The Market Is a Casino—But You Are the House – Episode #359

Is putting money into stocks more like gambling than investing? While there are those who believe that’s true, seasoned investors will explain how investing over a long period skews the expected outcome in favor of the investor. On this episode of the Dentist Money™ Show, Ryan and Matt illustrate how you can alter your investment odds to come out ahead—just like Vegas casinos do.

 

 

 

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Podcast Transcript

Ryan Isaac:
Hello everybody, welcome back to another episode of The Dentist Money Show brought to you by Dentist Advisors, a no commission, fiduciary fee only, comprehensive financial advisor just for dentists all over the country. Check us out at dentistadvisors.com.

Ryan Isaac:
Today on the show, Matt takes a long time catchphrase about the stock market, that the market is a casino, but we turn it on its head and we talk about how maybe it is a casino, but the trick is, how do you become the house? Boom! Thanks to Matt for the great topic, it was a fun discussion. And thanks to all of you for joining us in this episode. If you have questions for us, specifically, if you’ve got money questions in your life, a little one, a big one, a lot of questions, just go to dentistadvisors.com, click the “Book free consultation” link. It’ll take you to a calendar, you can pick a day and a time to chat with us, we will have a very low-key, no pressure, friendly discussion about your money questions, and we will point you in the right direction and we love to make new friends and have conversations about money questions. So go to dentistadvisors.com, click the “Book free consultation” link. Ask an advisor your money questions today. Thanks for being here, enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to the Dentist Money Show, where we help dentists make smart financial decisions and avoid the bad ones along the way. I am Ryan, and I’m here with Matt, and we’re very happy to be with you. What’s up, Matt?

Matt Mulcock:
Yo, Ryan, I am always happy to be here.

Ryan Isaac:
Yeah, this is a highlight of the week.

Matt Mulcock:
Here’s my question now. So you’re watching Game of Thrones…

Ryan Isaac:
I’m deep in the Game of Thrones.

Matt Mulcock:
So be honest, would you rather be watching Game of Thrones right now or hanging with me recording this? You can be totally honest.

Ryan Isaac:
I have no stance on… You know how it’s kind of cool to be like the rise-and-grind, 25-hours-a-day-working-hard, telling the world how hard you work and you grind all day, never stop working?

Matt Mulcock:
Yeah, you’re talking to me, bro. Yeah. That’s my life, bro.

Ryan Isaac:
You know that’s the cool thing? I have no stance against that or against not doing that, but it does feel weird to just watch a show in the middle of the day unless I’m sick.

Matt Mulcock:
[chuckle] Totally.

Ryan Isaac:
It doesn’t vibe, it doesn’t vibe, it just doesn’t… Now when the sun sets and I’ve had a meal. And even if… Let’s say I didn’t even work at all for a whole day…

Matt Mulcock:
A whole glass of vino, maybe? Maybe not for you.

Ryan Isaac:
A little vino. A little vino. [chuckle]

Matt Mulcock:
Not for you, but for me.

Ryan Isaac:
Even if I wasn’t even productive that day, it feels right, evening time, to watch a good show, so it’s just weird.

Matt Mulcock:
Isn’t that funny? ‘Cause you’re absolutely right. Even if you had… And we have days, like everyone, where it’s like…

Ryan Isaac:
Even if there’s nothing going on.

Matt Mulcock:
You had nothing happening, your wife and kids are out of town, your work schedule’s light…

Ryan Isaac:
House to yourself. Yeah, open calendar. Nothing going on.

Matt Mulcock:
But watching a show during the day, you’re right…

Ryan Isaac:
It doesn’t feel quite…

Matt Mulcock:
It’s almost like you feel a little guilty.

Ryan Isaac:
Yeah, and kind of like for me, I’ll watch it and I’m just like, this isn’t the… Oh, when you settle in and you’re like, “I’m just gonna watch a show,” you kind of feel like you’re just checking your watch, like, I don’t know.

Matt Mulcock:
Yeah, you can’t fully relax.

Ryan Isaac:
I’d rather go on a walk or something.

Matt Mulcock:
Yeah, or be recording with me.

Ryan Isaac:
I’d rather… Okay, so then your question, I’d rather be doing this than watching Game of Thrones…

Matt Mulcock:
Here we are.

Ryan Isaac:
But I will crank it back on later. It’s going crazy right now, Season 6. And here’s what I’m waiting for. These are no puns intended, but I’m sensing this really tension showdown coming between long lost brothers, the Hound and the Mountain.

Matt Mulcock:
Oh, you’re spot on.

Ryan Isaac:
The zombie Mountain resurrected is probably more descriptive, but the Hound and the Mountain have both come back to life basically, from almost dying, and they’re… It’s gonna clash and it’s gonna be big.

Matt Mulcock:
They are on a crash course for each other.

Ryan Isaac:
They are. Okay. Speaking of crashes, Matt, we’re in October of 2020, the stock market has not crashed according to technical definitions.

Matt Mulcock:
It feels like it, though.

Ryan Isaac:
And I swear, as soon as it goes down 10%, people think it crashes. That’s the word that’s used. I’m pulling up my apps here as of… What is today? Today is October 10th.

Matt Mulcock:
Take a look at this.

Ryan Isaac:
October 10th, Dow Jones, year to date, we are in a negative 20.18% decline since the beginning of the year, that is a bear market for the last…

Matt Mulcock:
: S&P.

Ryan Isaac:
Oh, you’re going S&P? What do we got?

Matt Mulcock:
I was gonna look at S&P, we are just below… We are at 24.69%.

Ryan Isaac:
There it is, 24. Let’s go back to the S&P, I like to look at this. The one year, we’re down… We’re almost bear market S&P for a year because as the year goes, and we’re getting closer to the…

Matt Mulcock:
Yeah, end of rolling… Yeah.

Ryan Isaac:
It started declining in January, so we’re getting closer to when it started, the two-year still positive, barely. The five-year still has a decent-ish gain, considering, tenure, of course, and above and beyond. We’re gonna get to that, but… Yeah. So speaking of crashes, that’s what it feels like this year.

Matt Mulcock:
It’s hurtful, yeah.

