August 15th, 2026 - Broad Markets, Amazon, and Retirement

Steven and Joey kick off a lively Saturday by unpacking a surprisingly strong, broad-based stock market, drilling into earnings, inflation data, oil shocks, and what the media gets wrong about the economy. They field a caller’s questions on gold, touch on quirks of London financial markets, and run a fun trivia question about how much Amazon sells every second. In the second half, they dive into retirement realities for boomers, explaining Social Security timing, the evolution from pensions to 401(k)s, and new plan ideas like Ted Benna’s “Radish Plan,” while warning listeners about high-commission gold and insurance schemes.

Transcript

Steven Van Wie 0:00

It's Saturday morning. It's 10 o'clock. This is the Van Wie Financial Hour. I'm Steve Van Wie. 

Joey 0:06

And I'm Joey Loss.

Steven Van Wie 0:07

And there is no Adam today. We are Adam-free. He is delivering his oldest child to college this weekend. The beginning of the end, I guess you might say, or the end of the beginning or whatever.

Joey 0:23

Depends who you're talking about. Yeah. I think I saw a picture of his son this morning in the dorm room. It looks like the beginning for him.

Steven Van Wie 0:24

It does, doesn't it?

Steven Van Wie 0:29

I think it's just the beginning. Yeah. He's going to Bama. And if you want to go someplace with spirit, and who doesn't? I can't think of many that would be better.

Joey 0:41

Yeah. I don't think anybody feels bad for him, including himself.

Marshall 0:43

Not really.

Steven Van Wie 0:44

Yeah. And it's quite a ways from home, but it's doable in a day real easily. So if you want to get a visit in once in a while, I'm sure Adam will find a way to work that in. But it's going to be a lot different around the house. I'm sure of that. I just wish them all a good time. What can you say? Well, to all the regulars, welcome back. We count on you every week. You keep listening, we'll keep talking. And to the new people, there's always new people coming on board. We hear it all the— all over the place all the time, that, um, try to stick around for an hour. You'll, you'll learn something in the course of a day. And further, Joy and I'll spend time talking about what it is we want to talk about, unless you would like to intervene. Pick up the phone and dial 904-222-8255

Joey 1:03

Yes.

Steven Van Wie 1:39

and talk about whatever you want to talk about. We will put you immediately to the head of the class. Those rules have not changed in all the 11 and a half years or so that we've been doing this on Saturday mornings. So take advantage of it. You'll learn something. That's almost a guarantee. And there's always a lot to talk about. Today, of course, is no exception. And after some tenuous times in the market not very long ago, things seem to be looking a little bit better, which is not necessarily what you hear in the news, but it's a lot more true than fiction. And I'll be hitting on a few of those topics today, too. You know, I can't imagine what this country would be like if the media actually were in favor of this administration and told the truth about everything. So it's always a headwind with these people. And despite that, I think it's coming along very nicely. And we'll have stats and stories to Bring that up along the way. And, um, I'll let Joey hit it without any further delay about what happened in the market this week. I know some records were set.

Joey 2:56

Yeah. I mean, it was a good week and it's been a good couple of weeks. So the S&P added about 0.4% this week and sits up 13.7% for the year. The Dow lost about 0.5% and is up 11.8% on the year, but the leadership is not where you might expect it to be. The Russell 2000 small-cap index hit a fresh record Friday and is up 23.7% year-to-date, beating the S&P 500 index by a full 10 points. Emerging markets are up 22.4%, and the NASDAQ is up 19% year-to-date. And that story has— and the story that has defined the last decade, which would be a handful of mega-cap technology names dragging everything behind them, is not the cause of all this. Both the cap-weighted S&P and the equal-weighted version made new all-time highs this month. When the mega caps sold off in June and July, investors rotated into everything else instead of heading for the exits. And that continuous interest in staying invested through rotations is a very strong signal for market confidence, which is what I think Steve's talking about when you say it's like, it's just not the vibe that the media is giving to us, but it's what the data tells us. On the commodity side, Crude is the outlier. West Texas Intermediate gained roughly 5% this week and is up 43% on the year, with Brent up 45%, driven entirely by the continued Strait of Hormuz standoff. Domestic crude inventories, including the Strategic Petroleum Reserve, had drawn down for 17 consecutive weeks, a record, before last week's build reading snapped that streak. The SPR itself dropped below 300 million barrels for the first time since January of 1983. Precious metals are the mirror image. Gold remains up 31% from a year ago, but only up 1.2% year to date. And silver's up 71% year over year, yet down nearly 9% since January. The official July CPI came out on Wednesday morning of this week and landed exactly on all expectations across 4 numbers, with core inflation at 2.5% year over year, tied for the lowest level since March of 2021. Headline inflation is running higher at 3.4%, and the reason is singular: gas, oil. Truflation has US inflation running at 2.28% as of Thursday, more than a full percentage point below the official 3.4% print. Their PCE read is 2.62% against the government's 3.67%.

