Hi.

You guys are going to absolutely LOVE this week’s podcast episode. But you’re going to have to wait a day longer than usual. There’s so much amazingness in it, Spotify’s publishing system couldn’t digest it in the normal amount of time.

Okay, the truth is Jeff is busy, and his responsibilities to The People of New Jersey took precedence. That’s a fancy way to say he probably forgot (totally speculation on Jason’s part).

Nonetheless, we appreciate you being a listener, reader, and all-around-great supporter, and we are sorry for the delay. Not a lot sorry, but a little. And isn’t that what matters?

Deepest apologies,

Jason (and Jeff, who is doing his civic duty somewhere in New Jersey)

P.S. If you haven’t already, please go sign up for our free (or paid if you want to help support us) Patreon at https://www.patreon.com/investingpod. We are still planning to sunset this platform, and that will ensure that you keep getting email notes like this, reminders about our monthly First Friday livestreams, and other occasional updates.

Hi.

As you’ve probably already noticed (or not, which is actually at the heart of the decision) we haven’t really created many random words on Random Words over the past few months, since we started our Patreon. The short answer is between a lot of other obligations, and more involvement with the Starter Position premium subscription there (it’s only $5 per month!), we just haven’t used this forum. For those of you who have subscribed to this, but have not signed up for the Patreon, we would like to encourage you to do so.

First: There is a free tier that will get you notes and emails about events like our livestream, new podcast episodes, etc. The $5 per month Starer Position paid level gets you a few extras that some of you may find valuable:

• Full episodes with far fewer ads.

• Monthly Rough Cut Exclusive shorts.

• Access to our members-only Discord channel.

So far, we have really enjoyed the conversations with our small — and growing — group of members, and we hope that more of you want to join in on the fun, too.

Please go to Patreon and sign up for either the free or (we hope!) the paid tier so we can keep the conversation going!

Jeff and Jason

August Livestream Link

Here’s the link for our Friday livestream: https://www.youtube.com/@investingunscripted

We are, if nothing else, consistent in our inconsistency! The show starts at 4PM ET. We suggest you bring your favorite beverage, a portable snack, and your sense of humor. Insults encouraged, viewer’s choice today!

See you online!

Jeff and Jason

P.S. If you haven’t already, please sign up for our free Patreon at https://www.patreon.com/investingpod. We will be wrapping up the use of this platform soon, and that way you can still get our occasional email reminders and other notes. Thanks!

July Livestream Link

Here’s the link for our Friday livestream: https://www.youtube.com/@investingunscripted

Just a reminder, the show starts at 4PM ET. We suggest you bring your favorite beverage, a portable snack, and your sense of humor. Making fun of the hosts highly encouraged.

See you online!

Jeff and Jason

P.S. You have probably noticed we aren’t publishing much here recently. We would encourage you to please sign up for our Patreon. There is a free level that will get you the same communications you typically get here, and if you’re so inclined for $5 per month you can join our Starter Position, which gets you limited-ad versions of our podcast episodes, monthly Rough Cut Exclusives, and access to our growing community on our exclusive Discord server. Hope to see more of you there!

Jason’s Random Words

I’ve played softball for most of my adult life. It’s a great combination of (lots of) social and (some) physical, and since many American kids grew up playing baseball, it’s the logical transition for our sporting careers as we age. Needless to say, pulled hamstrings are about as common as players hitting triples. We are (in some cases old) men playing a kid’s game.

The town league I am in only plays 16 games per year over the summer, (we have limited field capacity and can’t start our season until the kids are done) but the season really gets going two months before the first game when registration opens up. In an attempt to keep some competitive balance, new players are drafted. We hold a mandatory tryout about a week before the season starts, and the team with the worst record takes the first pick, with the second-worst drafting next, continuing to the last two picks of the first round which are taken by the two teams that played for the championship in the prior season.

Don’t worry: It’s a recreational league so everyone gets on a team. I won’t bore you (anymore than I may have already) with the minutia around how undrafted players are assigned to teams, but I can tell you that it’s wild how much time grown men will spend trying to uncover the details about some random 42 year old’s ability to play sports.

I’ll use my team as an example. I’m the manager, but two guys (who are both engineers — this is relevant only because it’s a very engineer-mind thing to do) take on the responsibility of researching rookies ahead of the tryout and draft. The league sends us a list of signups each week during the registration period, and new players are added to a Google sheet managed by my two engineers (who are both very good outfielders — not relevant but I thought you’d find it interesting) and shared out to the entire team.

On this sheet, there are no less than 15 columns of data we collect, including useful things about their athletics history (college sports experience is a big plus — any sport) along with obscure, and semi-invasive details including home addresses and links to spouse’s social media accounts.

That reads creepier than it is. We are looking for nice backyards (postgame BBQs are a big deal) and pools (this is a tie-breaker consideration when choosing a player), and shared social connections. We want good softball players, but we also want good people and families, too!

Needless to say, this is time consuming. By my estimation, my team spent about 100 person-hours researching the 15 new players this year before the tryout and draft even happened. We even had a two-hour pre-draft war room session two days before the draft with six people involved.

Okay, it was mostly just bros hanging out having a few beers. But we spent a lot of time talking about middle-aged guy’s relative athletic capabilities.

We aren’t an aberration. I would say we are along the lines of a median team; a few do a lot more (bordering on pathological) while one or two show up on the Saturday of the draft and that’s it.

The point? The combined input of time made across the softball teams in my town ahead of the draft each year is at least 1,500 man hours. That’s almost 38 weeks spent researching middle-aged dudes who’ll play 16 softball games a year.