Ryan Isaac:
Yeah. What’s the vibe, the conversation you’re having with people right now, what are you getting, what conversations are you having about what markets are like right now?

Matt Mulcock:
It’s funny, I get this question a lot from non-clients, just people that know what we do, they’re like, “Man, are your clients freaking out right now?” and I’m being serious, we don’t… I don’t know how you feel, Ryan, but I’m not getting tons of…

Ryan Isaac:
Nah, not really.

Matt Mulcock:
I’m not getting really emails much. Now, we’re coming up near the end of the year, we’re gonna start having our kind of our year end review of the clients and we’re gonna go over their goals and all the stuff we do in our just overall planning. But like… And so I’m sure we’ll talk about it then. And when I’m on a call with a client about something else, it’ll come up and I’ll get the occasional email, it’s always like, “Should I keep my drafts on?” You get that random one.

Ryan Isaac:
Yeah. “Should I keep saving?”

Matt Mulcock:
Yeah, but for the most part, it’s actually been pretty radio silent.

Ryan Isaac:
Yeah. I think the first of the year was a little bit more… Maybe people are used to it now, like it’s gone on long enough and it’s kind of dragging, and it’s like, “Okay. It is what it is.” If I… Yeah. I think if the person has time ahead of them for the majority, like people are just like… No one’s happy with it. Like, you don’t like to…

Matt Mulcock:
No, we’re not happy with it.

Ryan Isaac:
The money that’s sitting there, you don’t like to log in and see what it’s done, but the money that you put in fresh, it feels awesome.

Matt Mulcock:
Reinforcements.

Ryan Isaac:
Yeah. It feels good for the money that goes in fresh, because it’s cheaper than it was a year ago. But the money that’s been sitting there, it never feels that good. But it also never feels like… What have I purchased recently of any significance? I don’t know. You know when you buy something on sale for 20% and then you see it on sale for 30% later?

Matt Mulcock:
And you’re like, “Dang it!”

Ryan Isaac:
You feel like your discount was worthless.

Matt Mulcock:
Yeah. You feel like you’ve lost… It’s like FOMO. Yeah.

Ryan Isaac:
Yeah. You missed out. But that doesn’t make it true just ’cause it feels that way. And that’s I think where people are coming from, they’re like, “Well, I know it’s a 20% discount right now if I invest, but it could be 30% next week.” And you’re like, “Yeah, it could, but it also might be not 20% anymore.”

[laughter]

Matt Mulcock:
Yeah. Exactly.

Ryan Isaac:
It might only be 10% or no discount. Like, things move so fast. So I agree, that’s how the conversation’s been, pretty mellow about…

Matt Mulcock:
Yeah. And I think people, for the most part, just probably know what we’re gonna say. Maybe they… Like, we’re in their ear so much with the podcast.

Ryan Isaac:
So they don’t ask, yeah. [chuckle]

Matt Mulcock:
Well, no, I’ve had clients say this, like, “I know what you’re gonna say,” like in a good way, kind of like, “I know you’re gonna just tell me to… ”

Ryan Isaac:
Keep going.

Matt Mulcock:
“Stick to the plan. I’m only 35, I’m only 45. I’ve got 20 more years.” I think they kind of just know. And because we do so much content, we’re doing webinars all the time, we’re doing podcasts all the time…

Ryan Isaac:
They hear it enough.

Matt Mulcock:
I think people are just hearing from us, like…

Ryan Isaac:
It’s true.

Matt Mulcock:
“Stay the course. There’s nothing changing. Unless it’s changing in your life, don’t make any changes,” that kind of thing. So for the most… Now, maybe it’s a bad thing. Maybe everyone’s sitting there quiet, they want to talk to me, but they’re just too afraid, I don’t know…

Ryan Isaac:
They’re like, “You’re just gonna tell me no.”

Matt Mulcock:
Don’t be scared, you can call me. Yeah. Like, we’ll… I’ll still talk to you.

Ryan Isaac:
It’s still your money. You’re…

Matt Mulcock:
Yeah, yeah.

Ryan Isaac:
I don’t know if it’s helpful or not. I always try to remind people that before we ever have an investment discussion where it feels like there’s a little bit of emotion going on, which is totally normal, I always like to just bring that up. Like, “Hey, I’m not a gatekeeper of your stuff.

Matt Mulcock:
No.

Ryan Isaac:
Like, this is your stuff. These accounts are in your name. This is your life, your money, your decisions. I’m just here to talk and bounce ideas, and I have an opinion and some experience and so do you, and let’s just chat about it.” But in the end, I’m not here to keep you from what you want to do. Maybe I am, [chuckle] I mean, maybe inadvertently by… Maybe I’ll educate on something or say something and then I do keep them from doing what their natural impulse is, and it could be good for them. And that could be true.

Matt Mulcock:
I think I am not afraid to say like, “We’re here to have you second guess… ”

Ryan Isaac:
Totally, totally.

Matt Mulcock:
“Some of the decisions you’re making, by just… ” In a good way. Like you…

Ryan Isaac:
Think about it twice. Yeah.

Matt Mulcock:
Yeah. Like your instinct might be to… Like you said, your instinct might be to go one way. We have you pump the brakes and just think about it from a different perspective.

Ryan Isaac:
That’s true.

Matt Mulcock:
And then maybe you go a different way. Maybe you still go that way…

Ryan Isaac:
Maybe you still do.

Matt Mulcock:But either way, you’ve had that conversation. Yeah.

Ryan Isaac:
At least you’ll know. Yeah. At least you’ll know, like, I visited the topic and explored as much as I can before I made my decision. And that feels better than the regret of not exploring something or thinking about it.

Matt Mulcock:
Yeah, not going through that process.

Ryan Isaac:
Or feeling like you had a choice, too. You have a subject today we’re gonna talk about that is a fun subject, but I think we’re turning it on its head a little bit today.

Matt Mulcock:
And then you were just at a casino or you were in Vegas.

Ryan Isaac:
I was. Aria in Vegas. It was a high-end spot.

Matt Mulcock:
Maybe the Mecca.

Ryan Isaac:
By the way, it was a Friday night at the Aria, two weeks ago, and Jamie Foxx walks through with his crew. That was cool.