Joey 5:25

So the real-time data says disinflation is further along than official statistics Statistics have caught up to. The caveat is Truflation's own reading rose 0.38 percentage points over the last month, and they attribute it to energy and shelter persistence, which, Steve, that's something we've talked about over time. You know, short-term changes in oil are not inflation, but if they hang out for a long time, it creates a real inflation, which they're calling persistence.

Joey 5:51

Turning to the Fed market peg, the market pegs odds of a September rate hike at 30.6%. And a hold at 69.4%.

Joey 6:01

A month ago, those numbers were closer to 50-50. And less than a year ago, September 2025, all 12 voting members of the Fed voted to cut, one of them by 50 basis points, while core inflation was above 3%. Today, core's at 2.5%, even lower, and the committee's arguing about tightening or raising rates. Chairman Walsh came in talking tough on inflation but has not called for a near-term hike. The pressure is coming from other members. Meanwhile, the 10-year Treasury finished at 4.697, the 2-year at 4.18, and Thursday's 30-year auction cleared the highest yield since 2001. The bond market is not fully buying this disinflation story. And so the bottom line is this: second quarter earnings season is almost over. Walmart reports next week and closes it out, and it was exceptional. 76% of companies beat, and nearly 1 in 6 raised forward guidance, roughly double the 25-year norm. Two things still deserve watching. First is breadth. About 7 in 10 stocks in the S&P 500 are trading above their long-term trend line. That's healthy, but we haven't cracked 3 quarters in more than a year and a half, which is the longest dry spell since 2009. The market's close, but it's not there yet. And second, we can watch the calm. The VIX, the volatility index, closed at 14.25. Since 1990, it has only spent about a third of its time below 15. So this is the quiet end of the range. And Schwab's measure of what individual investors are actually doing with their money— not what they say, what they do— just hit the highest level of this entire bull market. So you have strong fundamentals, improving breadth, and a market that's priced for nothing to go wrong. 2 of those 3 are earned, and the third one is a choice.

Joey 7:43

That's it for the market wrap. I feel like— I'm shocked to say that this moment to me feels like the healthiest moment of the market in the whole bull run. I mean, there's been stronger, more— there's been clearer reasons to look at numbers and say, that looks kind of shaky. This moment just doesn't have that for me. I mean, yes, oil can move things. If we're high for years, of course, that's a problem. But the companies themselves look phenomenal.

Steven Van Wie 7:44

What do you think?

Steven Van Wie 8:10

I've I don't think I've ever seen an earnings situation like the one that we're in right now. And it's still, of course, it's going to close. Walmart reports next week. 

Joey 8:21

Right.

Steven Van Wie 8:22

Which is sort of the official end, although it's not the actual end, but it's the official end of this earnings season. And these numbers are just spectacular. I don't know why nobody will get on the bandwagon. Oh, yes, I do. Everything's— the news is being political, politically driven. The market, not so much. Yeah. The market loves what it sees. All right. Lots more of this when we come back after a short break. Don't go anywhere. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie. 

Joey 8:54

And I'm Joey Loss.

Steven Van Wie 8:55

And again, Adam will be back with us next week and actually Joey won't be. So we're doing a 2-person show for the next 3 weeks or so, at which time the world goes back to normal and we'll all be here. It's always fun when you can compare notes from 3 different viewpoints because we're 3 pretty significantly, significantly different ages and at different stages of our life. I always love the interplay, but, um, we'll, like I say, we'll be back at it. Uh, remind everybody again, lines are open, 904-222-8255,

Joey 9:08

That's right.

