Episode 77: Biden, the markets and the Rule of 72’s

MAK: Hi, everybody.

DAD: Hey, welcome back with Money with Mak and G. G over there, you wake? Hi, welcome. We’re here and we’re going to talk about today. We’re going to go ahead and talk about the week ending 122 of 21. We want to go over the markets, a little bit about Biden. We want to talk a little bit about the rule of 72s and some things that we can do. Mak, you want to say something? Yay! What’s the word for today G man, what’s going on buddy?

GRANT: Getting back into the flow of school.

DAD: Because last week was a four day week, right? Yeah. And you had Martin Luther King day off and school treating you pretty well?

MAK: Yes. Happy MLK Day.

DAD: Hey, we already had the happy MLK Day. And it was awesome. And my throat, I’m doing a little throat coat tea. We’re kind of working through it. But Makenna, what’s your, what do you call it, word for the day hon?

MAK: My word for the day is I’m just happy that we actually like got to the point where we switched President like, we got here. We got to this day, we got to 2021. And I’m just rooming, I’m zooming.

DAD: Are you like fired up? G Man is about the change in the president. Because that’s  big news. There’s lots of stuff. They’re trying to impeach Trump. You want to hear something crazy? Sure. Trump is going to be done being president. But I heard that, if he gets impeached, he doesn’t get a security team for the next until he dies, because you know, they get security teams, because people still want to kill the old presidents. You know that right? Oh, they do? Yeah, crazy, huh? So he doesn’t get that, he doesn’t get his pension plan if he gets impeached. Why did they want to do that? Another country would say, we don’t like you, America, we’re going to kill one of your presidents. And it gets a little nuts. So yeah. So Biden came in and G, what do you think about Biden?

GRANT: I think he’s generally good, and he just wants to help the community. But we’ll see later on in his presidential run.

DAD: And from my perspective, you know, I look at a lot of taxes. Because I’m a CPA, we do a lot of taxes. And if taxes go up for certain people, then sometimes that slows down the economy. Because if people know, hey, you’re just going to tax me more than, why should I earn more? Why should I try harder? So it’s kind of a weird thing. But you like Biden, what Makenna was interesting for the inauguration this week?

MAK: We have the first female vice president in American history. Yay!

DAD: Now, why is that important to you?

MAK: It’s important so I can open up my mind to new opportunities.

DAD: So you look at what’s available to you now and you know that, it’s possible to get up there into the highest level of politics as a woman. Yes. And that’s pretty cool. Pretty exciting for you, huh? Yeah. And it’s exciting for live people too. And exciting for a lot of people. What about you, G? Did you look at the inauguration whatsoever? What did you see, was there anything fun about it?

GRANT: Yeah. We, me, Mom and Makenna, we all listened to this poem that somebody composed.

DAD: Now, what was it about? Because I didn’t actually hear it. What was it talking about?

GRANT: I don’t know. Just like it all came at once. And then about now, she was just an African American, and she was like, I can’t imagine that, I’m here composing for the President and other stuff, inspiring stuff.

DAD: That’s pretty cool. Makenna, how old was she? Was she 95, is that what it read?

MAK: She was actually 22, which makes her the youngest poet composing for the President.

DAD: Poet laureate. Remember it? Yes. And what did we look up about the poet laureate? Didn’t one that, like the Library of Congress, names these people in order to…

MAK: Her name? Okay. Her name is Amanda Gorman. So just FYI, if you want to look up this speech later, it’s really good.

DAD: And when you saw it, were you inspired? Did you go, wow, that was cool? Yes, so the inauguration was a big hit. And when we talk about finance, a lot of people watch the presidency, because different presidents have different policies. What does that, do you guys know what the policy is, it’s kind of like the things they want to do?

MAK: Yeah. Could you say it was like a checklist?

DAD: Yeah, I guess you could. It’s kind of like, if I asked you, what do you want to do with your life, it’s i want to do these things. It’s almost a little bit like your personal policy. And so some presidents like to focus on education, others want to focus on healthcare, others want to focus on this or that. And so Biden, do you remember if he’s a Democrat or Republican? Democrat. And generally Democrats like to help those more in need and Republicans like to help the businesses, which there’s an idea that that helps people. Does that make sense? Yes. Okay. So Grant, what was one of the things that we were talking about earlier? What was one of the things Biden wanted to do?

GRANT: He wants to sell food stamps. That’s where people get food for free.

DAD: Yeah. Why did he want to look at that, and what do you want?

