since you're the champ today, let's start with you. You know, somebody is ready to, one of those people that you and Brian and Jesse gave the green light to, to start graduating. What do they need to know before they buy stock number one?

• 47:50Speaker 05

  Hmm. The first thing to really internalize is that you have a lot of unknown unknowns. Before you begin this process, be humble, know that you're a beginner, approach this with a beginner's mind, and seek to learn how to do it properly. And I say that because I know people, and I'm thinking of one person in particular. This person is that quintessential, like buddy said something at the proverbial water cooler, gets caught up in a hype cycle and doesn't know enough to understand how little he knows. A bunch of buddies hype something up, and so then he puts a disproportionate amount of his money, of which he doesn't

• 48:34Speaker 05

  have very much, into this one thing for no reason other than it got hyped. And so you just don't want to be that person. And if you talk to this particular person, he doesn't understand how little he knows. Like, he thinks that he can give you a reason why he bought the stock. He's like, well, I do have a reason, you know, it's, and then he gives you all of the like hype, these really flimsy hype reasons.

• 49:00Speaker 04

  It sounds like, Jesse, part of what Paula's talking about is kind of a healthy amount of fear, right? The fact that there is a increased risk of loss if I'm going with one company. Fear a good thing to feel when you're first starting out?

• 49:12Speaker 06

  Yeah, like fear and humility, I think, is another attribute that Paula was alluding to. And I'll tell you, Paula, the only thing More dangerous than what Buddy's doing and like losing for Buddy to lose money. If Buddy actually makes money, that's probably going to be even more dangerous to his long-term prospects because he's going to get this false positive that he knows what he's doing and that it's easy and that he needs to listen to the hype next time. And so anyway, that's where people can really get in over their heads out over their skis. But a little bit of fear, a little bit of humility. One thing that jumped to mind when you were asking the question, Joe, is this understanding of the numbers. And there's a professor out in Arizona,

• 49:54Speaker 06

  Bessembinder. Do you know who I'm talking about, Brian? Henrik Bessembinder? Does that name ring a bell?

• 49:58Speaker 04

  Nope.

• 49:59Speaker 06

  He's done some interesting studies on like, the entire history of the stock market. One cool one that always sticks out to me is that if you look at, you know, 100 years individual stock data, and the the average compounded return is like 10.1% per year, and that's a number that might resonate with a lot of listeners like, oh, yeah, 10% a year. About 28% of the stocks in his study beat 10% per year, and about 72% under achieved 10% a year. And so that goes back to that whole needle and the haystack idea, which is to say that, you know, the idea that you might pick a winning stock, isn't 50/50. There's a lot of skewness in the stock market and the odds are somewhat stacked against you.

• 50:41Speaker 06

  And so again, going in with some of that underlying kind of statistics and probability knowledge goes a long way.

• 50:48Speaker 04

  I like that. I like the focus here too, Brian, on mindset. But tactically, where do I begin?

• 50:55Speaker 06

  To me, the first thing that you should ask yourself before you buy any stock is, what's my goal? What am I trying to achieve?

• 51:02Speaker 04

  I thought you were gonna pull a Clint Eastwood and say, do you feel lucky, punk?

• 51:05Speaker 06

  Do you feel lucky? That's it.

• 51:06Speaker 04

  Right.

• 51:07Speaker 06

  This is something that so many people skip over. To me, the reason to buy an individual stock is because it's giving you something different than the index fund is giving you. Index funds are broadly diversified, no research, very low cost, easy to own, and they generate a return of roughly 10% compound annual growth rate when measured over the appropriate time period, which is decades. But sometimes there are reasons to buy individual stocks because they give you something that the index can't. The most common reason that people buy individual stocks is unlimited upside.

• 51:42Speaker 04

  Upside.