Steven Van Wie 9:31

where We have trivia question as usual sponsored by Paul Lloyd of First Coast Alarm. You can call Paul at 904-636-7888.

Steven Van Wie 9:41

I got Amazon on my mind today, and the reason might seem a little obscure, so I better explain it. The, the powerful but ignorant MSM, mainstream media, was lamenting that week that the consumer retail sales had fallen in July. And this doesn't happen very often. It's only twice in 9 months, I think. And they were, as usual, trying to make a point out of it that, oh, they're doing everything wrong up there. But I did find a couple of sources that understood what I thought was the most important statistic of this particular cycle. Everyone pretty much knows about Amazon Prime Day. And everybody pretty much waits for it. And when it gets here, they pick up the phone and call. It is incredible. Well, history had Amazon Prime Day in July, but this year they moved it up to June. So an entire batch of gigantic sales were moved into June, which left a little void in July. You take that out, the numbers look way different. In fact, if you, if you just threw out Prime Day, they'd be about equal. But if you moved it back into July and added it in, the stats would be kind of what's normal nowadays, just nice steady growth. So that's the kind of thing that irritates me, but I wanted you to know why I'm doing this trivia question before I ask it. I said the sales are gigantic. How about this one? How much does Amazon sell every second of every day on average? Every single second. What are their gross sales? And I'm not going to give you any hints. At all yet. Maybe if we're patient, we'll get some. Okay. Anything else on the market? I've— I had one.

Joey 10:30

Mm-hmm.

Steven Van Wie 11:55

Yeah, you did the beat ratios. That's an important one. The—

Steven Van Wie 12:00

this country's economics, the sales and the construction and so on, they're actually booming. And it just can't seem to get it through a lot of people's heads. But I think the administration is really second-rate at producing the storyline and making it believable and getting it out there. The things they say are largely true. They just don't seem to have a good salesman's approach to it or whatever. And they're fighting— it's always into the wind for these people. And I do have a little, um, Sympathy for them on that, but I think we do a very, very poor job of actually promoting what's going on. But here's a couple of things that I've been picking up along the way. This one: factory construction and wages are soaring. You don't hear about that in the news, do you? One of the brighter points in the administration is. as far as being a communicator is a guy named Kevin Hassett. He was one of the 2 Kevins that were being considered for the chairman of the Fed. And he didn't get the job because Trump likes having him around because he's so good with the media. He's the guy that's always smiling. Everything's rosy with Kevin. He's just a really nice guy. He says now there are 83,000 construction workers building factories. Right now, 83,000.

Steven Van Wie 13:34

Those factories, when they're done employing construction workers, are going to get filled with regular old people with jobs. It's coming and it's coming soon. It's not quick nor easy to build a factory, but it's going on. And speaking of factories, what does, what does,

Steven Van Wie 13:59

Is it Tesla that's building it? Or I can't remember.

Joey 14:03

Oh, the TeraFab.

Steven Van Wie 14:04

The TeraFab? Yeah, I know it's Elon.

Joey 14:06

100 million square— several hundred million square feet or something.

Steven Van Wie 14:09

Yeah, it's like, what, 6 Pentagons or something like that? This thing, when you see factory construction going up again, just look in Texas and you won't believe what you see. Yeah, I can't wait to see that one. That's To me, very exciting just knowing that it's about to go on. When Elon thinks big, he thinks really big. So pretty soon we're going to have a lot more control over what goes on in this country too. We won't have to import nearly so many things. And it's just going to get better and better and better. When they're looking at the employment rates, there was another little blip in the data where some jobs were lost. They reported last month. And again, if you read under the headlines, you find out that when FIFA was done, a lot of people who had been hired to be in the hospitality businesses, they went away. We've got to— just one second, Marshall, I'll be right with you. And the other thing is that a lot of teachers take that month off between semesters and so on. And if you add those things up, there's no problem. But another big one, we are still exporting people from this country, the ones who don't belong here, and they're going away fast.

Joey 14:12

Yeah.

Steven Van Wie 15:28

Good morning, Marshall.