GRANT: Increase it by 15%. So a lot of money.

DAD: Yeah, and why did he want to do that, there’s a reason for now?

GRANT: Because a lot of people are in quarantine, they don’t have food. So he wants people during COVID to have food.

DAD: Yeah, so people lost their business, lost their jobs, tough getting a new job. So he believes that, if we increase that financial support by about 15%, then that would be beneficial to helping out the economy. So what did we just talk about a few minutes ago, if we’re spending that money, where does that money come from?

MAK: That money comes from taxes or printing money, but we’re not going to go into that .

DAD: Because when we print money, what do we say, the supply goes up,  it remains the same or even goes down but when supply goes up, and demand doesn’t go with it…

GRANT: Yeah, it’s if there were a million switches, and then it would be really cheap because there’s so many options. Okay. Well, there are at least a million switches.

DAD: So the money would be worth less. That means if you have $100 today and it’s worth less, you may be able to buy $90 previously, so it’s kind of weird.

GRANT: Sorry if i confused anyone.

DAD: That’s okay. Hey, you guys are here in order to get your points and views across and that’s some pretty cool stuff. So Biden is in there, he’s a Democrat. What are the markets like, going way down thinking this is a bad idea for Biden, because he is a big part of what the stock market does. So what happened in the markets last week Makenna, like in the Dow?

GRANT: Actually we did pretty good this week besides Bitcoin, but we’ll get into that.

DAD: Yeah. But the Dow went up by a little bit. And you know, every week we talked about the Dow and I ask you the same thing. So what is the Dow, it’s a combination and it’s a gauge of how many companies? It’s the big 30 companies. Yeah. Grant gave me one on the big 30. Apple. Mak? Verizon. Give me another one G. McDonalds. Mak? Disney. Grant, how about you? Walmart. What about the shoes Mak? Nike. Yeah, Grant is a little coked up on his Coca-Cola. That’s not the right way to say it but it worked up and they got a little caffeine. But those are the big 30 companies, and Makenna you know, there is the weight, which company has the most weight? Remember, you love saying it wrong? Oh, no, sorry. Not home key pod. Even though they’re on the Dow, they don’t represent the biggest weight. Who represents the biggest weight? UnitedHealth Group. Yes. UnitedHealth Group Insurance Company and I’m sure do a lot of other things because I’m not as familiar with them. But that is the DOW, which went up 0.6 year to date. It’s a little over 1%. So pretty solid showing so far. S&P 500 Makenna I’m going to ask you this, please get this right. How many companies are in that index? The S&P. 500 Got her but she did answer that. She hesitated but she is so much better. And it’s so funny because if you look at the S&P, it went up a little over a percent and year to date, G, how far is the S&P?

GRANT: S&P went up by 1.2%.

DAD: No. Well 2.3% said year to date. So looking at all those companies, and all those industries up about 2.3%, which is almost double the DOW, and then what happened with the NASDAQ, for the week Mak, big week for the NASDAQ.

MAK: For the week, they did pretty good.

DAD: Really. Remember we’re usually at point percentages.

MAK: And now they went up 4.2% y’all!

DAD: So the NASDAQ is crushing it. And year to day. G it’s up 5.1%. So it’s like the Dow’s at 1.3% S&Ps almost doubled, NASDAQ’s almost doubled that. Wow! And a little bit over double that for the year, because Bitcoin is slowing down. We have Bitcoin, which for the week was down what G?

GRANT: For Bitcoin? Yeah. It went down by 12.2%.

DAD: But it’s still up almost 14% for the year.

GRANT: That big boost at the beginning.

DAD: Yeah, that’s right. And if you guys think about day trading, which is something pretty risky. Makenna, you get a little while out of this, but Kyle and I got together, we put a podcast up on the Educounting YouTube channel, which you can look at, pretty good stuff, I’d say. But what did we go up last week, Mak?

MAK: Last week went up a whopping 17.2%, that is a ton!

DAD: And for the year to day? 43.2%. That is some real stuff. So it’s worth it. What do you think, it’s worth listening to Kyle a little bit, because he’s 43%, he’s doing a lot of stuff. And then Apple, come on now, what happened with Apple?

MAK: It finally went up. Finally!

DAD: And for the week, what happened?

MAK: It went up 10.6%.

DAD: I think we’re going to have to dig into that when maybe next week, but year to date G man? You were losing money last week.

GRANT: Yeah, 5.5%.

DAD: Yeah, you made what?

GRANT: Take the L, Dad.

