Episode Transcript
Speaker 1 00:00:05 This is annuity straight talk since 2008. Your host Brian Anderson has helped clients nationwide navigate the complex market for annuities with Brian's assistance. Hundreds of clients have achieved a profitable and secure retirement. I would know because Brian has answered many of my questions concerning annuities and retirement planning so that you can benefit as well. Let's get started. Here's Brian.
Speaker 2 00:00:49 Hello and welcome everyone to the annuity straight talk podcast, episode number 55. My name is Brian Anderson. Uh, lovely, late August day. You guys will see this in September, but without fail every single year. This is one of the trends that I can point to as the most consistent weather event in Montana is sometime around the end of August, between the 20th, 25th, sixth, seventh, something like that. Summer breaks it's back, and we get a little bit of rain and a few cool days, and it feels really good. This is the heaviest clothing I've worn in about two months, but we got beautiful weather out there. It's nice. And I'm gonna do this and then I'm gonna get out and, uh, jump on a mule and ride into the back country for a few days. So going to try to enjoy this weather while I can and get out.
Speaker 2 00:01:33 So I'm gonna talk to you today about something I thought was I would try to make it as entertaining as possible. It's supposed to be fun. And really the idea. This came to me probably back in March, when I went to Las Vegas with one of my clients, I went with Patrick. He was just here for a quick visit this week and it reminded me of it. I thought about doing the podcast with him, but I didn't get it written and I didn't wanna put him on the spot. And it was kind of interesting to do it, a script with two people, but we could have bantered back and forth. And so I thought, well, you know what? This is a good time to just do it because he was here. He was my peanut gallery for the last episode. So when he showed up, I said, I gotta record this podcast.
Speaker 2 00:02:13 You can sit there and watch <laugh> and he did it. So Vegas odds, this stock market and annuities, I don't have a visual aid for you. And there's a lot of different things I could do. So I've got some time to continue working on this newsletter. I've got a little bit of it written out, but I don't know. I'm just gonna go for it. So right before, as I was getting my insurance license, I went to a financial conference with the firm that I, uh, ended up working with and it was in Las Vegas. And I remember it was my first time being in Vegas and I walked into this hotel casino and there was a sign set outside the casino that said, this casino pays out 97% of the time. I was like, wow, that's really good. We're gonna make a lot of money doing this.
Speaker 2 00:02:58 Right. And I didn't have a whole lot of money to, to spend on it, but it took me a while to really figure out what that meant. How could they say 97%? That sounds like awfully good deal. So it took a while. And that trip there, you know, after playing a little blackjack and whatnot, it was my first lesson in cutting money in half. And so for that reason, a lot of people don't do it. And that's again, why it's one of the thi those things you may or may not have control over. Talk about how that relates to the stock market. I guess you guys can, I guess get the idea, but thinking about those, you know, the Oz 97%, wow. I'm just gonna be rich if I figure out how to do this, you know, and I'd been to statistics class recently. So I, I kind of started to figure out that maybe it's not, it's put up there for the people that just say, wow, like I did.
Speaker 2 00:03:45 Okay. And so, so many things relate to stock market and the casino and all that stuff, but almost nothing in life is guaranteed. As we all know, annuities are guaranteed, but, uh, we'll get to that later. There's a big difference between making money and preserving money. Both of these things are at play. When you sit down in a poker machine or a slot machine or a blackjack table, some people like to gamble and others just like to play. I just like to play the machines and the reason I do, and I like to play blackjack. The reason I do is because I calculate odds all times my mind disconnects from things. It's a way for me to, to mellow out. I play video poker on a daily basis. It's a free site. It's not for money. It's just because I like to see the cards ball.
Speaker 2 00:04:28 I like to calculate odds of getting certain hands. It's a way for me to literally just disconnect completely. It's not as good as going into the mountains, but on a daily basis at the end of the day, it's a good thing to do, run through a few games. So video poker.com, shout out to those guys. I play it because I think it's a fun game. It doesn't cost. It's a membership. I pay the annual fee and all that stuff, but I'm not necessarily gambling because I like to play more than gamble. And gambling is a big thing in Montana. If you've ever been here, everybody notices that when they see it, like almost every gas station, every restaurant bar, they all have a little casino. They've all got video poker and keynote machine. So it's fairly interesting. You can't play until you're 18. But as soon as I was 18, I kind of like got in the habit of like, Hey, I'll throw five bucks in the machine and see what happens.