I realize the whole concept of spending this much time on something like “which dad should we pick to play on our sports team?” sounds crazy to many of you. That’s the point. It never fails to amaze me what we will spend our time on, and the power of incentives on our behaviors.

In the case of my softball league, adding a new person to your dynamic can change things for the better or the worse, both on and off the field. Getting this decision right feels really important.

At the same time, people fall on a bell curve; there are outliers who are exceptionally great and exceptionally awful — both athletes and people — but most of us fall somewhere in the middle. As Danny Kahneman wrote in Thinking, Fast and Slow, “Nothing in life is as important as you think it is while you're thinking about it.” This is just as true with our individual investing decisions as it is with a rec league team’s softball draft picks.

I’d love to hear some things that you spend a lot of time on that others might think are nuts. Share in the comments below, or if you’re a member of our Starter Position on Patreon, hop over to our Discord server and join in the conversation there! Not a member? It’s only $5 per month. We’d love to have you join us!

Jason

PS: You can get these Random Words as a free subscriber to our Patreon as well. We are considering making a permanent change with Random Words to only Patreon (the free one) in the next couple of months so we want to encourage more of you to sign up for that so you’ll still get our occasional notes.

June Livestream Link

Here’s the link for our Friday livestream: https://www.youtube.com/@investingunscripted

The streak was broken last month, when we held First Friday on a Saturday. We were in Omaha. It was great! Since the first Friday was last week, we are obviously off schedule again. See you tomorrow at 4PM ET.

Bring your sense of humor and some questions. Bring your best insults, too.

See you online!

Jeff and Jason

PS: Don’t forget that we are also considering shifting this newsletter to only our Patreon. It will remain free, but that’s also where you can find our $5 per month Starter Position membership, with a private Discord server where we are chatting about stocks, the market, and plenty of other fun conversation every day. Thanks!

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Jason’s Random Words

The reason we invest is to make sure we have enough wealth for financial goals. Financial goals are simply measuring sticks that exist to represent how much asset stuff we have accumulated that we can turn into money when we need that money in the real world.

I’ve already written about how I’m using bonds but I want to look at my cash strategy, too. We are in a strange and rare place with cash, where you can get a yield between 3-4% pretty easily and safely, and for that yield to actually outpace inflation. This isn’t common.

Yet at the same time, that yield pales in comparison to both the long-term average returns on compounding assets like stocks, the yields you can earn on fixed-income assets like investment-grade bonds, and real estate investment trusts (REITs).

So what purpose cash?

• Protecting against downside risk when you’re only a few years or less from needing cash.

• Dry powder for opportunistic buying of better-return long-term assets like stocks.

So here we are, about five months into 2025. At this writing, the S&P 500 is about where it started the year. However, it’s also been up as much as 5% from where it started, and down almost 20% from the high before the recent rally.

In other words, we have come through a period when, according to my guidelines around cash — deploy some of it when the market falls 10% or more from a recent high — I should have done such.

Let’s check the record. In early April I held about 28% cash. A significant portion of that cash is held to cover puts that I have sold, as well as from my annual solo 401K contribution as part of my tax planning. But even factoring for those two things, that was a significant amount of cash, and not the favorable mix I aim to have.

What about now?

About six weeks later, and my total cash across all of the investment accounts I manage is about 12%, including cash reserved for puts. Starting on about April 9, I began buying, adding to some of my favorite stocks, many of which were down more than the market, and that I have strong conviction in.

I still have a little more cash than I usually would, but I feel like I’m comfortable where it is. I also feel like I have done a pretty good job utilizing cash for the reason I keep some around, i.e. when there are opportunities like this.

I know a few investors who have actually seen their cash positions grow over the past couple of months. I don’t know what happens with the stock market later this year — I have sold some stocks and I still have that put I bought that shorts the market — but I know my strategy around cash says I buy what I like the most when the market sells off. So I did, and I think it will work for me in the long run.

If you’re a subscriber to our Starter Position membership on Patreon, I’d love to hear how you think about and use cash over on our Discord server. I’ll start up a conversation in our “I Did a Thing” channel once this publishes. If you’re not already a member, go to https://www.patreon.com/investingpod and check it out.

If you’re not a member and don’t intend to, but want to share your thoughts, reply to this post, or check out the free Patreon and comment on this post there.

Jason

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Hi friends! Apologies for sending posts in back-to-back days. We try to limit our extra messages when possible but wanted to get this one out to everyone quickly.

Jeff and Jason are taping the May podcast in a couple of days and we have room for a few more questions. Reply to this email (or comment at the bottom if you’re reading it on the website) with your questions and we will add them to the list. This is for the episode that will release next Wednesday, May 28.

Thanks!

Jason and Jeff

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Jason’s Random Words

As you probably know we were in Omaha earlier this month for what may prove to be the second-most consequential shareholder meeting in the company’s history. The first, of course, was the 1965 meeting where Buffett assumed control of Berkshire.

As an aside, Buffett didn’t take the Chairman role until 1970. Can he remain in that role for another five years? He’d still be a few months short of being a centenarian if so, and as I predicted, it looks like he plans to remain chairman until he is physically unable to do so.

Anyways, Jeff and I, along with our friend Tyler Crowe, made the decision to go to the Berkshire annual meeting this year in no small part because we were all of the belief that this would be Warren’s last as CEO.

And we were right! We were in the building!

Sort of!

We weren’t actually, technically in the room. But there’s more to the story, and you can hear it from me and Jeff in a new way, here.

So what’s up with the Patreon in the link above?

We have finally decided to do something that a lot of listeners have asked us for in the past year or so. We are starting up a community, and part of it includes exclusive access to content you can only find on Patreon, like our first Rough Cut Exclusive, where Jeff uses grownup words in anger at me. It was justified.

