Dollar Cost Averaging Is a Lie | 407

Hello, my fellow Ripplers! This is Chris Miles. Your Cash Flow Expert and Anti-Financial Advisor. Hey guys! Welcome you out for a wonderful show. A show that’s for you and about you. Those of you that work so hard for your money and you’re ready for your money to start working harder for you. Now! You want that freedom. That cash flow. That prosperity. Today! Not a bazillion years from now, but right now. So you can have that life that you love because you work because you want to. Not because you have to. Be with those you love. Doing whatever the heck you want. But see guys, you want more than just your own comfort convenience, because as Ripplers you want to create a ripple effect in the lives of others, because as you prosper, you can help others do the same. You can show up stronger, more confident and relaxed. And you have the resources and the means to bless more lives.

And guys, that’s what I’m here to do. And guys, it’s not just about showing you how to make more money, right? That giving you money does not solve your problems, but showing you how to prosper, how to understand those principles of prosperity. That is a ripple effect I’m trying to create for you guys. And I appreciate you guys being a part of this movement, creating a ripple effect in your lives, which allows me to create a ripple effect through you too. And we just keep making this world a better place.

Here is a reminder. Check out our website, MoneyRipples.com. There’s blogs on there. It’s got videos and we’ve got even, you know, our Beyond Rice & Beans e-book. You can download for free. So check that out.

So today guys, I want to just express some gratitude and teach a very important concept with everything going on. One, I appreciate those of you have been reaching out to me. Especially because just almost every time you guys reach out, it’s someone I can actually help. And this is exactly why I kind of came out of retirement again. Right? This is why I never fully retire because you guys give me meaning you guys give me this ability to keep doing more. And yeah, I love doing the infinite banking stuff with you guys too. Like that’s amazing. And I love that I can bring something unique and powerful there that even other infinite makers aren’t doing. But on top of that, when I get some of you guys that say, Hey, I think we’re a perfect fit for you right now to help take our money or do something with the assets we have and make something of it to create passive income. And man, like you guys have been reaching out almost every time.

It’s like, yeah, I can serve you and make a massive impact in your life. And it’s awesome! So I appreciate you guys that have been reaching out. As a reminder, if you think you’re in that position where you say, Hey, I’ve got at least a hundred thousand sitting around, or maybe I got a ton of equity in this house. Or maybe if you got a lot of depts. And you say, I’ve got some resource here, but I’m not sure how to make this all work. Shoot me an email. Chris@MoneyRipples.com and let’s check it out. See if there’s something you can do in your situation.

But today I want to get into Concept of Dollar Cost Averaging, right? And this is going to be heralded as, dollar crisis energy is going to be already been heralded as the hero for investing, right? I heard this months ago and I’ve even brought it up again in another podcast episode that we did. About, you know, how a dollar cost averaging is a lie. And I want to go into that and even just emphasize it a little bit deeper because the whole concept in cost dollar cost averaging is, they try to play off the whole buy low sell high. Which by the way, that is a true principle. Like you do want to buy low, sell high, or I shouldn’t even say that’s true principle. That’s more of a strategy than a principle. But overall it does work, right? You do want to buy something at low. And of course you’re going to sell it, sell it at a higher price. Right? But here’s the thing is that when they tell them a dollar cost, averaging, they say, Hey, the market is going down by more.

Here’s the flaw. When the market’s going up, what are they telling you? Buy more. Now this is never, Hey, you know what, right now the market’s going up. Don’t buy anything. Right? That’s the fundamental problem is that this is a sales tactic. This sales tactic has been used for you to basically get into the largest Ponzi scheme in the world, which is also known as the stock market. Right? And why do I say it’s a Ponzi scheme? Because people say, well, come on there’s assets. First off, you really don’t have any assets. Yeah. You have shares of a company that already went public. That already made their money off of selling it off. Right? They keep their own shares that just right off of your off, you know, basically they, they they can increase in value too, based on investors and what they’re doing.