Marshall 15:30

Gentlemen, how y'all doing this morning?

Steven Van Wie 15:32

Excellent. How about you?

Marshall 15:34

It's, it's a beautiful day in the neighborhood.

Steven Van Wie 15:36

Yeah, geez, we've got this Saturday morning thing down pat weather-wise, don't we?

Marshall 15:41

Yeah. Well, let me give you a wild guess right out of the box. How about 4 million?

Steven Van Wie 15:47

Uh, no, it's every second, and it isn't that high.

Marshall 15:53

Oh, okay, okay.

Steven Van Wie 15:55

But I'm glad. I'm always happy when we get a bracket started, and now we have one.

Marshall 16:01

I understand getting brackets started.

Steven Van Wie 16:03

So what else is on your mind today?

Marshall 16:05

I heard somebody talking about in that strange little place in the middle of London which has so much impact on the world's Economics. They sell gold certificates,

Marshall 16:21

which someone would believe is backed by an equivalent amount of gold,

Marshall 16:28

but it's not.

Marshall 16:31

And it's resold. In other words, they're reselling the same amount of gold.

Steven Van Wie 16:37

Hmm.

Marshall 16:37

And if anybody makes a claim and says, I would like my gold, In the fine print, it says they can pay in English pounds.

Steven Van Wie 16:48

Hmm.

Marshall 16:50

Are you familiar with that at all?

Steven Van Wie 16:52

Tell you the truth, I'm not.

Joey 16:54

Uh, I am not. Um, but that seems problematic if you get to choose between the 2 currencies, because I'm gonna go ahead and guess they're not gonna give you the one that's worth more.

Marshall 17:03

Well, you know, that's— Steve has mentioned before, just discussion about gold versus stocks in gold mining companies and all these different places. And of course, we've had some recent, uh, fraud scenarios that have been showing up trying to get people's money to buy, buy gold. Um, and while I understand the basics of it and I trust you guys implicitly, it's like, Wow, there are a lot of oddballs, not just the guy on late night TV. So I just thought it was very interesting. And of course, it was brought up as part of the overall discussion by, by a group I listen to a lot, Promethean Action. And she's always discussing that, you know, little town within London. And their impact on the world economy. Uh, but that's one of their games.

Joey 17:55

Yeah.

Steven Van Wie 18:01

They're the ones that have always set prices on silver and such, I imagine. Probably the same group.

Marshall 18:06

Yeah, they got their own little world.

Steven Van Wie 18:08

Yeah, the silver pricing group of idiots. I don't remember exactly what they're called. I mean, think about that. For decades, once in the morning, once at night, they told the world what the price of silver was. Now that is not based on supply and demand. To me, that's based on, oh, whether they're buying or selling, maybe. I can't say for sure that's it, but it seems strange.

Marshall 18:37

Not unlike the London Interbank Offered Rate, or LIBOR, which was an index used in the mortgage business pretty widely until Barclays and a few other of those bankers over there started realizing, They had been playing with it, speculating on it, trading on it. And it was like, wait a minute, wait a minute. This is supposed to be an index of what's actually happening. So—

Steven Van Wie 19:06

That was, that was the way that you could get an interest-only loan for when I was a bit younger. It wasn't even all that long ago, but you could, if you wanted to get a loan with a variable payment, It kind of worked like a line of credit. So you'd get a LIBOR loan and it would be actually put against your house and you were only required to pay interest only on it, but you could mess around with the principal all you wanted. And that was actually a very popular product for quite some time. I don't know if you dealt with them or not.

Marshall 19:41

Oh yes. LIBOR. Um, there, there were so many different indices. I think the reality is the Treasury was the best one to use. But hey, yeah, we had that, guys. Thanks so much for all your help.

Steven Van Wie 19:54

All right, um, we got just a few seconds left and I'll throw out another little thing and then we'll see you all on the other side. Thanks, Marshall. Always fun talking to him. He's a wealth of information. Um, there, the, um, gold people— we had the discussion in the office this week. I remember that one. If, if you really are concerned about whether what you hold is backed by gold and you can only feel it, as they say in the commercials, like you can hold it in your hand, be prepared for big commissions two directions. If you're not going to sit that there forever, it can really cost you a lot of money. I'd expand this, but I can't. We've got to take a quick break. We'll be right back. This is the Van Leeuwen Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Joey 20:44

And I'm Joey Loss.