But we want to build more. As much as we have a shared community already, it’s one-sided. A lot of you want more.

You want a place where you can go and be surrounded by your own investing community. Where you can connect with people who will actually be interested in talking about stocks. Where you can solicit for feedback on investing ideas, and give feedback in turn.

Where you won’t have to worry about spambots in your DMs or dominating the replies on posts.

And we believe a combination of Patreon and Discord are the solution to this. Where we can build an investing community together. Our upcoming episode this Wednesday, May 21st, explains it in more detail.

What we are planning to do

Let’s start with what we are not going to do.

• We are not moving our podcast off of the existing apps

• We are not changing our existing social media channels or our — admittedly rather minimal — engagement on them

• We are not getting rid of our YouTube channel

• We are not — at least for now — getting rid of this newsletter in its current distribution model

But we will be doing a few things differently.

To start, we will be co-publishing the Random Words to our Patreon. The upside is if you already use Patreon and the app, you can unsubscribe from this, and still get the weekly-ish words on a single platform you’re already using. The downside is if you like reading it in your email, you can’t do that with Patreon.

But part of our goal is to build more for you, and for us. Here are the other things that you’ll be able to get access to:

• Access to our exclusive Discord server, with a number of topic-focused channels where you can interact with us and with other investors.

• Access to episodes of Investing Unscripted with fewer — not zero, just less — ads.

• Rough Cuts Exclusive episodes available only on Patreon, at least once per month. — our first one is already uploaded, waiting for you to listen!

Here’s the catch. We are putting in a lot of time to make this happen and hopefully a success, and that means we need to charge for it.

How does $5 per month sound?

We think it’s a pretty great deal for everything we are putting together. More content. More spam- and bullshit-free community. Fewer ads. Exclusive content only members can access.

Jeff came up with the name: Starter Position. I think it’s a great name. Even if it was Jeff who came up with it.

Will you join us? I hope so. The Patreon is up and running, but we still have some bugs to hammer out. And we are planning to officially launch the Discord server on Wednesday, but early subscribers will probably get access to it sooner. Maybe.

At any rate, if you like what Jeff and I do and you want more of it, you want a better investing community, or even if you just want to help support us, we’d love you to come over to Patreon and check it out, and join the Starter Position community.

Hope to see you there!

Jason

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Jason’s random words on rebalancing

One of the things that I have added to my investing framework and process over the past year is the idea of rebalancing. In short, rebalancing is the idea that your portfolio should have a certain percentage of certain asset types to improve the odds of reaching your desired outcome, and as markets do their thing and your contributions happen, your portfolio gets out of balance. It’s actually a feature, not a bug. But re-optimizing your portfolio by rebalancing can help you earn more optimal outcomes.

For many years, rebalancing didn’t make sense for me, as my portfolio was entirely stocks and cash, and the excess cash served as “dry powder” for opportunistic stock buying. Like many of you reading this, the bulk of my investing journey to date has been during a period of extremely good stock market returns, very low yield for fixed-income investments like bonds, and with my financial goals measured in decades from the time I would need to take money out of my portfolio.

But, to paraphrase Ferris Bueller, markets come at you pretty fast. If you don’t rebalance, you could miss some great opportunities.

But I need to set the stage for what I have done first.

Changing with the times

Back in September, I wrote about two things that younger me would be embarrassed about: golf and bonds.

Something Warren Buffett has said helped influence the decision to shift some of my portfolio from stocks to bonds. “When the facts change, I change my position.” For me, a few important facts have changed.

• I’m closer to retirement than being in college.

• Interest rates have returned to more normal historical levels versus the lows of the past 15 years.

• I have a far clearer idea of the rates of return I need to earn to reach my family’s financial goals.

Yes, retirement is probably still at least a decade into the future, and probably a little more. I’m pretty certain both my wife and I will continue earning some income from work into our 60’s, like most people.

But I’ve also come to realize that there’s a non-zero chance that we go through a protracted period of extremely low stock market returns, and if that were to happen, it would harm our financial future. So we have made some allocation changes to help guard against unexpected volatility that for the most part, is not a risk. Except when it is.

Floor versus ceiling

I have reached a point in my investing career where think about the “floor” for future returns more than the upside. Considering that the bulk of our future retirement savings will come from our existing contributions, and less and less will be a product of new contributions, the idea of protecting against losses due to volatility has become more important.

To be clear, this is still a very low-probability risk. The most extreme examples are the peak-to-peak-to-peak periods of the 2000’s. For those who don’t recall the specifics, here’s what happened over the next dozen years:

• The S&P 500 peaked on March 23, 2000

• It fell more than 40% by mid-2002

• It did not recover until November 2006, more than 6 ½ years later

• It peaked again on October 9, 2007

• It hit bottom on March 9, 2009 down 48% from the March 2000 peak

• It did not fully, permanently return to consistent highs until December of 2011.

The figures above are based on total returns, so even with dividends included, this was a brutal 11 years for people who entered 2000 with a lot of already-accumulated wealth held in stocks.

Can you imagine being in your 40s in 2000, with a million-dollar stock portfolio? You’d just spent the past decade earnings more than 19% a year in average returns! If you could get the same over the next decade, you’d be coasting into your 50’s with a $5.5 million portfolio!

Instead, the market did what the market does. That million-dollar stock portfolio in January 2000 would have been worth $1.06 million 11 years later. That’s less than 1% per year in average returns.