Matt Mulcock:
Did you get close to him? Did you say, “What up?”

Ryan Isaac:
I was probably 20 feet away. But it was one of those surreal things when you see someone like…

Matt Mulcock:
You’ve now peaked.

Ryan Isaac:
Dude, yeah, totally.

Matt Mulcock:
Your life has now peaked.

Ryan Isaac:
There was like 25 people around that guy and about… Out of 25 people, maybe 10, maybe a little less than 10 seemed to be like buddies. And the rest were bodyguards.

Matt Mulcock:
All security. [chuckle]

Ryan Isaac:
Gigantic security people, front and back and sides. And he had shades on, walking through, talking on the cell phone. And one of those… I don’t think they’re… When cool people, when they’re full of money and cool people wear them, I don’t think they’re called fanny packs anymore. And they go across your chest, but they’re fanny packs. But you wear them across… What are they called? Like, for what…

Matt Mulcock:
Rich people fanny…

Ryan Isaac:
Rich people packs.

Matt Mulcock:
Rich packs, I don’t know.

Ryan Isaac:
That thing was fat and stuffed with cash, I guarantee it. I’m imagining that was the case. Just ’cause it was in my fantasy book. So we don’t know.

Matt Mulcock:
Okay. But I’ve been thinking about this lately ’cause this whole idea, this whole concept of the stock market is a casino, right?

Ryan Isaac:
Common phrase. Yeah.

Matt Mulcock:
Common phrase. I’ve actually… I was raised on this, I was raised on this thinking.

Ryan Isaac:
Because why?

Matt Mulcock:
That the stock market’s a casino. Just my dad…

Ryan Isaac:
Your family is in real estate.

Matt Mulcock:
My family’s in real estate and my dad got burned in some penny stocks back in the day and kind of equated that to like the stock market.

Ryan Isaac:
Totally.

Matt Mulcock:
And so he… I was raised on this notion, this idea.

Ryan Isaac: Well, he wasn’t wrong. If he got burned on penny stocks, he wasn’t wrong.

Matt Mulcock:
Exactly. [chuckle] Exactly. And this happens a lot, where someone has a specific experience about something and then they extrapolate it out…

Ryan Isaac:
And labels the whole thing.

Matt Mulcock:
To like the entire thing…

Ryan Isaac:
Totally.

Matt Mulcock:
On the entire system. And that’s exactly what my dad did. So he got burned early on, like probably around my age now when he was my age now. And he had some extra money and he put it into some penny stocks with a friend and got totally burned.

Ryan Isaac:
Dang.

Matt Mulcock:
And then pretty much from that point on, he was like the stock market is a casino. And I literally was raised on that.

Ryan Isaac:
Oh, interesting.

Matt Mulcock:
So what did I do?

Ryan Isaac:
Went into the…

Matt Mulcock:
I go into a profession that helps people invest in the stock market.

Ryan Isaac:
Yeah. Weird.

Matt Mulcock:
I’m maybe a bit of a rebel. No, but I was thinking about this whole idea of the stock market as a casino, and I’ve thought about it a lot in my 10 years of doing this, and I’m like, you know what? That’s actually true.

Ryan Isaac:
It’s true.

Matt Mulcock:
The stock market is a casino.

Ryan Isaac:
But…

Matt Mulcock:
But it’s not a bad thing. It’s actually a good thing. And that’s what we wanna break down.

Ryan Isaac:
Well, who’s the casino?

Matt Mulcock:
Who’s the house? That’s the whole key.

Ryan Isaac:
Who is the house? That is the key, man. Like, yes, it’s a casino, but not the way that we traditionally think of casinos where dumb people like me wander around and… Hey, I saw a game actually, I was walking through with some friends, the same trip, and I actually saw a table where you could bet on War. You know the War game? War?

Matt Mulcock:
Oh, heck yes. I’ve seen this and I’m into it.

Ryan Isaac:
I didn’t know this was an actual casino game, dude.

[laughter]

Matt Mulcock:
Yes, I love it.

Ryan Isaac:
But you play War. Isn’t that where you… Like, each of you just slaps down a card, whoever is higher wins?

Matt Mulcock:
You literally flip a card and the high card wins. [laughter] It’s the best. And if you tie, you go to war…

Ryan Isaac:
Oh yeah. Boom, boom, boom, boom.

Matt Mulcock:
And then you start… You gotta flip three cards and then the next one… Yeah.

Ryan Isaac:
And I mean, so most people think of casinos the way that a dumb person like me experiences them, which is like, if I ever take $20 bucks, I throw it in a slot machine and it’s gone instantaneously, and that could have been a meal, a cheap one. But you’re right that the stock market is a casino. This is a hot take, actually.

Matt Mulcock:
Hot take.

Ryan Isaac:
This is the title. The stock market is a casino, but you are the house if you do it right. And that’s just it.

Matt Mulcock:
If done properly…

Ryan Isaac:
You’re the house.

Matt Mulcock:
Yeah. If you approach it in the right way for a long enough period of time, then it’s not a bad thing that it’s a casino. And like you said, you can become the house. You use the same concept that the casino uses, that Vegas uses to make billions of dollars.

Ryan Isaac:
Odds, long term odds.

Matt Mulcock:
Yep. That’s all it is.

Ryan Isaac:
Yeah. Every once in a while, someone’s pulling the lever and the bells are dinging, or a big night at the table, but you do it long enough and they’re just smiling, like, “Have fun, suckers.”

Matt Mulcock:
Yeah, yeah. [chuckle] Exactly.

Ryan Isaac:
Keep going. Don’t leave.

Matt Mulcock:
So we have… We both looked this up. I have… You probably have it too.

Ryan Isaac:
You did, okay. Yeah. What did you look… Did you look up the best odds and worst odds in casino games?

Matt Mulcock:
Yeah. I just have a table here of the main games you play at the casino, and it’s like the house advantage… So I guess that’s like the main thing we wanna break down first, is how does a casino even work? I think most people know this.

Ryan Isaac:
Yeah. But explain it. What’s a house advantage when we say that? What does it mean to be the house? What is house advantage? House always wins. What are you talking about?

