How to Be a More Effective Decision Maker – Prudent Money Show – January 25, 2017


How to Be a More Effective Decision Maker

Bob interviews New York Times Best Selling Author Brian Christian on his latest book Algorithms to Live By – A book about being a better decision maker.

What We Might Get Financially with a Trump Presidency

What We Might Get Financially with a Trump Presidency

If you have studied Trump’s past, you would know that he takes big risks and swings for the fences. He has several books out and by reading them you can get a good idea of what to expect. The reality is that his formula for success has been consistent. The consistency of his brand is actually pretty remarkable.

For one thing, his past has been a mixture of big wins and big busts. As a result, we will probably see big wins and big failures. Politicians on the other hand tend to take the safe road and not take big risks. After all, they are about re-election the meeting they get elected. So, it will be interesting to see how this whole experiment will end over the next 4 years. Of course, the experiment being to run the country through the lens of results oriented business versus the lens of pure politics. The government was built on the framework of politics not business is advice in one book is that you just go ahead and expect big problems. That is the way of life. So we have a President with a belief system of expecting big problems and expectation of winning all at the same time. I have a belief that we get what we expect – making it very important that we protect our mind.

Proverbs 4:23 says, “above all else, guard your heart, for everything you do flows from it“. Proverbs 23:7 says in the first part of the verse, “for as he thinketh in his heart, so is he” – heart is often interpreted as mind. As a man thinks so is he. Thus maybe the reason for boom and bust. He has a strong expectation of problems and of winning all at the same time. That spells volatility. So with that at part of the core of his DNA, here is a forecast of things to come in a few areas.


Stock Market – The Stock Market doesn’t like uncertainty. Trump represents uncertainty. We are in uncharted waters. The market has rallied since the election on the pros only without considering the cons that go along with the untraditional. I don’t think that Trump leaves office without a very large bear market.

The Economy – Here is where I think he ultimately excels. The problem is that he is starting out with an economy that is in a delicate balance.  You have President being the only President in US history to not have an economy that exceeded 3% growth in any 12 month period. That is remarkable considering he was in office for 8 years. However, it might take a few years. I see him getting those growth numbers up.

The National Debt – This is what concerns me. We are almost at 20 trillion dollars worth of debt. The government is spending more than it is receiving in revenue. There aren’t a lot of spending cuts you can make that will amount to anything when you are considering trillions of dollars.  He has big plans and it will take a while to increase revenue. He has no problem with accumulating debt. In 8 years, President Obama accumulated $9,335,000,000,000 in debt. This of course was a record. However, he never did anything to create revenue. We might see a great deal of debt in the first few years and then an increase in revenue that sort of keeps us at bay. The bottom line is that there will be more debt.

Healthcare – I think that this will be one of his major busts. First, you have to keep the core foundation of Obamacare in-tact. There is no repealing Obamacare. Second, you can’t give everyone a 20% to 30% reduction in premiums. That train has left the station. There are small things that can be adjusted to reduce expense. However, for the most part, those costs are here to stay. The bottom line is that there will be no repealing happening. To repeal would mean to completely change the system. The system is forever changed already.

Then there is the division – This might be the biggest problem of all. I have never witnessed so much hatred. It is tough to know how this all ends. They call him a racist. Yet, President Obama did nothing to heal the racial divide in this country. In fact, he stirred the pot and I believe made it worse.

Personal advice to those who hate Donald Trump

I never hated President Obama. My mom always taught me not to hate. I had a strong dislike. However, God reminded me that he was a man just like me with a family just like me. He also had an ideology like we all do. I came to accept him as my President. Then I respected him for who he was even though I didn’t agree with him. I didn’t have to agree with him. As Christians, I think that we have to pray for our leaders. After all, God allowed this to happen. If you are struggling, read 1 Timothy 2.  It might change the way you look at things.

The Government Wants to Socialize Your Retirement

Lawsuit Claims Free Standing Emergency Room Operator Scam Patients

Lawsuit Claims Free Standing Emergency Room Operator Scam Patients

My son was playing basketball and another player landed on top of him and just like that he is holding his shoulder in supreme pain. Of course, as the caring dad, I encouraged him to shake it off and get out there and play. The next day my wife called to inform me that his shoulder was very swollen. Of course, this was 4 pm on July 3rd. Our Doctor was not an option. Waiting didn’t seem like an option since my common sense advice to “shake it off” got us in this place to begin with.

Then I realize that that there is an emergency center on the corner not too far from the house. I remembered that I had a $500 deductible for emergency rooms and thought I would just take him there. Stop the story – Since my boys thankfully never go to the doctor much less need an x-ray, ‘Mr. Prudent Money’ forgot everything he talks about on the radio and didn’t ask the right question.

What is the difference between an emergency room that is stand alone, a hospital emergency room, or an urgent care center?

Does he really need anything more than an x-ray? Can’t you get that at the doctor in a few days?