• 51:43Speaker 06

  They want a huge upside potential, which is a completely valid reason to buy a stock. But some people buy individual stocks because they want more income than the index is providing. The total stock market index fund dividend yield right now is like 1.3% or something like that. That's not a lot of income. There's lots of dividend stocks out there that pay much higher yields than that. Some people might want lower volatility than the index. There are individual stocks that have lower volatility than the entire index in general, especially now that the indexes are so heavily weighed towards large technology stocks. So first question to ask is, what am I want? What is my goal with this? And again, for

• 52:25Speaker 06

  most people, the answer is infinite upside potential now is what they're really want when they're buying an individual stock. But once you have established your goal, the next thing to do is just answer some extremely basic questions about the company. What does it do? How does it make money? Why do customers buy from that company and not from the competitor? What are its growth prospects over a long period of time? Who's in charge? What's its valuation? If you don't know the answer to any of those questions, learn how to answer them.

• 53:00Speaker 04

  Is it a mistake thinking that a company that's a great company is also a great stock?

• 53:05Speaker 06

  It can be. And that can be one of the most challenging things about buying individual stocks. Take a company like SpaceX right now, which came public a couple of months ago. SpaceX, by all accounts, is like an N of one business. Truly phenomenal in so many, so many respects. But when that company came public, it was worth 1.5 trillion, trillion with a T, dollars. And I think it traded up to like $2 trillion on its first day. So people that are buying SpaceX expecting a 10x return on that are basically saying, this company is going to be worth half of US GDP for it to generate a 10x return. So

• 53:49Speaker 06

  SpaceX is a phenomenal company on many levels. But I don't think when people buy SpaceX, that's not necessarily what they understand they're betting on. You're betting on it becoming worth tens of trillions of dollars for it to generate the return that people want. So great companies can be horrible investments. That is absolutely true.

• 54:09Speaker 04

  I love just a little bit of math there. Goes a long way. Like, can I really achieve anything with this company? Paulo, I want to go back to your friend. I think you made an excellent point here that we should probably get back to, which is, how much competence do I need before this knowledge gives me an actual advantage, rather than just enough confidence like your friend has to be dangerous?

• 54:33Speaker 05

  Yeah. Well, there's the Dunning Kruger curve, right? Where when you're a very beginner, a complete beginner at something, you don't know enough to understand how little you know. And so at the beginning of something, you tend to be overconfident, a natural human trait, right? We tend to be overconfident in the beginning because we don't know enough to understand the complexity of something. Joe, you and I know podcasting. Many people believe that it, you, oh, what? You just show up to a mic. It takes an hour a week. So you don't know enough to know what you don't know. And then as you've begun to learn about something, you eventually learn enough to understand how little you know. And then

• 55:14Speaker 05

  you go into a bit of like this pit of despair, where you realize how big and complicated the field is.

• 55:20Speaker 04

  The hill becomes a cliff.

• 55:22Speaker 05

  Right. Yeah, exactly. And you gain this appreciation and respect for the complexity of this, this field. And there's a little bit of despair where you're like, oh, I really, it's a very humbling, like, I don't know anything. You start to come out of that a little bit as you learn more and more and you gain some confidence. And you're like, cool, I am like, solid intermediate right now. And I think when you get to that level, I think you're good. You're, you're ready to start being a practitioner and making decisions and really throwing yourself into it and being, you know, because then what's going to happen after that? As you develop increasing expertise, you are increasingly going to be a little bit like, oh, I don't know anything again. And that's naturally what tends to

• 56:07Speaker 05

  happen. Like, the more you become an expert in something, the more you just lose touch with how deep your expertise is because you're aware of the gap between where you are and where you could be.

• 56:18Speaker 04

  But I love this idea. If you haven't felt this like pit of despair in your stomach, you don't know enough. Like, that's actually a good thing. Oh, you're at this pit of despair? High five. You're almost there.

• 56:29Speaker 05

  Exactly. Yeah. Yeah.