Matt Mulcock:
So that’s what’s interesting, is when you really look at these odds, so all a casino does is executes on a very small skew towards them. They call it the house advantage, the advantage of the house. When someone says, “The house always wins,” over enough time, all they do is just… Simple statistics. They take a very, very small positive skew towards them. And we’re talking some games… Like on average, it’s like 1-5% skew, like 5% would even be high.

Ryan Isaac:
Of them winning versus the customer.

Matt Mulcock:
Of them winning versus you. So you roll a dice, you flip a card, there’s like a 0.01-5% chance that the house will… It’ll skew towards the house. Very, very tiny. And that’s by design. That’s gonna keep you coming back. This idea that you’re not gonna… If you flipped a card every time… If you lost every single time, 95% of the time, you would never come back.

Ryan Isaac:
But if you’ve been to Vegas lately, they’re not done building.

Matt Mulcock:
Oh no. They’re building empire on empire.

Ryan Isaac:
It is gigantic.

Matt Mulcock:
Yes. It’s insane.

Ryan Isaac:
Gigantic. I was blown away at how big the place I was staying. It was like a self-contained entire world. Like, there’s money being made for this exact reason.

Matt Mulcock:
Yeah. And again, if you really break this down, which I think is… This is really interesting, is that they just play this small probability of them winning over time and then they literally just bank on this… Their secret truly is time. They’re saying, we know… It’s really this: The law of large numbers, meaning, they just know that millions of people are gonna be coming through and they’re gonna… With enough time, enough rolls, enough card flips, that small advantage over time turns into billions of dollars for them. That’s the concept. It’s very, very straightforward.

Ryan Isaac:
Which is why you get free drinks and why there’s no windows…

Matt Mulcock:
Exactly.

Ryan Isaac:
And why it always seems like it’s about 9:00 PM all day long. [laughter] Yep.

Matt Mulcock:
Yeah.

Ryan Isaac:
Inside.

Matt Mulcock:
They designed the whole environment for you to sit there and stay. You don’t know what time it is ever.

Ryan Isaac:
Entertainment. And these places are like… I mean, I lived close enough to Vegas, I was going there… Sounds funny, I was going there when I was a kid. But we’d always drive through there…

Matt Mulcock:
Yeah, I’ve been going to Vegas forever, I’m a card shark.

Ryan Isaac:
Yeah. It used to be like… There was a push, I think, in the ’90s to make Vegas like a family attraction place, so they kind of put in a lot of rides and stuff. It’s definitely not the case anymore.

Matt Mulcock:
Yeah. [laughter] That lead into the other side of that, yeah.

Ryan Isaac:
But the pools… [chuckle] Yeah. But I mean, I remember those days, but now, man, you feel just like you are in posh, beautiful surroundings. Everything just feels so comfortable. There’s so much to do, so much to eat and drink, and it’s like… It’s highly entertaining.

Matt Mulcock:
Oh yeah.

Ryan Isaac:
It’s just almost overwhelming. It’s so… Like the new hotels are so beautiful. They’re insane. Yeah, and all… All they have to do is just keep you there long enough because of these odds, even small odds over a long enough period of time, like, you’re a guaranteed winner if you do it long enough. And that’s it. And you’re a guaranteed loser if you play long enough…

Matt Mulcock:
If you play long enough. Yep.

Ryan Isaac:
On the other side of that.

Matt Mulcock:
So I’ll start first with the best odds…

Ryan Isaac:
Okay. Alright.

Matt Mulcock:
For you.

Ryan Isaac:
Okay.

Matt Mulcock:
For you as the participant or the gambler, the best odds… In fact, there is one that is completely neutral. It’s single deck blackjack.

Ryan Isaac:
50/50?

Matt Mulcock:
Single deck blackjack has a zero house advantage.

Ryan Isaac:
Ah, okay.

Matt Mulcock:
So a lot of casinos actually have gone to six deck blackjack or like multi deck blackjack because it gives them more of an advantage. If you play a six deck blackjack, it’s 0.5%, it’s half a percentage point towards the house.

Ryan Isaac:
Okay.

Matt Mulcock:
But think about that, it’s a half a percentage point, but what they’re gonna do is they’re gonna get you drunk for free.

[laughter]

Ryan Isaac:
And just keep you going.

Matt Mulcock:
And just make you sit there with enough time to make bad enough decisions to eventually lose.

Ryan Isaac:
Like, sir…

Matt Mulcock:
And they’re gonna say, “Okay, 99% of people are gonna lose.” There might be 1% of you that win, and… That are the high rollers. But like, again, law of large numbers, we know over time, we’re just gonna keep taking advantage of people like me.

Ryan Isaac:
Well, and you know what’s kind of crazy to think about too, in this reverse scenario where the stock market is a casino and you can be the house, your advantage of sticking in a stock portfolio over a long enough period of time, just historically is much higher than a casino’s odds even.

Matt Mulcock:
Yes.

Ryan Isaac:
Cause if we’re saying…

Matt Mulcock:
Oh, for sure.

Ryan Isaac:
If we’re saying the house advantage goes up to 5% for a casino over a long period of time, the equity markets over long periods of time are more than double that on average.

Matt Mulcock:
Yep.

Ryan Isaac:
Just using like S&P 500 data. So like, geez.

Matt Mulcock:
Yeah. And I’m sure there’s some…

Ryan Isaac:
It’s not nothing.

Matt Mulcock:
I’m sure there’s some deep math on this, like some statistician or I don’t know. Robbie could come in here and give us the math side of this.

Ryan Isaac:
Yeah. We should actually have Robbie here. Yeah.

Matt Mulcock:
But like a 5% advantage over the course of so much time probably turns into… I’m sure there’s a lot of deep math on this. But you’re right. If you think… Yeah. And we’ll get to this, we’ll get to the numbers of the stock market and how you can again, treat it exactly like this.

Ryan Isaac:
But Dude, you could replicate the highest maximum advantage of a house in the casino world by having a very conservative portfolio in the stock market for a long period of time.

Matt Mulcock:
Yeah.

Ryan Isaac:
It’s kind of… That’s kind of crazy.