Did I ask google? After all, the stand lone emergency room can wait. It is open 24 hours. There is not a matinee discount or blue light special or anything.

Bonus question – How much is this going to cost and what will my insurance cover?

‘Mr. Not So Prudent Money’ failed at this one for sure. The upside was that it was 20 minutes, a visit with the doctor, and x-ray that showed a mild separation, and then here is the slap upside the head – A bill for $1,900.

A recent article in the Dallas Morning News shows that there might be more to these 24 hour stand-alone emergency rooms.

“Lawsuit Claims Free Standing Emergency Room Operator Scam Patients”

A Colorado man has filed a $5 million lawsuit and is seeking class action status, in perhaps the first case to question the facility fees charged to patients. It claims that Adeptus takes advantage of confusion in the marketplace, fraudulently preying on consumers by failing to disclose excessive costs. 

Much like hospital-based emergency rooms, the stand-alone centers charge a facility fee to cover the overhead costs associated with staffing teams of emergency specialists around the clock.

However, the lawsuit says that Adeptus “tricks patients into believing its centers are appropriate,” even when the consumer might be better off at urgent care, or lower-cost facilities that can handle non-emergency situations and where no such fee is charged. 

Moreover, they do not disclose the amount of the charge before the patient undergoes care.”

I think that you get the picture. The bottom line is to stay away from these places unless it is life or death and two minutes is going to make a difference. Even then an ambulance ride to a major hospital still might be a better choice. Any other reason? Sure, if you like convenient expensive healthcare, they make a great option. 

So did I get scammed? Since I didn’t ask the right questions and since no one lied to me, I guess not. However, it sure felt like it! #lessonlearned

The Market Is Due a Correction – Look at These Stats

The Market Is Due a Correction – Look at These Stats

Economist and Financial Writer John Mauldin wrote this in his weekly newsletter a few weeks ago.  It just goes to show you how out of balance the market is right now.

It has been 116 days since we had a 5% correction.

Since 1928, the average number of days before a 5% correction occurred was 50.

We have been 210 days without a 10% correction. Since 1928, the average number of days before a 10% correction occurred was 167.

It has been 1955 days since we suffered a 20% correction. Since 1928, the average number of days before a 20% correction occurred was 635. In secular bull periods the average number of days was 1105. In secular bear periods the average number of days was 486.

The current case of 1955 days without a 20% correction is more than three times the average of 635 days (for the whole period from 1-3-1928 to 12-8-2016).

Corrections (declines of 10 to 20%) are normal for the stock market.  My biggest concern about the market right now are those stats.  It has been a long time.  As a result, investors forget that they are normal.  A 10% to 20% decline could feel more like a 30% to 40% decline creating more selling morphing a correction into a bear market.

Careful Financial Advisors Are Raising Fees – What You Need to Know

Careful Financial Advisors Are Raising Fees – What You Need to Know

It has been my experience that there is so much misinformation on how fees work in the financial advice and investment/money management business. I am starting a two part series on what you need to know.

The new Fiduciary Rule partially goes into effect this April and is in full effect January 2018. I won’t bore you with the details of this 1000 page piece of legislation. You just need to understand the end result on the financial advisor industry and how it potentially affects you. So, just take this as the bottom line. For the advisor, it creates additional liability, increases costs, and limits how they can earn money if they are commission based. For the client, your advisor might drop you as a client because of the liability/cost, raise your fees because of the liability/cost, or start charging you a fee because commissions have been reduced or taken away.

So, if you are working with a financial advisor, here are the scenarios that you might face:

1)    Increased Fees

They may already be charging you a money management fee for managing your investments. They might raise those fees. First, make sure that your advisor is doing something for that fee. It isn’t called a money management fee for nothing. Most advisors charge a fee and do not actually manage the account. Management of the account means buying and selling investments strategically to protect and to grow the account. So, if they are charging a fee for doing nothing, I would consider finding someone else. If they are actually managing your account and you like what they are doing, then you have to decide if the increase in fees is worth it.

2)    Start Charging a Fee

If you have been in a commission based account, now your advisor wants to start charging you a management fee. First of all, this in my opinion is a violation of the fiduciary rule which states that you have to put your client’s interest first. Many advisors are switching over to a fee based model because they can’t earn commissions anymore. If that is the case, think hard about why you would want to start paying a fee for someone who has no management experience and probably will not do anymore than they were doing when they weren’t charging you a fee.

3)    Drop You as a Client

Since the new rule increases liability, there will be some advisors who drop smaller clients. I personally think that makes no sense. If that is the case, send me an email ( and let’s talk. They obviously don’t have the proper framework set up in their practice.

Fees can be a confusing subject. However, knowing just a little information can clear up the confusion. The bottom line is simply this. If you are paying a fee, what are you getting for it or what do you hope to get for it? If you can’t answer that question, then you are perceiving no value for the fee you are paying.

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