• 56:32Speaker 04

  That is interesting. Jesse, it's funny, looking at, you know, some of the things that Brian talks about online. He talks about how two thirds of individual stocks underperform their benchmark. Is that something that's important to know ahead of time before you get into individual stocks, that the deck is two thirds against you?

• 56:49Speaker 06

  Yeah, I think that's an important thing to know. Just again, it sets that expectation of, right? If you go out and whether you want to just pick one stock because you believe in it for some reason, or maybe you come from a portfolio approach and you say, I'm going to build a portfolio of 25 stocks, or whatever the number is, knowing whatever that statistic is, one third overperform, two thirds underperform. I mean, knowing that two thirds of your 25 picks are likely going to underperform the benchmark is a good thing to know upfront. It's probably one of many metrics that you could use to judge yourself against. One could just be the overall performance of your portfolio. Another one could be how many of your picks overperform or underperform. I think another

• 57:32Speaker 06

  one, I'm no expert here, so I'd really lean on Brian for this, is like, how many of your feces, is that the right word? Right? How many of your feces actually play out in actuality? You know, I am buying Starbucks because of reason one and reason two and reason three. And how many times can you look back 12 months from now and be like, oh, I was right. And my price target was accurate. Two and everything worked out versus how many times are you going to be like, oh yeah, I wasn't expecting Chipotle to get their customers sick with all these foodborne illnesses. Like, what was that, like 10 years ago, five years ago?

• 58:06Speaker 04

  Too soon, still too soon.

• 58:07Speaker 06

  Correct, correct. I could use a, anyway, things don't always play out the way you want. And the idea that you make an investment upfront with a particular idea in your head, it's worth tracking that and journaling, for lack of a better term, to measure your own performance and your own ideas.

• 58:24Speaker 04

  Brian, you brought up in the first half of the show that putting the right amount of money when you're first starting out is a super important thing. What is that right amount of money? How do I begin to get my head around that?

• 58:34Speaker 06

  That's different for everybody, right? That depends on your net worth, your savings rate, your comfort level with risk and all kinds of other factors. I can tell you that about half of my net worth is in individual stocks, but I've built that up slowly over the last 20 years. And I am extremely interested in this subject.

• 58:52Speaker 04

  But you wouldn't start there.

• 58:54Speaker 06

  I would not start there if I was starting from scratch. Or, well, I guess it depends again on how much money you have. If you are, again, maxing out your 401k and you have your financial life in order aside from that, there's nothing wrong with putting a couple hundred or a couple thousand dollars. That's how I started. And Jesse, to Jesse's point, Jesse, you'll be happy to know when I first started buying individual stocks, I lost my shirt. I, like, everything I bought, pretty much, I lost money on. And I view that as the best tuition that I've ever paid. And to your point, if it worked out immediately for me, I would have just steamrolled that into more and more and thought that I knew everything. And that would have probably led to bad things. So yeah, there is something to losing money immediately as a good filter for, hey, do you still like this? And should you stick with it?

• 59:40Speaker 06

  There's Brian, there's the thing, um, the AI wonder kid, Leopold, who blew up recently. Yep. Like, I heard someone in the aftermath of his hedge fund blowing up, someone out there said, the right amount of times for any investor to blow up is once. You need one time where you lose your shirt to be like, oh, right. This has consequences if I don't get it right. Hopefully it never happens to you more than once. And he did it with hundreds of billions, tens of billions of other people's money, I'm pretty sure. So talk about feeling bad, right?

• 1:00:09Speaker 04

  Yeah, somebody else's cash, that's not the way we want to do it.

• 1:00:12Speaker 06

  Yep.

• 1:00:12Speaker 05

  And the day that it all blew up was his wedding day.

• 1:00:15Speaker 06

  Wedding day. Shakespearean.

• 1:00:17Speaker 04

  Yeah, we don't want that to happen. Another question, Brian, before we say goodbye to you, which is, you know, we talk about diversification, obviously, to Jesse's point, I think you would advocate having more than one stock, one thing that you're, you're investing in. But when do you own so many that it's just like a really bad index fund?