Matt Mulcock:
Yeah. It really is.

Ryan Isaac:
Yeah. Okay. So keep going. Okay, so blackjack.

Matt Mulcock:
So blackjack is the best odds for you. So if you’re gonna stick with any of it, if you’re gonna play any game, go learn and play blackjack.

Ryan Isaac:
Geez.

Matt Mulcock:
And then we’ve got, I’ll just… Then I’ll just start at the top and go down after, other than blackjack. So we’ve got roulette. Roulette is a 5.3% house advantage.

Ryan Isaac:
I wouldn’t have guessed Roulette. Roulette seems like just so random.

Matt Mulcock:
I know. It does seem like you’d have a bigger advantage…

Ryan Isaac:
Yeah, okay.

Matt Mulcock:
Meaning for the house. We’ve got two versions of craps. You ever played craps?

Ryan Isaac:
Never played craps. I’ve heard that that is one of the best games to try to win at. I don’t even under… You roll dice in and it’s cool if you get some numbers and not if you get others. Did I [0:20:15.8] ____ fail it?

Matt Mulcock:
Yeah. So craps is always the fun game. You look out and you’re like, you see the crowd around the table, and they’re like throwing the dice…

Ryan Isaac:
Yeah. They’re like blowing on the dice. Like…

Matt Mulcock:
Cheer, yeah, they’re blowing on it. So I played a few times with some friends who know what they’re doing.

Ryan Isaac:
Oh really?

Matt Mulcock:
It’s a fun time, man.

Ryan Isaac:
It’s a riot?

Matt Mulcock:
If you get going and someone gets hot, like it’s a fun time. Yeah.

Ryan Isaac:
That’s all I actually want, is I actually just want to be a hype man. I just want to hang out with good gamblers. I’m too cheap to… And I don’t really care to learn it, but I just want to hang out at a table where someone’s just like on a hot streak and having a good time. ‘Cause it’s just so fun. It’s fun.

Matt Mulcock:
Yeah. It’s fun if you’re there with your friends and people, you just start high fiving strangers and chest bumping. Yeah.

Ryan Isaac:
Yeah, I’m with that. Okay.

Matt Mulcock:
It can get fun. Craps is fun. So we’ve got craps, which is… So they’ve got two versions. We’ve got craps, they’ve got pass come craps. Then you’ve got pass come with double odds, whatever that means.

Ryan Isaac:
Yeah, sure.

Matt Mulcock:
So that’s a 1.4% and then a 0.6%. So literally, like barely, like minuscule. Then you’ve got… We already hit blackjack, so then you’ve got baccarat.

Ryan Isaac:
Oh, yeah.

Matt Mulcock:
Which seemed like an old dude game where it’s like…

Ryan Isaac:
It does.

Matt Mulcock:
Doesn’t it? Like you’re smoking a cigar playing baccarat…

Ryan Isaac:
It does seem like a back room… Yeah. Like a very smoky room. Baccarat.

Matt Mulcock:
Yeah. Smoky room playing baccarat, 1.2%. Caribbean stud. Never even heard of this…

Ryan Isaac:
Chance… It’s gotta be a poker.

Matt Mulcock:
5.2. Let it ride, 3.5, so on and so forth. The worst odds, if you’re gonna stay away from any game at the casino…

Ryan Isaac:
Slot machines? I’m gonna guess.

Matt Mulcock:
Slots are not great, 5-10% depending on what slot you’re sitting at.

Ryan Isaac:
To the house.

Matt Mulcock:
The worst is Keno.

Ryan Isaac:
Oh… [laughter] It’s funny. It’s probably one of the ones I’ve ever played the most because that’s what the one that’s always going on when you’re eating.

Matt Mulcock:
Yeah. [laughter] So Keno.

Ryan Isaac:
And I’ve never won Keno ever.

Matt Mulcock:
27% for that.

Ryan Isaac:
I’ve actually played quite a few times because it’s going when you’re eating. They’re so smart. We’re so dumb. And they’re so smart. [laughter] Geez, man.

Matt Mulcock:
Yup. They know what they’re doing. So 27% house advantage.

Ryan Isaac:
Okay. So…

Matt Mulcock:
So there you have it.

Ryan Isaac:
My mind, when I also looked up those odds, the next thing I went to, and this may be where you’re going next, so lead us there mighty leader, but was the contrast to what the stock market odds of winning. Your odds… Your chances of winning and you getting a positive return. And you can say what that return would be by just looking at historical data over these time periods. What’s the odds of winning and getting a positive return by being an investor in the stock market over certain periods of time? Did you also go there? That was… That’s where my brain went to. Is that your next point? Or hit your next point if you’re… If that wasn’t the next point. That’s the next…

Matt Mulcock:
No, this is exactly where we’re going. We’re on the same page here. So yeah, go ahead.

Ryan Isaac:
This does make me laugh though, when you’ll… You texted me today and we’re gonna record, and you just said, I’ve been thinking about this like stock market’s a casino thing, but let’s kind of turn it on its head. And we ended up just independently prepping the same timeline of conversations.

Matt Mulcock:
Literally the same thing. We got on, you’re like, “I’ve got these cool odds of all the games that… [laughter] At a casino.” I’m like, “So do I.”

Ryan Isaac:
Me, too. Alright, so the data I pulled up, this is all US stock portfolio data. It’s just basically all the stocks in the US. It’d be something like the Russell 3000 or something, just like a big index. But the first chart that came up, I wish we could show, maybe we’ll do this in a webinar format sometime because there’s some cool visuals here. But I pulled up a chart and this is the last 50 years of data, and I got that just because it felt a little more relevant. 50-year, I mean, it’s so long, but 50 years is an actual timeframe that people will invest for.

Matt Mulcock:
Totally.

Ryan Isaac:
I mean, even if you start somewhere in your 30s and you invest well after retirement, you’re a half a century investor. How crazy is that?

Matt Mulcock:
Easy.