Steven Van Wie 20:51

 And we have lines open, 904-222-8255, where I want to know the answer to this question: how much does Amazon sell every second of every day on average? And we know it does not have 7 digits in it. See, I gave you a hint already, so I lowered Marshall's bracket from 4 to 1 million, and it's under that. All right. Kevin Hassett, I was talking about. What he pointed out to me was the highlight of this article. Since Trump has been in, earnings have gone up by around $3,000, maybe $4,000 annually for the same people Who under Biden lost $3,000 annually. So we're now doing better than we were back in 2000, 2001.

Joey 21:45

Earnings on what?

Steven Van Wie 21:47

Average earnings for workers. Workers for earnings. It's easy for me to say. Yeah. That wages are not only coming back, but they're staying ahead of inflation. And you just don't hear this anywhere. But people are really doing a lot better right now. We're still in this low turnover for, for workers. Nobody's quitting their job. But a lot of people, strangely enough, are saying we are getting ready to start hiring big time. And it's a lot of small businesses.

Joey 21:49

For workers. Yeah.

Joey 22:24

Can we expand on what you— there's something you touched on just the fringe of, and I was working on an article this week and put it to the side. I want to talk about the concept of the K-shaped economy because it comes up a lot. And I think there's 2 versions of it that are getting conflated a lot of the time. And so you just alluded to one, which is the income story versus cost of living. There's convergence there that's positive. That's what you were saying is that wages have gone up relative to the cost of living in a way that has brought them closer to what you might say the top of the K is doing than has been true in many years past. But the other side, the wealth side, the balance sheet side of this has remained kind of a challenge for these people. If you came through COVID with assets, with large 401s, with a home, then you're so much marginally better off than the person who did not, that that only becomes more and more true year to year. But the thing that we can most control today is that wage story, and that is converging. That's a positive story. But People tend to talk about the K-shaped economy as whatever suits their political aims.

Steven Van Wie 22:56

Yep.

Steven Van Wie 23:28

Yeah, everybody creates this image of all these things we're talking about that's always negative. Yeah, look at the, the losers and not the winners. Well, small business optimism rose again 2.4 points. It's now at 99.8, the highest level since August of '25. So a year ago, it was as good as it is now. Then something happened. That something has 4 letters and starts with an I. And the troubles in Iran drove the confidence index down. Even though Iran's not over, business confidence is back to where it was. This is excellent news. Their hiring plans are about to be kicked in the rear end. 16% now say that taxes are the most important problem. That's interesting because for a long time taxes were down the list. Inflation is down to 14% of them say it is a big problem. 8% is labor costs, but now there's a switch into that problem of small business and its labor availability. That's interesting. Why are there so many millions of young, capable, working-age males that aren't even looking for work? Who's supporting all these people? and I'm literally asking these questions. I'm not going to tell you the answers because, Frankly, I don't know.

Joey 24:00

Hmm.

Joey 24:48

Mm-hmm.

Joey 25:01

I—

Joey 25:08

Yeah, I genuinely don't know.

Steven Van Wie 25:11

You mentioned the Producer Price Index. It showed zero in July. Well, Producer Price Index translates down to the people index, right? The consumer index very quickly. All these things are going on. And they all take just a little bit to reveal themselves in the economy. Things are good, and I'm getting very concerned that we're gonna get a bunch of idiots who go in there and put their foot on the brake when they don't need to. So please, everybody, go vote.

Joey 25:47

One thing that I'm, uh, that I think is worth watching is one of the reasons that the fallout from the oil situation in Iran has not gotten as bad as many doomers had said it would get is because China largely pulled out of consumption relative to where it was. It looks like they are dialing up consumption again as it relates to Hormuz oil. That is something that can make, whatever the pace of consequences for continued conflict over in Iran, I think now we're looking at a faster pace of pain. So hopefully there's some resolution there sooner. We just have to get that wrapped up. But if that's off the table, I'm with you. I think most of this stuff looks good and We should lean into the things that are really problems and not pretend like good things are problems.