• 1:00:38Speaker 06

  That, again, it depends on your overall asset allocation. If 100% of your portfolio was individual stocks, you definitely need 25 or more, more than that. But if 95% of your net worth is in index funds, I have no problem with you owning two or three, or however many you can track. Because again, if they blow up on you, you're playing with such a small amount of your portfolio that your, your net worth is fine. But to me, if you're going to be using a small amount of your portfolio, you probably want around about five or so, enough that you can track them and that you're interested in following them, but not too many that your portfolio becomes a wild. And the way that Jesse brought up that great stat before, the way that I like to think about stock picking is it's a roll of the dice.

• 1:01:21Speaker 06

  You have about a one in six chance of buying a really great stock. And you have about a two in six chance of losing your shirt. And the other three numbers are kind of like below average returns or slightly above it. So before I started, I thought it was a coin flip. Either I beat the market or I lose to the market. I think a dice roll is a much better mental model to keep in mind.

• 1:01:42Speaker 04

  Those statistics go all the way back to, I remember reading Peter Lynch's book, Beat the Street. And he was talking about how one winner, Brian, makes up for a lot of losers. And a guy is, who is, people who don't know Peter Lynch don't know this. No, just a phenomenal investor, a fantastic investor. And yet, Brian, he lost a lot more often than I think most people know.

• 1:02:00Speaker 06

  He also owned thousands of individual stocks as part of his portfolio. But yeah, that's exactly how the market works and watches why buying everything is such a good idea. Cause you're guaranteed to get those few mega winners into your portfolio and they more than pay for all of the losses. Speaking from personal experience, I've bought dozens of stocks that have lost me money. I've never had 100% loss, but I've come real close. And every single loss that I had combined is lower than the amount of money I've made on just Netflix. So my Netflix gains have more than offset all of my losses. And I've taken plenty of losses combined.

• 1:02:44Speaker 06

  That's how the math of investing works.

• 1:02:47Speaker 04

  That's great. Paula, you know, we always talk about unafford anything, you're thinking about your thinking. If somebody's thinking now, okay, I think I'm ready to graduate, time to start buying individual stocks. Let's talk about the other side of this coin. What's the opportunity cost here? Like, what am I giving up by starting to devote a lot more time and attention to my portfolio?

• 1:03:07Speaker 05

  Well, to go back to the side hustle analogy, if you are really investing the time in learning how to do this properly, that necessarily means that you're not putting that same amount of time into some other opportunity. And for the sake of making this a simple example, let's just assume that you're cross comparing money-making opportunities, right? Because individual stocks are a money-making opportunity. So if you're going to focus on individual stocks, it means necessarily you are likely not going to focus on building out an Amazon store and getting into e-commerce on Amazon. And you're probably not going to focus on rental property investing.

• 1:03:50Speaker 05

  And you're probably not going to focus on owning storage units or mobile home parks or opening an Etsy shop or becoming a service provider, like a freelance or consulting service provider. Like, these are all, they're all money-making opportunities. Pick one, pick one at a time, right? Like, over the span of your life, you can do multiple things, but you've got to sequence them. Cause you know, you can do many things, but not simultaneously.

• 1:04:17Speaker 04

  Yeah, no, you're not going to do three things well.

• 1:04:20Speaker 05

  Right.

• 1:04:20Speaker 04

  Jesse, I think there's got to be also an opportunity cost maybe on your personal life.