Ryan Isaac:
So, 50 years of data, this is US stock data, and it was the probability of getting a positive return based on how many years you invest for. So if you invest for one year at a time, in any given year, and this is any given year in the last 50 years, so 1972 till now, your probability, and this is what’s crazy, man, your probability in the last 50 years of having a positive year in any single digit year is almost 79%. It’s 78.43%. Like, okay, that’s still better than… [laughter] Even if you are the house of the casino, that’s still… That’s crazy. Two-year period jumps to 86, four-year period, 88, let’s go to a five-year period, 92%, a 10-year period, a 97% chance of a gain. And then you have basically a 100% chance of a gain at 12 years or more.

Matt Mulcock:
Yep. I know we’ve never had a negative 15%. We’ve never had, in a hundred plus years of data in the US, we’ve never had a negative rolling 15-year period or more or longer.

Ryan Isaac:
Which is like, I know when you’re in it, I mean, out of almost 500 clients that we work with, I know, and many of them are new to investing in the last several years or even this year. And for those that are, I salute you because you’re learning, you’re getting some investment chops early in your career, and it’s actually better for…

Matt Mulcock:
Could be one of the best things for you, honestly.

Ryan Isaac:
It might be one of the best things for your investment career, although you’re probably losing your mind. I get it, it’s okay. I just think about like, I know when you say like 12 years, 15 years, there’s no losses in any rolling period, that seems like a long time when you’re a year in or two years in. And your first few years are losses, I know what that must seem like. But if you’re an investor starting like most, somewhere in your 30s, and you go well after retirement into maybe your 70s, 80s, 90s, that… I mean, you’re gonna have multiple periods of that 12-15 years. And when we start saying that there’s no scenario in any rolling period less than 12 years where there’s not 100% chance of getting a positive return, I mean, you just can’t ask for better odds. And especially when you’re talking… We say this a lot. When you’re talking about an investment that is like constantly liquid, completely transparent, has like low barrier to entry, anyone can do it, you can do it on an app, you can do it through a person. Costs are relatively low compared to a lot of other investments and what they used to be, and what returns end up being, given all this stuff, and your ability to diversify so that your risk of permanent loss of money, like it can’t disappear forever…

Matt Mulcock:
Basically, non-existent. Yeah.

Ryan Isaac:
It’s just like, man, they’re good odds. Now, they’re not sexy in the term… In the perspective that it’s fast. [laughter] But nothing…

Matt Mulcock:
But what is?

Ryan Isaac:
What really is, that isn’t a giant risk?

Matt Mulcock:
Yeah. What path to wealth is quick?

Ryan Isaac:
Yeah. None of them. So anyway, yeah, it’s really kind of crazy to just think that, hold it for a little more than a decade and there’s never been a period of time where there’s been loss. And if I scroll and we’re probably looking at a little bit different data, but if I go to… I’m gonna go to that 12-year rolling returns. Okay. So in that… Okay, so in the data I’m looking at, and this might be different than a chart that says like just the S&P because mine was a chart from all of the stocks, which is just a little bit more comprehensive than S&P, but it’s gonna be really similar. If I go to the chart for the 12 years and we’re saying that there’s no 12-year period of time, like any 12-year period of time, you have 100% chance, so far, historically of having a positive return. Here’s some stats from the average 12-year period of time in the last 50 years. The average return in this US stocks again has been 11.18%. The best return any 12-year period has been 18. The worst has been 1.28 and of course, that was January 2000 to December 2011.

Matt Mulcock:
Yeah. The worst decade for… Yeah.

Ryan Isaac:
The worst decade of US stocks in like US history with no negative periods in 50 years. So like your average return over the last 50 years in any 12-year rolling period of time, had no negative returns. The average was just shy of 12% return, which is like, dude, pull out a calculator and see what money turns into at 12% over 50 years.

Matt Mulcock:
Right.

Ryan Isaac:
Not like every year does that. But see what that does.

Matt Mulcock:
On average. Yeah.

Ryan Isaac:
On average. See what that does, it’s more money than you think it’s gonna be. And so it’s like, “Well what if you didn’t even get 12? What if you achieved 8% of that over your career?” ‘Cause sometimes you pulled money out and you had life events and maybe you didn’t invest all the way aggressively in all stocks. Maybe you had some bonds and cash in there. It’s still like, if you stick to this stuff, it’s still a lot of money if you’re saving.

Matt Mulcock:
Yep.

Ryan Isaac:
It’s just pretty incredible, especially, sorry, I was just gonna say, especially when, to go back to our example, we’re talking about a city and an entire industry built on much smaller odds over long periods of time and it’s just flourishing. Like it’s…

Matt Mulcock:
It is…

Ryan Isaac:
Like [chuckle] it can’t even build enough because they’re getting so much money in it. And so your odds as a stock investor if you stick to it, they’re just incredible. It’s kind of crazy to look at those stats.

Matt Mulcock:
I was gonna say exactly what you just said. It’s the same concept. It’s the same secret. It’s the same secret sauce that Vegas uses. It’s what you just said. It’s this exposure, they’re exposing you to a slight skew in their direction, a slight positive skew for them, negative skew for you as the gambler. And then, but it’s the same concept for you, we just went over. You’re exposing yourself to a daily, monthly, yearly, quarterly, decade-long, multi-decade long skew towards positive returns. And you do that over a long enough period of time, you win, every time.

Ryan Isaac:
Yeah, you will.

Matt Mulcock:
So I was gonna double down on your stats. You were…

Ryan Isaac:
Okay. Double it.

Matt Mulcock:
So you’ve got…

Ryan Isaac:
Wait, is… That’s a gambling term, double down?

Matt Mulcock:
Double down. I’m double… You see what…

Ryan Isaac:
Isn’t that in blackjack?

Matt Mulcock:
Yeah. You see what I did there? Yeah, I’m gonna split them. I’m gonna double down. Yeah.

Ryan Isaac:
Yeah. Okay. Someone talk about this. Alright yeah.

Matt Mulcock:
Double down. No. So I took S&P data because I’m lazy, but the concept is still the same.

Ryan Isaac:
Okay.

Matt Mulcock:
So over three years… So this is from 1926 to 2000 or 2022.

Ryan Isaac:
Yeah. But you went a century. You did double down. This is a century of data.

Matt Mulcock:
Yeah. Literally, let’s just call it 100 years, looking around that.