I don’t expect to see that sort of extreme volatility and weak returns over the next decade-plus. But it’s not a zero-probability likelihood, and since bonds and cash are now worth holding for some yield, I have increased my exposure to those asset classes. Resetting the floor a little higher, if at the expense of a lower ceiling for total returns.

How rebalancing works in this scenario

As explained above, most of my reasoning for shifting to more bonds is to help soften the impact of downward volatility on my existing portfolio. But as I described to Jeff on the podcast episode when we talked through my decision, there’s more to it.

In short, acting opportunistically during market downturns to rebalance bond exposure down, and increase stock exposure back to those ideal levels, is a way to boost returns.

And just as I have rules around cash and buying — I hold a lot of extra cash specifically to deploy during market selloffs — I have put in some guidelines around rebalancing bonds, too. And I did exactly that on April 8th, being lucky to “call the bottom” of the tariff selloff — at least to this point.

I was able to “avoid” the selloff with a portion of my portfolio, and “buy the dip” when stocks fell almost 20% in a matter of a few months. It was a nice little win that confirms my process is favorable for me, and just based on some basic fundamentals of investing success versus special insight or skill. I just used the playbook.

To be clear, these are still relatively small amounts of money, and I just rebalanced the percentage of my portfolio from bonds — which had increased as stock values fell — into stocks closer to my desired levels.

Now comes the hard part: rebalancing the other way later this year if we continue to see stocks move higher. But that’s content for a future post.

Jason

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Jason’s Random Words

So far, our record at Investing Unscripted is undefeated when it comes to Berkshire Hathaway (BRK.A)(BRK.B) annual meetings. The 2023 meeting we attended turned out to be the late, great Charlie Munger’s last, and this weekend’s meeting will be Warren Buffett’s last as CEO.

Whew. There’s a decent chance the Board doesn’t let us come back.

On a more serious note, Charlie’s unexpected death in 2023 a few months after the meeting was a bit unexpected in its exact timing, but not a surprise based on his recent health. As Buffett likes to kid about himself, based on the Social Security actuarial charts, Munger was already living on free time, just shy of his 100th birthday. For Warren, it seems that he’s reached the decision to step down, if maybe not exactly when he would want, certainly more on his own terms. He remains in reasonably good health considering he’s approaching 95, and based on his four hours of answering questions on Saturday morning his mental faculties seem as sharp as ever. As friend of the show Wayne described him on our livestream Saturday afternoon after the meeting, he’s the “Greg Maddux of investing.” He may have lost his fastball, but he can still locate his pitch with the best of them.

What does this mean for Berkshire?

I think in the near term, not much of anything. Greg Abel — the longtime executive in charge of the utility business who came to Berkshire when it acquired Mid-American Energy in 1999 — is his named successor (though the Board will make an official decision on that in a meeting soon) and has taken on more responsibilities over the past few years. Ted Weschler and Todd Combs have spent 13 and 15 years respectively managing a portion of Berkshires investment portfolio, as well as taking on more leadership roles with the subsidiaries. Ajit Jain remains central to leading Berkshires insurance businesses.

For the smaller subsidiaries, this is almost certainly a non-factor in how they operate. Those businesses are largely self-operated. They report up to headquarters, but headquarters rarely dictates back down to the subsidiaries what they should do. Beyond discussions around long-term capital needs and planning, and meeting their obligations in earnings they contribute to Berkshire, they’ve largely been left to their own designs. We’ve also seen more and more of them report up to someone besides Warren over the past decade.

In other words, the process of decentralizing Buffett’s prior responsibilities started years ago. Sticking with the baseball parlance Wayne used on the livestream, it’s almost like Buffett has already transitioned away from being the great player who locked down their defensive position while also having a potent bat, and has already transitioned into the “designated hitter” portion at the end of his career. He may have slowed down in the field, but he can still knock it out of the park.

What happens next?

The next year will almost certainly be nothing unique except being the end of an era. The transition from Buffett, as noted above, started years ago. And as our friend Tyler of Misfit Alpha (use the link! Get a discount!) pointed out, his answers to questions have become a bit more wandering in recent years, though he still gets to the destination with his usual wit and insight. So this timing may have surprised some people, but isn’t really that surprising (the reason we came to the meeting was in large part because we expected it would be his last as CEO) considering everything that’s happened in recent years.

But looking beyond Buffett and the C-suite, I do think there is reason to be concerned about further deterioration at the smaller subsidiaries. Like Buffett, many of the founders and managers at those companies are going through a turnover. Buffett wrote about Pete Liegl, the founder of Berkshire RV and boat manufacturer Forest River in his annual letter, after his death late last year. Berkshire bought Forest River from Pete in 2005, and he remained on board to run the company for the next 19 years.

This isn’t particularly unique with many of Berkshire’s smaller subsidiaries, and the loss of this generation of leaders could fundamentally alter the culture of businesses that Berkshire has had a relatively light touch on for many years.

To put it another way, what has largely been a feature of Berkshire’s ownership of these businesses under Buffett could prove to be a bug for Abel and co down the road. My hope is that future management has the same mental flexibility that Buffett has had, and the willingness to very quickly do things differently when the reality on the ground has changed, too.

The hardest part of transitions

Buffett’s mental flexibility — that willingness to adapt and change — is his most underappreciated superpower. And I think that same skill may be the one that’s most needed by Abel and his team once Warren isn’t CEO anymore.

And that’s the lesson I have tried to take for myself as well. Change happens. Life moves forward and we have to adapt. Learning how to be more mentally flexible is hard, but if there’s one Buffett trait we should all try to emulate, I think it’s the most important one.

Jason

Hey reader/listener!