Speaker 2 00:05:16 A lot of funny little stories about that. Couple of 'em being that I actually got lucky and, and won a few hundred bucks one time, and then you gotta be careful, right? So you hit it big and then you gotta preserve your money. When I was doing it, I didn't really pay much attention to gains and losses and all that stuff, because it was only five bucks. I didn't have a ton of money, but yeah, five bucks, right. It wasn't a big deal. And I never really figured out, Hey, what's the return on this? And what are my odds? What's my percentage payout. But you know, when a, a casino in Vegas says 97%, they know exactly what they're talking about. They don't just put it out there. Anything that advertise is gonna be fairly accurate if not spot on. So you gotta know what it means means, and that it, it was so playing a few poker machines in Montana before I went to Vegas, I was already kind of clued into, you know, I know there's not, obviously the machines are not gonna be there unless they make money.
Speaker 2 00:06:08 So, but now I figured out in the past, I figured out exactly how to explain it. And I hope everybody kind of gets it. And it relates to the stock market specifically because what you see on TV and what you hear reported as the yield is almost never going to be your yield. So you need to understand and put your expectations in line with what, with what your actual performance has been over time. So the 97% payout rate means nothing more than for every dollar. You bet you get 97 cents on average in return. So why else would they be able to afford such a fantastic show? Every extra dollar now 3 cents doesn't sound like a lot, but think about it. If you've ever walked through one of those casinos and, or maybe throw a five or a 10 or a 20 into a machine and gone for the big prize, you know, there's the car rotating on the wheel and a million dollar jackpot and ah, it's worth 20 bucks, man.
Speaker 2 00:07:08 Those casinos know it's like, that's their 20. They got it. Right. Cause most people just put it in. So if you think about like for one, you know, $1, nobody puts in $1, some people I guess maybe do, but every put Barry puts in 20 or 30 or something. I talk to a lot of people, oh, I have a hundred bucks. And when that's gone, I'm done and all that stuff. Yeah. So they're, they're making all that money. Here's an example of how I do it. Like I wanna put a hundred bucks into a poker machine and I'm gonna bet $5 per hand. So I hit the play button and my balance is 95. My five bucks is gone. Now if I hold some cards and then I draw and hit the smallest hand, I get my $5 back that is considered a 100% payout.
Speaker 2 00:07:55 I bet five I, one, five, even a hundred percent, but I didn't make any money and I don't play. I didn't go there to, I have. Okay. So if I bet five and win 10, that's a 200% payout, but I didn't put a hundred bucks in the machine to just win $5 and walk away. That's why they make money because you keep playing until it's gone. Only until you take the ticket in. Do you get it? It's the same thing as a stock market. Like it's not yours until you actually cash it in, have it in your hand, earn in your bank account. Right. That's really hard. So you play back and forth. Now there's some, sometimes, like I said, when I was a kid, I, you know, I got lucky on five bucks and won a few hundred bucks and it was like, whoa.
Speaker 2 00:08:38 I mean, cuz that was, that was a windfall. I think I was 21 years old, 1, 250 bucks. It's like, holy cow. That's amazing. So yeah, no one puts a hundred bucks into machine bets, $5 loses it and then quits, right? You're gonna keep going. You lose the first one. You're gonna, oh, that's another $5. You got 20 bets of $5. And I don't know about you, but I'm gonna try to win some money when I do it. But all of those things average out in the, the casino knows you ever think about, that's why they got such a big, uh, cashier station and the people are really happy to count you out the money when you win, because they know you're gonna turn around and go put it back in the machine. Or the average person will maybe not you, but everybody does. And that's the same thing as watching guys in the stock market, cuz they're like, oh yeah, cool.
Speaker 2 00:09:26 Yeah, come invest, come invest. You realize that the advertisements in the funding of all, you know, financial shows are major financial institutions. They absolutely want to play with your money. They absolutely want you to put it in there. The thing about gamblers, if you get like a really good a gambler, there's some people that do it for a living. They know they have to draw down a long ways to make money. I'm a good enough gambler and I've done it enough that I know I put my a hundred bucks in. I may well have to spend the whole thing. Okay. I did that in Vegas, in March on a hundred dollars bill and I got down to 15 bucks, it was up down and I was losing all the money. Bam. I hit a $2,000 hand. It was amazing. It was awesome. Maybe I'll put the picture of that up there.