Steven Van Wie 26:24

We do.

Steven Van Wie 26:33

Yeah. And here's another one. Prescription drug prices fall at record-breaking pace. Trump has been working very hard to get prescription prices down, and they, they are doing it. It's been very successful. But again, people don't know this. And a lot of people get their drugs through prescriptions with a plan on them and don't understand it. That is a disinflationary piece of the economy that gets absolutely no play. So things, things are really getting a lot better. All right. Well, Joey and I wanted to spend a little time on eventually getting into 401s, but just kind of retirement planning in general. The, uh, interestingly, the last baby boomers, you know, their baby boomers were born from 46 to 64. So I am one and my wife is one and we know a bunch of them, of course. But the younger ones, the youngest ones are turning 62 this year. That makes them eligible for claiming Social Security benefits. So now we've got this absolutely gigantic group of people and yes, they are failing a bit too, getting older and dying off. But we are having a lot of people, about 10,000 to 12,000 a day, who are retiring, fixing to. And this is going to make a lot of difference in what you do when you get there. So I'm kind of talking about the older generation to the younger generations. You don't want to get to 62 and not have something more than Social Security. You're not going to be able to live on it. You can't now. You never could. It was never designed for that. It was always a supplement. People are making some very, very bad decisions about claiming benefits and what they do with their 401s and so on. And it, it's important that people learn more about what they have to do. If you only took one thing away from any discussion we might have on this, it is before it becomes an issue, come and talk to some people like us who know the ramifications of early versus late and so on. And don't make a mistake because you only have one shot when it comes to Social Security. You claim one day. And that's almost completely true.

Joey 29:09

Yeah. And, and if I could just add a footnote of framing, you've spent a lifetime working to build this set of options that you have. You know, you owe it to yourself to get the best of what you've already done.

Steven Van Wie 29:20

Yep, absolutely.

Steven Van Wie 29:23

There is a provision where for 12 months after you file, you're allowed to pay the whole thing back and recalculate your starting point. But you have to have all the cash and you've paid If you're 65 or up anyway, you will have been paying your Medicare out of that, and that would have to be replaced. But if you file at 62 and change your mind, you do have 12 months to undo that. Other than that, you have one filing date, and once you claim it, that's it. All right. Here's some problems that people think about Social Security, because half of making good decisions is understanding the truth. The big one. I want to get paid before Social Security goes bankrupt. That's the most common reason heard for people filing at 62. Well, when the money's gone, I'll at least have gotten some payments over the years. Well, that's false. There is no scenario under which you will get no money from Social Security. The change as it is sitting now The change comes in that, you know, it's a— what a traditional person like me would call a Ponzi scheme. The money that comes in from people working is paid out as part of the monthly benefits. The rest of the monthly benefit is from what they dubbed the trust fund, which is actually a filing cabinet in West Virginia. That's another story. But they're credited against previous payments. When that trust fund runs out, which is estimated to be in 2032,

Steven Van Wie 31:04

it is currently providing about 23% of everyone's benefits. So in the absence of doing anything else, if 2032 comes and it hasn't been corrected, your benefit would be reduced by about 23%, but you would get the lion's share of it. So that is not sufficient reason for most people to take Social Security that early because of what they're giving up if they live any reasonable amount of years after that.

Steven Van Wie 31:36

So understanding that, it, it's easier to talk people into doing the right thing. That's just one. Politics are integrated with this. As a boomer, I speak for everybody when I say I don't want a cut in benefits. And if any of my elected representatives either support the cut or don't fight the potential cut, I'm going to vote them out. And there are millions of people who agree with me completely. No politician who likes his or her job and wants to get reelected will ever allow those cuts to be made. To be picked up on the other side. Don't go anywhere. We'll take a quick break. This is the Banwe Financial Hour. Welcome back to the Banwe Financial Hour. I'm Steve Banwe. And I remind everybody, lines are open,

Joey 32:27

And I'm Joey Loss.

Steven Van Wie 32:33

904-222-8255. And the trivia question is out there. How much does Amazon rack up in sales every second of every day?

Joey 32:42

I can tell you what that number is for my house. And it's more than zero.