Ryan Isaac:
I was lazy because I did 50 years. You did 100. So you went above…

Matt Mulcock:
But I just doubled down because we went double the time. Right?

Ryan Isaac:
You did double down. Okay.

Matt Mulcock:
Just doubling down. Okay. So three years. So this is annualised return, average annual returns high and low. So it took best three years, annual return, 10 years, 20, 30, and then lowest.

Ryan Isaac:
Okay.

Matt Mulcock:
So for a three-year period, the highest annualised return for any three-year period over that 100 years was 43.35%.

Ryan Isaac:
Geez.

Matt Mulcock:
Crazy. Right?

Ryan Isaac:
Does that have a period of time for that?

Matt Mulcock:
It does not.

Ryan Isaac:
Okay. I was just curious.

Matt Mulcock:
No. We probably can go dig into that, but…

Ryan Isaac:
No, It’s alright. Okay. It’s a hot, it’s a high.

Matt Mulcock:
It’s high, right? Lowest was 42.35%. So basically, a coin flip. Am I gonna be up 40% a year for three years or down 40% for…

Ryan Isaac:
Yeah. Okay.

Matt Mulcock:
Right? You go out to 10 years, its best annualised rate of return over any rolling 10-year period was over 21%. The lowest was just below 5%. Negative, sorry, negative 5%.

Ryan Isaac:
Yeah.

Matt Mulcock:
20 years, you go to 18.26% per year over a 20-year period. The lowest was 2%. So now you’re positive.

Ryan Isaac:
Yeah.

Matt Mulcock:
The lowest was a 2% rate of return. 30 years, the highest annualised rate of return for the S&P, any rolling 30-year period, was 15, just below 15%, the lowest 8%, 8% the year is the worst.

Ryan Isaac:
The worst return you could get if you’re a 30-year investor is 8%. Again, pull out a financial calculator or go online and see what your money does at 8% a year for 30 years.

Matt Mulcock:
Yep.

Ryan Isaac:
Any dentist with average savings is gonna accumulate enough money over a 30-year career. And that’s not even post-career investing. It is amazing. And it’s also, I guess in the same conversation, this show… Okay. So one question would be like, well then why doesn’t everyone just do this?

Matt Mulcock:
Yeah. Right.

Ryan Isaac:
So you’re telling me that every investor out there gets amazing returns and if they hold… They don’t have any losses. Like, no, actually the funny thing is, this is the data for what the market can do for you. And then the data from what people actually experience is vastly different.

Matt Mulcock:
Yep.

Ryan Isaac:
Why?

Matt Mulcock:
I have an answer for this. [laughter]

Ryan Isaac:
Yeah. [laughter]

Matt Mulcock:
If you want it. [laughter]

Ryan Isaac:
What’s the answer, Matt?

Matt Mulcock:
I think the answer is because most people think that getting these types of results that we’re talking about is about mastering like the technicals.

Ryan Isaac:
Yeah.

Matt Mulcock:
Like they think of the grand challenge of investing as technicals or strategy or like…

Ryan Isaac:
: Or the timing.

Matt Mulcock:
Or timing, right?

Ryan Isaac:
Mm-hmm.

Matt Mulcock:
When really, it’s just temperament. It’s mastering yourself.

Ryan Isaac:
Yeah. Yeah.

Matt Mulcock:
It’s how do I master myself and create a system I can stick with?

Ryan Isaac:
Yep.

Matt Mulcock:
And remove emotion from it and treat this truly like I’m the casino, I’m the house. Like that is all done from mastering your temperament, creating a system, consistently sticking to it over a 30-year period. Think of anything in your life and you say, anyone that’s 35 or older, what in your life have you stuck to for 30 years?

Ryan Isaac:
I know.

Matt Mulcock:
Like, it’s really hard. That’s what it is, but it’s not a technical side of it. It’s the temperament side of it.

Ryan Isaac:
Man, I love it. Yeah. Not… It’s temperament, not technical.

Matt Mulcock:
Yep.

Ryan Isaac:
Yeah. That’s so true. And it’s like any business. I mean, how do you say this the right way? [laughter] How many of you know really, really successful dentists that aren’t necessarily like the sharpest business people you’ve ever met in your life or weren’t necessarily the top of their class in dental school?

Matt Mulcock:
Yeah.

Ryan Isaac:
This isn’t like a knock, I’m just saying like, the key to success isn’t being the absolute smartest in figuring out the most technical aspects of every approach to running a dental practice either. It’s like, do you do ordinary things long enough for the averages to work in your favour?

Matt Mulcock:
Yep.

Ryan Isaac:
And the same thing goes for health and fitness and other kind… I mean, real estate investing’s no different.

Matt Mulcock:
No.

Ryan Isaac:
I mean, it’s not a different path. All of these have one common denominator to success and it’s what you said, it’s temperament.

Matt Mulcock:
Yeah. It’s…

Ryan Isaac:
So smart.

Matt Mulcock:
And it’s having that system and sticking to it. Real estate’s a great example. We have so many people that come to us and think what we’re describing right now, like you said, is not sexy. Like they’re thinking, I wanna get into real estate.

Ryan Isaac:
Which is kind of true. It isn’t really sexy.

Matt Mulcock:
It is not sexy. It’s not…

Ryan Isaac:
I mean, you know.

Matt Mulcock:
Somehow, real estate seems sexier, which is why it’s so easy.

Ryan Isaac:
Seems more… Well, it’s like you… Yeah. I get it. I know… You get it…

Matt Mulcock:
I get it. But it’s the same concept, like…

Ryan Isaac:
Same old stuff.

Matt Mulcock:
: The tool you’re using is different, but the concept is the same.

Ryan Isaac:
Same stuff.

Matt Mulcock:
You gotta have the right temperament and you’ve gotta have a system for success. Like, that’s it.

Ryan Isaac:
And do it for a long time…

Matt Mulcock:
And you’ve got to, like time… Yeah. You gotta wait for a long time.