But essentially you’re kind of making more money because more people throwing money into it. Which is also a Ponzi scheme does. People throw money in, right? And you basically get paid from investors money. That’s one of the common traits of a Ponzi scheme is that you’re not making money because the assets paying you, you’re making money because people are throwing money into it. Guess why the stocks go up? Not necessarily because the company’s anymore valuable. Because people are throwing money in. Right? Another problem is that, you know, do you really have an asset? The truth is no. I mean, even though you might say, Hey, I got this piece of paper. It says, I have something. You really don’t have squat. How you really aren’t a very, you’re not as significant shareholder in the first place. You think you’re a little bit of, money’s going to make a difference in that company?

Not at all. You’re just gambling with money. You are purely a gambler when you have your money in the stock market. And so I know that’s the common thing. And I know it’s a sacred cow for a lot of people, but the truth is the stock market is not the place to be. And dollar cost averaging is actually the very concept to also prove that. Hey, here’s, let me show you now, those either watching this video, you’ll want to watch this right? If you get concepts, you know, you can create images in your mind, this will work. But I have this sheet and I showed this before. In another video. This sheet is the sheet I showed to my clients back in my traditional financial advisor days. Now this was a very useful sheet, especially in Y2K, which is when I came in, right?

Because the market was tanking. Especially 2002. That was the year I came in and that was the biggest losing market. And so we would show people, listen, when the market’s going down, you want to buy more. You don’t want to stop buying and jump out of the stocks. You want to buy more of this. And so I show this example. So this one, the first there’s three different graphs. The first one shows you putting in $200 a month. This shows you just what kind of demographic I was dealing with. Back in those days, you’re just throwing in $200 a month and their stock price started at $10, right? Or the mutual fund price start at $10 a share. So at $10 a share, you bought 20 shares because 200 divided by 10 20 shares, right? The goal of this concept is to try and buy as many shares as possible.

And then the, hopefully the price goes up right? Now, the next month you buy it at $12 a share, basically over the course of six months, he goes from 10 to $20. You bought $2 increments per share along the way. In the end, so it’s $200 a month. It went from 10 to 12 to 14, to 16, to 18 to 20. Over the six months you bought 85 shares. Now 85 times $20 a share because it jumped, it doubled in price in six months puts you at 1700 bucks. Now here’s the concept that I show people and say, look, now if the market was at $10 a share, but then it dropped to $8 the next month, and you’re still putting in 200 bucks a month. Then down to five. Then it’s set at five for another month. Then went back up to eight. And they only went back up to 10, only broke even.

Now, after doing all of that, you ended up buying 170 shares. You bought double the amount of shares of the one that was going up in price. Why? Because you bought it at a discount, right? Here’s the thing. If the value was 1700 bucks, same exact value as the one that doubled in price. So even though the price stayed the same overall, you still made as much money as if it had doubled. Right? In an upward trending market. The last one, the last one of course is the most impressive one I’d show people. And this was a huge seller during Y2K. The last one shows that it started at $10 a share, right? You bought $200 a month or $200 a month. You put $200 to $10 share you buy 20 shares. The next month went down to eight. So now you’re buying about 24 shares or 25 shares.

Then it went down to $5. You’re like, whew, I just bought now 40 shares. And then it went down to $1 for two months in a row. So basically went down 90%. So you’re buying a $1 a share. That means you buy 200 shares in one month, 200 shares again the next month. And then it only recovered up to $4, which means you still bought 50 shares. So in total now instead of 85 or 170 shares, you bought 535 shares. Now time’s up by four bucks. You have 2,140, which is over 400 bucks more than the other two examples. And again, like, it’s easier to see this on the video. If you’re visual, the point is you bought at a discount, right? That’s the thing. Here’s the problem. Here is the big problem. Because again, if you’re going to teach a concept, make sure it works.