Steven Van Wie 32:46

I hear you loud and clear.

Steven Van Wie 32:50

All right. A little quick background before we get into the more advanced topics in the 401s.

Steven Van Wie 32:57

In the early days, your grandparents probably had a pension. Anybody in your family have pensions?

Joey 33:03

Uh, I had a grandfather with a pension.

Steven Van Wie 33:06

Okay. And that's typical. Back then you got a job with a company, you stayed there forever, and when you left, they gave you a gold watch and a pension. And that's how the world worked. But then a bunch of things happen. Right now, traditional person going into the workforce right now will have several jobs. Many, I think the average is somewhere around a dozen jobs in their working career. And that doesn't really play well with pensions. So along the way, and I think you're going to be surprised where this came from, the profit sharing plan as we know it today was actually started by a company in Minnesota. One— the son of a founder, I believe it was, came up with an idea that if they shared their profits with their workers, it would cause them to be more loyal, stay there longer, be more productive and so on because they're— you go to work, you contribute to the profits and they give you some back. That company was the Pillsbury Flour Company. The last place I would think of for or innovation of that type. But why, I don't know. It just hit me kind of funny that that's where it was. And it was very successful. And a lot of people actually had money to retire on and a pension, which is, let's face it, the ideal situation. You gotta have more than one source of income when you get later. That plan became known as a defined contribution plan. That means the employer's responsible for what goes into your account. The change to the defined benefit— defined contribution plan. Did I say that wrong? I can't remember. That's the defined benefit plan. The employer's responsible for the input. Defined contribution came in and it started out in basically in the '70s and it became quite popular because the employer just named an amount of money that was going into the plan. And then they washed their hands of it.

Joey 33:07

Yeah. Yeah.

Marshall 34:06

Hmm.

Joey 34:27

Hmm.

Joey 35:07

Yeah, much lower risk for the company.

Steven Van Wie 35:08

Much lower. And it worked out great for both sides in theory because the company knew what its obligation was and the employee got a quarterly statement that showed actual money in it, which you'd never got when you had a pension. They loved it. They especially loved watching it grow. Well, then back in 1974, Congress had recognized some problems. The people— the companies that had implemented profit-sharing plans didn't bother to teach their employees much about investing and so on. And a lot of them languished in money market accounts and lost money due to whatever bad investments they made. And the companies that handled the funds, the trust funds, the mutual fund companies and insurance companies and so on, They charged exorbitant fees. So was the plan an improvement? Not in every respect. And that resulted in ERISA, the Employee Retirement Income Security Act of 1974, which put some guidelines on responsibility of employers especially, which was an absolutely good thing. And just by coincidence, that was the year I changed jobs and went to work for a small consulting company that my father-in-law owned. And one of the things he did, he consulted for small companies and he had always been involved with those companies on pension and profit sharing plans. So his first instructions to me, this is 28 days after ERISA was actually passed. The ink was still wet on this little book he handed me that was all about ERISA. And he said, here, read this and memorize it. It's what we do. So I've been involved in these things since ERISA completely and have, of course, learned an awful lot. Well, time goes by and there's a fellow who was in the benefits business. His name was Ted Benna. And Ted Benna realized as he read Section 401 once upon a time that this could be construed To allow the worker to add money to his own account, that was a novel concept at the time, and it was tested in the courts, and it won. And everybody kind of knows what I mean when I say the rest is history because 401s are absolutely huge now. But there are people out there who are writing stories about Ted Bennett, who is called the father of the 401, and how. He is, he is not happy with the way it has worked out. And they sort of imply that he wishes he hadn't done it. Well, that is absolutely ridiculous. But his point is that it works better for higher-paid people who have more money. To which I respond, duh. Now, does that make the 401 plan a bad idea? No, it does not. But he's now done one stupid thing and one thing that I'm not going to render an opinion on. The stupid thing, according to him, he has put most of his personal money in a fully funded life insurance product. Now, you'll see these things all the time. They're the people who say, you're going to get all this money for the rest of your life. and you won't pay taxes on any of it. And the problem with those is that they don't work. They can work if you're lucky. You might get one that works, but they don't work. And if you're in doubt about that, just Google Kyle Busch from NASCAR and look at what he was sold and how much he lost and how much he won by taking them to court. These things are horrible. The one—

Marshall 35:33

OK.