Speaker 2 00:10:15 Who knows? It's the same thing with professional traders. I've got one. I do have one client who is worked. It trades in the commodities markets because it was uh, related to his job and he is comfortable taking major draw downs like 25, 30, 40% of his investment account. He knows will lose because if he can do that, he's gonna be able to hit the right point in time where he'll double that and make money over time. This is what professional traders and gamblers are. Not really a whole lot different. They know where to take losses. They can rationalize those losses and they understand like I know enough about gambling, that the more I push that button, the better chance I have a hitting that $2,000 pot again, I just have to do it before I spend 2000 bucks. So a guy that plays, you know, guys claim, they play video poker for a living.
Speaker 2 00:11:07 They'll spend $1,900 to win that 2000. It's a hundred bucks. And I just don't, I would never sit there and play for my entire life. 12 hours a day. That sounds awful. So anyhow. So I hope everybody understands. Like when you go, like the casual per visitor to Vegas goes in, you throw money into a machine, you might as well kiss it goodbye. Right? It's not quite the same as the stock market, but you're being manipulated in a very similar fashion. And your co-mingling your funds with people who are experts and professionals in the business. I surprised that, you know, everybody, I don't like annuities. Okay. Why? Well, I don't tie my money up. Uh, all right. Where it's in an IRA and you're 65. How many times have you pulled money outta your IRA or you have, you've had it for 30 years or so?
Speaker 2 00:12:02 Well, I've never touched it. Do you need, need any money? No, I don't even really need money. I said, well, is it, has it not been locked up for 35 years or you haven't touched it? And it's always, it's an interesting mindset to me. It's like your money is it's already locked up. It's locked up because there's a tax hit for moving it for taking it out for spending it. Now there's an issue with transferring it wherever you want to go. But if you sit in the same mutual funds for 35 years, your every bit is locked up as anything else. And you've got essentially you're playing a game that you don't, most people don't really understand and you're letting professionals are dictating the outcome of that. Very, very similar to what happens in a random slot machine in Las Vegas. So, uh, one interesting story.
Speaker 2 00:12:45 I had a buddy of mine who we used to, uh, go watch college football on Saturdays, maybe NFL on Sundays. We'd go to, you know, go to a bar, have a burger and you know, watch the games and you know, and withdraw some money into the machine, you know, kinda casual playing. And he did it a whole lot more than I did and what his, this is what traders do. And this is what gamblers do, stock market traders and gamblers. So if he put a $20 bill into the machine now in Montana, you can't bet as much as you can in Vegas. So the pots are smaller. The bets are smaller. Money lasts a little bit longer if you're just in it to play. And I, I like to play 'em I understand it's probably a bad habit, but Hey, sorry. I like to do it.
Speaker 2 00:13:25 So if he put a $20 bill in and he double his money to $40, he would cash it out of the machine and put that little slip in his pocket. And then he'd put a 20 in that machine or in a different machine. And every time he got, if he turned 20 into 40 or 60 or 80, he'd cash the machine out, put the slip in his pocket. So he's preserving his gains that way he knew he was always walk out. He wouldn't ever turn 'em in and get the cash for him until we left for the day. So at the end of the day, he might have three, 400 bucks worth of slips in his pocket. And sure he spent two or 300, maybe spent 500 doing it. I never went that big, but he might have done it. But still that was his annuity.
Speaker 2 00:14:10 Right? I know I've always got this. I'm taking it out. I got it. Now I could have given this lesson two weeks ago before the market dropped into their 4% and it's, I don't have it up right now, but it's down today when I'm recording this, who knows what's gonna happen? I know a lot of people got comfortable as it rose back up, right? Hey, you hit the big hand on the machine. It's going, ah, hands off, you gotta cash out. At some point in time, you gotta put your annuity in your pocket. So my friend Allen, who did that, he was really smart because no matter what, you know, there were a couple times I went into, into one of those places. I had a hundred bucks and I played to the very end. I lost a hundred dollars. It's not a very good feeling, but I didn't like it very much, but there were tons of times when I could have said, oh, I'll take this 40 out or that 40 out then instead of walking out with a out a hundred, I might have 60.
Speaker 2 00:14:57 So is that not a risk mitigation tactic? That sounds a lot like what you should be doing in retirement. And you know, in the stock market, I know a lot of people and I'm not saying I cuz obviously most of you do have save money. Maybe a lot of you haven't used annuities, but it's very similar. You plan against the pros and you look at the people that make it work. And you got a commodities trader, a professional poker player and an equities trader they're honestly doing some pretty similar things. So, and some people say, ah, the, I would never put money into one of those machines in Vegas. I just go for the shows or I don't even go at all, but no different. If you're hanging money out there in the stock market, now you're not gonna lose it all. But you will take large draw downs.