Make sure that you’re going to actually question what you’re teaching here. Because what happens to stock market overall? Which of these three graphs is the stock market over time? Generally speaking right now, it goes up and down all over the place. Generally speaking, the market goes up over time. This is like graph number one. Sure. Doubles in price. But the truth is over time, you’re really just buying on an up market. Meaning it gets more and more expensive all the time. You are not buying low. You just keep buying higher and higher. So your money actually buys less and less over time. In the other example. Yeah, sure. It goes down and comes up. Now this might look like the last four months, right? If you go from February to now, June, now these four months, it’s done almost exactly this. Like the markets now come back up to where it wasn’t about late February as of right now.

Right? So people are getting really excited. They said, see, Chris dollar cost averaging works. I was able to buy it when it got down cheap. When it went down like 30%, you know, when the market went down 30, almost 35%, the low, right. So I bought on sale. So look what happened. It would have been just like the market went up, but no, I’ve actually bought some for cheap. That’s true. But here’s the thing, guys. The more likely scenario at least you’re looking in the next few years is actually looking closer to graph number three, when the market keeps going down. Sure. Short term, we see this little bounce going up, but guys, just the other day they announced. They announced that the, that we’re in a recession. Like it’s official. We are in a recession. Why did the market go right back up to where it was?

Doesn’t that seem fishy to you? Why is it that, you know, we’ve had massive unemployment, right? We have, so think of February. February, we just heard about corona virus being out there. Like it was starting to show up a little bit in New York state. But for the most part, it was, there was a Chinese, remember people were calling it the Chinese virus, right? And then people were saying, that’s rude! You shouldn’t call it Chinese. Like it’s not a Chinese virus. Okay. Whatever! It was a virus that we heard, first heard about starting in China. Right? So in February, just four months ago, this was hardly even a topic. It was, it was just like news of something out there. The market was about where it is now. It was even a little bit higher than it is now barely higher. Right? But now we’re in a place where there’s massive unemployment. People aren’t quite going back to work.

Like we had hoped. Now people are starting to go back to work, but there’s a lot of people not. Or worse yet. What they didn’t put an emphasis on reporting is that, wages didn’t go up over the last year. Wages actually went down 0.1%. So even though people haven’t been hired back, they’re not getting hired back, making more money. And over time you need that to happen. Or we’re in big trouble because if wages go down, that’s a big issue. So if we’re not seeing wages go up and in fact, even they start to go down, sure. You might have a job. If you’re not making enough to make ends meet, you start cutting back everything. And that affects all the other companies too. And they all make less money as well. Again, whatever stops money from exchanging is what’s happening. Now, the government’s trying to artificially boost it up by throwing money at you and at companies and everything else, keep people afloat. Which, cool!

I see that short term making a difference. You know that they’re trying to just like a plane that’s crashing. They’re trying to slow the crash down by saying, Hey, let’s put a little parachute on this thing as it’s coming to the ground, you know, maybe it won’t crash as hard. But it doesn’t stop the fact that, for the most part, these are still monies that have to be paid back that are going to cut into future profits. So all this is happening. We’re actually in an official recession, but still the market’s bounced right back up. This should be concerning to you. Now this could be an opportunity because this could be saying, Hey, at least I made some of these losses back. If you have money in the market, right? At least you could say there’s a silver lining. But I can tell you this, is that it makes zero sense for the market to stay up or even go a lot higher than where it is now.

Now some people will say, if Trump gets reelected, maybe it will. But again, we don’t know. We don’t know what’s going to happen. We don’t know. At what point will investors say, cool. We just made a bunch of money by, they actually did do this very thing, right? They did this dollar cost averaging, but in a different way. They looked at it from a very short term perspective, getting out short term. Do you think that there are people out there both in, you know, successful investors, right? And that, and now when I talk about investors, there are people that actually buy into companies that are real investors. If you’re just gambling in the markets, you’re not really investor, you’re just gambler, but there are very experienced gamblers out there. I know because I, I taught people to gamble in the markets. I actually taught people how to trade stocks and options at one point for several years.