Jeff and Jason — and hanger-on Tyler Crowe of Misfit Alpha fame — will be in Omaha for the Berkshire Hathaway annual meeting this weekend. We have a few plans in place, including attending a few conferences and hangouts with fellow investors. If you’re planning to be in Omaha, please reply to this email, or email us at InvestingUnscripted@gmail.com and let us know!

First Friday Will be SATURDAY From Omaha

Since we will be in Omaha, and together in person, we have also decided to do our monthly First Friday livestream from Omaha as well.

PLEASE NOTE: It will be on ***SATURDAY*** this month. We still plan to go live at 4PM ET.

We will send another note out to remind you, but wanted to give everyone some early notice!

See you online, or maybe in person!

Jeff and Jason

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Jason’s Random Words

I have a friend who’s a seasoned investor who recently participated in a U.S. Treasury auction. These were short-term treasuries (13 weeks and 26 weeks). His thesis was, in the midst of all of the drama with the Trump tariffs, we had already seen some pretty concerning actions with longer-dated treasury auctions in recent weeks.

He figured he’d be able to capture a higher yield than would be available in a deposit or money market account for a short-term holding, boosted by a debt market that’s recently become a little bit less and just accepting of the U.S. dollar as the global reserve currency.

To paraphrase, he told me something along the line of he’d either get a modestly better yield, or a very high yield. If it was a much higher yield, we were screwed, but yay, higher yield!

So what would it really mean if the U.S. dollar was no longer the de facto global reserve currency? That’s a question for another format (foreshadowing!). My guess is it wouldn’t be good, and it would erode a massive amount of the wealth most of those who bother to read this have accumulated, and in some rather permanent ways.

But thinking about it got me thinking about the assumptions we make as investors. I’ve written about how fortunate those of us who have simply held investments in stocks over the past 15 years have been. To put it into context, Every period of time longer than 3 years since the beginning of 2010 has generated annualized returns of more than 12%. That’s about 20% above the market’s long-term average, and a lot of those years have been much better than that.

How many investors out there now expect to just get that automatically now? That it’s become the new stock market average?

How’s that workin’ out for ya?

Ask anyone who started investing in 2000 how that sort of thinking worked out. Since the start of that year, the S&P 500 has averaged 7.35%. That’s more than 25% worse than the market’s long-term average, and the result of two of the biggest market crashes in history in the first decade. As much as we may have been lucky to have avoided a similar fate in the pandemic, eventually, long periods of outperformance get bookended by some period of lower returns, whether due to a starting point of extremely high valuations (dot com bubble) or some global economic calamity (Great Recession).

Here’s some proof in the pudding, so to speak. The “lost decade” of the 2000’s came after one of the greatest decades in market history, with the S&P 500 averaging more than 18% per year from 1990 through 1999. The 1980s, while starting and ending with some trouble, was also a great period for stockholders.

Keeping (messed-up) expectations in check

The point is, whether it’s how the market did last year, last decade, or last century, those numbers are just starting points to understanding how investing in stocks can help you create — and also lose — wealth. But it’s when we use those assumptions as a proxy for some promise the market “owes” us that we run into trouble.

A better idea? Set some goals, and then assume you’re going to come up short. The market will crash or have a handful of bad years. Or both. You’ll lose your job or get sick at some point and fall behind on retirement savings for a year or two. Something will happen.

Shit happens.

So what do you do? Plan better. Increase your retirement savings contributions. Find a side hustle for a few years. Put extra cash in savings. Get more and better insurance (especially term life when you’re young. Your family can live without you, but not without your lost income). I know it sucks to think about. But if it happens, you’ll be dead. Your family will be the ones thinking about it.

Plan for shit happening. That’s the whole point of planning!

If you’re only planning for things to go great, you’re wasting your time and not doing it right.

Chances are, things will be fine. There have been far more great decades for investors than lost decades. You probably won’t die. Or get laid off. Or get cancer. Or get cancer after being laid off, have to cash out your 401K to make ends meet, and then still die.

But shit really does happen. Assume things will go great. Just don’t plan for it.

You can do it,

Jason

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Jason’s Random Words

That’s some headline, huh? Selling stocks. Shorting the market. Sounds like a pretty stark deviation from my long-term goals, and the framework that I use. After all, I’m still very much in the net-contributing, and time-is-my-biggest-asset place in the continuum of my investing journey. I’m still measuring the time between today and reaching most of my financial goals in decades. We are in our prime earning years, and we have managed to avoid lifestyle creep as our income has grown.

Even with our son outgrowing his — man this stuff is expensive — sporting goods and apparel faster than our discretionary spending, we still have a decent margin of safety, and enough emergency savings and adequate insurance that insulates us from a lot of what is happening in the real world right now.

What and Why I'm Selling

Okay, the headline is intentionally bombastic, but I have done a pretty decent amount of selling — for me — since the market’s recent peak in mid-February. In all, it’s equal to about 1.7% of my portfolio’s current value, a relatively small amount, all considered.

Next, the “why.” This was a combination of weed trimming, moving on from some ideas that weren’t panning out for me, and taking a step back. Here are the stocks I sold, and why:

• Redfin (RDFN): I am not interested in owning Rocket Companies (RKT), which has reached an all-stock deal to buy Redfin.

• Zillow (Z, ZG): It could be a big winner. But residential real estate is a mess right now, and I want to see if the ongoing consolidation of platforms (note Redfin deal above) give it an advantage. I may buy again. For now it’s in the “too hard” pile.

• Boston Omaha (BOC): This could prove a bad time to sell, if investments in residential fiber and wireless broadband start paying off. But the returns on its billboards business have been paltry, and I think it overpaid for those assets. I see too many other opportunities to keep waiting for a turnaround.