DAD: Loser, got it. Well, I’m on the day trading, some right now kicking your bottoms. And we need to figure out what you guys need to do going forward. Day trading? Yeah, I don’t know. That’s a pretty risky one, and you shouldn’t listen to the podcast online. We didn’t release it to the project.

GRANT: Wait for Dad to fall down to his doom.

DAD: I don’t know. We’ve got some good momentum going so we’re way ahead of you. But, we were talking upstairs about what a Dad really would want you to learn. And I am sitting there trying to impress upon you that investing is really important, right? Yes. And we want to learn about ways to save your money, but how you invest, and what it can mean, is very important. Makenna, I’m telling you upstairs, the most important philosophy or theory that Einstein said is the most powerful force in the universe? Starts with the C.

MAK: Compound interest.

DAD: That’s right. Compound Interest, which is the whole idea of what goes on top of what? Money earned like into…

MAK: Money, Yeah. Interest earns money, which earns money.

DAD: So the interest, you earn money on the interest that you earn, which is on top of that, right? Hashtag free money, baby! So what’s the rule that we just went over, what’s it called?

MAK: The rule of 72.

DAD: Is that special number Makadoo?

MAK: Yes, it’s a very special number.

DAD: Do you remember how the calculation works?

MAK: 72 divided by your interest income, I mean, interest rate. Will tell you how long it takes for your money to double.

DAD: Exactly. So let’s do a quick one. 72 divided by an interest rate. Now the interest rate isn’t like on a loan, but if you earn 10% in the stock market, 72 divided by 10 equals, how many years to double? Right. 72 divided by 10 is 7.2 years. All right. So I was telling you about one of my first investments, how old was I, Mak? 22. Don’t say this too loud but Grant, how old am I now? 52. Yes. When the dinosaurs roamed here. Ancient man. I made my first investment, when I was 22. How long has it been since then?

MAK: That’d be 30 years. I’m not even half that.

DAD: I think they know that. But if it was 30 years, and I’m earning about 12% a year, so on that investment, 72 divided by what, the 12% equals six. So every six years my money, $2,000 would double. And so there’s a 30 year difference. Right. So if it doubles every six years, how many times it’ll double, Mak? It will double five times now. Wow. Everybody out there if you’re thinking. Let’s do it with our fingers. Mak, the $2000 went to $4000. That’s the first double. Then from $4,000, it doubled to $8,000. Then Mak, $8,000 to $16,000. Grant? $32,000. $16,000 to $32,000, doubled. And then the last one, the fifth one $32000 to, $64,000 bucks. So, as a parent, I want to impress that on my kids. That Grant, is it better? Now, to put it into perspective, I think if you work full time at MacDonald’s, making hamburgers and such, you make about $20,000 a year. If you make that much, I just made that investment, how much I make? I invested $2,000 and now I have $64,000. How much did I make between those two amounts? 64 minus two is $62,000. So if you’re working at MacDonald’s, you’re earning about $20 grand, and how many years do you have to work to make $62,000 bucks? Yeah, over three years. So is it easier for me to go sleep in my bed and let my money work for me, or is it easier for me to go out and kind of work on a job?

GRANT: Sit in bed and get free money kids!

DAD: I got free money. But investing is a big thing. And what is that rule called? I want everybody to know this. For goodness sake, please learn this rule. What is the rule called, the rule of…

GRANT: 72. I was off track. But that doesn’t matter.

DAD: But it is the rule of 72s. And math is a very important thing to learn. And that’s really what I wanted to come across today, is to understand the rule of 72s, to keep our eye on the market for right now. Because those percentage rates that we look percent, how much do you earn per 100, that’s what cent means. And so it’s very important to understand the law, the law or the rule of 72s. So we’re going to do an absolutely short one this week. We’re not going to go into a whole bunch of other stuff. We’re going to come back next week and hopefully do another one. And we’re just really glad you guys are here. What did we learn last week, do you remember? Market cap. And what was the one thing that Dad was kicking himself all week, when we said 900,000 shares, it’s really 900 million shares? And I need to know better than that for Tesla and what’s been happening to Tesla, but we’re going to do some additional releases. We have the limited series on successful people coming out. If you haven’t listened to that Jacobi Petru’s very interesting story. Your cousin Jacobi and so that one’s coming out. Then we got a handful of other ones that should be really interesting. So rule of 72s, thanks for being here. Mak and G, suys want to say goodbye? Bye and we’ll see you next week. Bye!