Here’s the thing is that I would be also be telling people like if, if profits coming back up watching for any sign to sell out right away to take out profits. Like if you’re doing a swing trade, you know, when you talk about swing trading, short term, hold on to a stock framework from a few days. And they worked for two weeks, right? Not much more than a few months. You’re gonna start taking your money out and cashing it out now. And then waiting for things to shift and figure out where the trend is actually going in the market. There’s a lot of uncertainty going on. You don’t want to be trading on news and things like that. And a lot of news is affecting what’s going on in the markets. So guys, there’s a lot of reason to sell out of the market right now.

In fact, everything that’s talking about buying, it seems a little bit, doesn’t it seem a little bit fake to you? Doesn’t it seem like it goes against, our actual common sense? And yes, there’ll be people out there say Chris, but here’s the thing. People are turning off emotion. What they foresee in the future. They see us making this V-shape recovery. They see this and that. Sure they do. But guess what? Even the feds don’t even have that optimistic of a view. Maybe, the news and the hype they’re trying to use is a great way to make some profits and then take their profits and run while you’re left holding the bag. As you watch your money, disappear into oblivion. Do you think that’s possible? Here’s the real point. Either way, you have no clue what’s going on. You are just gambling with your money.

When you keep it in the market, you might try to hold on to it. But here’s human nature. Human nature says even when the market is going down, just like you probably did a few months ago and the markets are going down on March. Did you bail out? A good chunk of you? Some of you did. I know cause I talked to some of you, but a good chunk of you, didn’t, some of you guys wrote it. You wrote it down 35%. I’m thinking, well, it’s got to pop back up. Cause that was ridiculous. Yeah, you’re right. That dropped way too fast. Right? It’s an unlikely for something to drop that fast and not pop back up a little bit. They even call it a dead cat bounce. You know when there’s no reason, it’s just because it falls too fast. Just like if it goes up too fast, it has to pop back down.

There has to be balance. Same thing you probably held on to that whole wild ride. Didn’t you? If you did, you’re going to do it again. I guarantee it. You’re going to end up saying, well, it might come back up again. You never know, like, Ooh, that came down pretty fast, but you know, it might come back up. And that’s what every person has said in every recession. They said it in Y2K and they watched their retirement money disappear. And then they had to wait for their money to come back. And then when it came back. Almost came back. Then we hit the next recession, the great recession. Right? When they’re like, okay, my money’s almost there. Oh, I got hit again. And it wasn’t till about 2015, 2016 that you finally said great. The money I had in 2000, if you didn’t contribute anything to it, right?

You just let it ride. Finally. By about 2016, you said, I got my money back. That’s like over 15 years guys, that you’re waiting for your money to come back. That is ridiculous. Okay. Now again, I’m not saying you’d go and sell off everything. Again, I’m not going to give you those kinds of recommendations on the air or even off the air necessarily. I just want you to be fully aware of what human nature does, which is human nature does not want to sell when things go down. Human nature wants to hold on and hope that money comes back. Cause they’ll, cause you’ll always say the lie. You’ll still lie to yourself saying, well, I don’t lose money until I sell. That’s true. And yet that’s the very deception that keeps people losing money. Secondly, you think you’re buying cheap when you buy it when it goes down. The truth is you don’t. Because the best thing you could have done in this example here, right?

Is not keep buying when it goes down. If you actually knew it was, you knew what you’re doing in the market, you would wait until it hit $1 a share, Hey, maybe it was even $3 a share. Let’s just use that example. Let’s just say that you save it for money for three, four months, right? That $200 month, you did not put in the market. But then you said I have 800 bucks now over four months, I’m going to buy a $1 a share. That’s the a hundred shares. Even if you didn’t do anything else and you just did that. And then maybe you bought the next month. He was like, woo. All right. It’s awesome. So you bought no 200 shares. Now you’re at a thousand. And then you pocket it 200 bucks. You just left it there. He said, Oh, it’s coming back up.

