034.The Stock Series Part 2

034 | The Stock Series Part 2 | JL Collins

This content may contain affiliate links through which we are compensated when you click on or are approved for offers from our partners. See our disclosures for more info.

This podcast is Part 2 of the Stock Series discussion with JL Collins, author of The Simple Path to Wealth and the website JLCollinsNH; we discuss the Great Depression and the mindset you need to be a successful long-term investor, plus how to allocate between equities and bonds.

1500 days
In Today’s Podcast we cover:

  • Part 2 of the Stock Series conversation with Jim Collins
    • If you have not yet listened to Part 1 you can listen to it here
    • Be sure to check out the associated Friday Roundup here for Brad and Jonathan’s take-aways
  • A discussion of what happened during the Great Depression and the Crash of 1929
  • A large portion of the crash was due to many people buying stock on margin
  • Jim’s explanation of leverage and buying stocks on margin
  • Jim’s Four Lessons to watch out for
  • Making peace in your mind when a crash/correction happens. What caused it?  Psychology or something legitimate?
  • Unless you believe the US economy has permanently collapsed, then “the market always goes up” over time according to Jim
  • Jim says the best thing that can happen to a young investor is a market crash as you get to purchase stocks “on sale” for potentially years
  • Savings rate is the most crucial aspect for the FI community since it allows you to continually invest in good markets and bad
  • Bull markets and bear markets are a part of life. We need to toughen up mentally to prepare for both
  • Jim’s explanation of the 40 year period starting in 1975 showing the calamities that happened and yet how far the market increased
  • Nobody knows what the next 40 years will hold, but we have a dynamic economy
  • What stage of investment life are you in? It varies depending on your age
  • Wealth building and wealth preservation stages and the discussion surrounding both
  • When you’re in the wealth building stage you need to have your psychology correct: Keep pumping money into the market and take advantage of sales when the market goes down
  • 100% equities in the wealth building stage per Jim
  • When you stop working for money you are in the wealth preservation stage
  • What percentage should you have in stocks and bonds in the wealth preservation stage
  • The more you have in bonds the smoother your ride will be, but the lower your return will be
  • Your tolerance for volatility will determine your percentage in equities and bonds
  • Would Jim ever consider going back to 100% equities?
  • Mathematically you are always better off in stocks than bonds over the long-term
  • Even Jim contemplated selling during recent market plunges, so everyone is susceptible to this

Links from the show:

Books Mentioned in the Show:

Related Podcast

2 thoughts on “034 | The Stock Series Part 2 | JL Collins

  1. I think this is a great investment strategy from a psychological perspective since it is so simple. But from a financial perspective I would think it isn’t that great since from a numbers perspective it is actually safer and you earn more when you diversify your money in different asset allocations. You can look on portfolio charts websites to see how this works out (he would probably be a great person to interview also). But when you are saving over 50% of your income you are probably only looking at a few years or even months difference of when you hit FI.

    This first came to light for me when I was reading a book on Probability & Stochastic Processes for my masters program. I can’t say that I’m smart enough to really understand all that though :-).

  2. OK, last comment on this. If you look at his Golden Butterfly portfolio, I believe that did better than the stock market. Of course, past returns doesn’t guarantee future performance :-). Just food for thought.

    Here’s the website. https://portfoliocharts.com

Leave a Comment