• 23andMe (MEHCQ): An excellent reminder that “how much more can it go down” is 100% more. I sold about a week before the company filed for bankruptcy. I held because was convinced that its founder would put together a deal that saved a little bit of equity value. That didn’t happen.

• Etsy (ETSY): I could make the case that it’s a buy, trading for a single-digit free cash flow multiple, but my concerns trumped the value play. Buyer counts are falling, less money is changing hands, and revenue growth is entirely coming from higher fees paid by sellers. That’s not a recipe for success, and this could be a value trap.

Put it together, none of this selling was because of the ongoing market selloff. Sometimes when you’re looking for buying opportunities, you see ideas it’s time to sell too.

I Did Far More Buying

I know, I left this out of the headline, but clickbait works! While doing the above selling, I bought shares of six different companies, and more of the Treasury bond ETFs that I own. In all, I have added about 2.6% to my stock and bond holdings, a good bit more than my selling.

This doesn’t even factor in the options corner of my portfolio, which I am using to generate additional cash, and hopefully find more attractive prices to buy shares. When we include those moves, that’s another ~1.5% of my portfolio that could eventually get rolled into shares of my favorite stocks.

About That Market Short…

I didn’t sell any of the indexes short; that’s a game that I am not comfortable playing. However, there is a way to create the same upside dynamic as shorting, while also capping potential losses at a set amount. In this case, I bought puts of an S&P 500 Index ETF. If the price of the index falls, the puts that I own will increase in value; if the market goes up, the value of the puts will go down.

Why I Did It

It’s probably more accurate to think about this as partial insurance than a big short. Not only are my losses capped to the amount I paid (about 0.5% of my portfolio value), but the upside would not offset the losses in my portfolio if we see a continued decline by the market. But I’m not trying to perfectly offset losses as much as generate extra cash to invest if it happens. I’m also not paying to borrow anyone’s shares to sell short, so no leverage or risk of margin calls.

Moreover, if these puts expire worthless in December, it will be because the market has moved up in value. If that happens, my portfolio’s gains will be far in excess of the cost of the puts. It probably also means we have moved on from the current turmoil. So I’m willing to trade a little bit of potential upside for more capital to deploy in the midst of a deeper market selloff.

What Are You Doing?

My investing strategy has gotten a little more sophisticated in recent years, but actually takes about the same amount of time and energy to manage. To some extent it’s working, with my portfolio declining less than the market’s selloff so far, in part because of my timing moving to more cash and bonds before the decline. Will it still earn market-beating returns during the next bull market? Time will see; either way I expect it will deliver on my financial needs with more certainty.

My framework is still built to serve my financial goals, and my actions are within those constructs. I hope and trust that you’re doing the same thing. Jeff and I would love to hear from you.

What are you doing right now to navigate the market, and exceed your own goals? Reply to this email or comment below and tell us!

You can do it,

Jason

Tariffs Surge — This Tech Disruptor Moves Faster Than Global Shifts

Consumer electronics may have dodged the tariff bullet, but one smart home disruptor isn’t waiting for luck.

They’ve strategically secured production outside China, staying ahead of the global manufacturing shift.

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Their smart shade technology is reshaping home automation, protected by patents and backed by powerful retail partnerships.

Smart investors spot the pattern: companies that turn global challenges into strategic wins often deliver the biggest returns.

At just $1.90 per share, you’re looking at a company that’s not just prepared for supply chain shifts — it’s already capitalizing on them.

INVEST NOW BEFORE THIS OPPORTUNITY ENDS

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Jason’s Random Words

I’ve read some pretty great anecdotes this week.

Our good friend Tyler told a story about his grandfather catching the family car on fire (it’s behind a paywall; if you want to subscribe, get a discount here).

Ben Carlson shared a story about acting when the risk doesn’t matter in the worst case since you’ll be dead.

I’ve also thought back to some stories told to me over the years about people’s experiences during troubled times in the past. A good friend told me about a year ago that during the worst of the Coronavirus pandemic, he questioned whether he’d be able to pay for his kid’s education in the future. Another friend told me the story of losing his job on March 9, 2009. That was the day that the stock market hit bottom during the Great Recession.

The first two stories are about people who had developed the life experience and skills to navigate scary, uncertain times. The latter two were real-world examples of how, in the midst of uncertainty, life can be hard to navigate, even when you have the skills and experience (for the record, the first friend’s kids aren’t at risk of not being able to pay for college, and the second friend semi-retired in his early 50s).

Putting political leanings aside — I realize that’s asking a lot — my expectation is that these sweeping tariffs will wreck the economy. But that’s easy for me: I always expect a recession is just around the corner. I’m only right about 10% of the time. Sadly, I’m feeling lucky.

Needed or Needless Disruption?

But many people (and surely some of you reading this) fully support what President Donald Trump is doing, and for reasons I understand. For decades, the middle class has lost ground, and the government seems to not work for most of the people. Sometimes it takes massive disruption to the status quo to move forward in a meaningful way. Occasionally that means wrecking what’s there and starting over.

But there’s a thin line between political support and having the people turn on you. As Harry Truman (and then Ronald Reagan) said, “It's a recession when your neighbor loses his job; it's a depression when you lose yours.” For now, Trump has the will of much of the people and (more importantly to pursue his agenda) Congress. Lose the people, lose the Congress.

And as Ben Carlson described in the post linked above, we have a historical record of the prior two times in American history that sweeping tariffs were implemented; one amplified the causes of the Great Depression (which we all learned about from the great conservative speech writer Ben Stein); the previous time was two decades after the Civil War, and inflation crippled the economy then, too.