• 1:04:25Speaker 06

  Yeah, good. So Paula can appreciate this one. The house that I lived in in grad school, there were six of us, six of us, like graduate students living in a house in like the cool neighborhood of Rochester. And it recently went up for sale. And I looked at it and I looked at the price that it was at least on the market for. And I thought about what we paid in rent. And I'm like, man, Paula would really like these ratios, right? You would, you would really like that ratio, Paula. And I'm kind of noodling on it. And then it's like, wait a second, do I want to commit the time that it would take to be the landlord? To fix up this house, to, to manage the tenants and the whole list? Like, I've got kids at home, I'm trying to run my own business too. And so again, for me, it was like, even if it was a great investment,

• 1:05:10Speaker 06

  I just thought of the time committed to it and I couldn't make that work. And similarly here, I just think that if you're going to commit this amount of time to picking individual stocks, you probably either need enough money at risk to really move the needle. I mean, Brian can tell you, like, if Brian's Starbucks or Netflix, rather, if Brian's Netflix pick was like one share, it's like, no offense, who cares? You know, one share, 20x, who cares? You have to put some money at risk to actually make that time commitment worthwhile. Or you just have to get this wonderful intrinsic benefit.

• 1:05:46Speaker 04

  Right.

• 1:05:47Speaker 06

  That this feel good of scratching that itch. Cause if it's not one of those things, then, then it might not be worth it.

• 1:05:52Speaker 04

  Yeah, because Jesse, I was thinking, and Brian, we'll give you the last word on this, that even if you don't make money, you know, it's the one share. And to Jesse's point, what's it worth? Part of me is like, let's say I, I underperformed the market by 2%, by a healthy number, but it's my favorite hobby. I mean, how great is that?

• 1:06:14Speaker 06

  Yeah, if you literally get joy out of doing the research and following companies, then there is a payoff from that. It's just that most people do not get joy out of it. When they, when they pick up a newspaper, the financial section is one they skip over. I know I did before I cared about any of this, so.

• 1:06:32Speaker 04

  But you're one of those sickos on the other side of that now.

• 1:06:34Speaker 06

  I am definitely a sicko like that. I go to investing conferences, I talk stocks with my friends. It's just something that fascinates me. And there is a small cadre of people out there that are in the exact same boat as I am. It is something you can do as a side hustle, but you do have to put in the time, especially upfront, to really learn the fundamentals of how business works. And I will say one other thing, one thing that investing does do for you, if you do it for long enough and you actually study businesses, you learn about business. You learn about entrepreneurship. You learn about the principles of what makes for quality companies and not quality companies. So it does pay off in your job, like your career. If you can speak intelligently about business models and stuff like that.

• 1:07:17Speaker 06

  Like in my past career, people learned that I learned accounting and I explained to people when we reported earnings, what it meant. And I was explaining this to like, again, upper management, how that works. So I think that would have been favorable to my career, had I chosen to stay in the, in the working world. But I do think that you can learn a lot about business by becoming an investor.

• 1:07:38Speaker 04

  Brian talks about this at parties. So we will link to this in our show notes. If you'd like to hire Brian for your next party or bar mitzvah, where he will regale everyone with business facts, he's probably available. Thank you, guys. That was a great discussion about graduate, not graduate. And I think even based on the people hanging out with us here, we got some people who are excited, some people like, I don't have the time, not for me. Fantastic place to end up. Brian, let's start with you because not only have you been teaching lots of people, those basics that we talk about for a long time, and you've got a lot of cool tools. You have a brand new tool that you've just created that you and I both are slightly excited about. Can you tell everybody about it?

• 1:08:21Speaker 06

  AI has changed the game when it comes to stock research. It used to be you had to really dig into SEC filings to like, understand what does a company do? Who's in charge? Whatever its competitive advantages? So I've, I've been using AI to help me analyze stocks for better part of a year. I built a tool called Stock Simplifier and you can put any stock in there. It goes out, reads the SEC filings for you and brings back the information to you in like an easy to understand way.

• 1:08:48Speaker 04

  Wow, that's fantastic. And it's at stocksimplifier.com is my understanding.

• 1:08:53Speaker 06

  That's it.

• 1:08:53Speaker 04

  Brian, thanks so much for hanging out with us. Let's find out what's going on with Jesse and with Paula. Jesse, what's coming up on personal finance for long-term investors?