Marshall 38:32

Hmm.

Joey 39:07

Maybe that's how they— maybe that's how they're designed to work. The product doesn't work, but if you have the patience to go to court, you can actually—

Steven Van Wie 39:14

So in other words, just designed by lawyers. Yeah, like everything else. Anyway, the, the, um, the company that I'm familiar with— I'm not picking on them, they're, they're just like a lot of others— but they send me emails and such. It's called Bank on Yourself. And they're the ones who are constantly telling me that Ted Benna is so unhappy about what he did. Well, and I say, nah, that's not good enough. It's kind of like saying Robert Oppenheimer was sorry for doing the bomb. He really was. And he caused a lot of destruction. But what nobody, including him apparently, thinks about is how much he saved, how many lives he saved, how much expense and so on by getting the war over with. So you gotta look at these things a little bit differently and a little more thoroughly. Now I'm gonna ask Joey a question. Are you familiar with, I gotta get the right number or the right name on it, the Radish Plan?

Joey 40:19

The Radish Plan? No, I'm not.

Marshall 40:20

Yeah.

Steven Van Wie 40:21

Bennis' newest concept is called the Radish Plan. And the RADISH plan is a way for employers to feed extra money to their employees. It doesn't depend on the people having a big salary or a high overall take. It says that he can— the employer can reward someone. They set the parameters up in the plan and say, if you have X amount of absenteeism or lower, we'll put this amount into your RADISH plan. If you show productivity gains so much, we'll put that in. There can be any number of things in the radish plan that allows the company to put extra money in the employee's radish plan. It's not taxable to the employee as received, is deductible to the company as paid. So in that respect, it's kind of like a 401. And the, the radish plan can be withdrawn from under certain circumstances. The rules of that are very Uh, clear. And it— like most retirement plans, if that money is drawn out, there will be taxes and a 10% penalty on it unless you're 59 and a half. So it is a way for lower-paid people to get paid more money and put some away for retirement. My problem with it is that it's just an extra piece of compensation to people. The good part is they actually have to show some positivity,

Marshall 40:24

Right.

Steven Van Wie 41:56

whether it's in productivity or whether it's in showing up or whatever. And I don't know if it's really good for longevity or not. But to me,

Steven Van Wie 42:06

that is not mutually exclusive with a 401. And using, using the 401 as an example of what not to do seems like a very, very bad idea to me. So when you hear some of these advertisements about Ted Benna, the very father of the 401, how he doesn't like them anymore, please do a little more research. Talk to us if you have to, or whatever it is. I can't stand the way people sell things in the financial world that are just not so.

Joey 42:40

Yeah, that— well, yeah, but I agree with your thought that They're not mutually exclusive. I don't really have a strong opinion on that description, the radish plan. I mean, I think it's a little paternal in nature from the employer side. Like if you just think if someone's worth more compensation, you can do bonuses, incentive bonuses in cash. And my guess is if they're low compensated, let them have access to the cash. Don't lock it up in another pre-tax plan.

Steven Van Wie 43:05

Well, from both sides, there are no, there's no Social Security withholding. Or federal tax withholding on these things. So in that regard, you're probably getting a little extra bang. All right, but we're going to carry on this whole 401 discussion on and off for the next month or two. I just think there's so much going on in there right now that's important. Meanwhile, Amazon sells $25,500

Steven Van Wie 43:31

every second of every day in the whole year. And what I just described there, they picked up another couple hundred thousand in sales, and it wasn't from Joey or me this time. 

Joey 43:44

Wow.

Steven Van Wie 43:45

But we'll make up for it when we get home. 

Joey 43:47

At least not that we know about. We gotta pull up our apps to be sure.

Steven Van Wie 43:50

Well, that's true. Sarah put some things on automatic purchase. You never know. Yeah. All right, well, this has been fun, and we'll do it again next week with Adam. And everybody, have a wonderful, productive week ahead, and maybe we'll get another beautiful Saturday next week. Thanks for listening. We'll see you again next week. This is the Van Wie Financial Hour.