Maybe I’ll buy. But maybe I won’t. Well, let’s just say you did buy. Let’s just say you did $4. You bought 50 more shares. That’s 1,050 shares. Times four bucks. You’re now at $4,200. More than double the little bounce. If you just followed it. Or get really just yeah. More than. Yup! Double. Double of what you would have done. If you just kept buying all the way down. Guys, buy low, sell high. That means you don’t buy when it’s tanking. You wait until after it’s tanked. And everybody says the market’s bad. That’s when maybe if you’re looking to buy in the market, that could be the time. Understand that opportunity happens. When usually people say don’t buy this. This is a bad idea. That’s usually the best time to buy. When everybody’s saying, Hey, stay in the market. It’s the best time to be in it.

That’s usually the time not to be in it. You know, now there’s, there’s definitely voices saying, Hey, we don’t know what’s going on. Here’s why the market’s going up. Because again, they already factored in everything that’s going on right now. They expected this. That’s the point guys based on expectations. That means whenever there’s weird, crazy news that comes out. There’s no, almost no time to react. That’s when they’re going to buy or sell. So if there’s news, that’s unexpected, right? Then people buy in the market goes up. When there’s news, unexpected, that’s bad. Like not just good news, unexpected, but bad news unexpected. Then it goes down. We don’t know what the heck is going to happen. This is the thing you are gambling. You have no clue. This is why every financial advisor, and I was taught to say this as a traditional financial advisor was, do you not buy anything?

Right? Like don’t, don’t try to time the market don’t do any of that stuff. Just keep putting money in the market. Blindly. Just keep doing it on a regular basis. Cause you don’t have the time, the training or the temperament to understand it. So just keep pulling the money in trust us as advisors, trust us that we’ll guide you along the way. Guys. This is how you lose money. This is why middle America is still broke. If you want to be like everybody else and say, man, I haven’t really made as much as I had thought I would in the market. And you probably have already been saying this for years. You want to keep doing that? What’s the definition of insanity? Doing the same thing over and over and expecting a different result. Guys. I hope you understand that dollar cost averaging. Hell has a half-truth and those are the biggest lies.

The truth is buy low, sell high. The lie is that you should be buying all the time. And remember the market goes up over time anyways. Why would we keep buying what’s more expensive? Why don’t we want to wait? So like you’re deep into a recession before you buy anything? Save up your money, then buy. If you’re going to do that philosophy. If you’re to trust actually what advisors have been saying. Buy at the bottom. Or buy near the bottom, when everybody’s been selling out like crazy. Then maybe, and that’s usually takes by the way, at least a year or two before it hits bottom. That’s usually the case. It’s usually takes at least a few years for you hit bottom. Just like I said, a few months ago, don’t think we’ve hit bottom. Don’t think that little dip of 35% was bottom. That was just a test.

The test is, did you win or fail? Did you hang on rationalizing? If you did and you failed. You failed the test cause you will do it again. It will be more costly the second time around. So guys, I hope this is enlightening for you. I hope this opens your eyes and gets you that at least ponder and think about what you’re actually doing because there are many, many better ways to be able to create money and create better passive income than just gambling and something that really no one knows what’s going to happen. No one knows how it’s going to happen. What it’s going to look like a wind is going to be. If we had a crystal ball, Awesome! But guess what guys, this is not back to the future. You do not have morning Mcflys, a little book that he bought in the future to be able to gamble and make money. You didn’t have that guys. You have day to day. Are you going to gamble your wealth even to the point of possibly losing it all? Or are you going to actually go for something that’s certain that’s been proven for years and years? That is my challenge to you guys. Again, if you have questions, shoot me an email, Chris@MoneyRipples.com. I hope we make it a wonderful and prosperous week. And we’ll see you later.