• 1:09:03Speaker 06

  I think our next episode is an Ask Me Anything episode compiled around some people's early retirement questions. So some tax planning and early retirement, portfolio construction, healthcare planning, just some good fire and early retirement questions.

• 1:09:21Speaker 04

  Awesome. And that's it. Personal Finance for Long Term Investors. Wherever you find the finest podcasts, such as Afford Anything, Pull a Pant, what's going on at Afford Anything?

• 1:09:31Speaker 05

  On Afford Anything, this is the 18th of September. You and I, Joe, are at FinCon right now.

• 1:09:38Speaker 04

  And Jesse.

• 1:09:38Speaker 05

  And, and Jesse.

• 1:09:39Speaker 04

  And Brian.

• 1:09:40Speaker 05

  No, not Brian.

• 1:09:41Speaker 04

  Not Brian.

• 1:09:42Speaker 05

  And not Doug.

• 1:09:43Speaker 04

  Doug's not coming. One star.

• 1:09:45Speaker 05

  On the Afford Anything podcast, so last week, we had an interview with Michael Hanksen that ran on September 11th. Michael Hanksen is a 9/11 survivor and he is blind. And so he tells us the story about descending 78 flights of stairs. He was on the 78th floor of the North Tower at 8:46 a.m. when the first plane hit. It's a story of fear. It's a story of persistence. It's a story of teamwork because a lot of people were starting to really get scared. It's an amazing interview. If you didn't catch it on September 11th, I would encourage you to listen to it.

• 1:10:20Speaker 04

  That's wild. And that's at the Afford Anything podcast, wherever the finest podcasts are found. All right. Big thanks to everybody who hung out with us today on YouTube where we make the show. It's always fun. We make these shows on Monday and it's always fun to pretend it's Friday. So if you want to join us on a Monday, come on out. We're generally here at about four o'clock Eastern time. Do the math on whatever time zone you're in. All right, everybody, that's it for us. Doug, you've got it from here, man. What should we have learned on today's show?

• 1:10:53Speaker 03

  Well, Joe, first, take some advice from our guest, Brian Feroldi. Get some skin in the game. Investing in an individual stock could be the impotent you need to get interested in learning about corporate finances.

• 1:11:06Speaker 04

  I'm not sure that's exactly what Brian meant, but why don't we go ahead and run with that, Doug? What's your second one?

• 1:11:11Speaker 03

  Second, don't forget what Paula said. Step away from the candle making kits and selling crystals on Etsy. Investing can be your side hustle. Just don't dive into the deep end right away. But the big lesson, when Joe's mom says you've got the green light on the shrimp appetizer at the Sizzler, get it in writing. Turns out what she meant was she's extending me a line of credit with repayment terms so bad, I gotta get a loan to pay off the loan. So if you're listening and can loan a guy a few bucks at a reasonable interest rate, meet me at the Sizzler. I'm buying.

• 1:11:48Speaker 03

  Thanks to Brian Feroldi for joining us today. You'll find Brian's new Stock Simplifier tool at the easiest URL ever, stocksimplifier.com. That's how it's done, Jesse. Walking the dog, I got you covered. We'll link to it in our show notes at stackingbenjamins.com. Thanks to Paula Pant for hanging out with us today. You'll find her fabulous podcast, Afford Anything, wherever you listen to finer podcasts. And finally, thanks to the Jesse Cramer for joining us today. You'll find his filthy podcast, Personal Finance for Long Term Investors, who may or may not be interested in investing, wherever you're listening to it, us right now. Go subscribe. You'll love it. I don't know, there's so

• 1:12:32Speaker 03

  many words. I don't know when to stop with his title.

• 1:12:37Speaker 03

  This show is the property of SP Podcast LLC, copyright 2026, and is created by Joe Saul Sehig. You'll find out about our awesome team at stackingbenjamins.com, along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. And oh yeah, before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor Doug, and we'll see you next time back here at the Stacking Benjamin Show.