But We Don’t Know What Happens Next

I’m reluctant to expect it will be different this time, but I’m also smart and experienced and humble enough to know that I have no idea what the outcome will be. Someone else used the analogy of a horse in a hospital. Nobody knows why the horse is there. The horse doesn’t know why it’s there. Just as with a horse walking down the halls of a hospital, the likelihood of a bad outcome seems very high, but the reality is, right at this moment, it’s sentiment driving the market, not any real economic impact that’s happened yet.

But that could change very soon, with global tariffs on most of the U.S. biggest trading partners above 40% set to begin hitting consumer and business balance sheets in real time.

We will get our first real look at how the business community is measuring the risk and probability of a protracted economic downturn this week. Delta Airlines (DAL) reports earnings on Wednesday, with used car giant CarMax (KMX) reporting on Thursday, and their outlooks will give us some more data. Friday, JPMorgan Chase (JPM) CEO Jamie Dimon will give us our first unvarnished prognostication. Maybe more importantly, we will learn what JPMorgan, along with mega-bank peers like Wells Fargo (WFC) and then early next week Bank of America (BAC) are doing to prepare for the economic impact when they report the loss provisions they are taking on their balance sheets. This may be the first pure signal we will get about the economic risk measured by those whose job is literally measuring risk.

This Will End…But it’s Not the End

I’m not optimistic about the outcome of Trump’s strategy. I was tempted to title this post “Trump’s Folly” but realized that was way too polarizing, and doesn’t serve anyone but maybe some egotistical hindsight vindication if I’m right.

But I want to be clear. I believe this will cause unnecessary harm to billions of people around the world just trying to take care of their families and give their kids a better chance at success than they had. It could put millions of Americans years behind on their financial and life goals. But I’m also not blowing up my process or making massive changes because of what my brain and guts think will happen now. I’m already prepared in the real world for uncertainty. I hope you are, too.

But! Even a bad outcome for this moment in time isn’t the end. It’s just part of the journey. Because — one more anecdote, the last one, I promise — as one of the smartest, best investors I know told me in the throes of the March 2020 market crash, this is what we train for.

If you’ve been listening to me and Jeff on our podcast, reading these occasional Random Words, and hopefully opening up more 10-Ks and proxy statements in recent years, then this is literally the moment you’ve been preparing for.

I don’t give a damn what your politics are. I just hope that you’ve spent your time preparing for this downturn, and you’re not too twisted up in why it’s happening that you forget what you’re trying to do: Protect money you’ll need in the near term, and grow your wealth for the long term.

Arnold’s Wisdom

One of my favorite sayings is “we don’t rise to the occasion; we sink to the level of our training.” I am pretty sure Arnold Schwarzenegger* said that in Commando, co-written by my friend Matthew Weisman (who also co-wrote Teen Wolf, but now I’m just name-dropping).

The point: Don’t throw all your hard work out the window. Double down on your process, goals and framework. And to quote Jeff (ugh) “don’t trade, learn.”

You can do it, even — especially — right now.

Jason

*I know it wasn’t Arnold. It was Danny Glover in Predator 2 which was not co-written by my friend Matthew Weisman.

April Livestream Link

Here’s the link for our Friday livestream: https://www.youtube.com/@investingunscripted

We will be talking about the markets, what we are doing, and answering your questions. Bring a stiff drink, good questions, your best insult, and your sense of humor.

See you online!

Jeff and Jason

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Jason’s Random Words: 3 steps to success in a down market

I’m a big reader. One of my favorite book series of all time is The Hitchhiker’s Guide to the Galaxy. In the story, the protagonist, a man named Arthur Dent, finds himself in strange, unpredictable, at times scary situations. But as he is also in possession of a copy of The Hitchhiker’s Guide, all he has to do is look at the cover of the book for an important reminder of where to start in these situations.

We all would love an Investor’s Edition of the Guide right now. After a good Friday (it came a couple weeks early this year…. I kid!) the S&P 500 is down around 8% from the high following a temporary dip into correction territory on Thursday. The tech-heavy indices have been down more than 10% for a few days and remain down that much still. The market is always forward-looking, and it largely does not like what it sees.

The thing is, the economy isn’t really in that bad of shape. Employment remains strong. Inflation isn’t as low as the Fed wants, but it’s not wrecking the economy. The housing market is still a mess without enough inventory, but there’s plenty of pent-up demand and homebuilders are trying to meet as much as they can. I could add more positives, and also point out a few concerning factors (including many of the things the Trump administration is doing that, wherever you stand on them long-term, there will be short-term pain if things continue apace) but the point is, it’s not terrible out there as our pal Lou Whiteman wrote yesterday.

Lou also had some solid suggestions for how to think and act in the current environment. So do I, in three simple steps.

Step 1: Don’t Panic

Seriously. You have to start here. Take a step back. Take a deep breath. Don’t rush your decisions. Us small-money, retail investors don’t have many advantages, any speed definitely is not one of them. Chances are, acting quickly is reacting to the market, not making meaningful decisions based around your financial needs and goals.

Step 2: Work your plan

You have financial goals. You know when those goals are. Act in the interest of reaching those goals. If they’re near-term (for me this is within a few years, your mileage may vary) consider if the volatility risk of stocks is too great and holding cash, CDs, etc., makes more sense (pro tip: Almost certainly yes). The further out those goals are, stock selloffs become something between benign and an opportunity.

The main thing is that by defining your goals and when they are, you can appropriately allocate capital to assets that are aligned with these goals and avoid wealth-destroying mistakes like selling stocks you won’t need to touch for many years just because the market is falling, or holding stocks that you should have already turned into cash right into the next market crash.