Speaker 2 00:15:40 The commodity trader knows that he knows he's gotta take draw downs. The poker player knows I gotta go in the hole to be around. I gotta be sitting at the table when that thing pays off, they know that equity traders know that it's the same thing. What game do you wanna play? Do you wanna play the game where, you know, you always got something safe on the side or do you want to play the game and just have it all at the whim of someone else who knows what they're doing and whether you like it or not. That is how it works. So again, I, I think it's kind of as close an analogy as I can possibly make to what people are doing otherwise. Now I, you know, you look at like at, at gambling. So I went to Vegas with Patrick. We played a lot of blackjack.
Speaker 2 00:16:24 It was coffee in the morning at 6:00 AM black. We were in bed pretty early. And then we watched sports at night cuz it was right before the NCAA tournament. And I thought it was really cool. Cuz the MGM sports book, you can go in there and they've got 90 screens or whatever. And you can watch every sporting event going on anywhere in the world. I mean they've got table tennis to rugby, Australian rules football, right? And you play black like blackjack is like the easiest game to play. And it's the easiest game to win if you play absolutely perfect blackjack, meaning you bet at the right time, you call for a card at the right time. You hold at the right time. You've got uh, it's still, what did he tell me? The casino has 1% odds, right? So that's you put a dollar in for every dollar you get 99 cents.
Speaker 2 00:17:16 So that's the closest to, you know, a neutral playing field between you and the casino. They've got 1%, you go to two, three, 4%, some games and they're different. So if the casino says we average 97%, then you've got some games that are only a 90% payout, some games that are in 99 and it all kind of averages out. So you also have to pick the right game. It's kind of like picking the right stocks and doing it the right way equities market. If you're trading future or if you're trading options, you're probably gonna get your, they're gonna eat your lunch. But if you're just buying index funds and you're probably gonna move it along with the average market, the index funds are probably going to have a lot smoother ride over time. And it was kind of interesting over the like earlier this year, this is why I thought of it is that the, I remember before I went to Vegas, there was something and, and you guys have probably seen this on Bloomberg.
Speaker 2 00:18:08 I looked at it and it said, oh, there's a 66% of 66% chance of a recession. And then it went to 70%, 80%. And then it's down down to 40%. It's like, what do those percentages mean? What are the percentage chance? I don't quite understand that. I think it's a lot of speculation, but if there's a 40 or 50% chance of recession in the stock market, uh, that's kind of like sitting there winning the big hand on the poker machine, knowing once you hit it, you know how much longer it's gonna take till you hit it again, nothing but draw downs. So that's kind of one of those things where you like all these numbers thrown around and I thought, Hey Vegas, odd stock market and annuities, annuities are what you do. Those are gains. You take off, you protect them and throwing your money into a poker machine has a lot of similarities to being in the stock market.
Speaker 2 00:18:59 So anyway, I don't wanna Blab on too long, but I hope you guys kind of got the idea. I would love to hear your stores. If you've ever been to Vegas, Patrick thinks that I should do a client appreciation trip in Las Vegas next spring. It'd be kind of fun. Anybody hears this and they want to think about it. That'd be great. We'll tell you. Yeah, we'll probably be playing blackjack in the morning. You can do whatever you want. But I thought about maybe hosting a couple of dinners, reach out and tell me if you think that's a great idea. If you'd be willing to go, it'd be kind of fun for a bunch of people to you guys, to some of you guys to meet each other. And we'll see if we get any interest in it. And I told <laugh> it's so bad.
Speaker 2 00:19:30 I said, what if you're the only one that shows up? <laugh> he said, he's like, well then we'll have fun playing blackjack. Okay. Anyway. So thank you again for joining me in episode 55, Vegas OS this stock market, an annuities. My name is Brian Anderson. Appreciate you guys sticking with me and uh, hope you get something out of this every week. Uh, subscribe to YouTube or your favorite podcast platform to be notified. When the next episode is released, you can call me at (800) 438-5121. The day you see this on from the email is gonna be the beginning of Bo hunting season in Montana. You guys know I will be gone. I'll have other ones teed up and ready next week. So don't you worry about it? I will, uh, seemingly be here. Forgive me if my calls take a little bit longer to return. So thank you again. You guys all have a good week and a great rest of your day and I will talk to you next time. Okay. Bye.
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