Step 3: Don’t try to get it perfect, but be ready to act when there’s opportunity

Peter Lynch is known for saying that more investor money has been lost waiting on the next crash than in all the crashes combined. His point is that the opportunity cost of waiting for a big crash is usually higher than the benefit of waiting. This is because the market goes up about three of every four days, and ¾ of years, too. When something good happens 75% of the time, waiting for the bad thing to give you a better opportunity just isn’t worth it.

But! A 10% market selloff isn’t as rare as the big crashes; we actually get one a little more than two our of every three years, and it’s worth taking advantage of them. They are meaningful enough that for me, a 10% selloff triggers one of the few rules I have: I have to buy some stocks when the S&P hits correction territory.

I actually chose to do some buying before that this week, adding to some of my favorite homebuilder stocks, which have fallen by more than one-third in the past several months, on Wednesday. I think there are plenty of other opportunities out there, too.

But I’m also not naive to the possibility that the stocks I just bought could continue to fall more, and stay down for an extended period of time. I didn’t make these investments looking for a quick buck. I don’t own them with money I’ll need in the next decade, much less the next few years. And I believe that when I do need to start turning them back into money, they’ll be worth considerably more than the dollars I invested.

Jason

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Random Words from our sponsor, Public.com

Listen up folks. Time could be running out to lock in a historic yield at Public.com. You can lock in a 6% or higher yield with a bond account. Here's the thing. The federal reserve just announced a big rate cut, and the plan is for more rate cuts this year and in 2025 as well. That's good news if you're looking to buy a home, but it might not be so good for the interest you earn on your cash.

So, if you want to lock in a 6% or higher yield with a diversified portfolio of high yield and investment grade bonds, you might want to act fast. The good news: It only takes a couple of minutes to sign up at Public.com. And once you lock in your yield, you can earn regular interest payments, even as rates decline. Lock in a 6% or higher yield with a bond account at Public.com/InvestingUnscripted, but hurry. Your yield is not locked in until you invest.

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Jason’s Random Words

Earnings season is starting to wind down, and broadly, most of the companies I own and follow did fine, a few did very well, and some didn’t do very good, and mostly — but not all — met expectations. We got some answers to a few questions, ended up with a few new questions (looking at you, The Trade Desk) that need to be answered, but mostly just added a little bit more incremental knowledge and understanding of the businesses we own and study.

And as always, we are looking forward. Riding the hamster wheel of “what will you do next?” It never ends, and either you love the process or you’ll make yourself miserable.

One of the things I do to make the process more bearable and enjoyable, and also as a way to remind myself that speed isn’t an edge that I or any retail investor will ever have, is put off taking a close look at the earnings reports of many companies I own until a few weeks after they report. The exceptions are the ones that I am really interested in, or for professional reasons need to look at quickly.

By making a point to open the filings weeks after they report, I’ve waited until everyone else has already reacted and traded on whatever they reported and projected, and generally after Wall Street’s finest have updated their estimates and price targets.

I literally want to be last to the party.

In many ways, this is incredibly freeing. If I’m not looking at earnings a few minutes after they come out, I can’t get caught up in trying to trade as soon as markets open, to get ahead of whatever momentum is going to do. I have stripped away any incentive to follow or chase a stock higher, buy a post-earnings dip, or otherwise move with velocity.

That’s not my edge. It’s not yours, either. We small-money retail investors have limited advantages, but they are ours entirely.

We know what our financial goals are. We know when we need to reach those goals. We don’t have investors whose expectations we have to meet every quarter. We don’t have a bonus we have to make the most of by some arbitrary date.

We know what our financial goals are. We know when we need to reach those goals.

So I invest in my own time, and in my own way. I use a framework that takes away any incentive to move quickly. But when I do decide to move, I act…well, I act after a couple more days.

So I’ll really do most of my earnings research and thinking in the weeks ahead. I encourage more of you to do the same thing. The good stocks will still be there waiting on you when you’re finished, and it’ll be easier to tell the good ones from the mediocre, and the worthwhile prices from the less-appealing when you remove the pressure to consume and act quickly. At least that’s my experience.

Jason

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March Livestream Link

Our First Friday livestream starts soon! Join us!

Here’s the link for our Friday livestream: https://www.youtube.com/@investingunscripted

See you online!

Jeff and Jason

Big Tech Has Spent Billions Acquiring AI Smart Home Startups

The pattern is clear: when innovative companies successfully integrate AI into everyday products, tech giants pay billions to acquire them.

Google paid $3.2B for Nest.
Amazon spent $1.2B on Ring.
Generac spent $770M on EcoBee.

Now, a new AI-powered smart home company is following their exact path to acquisition—but is still available to everyday investors at just $1.90 per share.

With proprietary technology that connects window coverings to all major AI ecosystems, this startup has achieved what big tech wants most: seamless AI integration into daily home life.

Over 10 patents, 200% year-over-year growth, and a forecast to 5x revenue this year — this company is moving fast to seize the smart home opportunity.

The acquisition pattern is predictable. The opportunity to get in before it happens is not.

INVEST BEFORE BIG TECH MAKES THEIR MOVE

_{Past performance is not indicative of future results. Email may contain forward-looking statements. See US Offering for details. Informational purposes only.}

March Livestream Link

Here’s the link for our Friday livestream: https://www.youtube.com/@investingunscripted

We are pretty sure this makes three months in a row we’ve managed to get our First Friday livestream on the actual first Friday of the month! That means it’s tomorrow, March 7 at 4pm ET. Join us!

Great job last month bringing some insults of Jason’s hair, people. This month’s assignment: insult Jeff’s musical talent. You can do it!

See you online!

Jeff and Jason