[laughter]

Ryan Isaac:
Yeah. Well, what I’m trying to say with like, you know, you don’t have to be like the most brilliant academic dentist and you don’t have to be the most brilliant super MBA entrepreneur mind to be a successful dentist, run a successful practice and make a lot of money over a long period of time. But like, so what are the characteristics then for those who are successful, who do stick to it over a long enough period of time, who do the average, boring, mundane daily stuff for enough days to have the averages work in your favour? Like, what are the… Why do those people do it? I mean…

Matt Mulcock:
Yeah. I think number one, it’s gonna sound… People are gonna be like, of course, they’re saying this but…

Ryan Isaac:
Well, let us tell you what… We’ll let you know.

Matt Mulcock:
Yeah. But no, but like, this is like the number one foundational answer every time. It’s the ones that are successful that are doing this, number one, are organised…

Ryan Isaac:
Mm-hmm.

Matt Mulcock:
That’s it. Like they’re organised. The foundation of which everything is built when it comes to money and building wealth is they’re organised. They know their numbers.

Ryan Isaac:
You just know what’s going on.

Matt Mulcock:
They know exactly what’s going on.

Ryan Isaac:
Yes.

Matt Mulcock:
And I think a part of that too, this organisational thing we always talk about, and I’ve mentioned this a bunch and I think it fits into this category, is you just said it, they know what’s going on and specifically around what is success to them. I think that cannot be overstated in my mind enough. I’m always talking to my clients about this of like, what… Like define success for yourself ’cause that’s different for everyone and then…

Ryan Isaac:
Or redefine. Let’s define it every year because it might have changed.

Matt Mulcock:
Every single year. Exactly.

Ryan Isaac:
Yeah.

Matt Mulcock:
But if you’re not starting with that, and I’ve seen dentists do this where it’s like they have no clue what success even is to them. They’ve not… They’ve never defined it. And so then it’s like, well then what are we working towards?

Ryan Isaac:
Then you’re never getting there, ’cause it’s not…

Matt Mulcock:
Yeah.

Ryan Isaac:
You don’t even know where that there is.

Matt Mulcock:
You’re building a DSO or you’re running a lifestyle practice, those are two very different things.

Ryan Isaac:
And everything in between. Yeah, that’s totally true.

Matt Mulcock:
Yeah, I think that’s key to this organisation piece of it.

Ryan Isaac:
Thanks for the conversation. I liked… I enjoyed my time in Vegas a couple weeks ago.

Matt Mulcock:
Yeah.

Ryan Isaac:
And actually, shoutout to my Uber driver. So real quick story. I got in my Uber and this dude was rocking out to a little known artist. If anyone listening to the show knows this artist, just reach out and tell us. This is just super cool. It’s this artist named JMSN. J, and he spells it, J… It’s all capitals. J-M-S-N, JMSN.

Matt Mulcock:
Okay. I’ve never heard of them.

Ryan Isaac:
Okay. It’s like the most soulful, smooth, like R&B. Like it’s kind of the stuff you put on like on a good date. Alright.

Matt Mulcock:
Yeah. [laughter]

Ryan Isaac:
Driving in the car…

Matt Mulcock:
Everything going well, put on some JMSN. Pour some JMSN.

Ryan Isaac:
Dude, it’s this skinny little White guy. So short story. One of my good friends that I used to play in a band with was his drummer for a long time.

Matt Mulcock:
Okay.

Ryan Isaac:
So I get in this Uber and I tell this guy, I’m like, “JMSN fan.” The guy loses his mind that I know who JMSN is. And then he proceeds to crank up JMSN as he’s driving me to the hotel. We arrive at the Aria and there’s a big roundabout, like this huge circle you can go in, and he is like, he goes, “Look, if you’re not in a hurry, there is a seven-minute guitar solo coming up and you just have to feel this.” And he turns it up so loud. We’ve got windows down and we’re going in circles around the front of the Aria…

Matt Mulcock:
Around Aria…

Ryan Isaac:
Dude, I’ve got a video of it from the back seat. He’s playing air guitar ’cause we’re going like 5 miles an hour in this little circle. And he is just absolutely rocking his brains out playing air guitar to some JMSN guitar solo. And it was, I just… Thank you to my Uber driver.

Matt Mulcock:
That guy is living his best life.

Ryan Isaac:
He kicked off my Vegas weekend very nicely.

Matt Mulcock:
Yeah.

Ryan Isaac:
And so this was a very appropriate conversation. Thanks for bringing it to the show, Matt.

Matt Mulcock:
Yeah. There you go. Treat your portfolio… Treat yourself like you’re a casino, and you’ll be more successful.

Ryan Isaac:
You are the house. We need a shirt.

Matt Mulcock:
You are the house.

Ryan Isaac:
That’s the shirt.

Matt Mulcock:
And the house always wins. We just showed that.

Ryan Isaac:
Yes. That’d be the front. You are the house and the back is, the house always wins.

Matt Mulcock:
The house always wins. Yep.

Ryan Isaac:
That’s the new T-shirt…

Matt Mulcock:
That’s it.

Ryan Isaac:
For today’s episode. Thank you, Matt. Thanks everyone for tuning in. And one thing that we love doing is we love when people have money questions, like really nitty-gritty, specific, detailed money questions that they wanna figure out in their life. And a really simple way for you to get an answer to your money question is to go to our website and click on the “Book free consultation” button and you’ll link up your calendar with that of one of our advisors. And maybe we’ll have a five-minute chat about your money question and point you on your way and that’ll do it. Or maybe we end up talking for a long time and we have more solutions that might help you. We don’t know. We’ll find out.

Matt Mulcock:
We have no idea.

Ryan Isaac:
We have no idea. Let’s go on the journey together.

Matt Mulcock:
Yeah.

Ryan Isaac:
Go to dentistadvisors.com. Click the “Book free consultation”. Let’s have a chat.

Matt Mulcock:
It’s a roll of a dice.

Ryan Isaac:
Yeah.

Matt Mulcock:
A roll of the dice. Huh? Huh.

Ryan Isaac:
Just roll the dice, folks.

Matt Mulcock:
: How many casino puns can we have?

[laughter]

Ryan Isaac:
Oh, we could do… If I’d been thinking about this more actually, I would’ve dig… I feel like we could have done that. [laughter]

Matt Mulcock:
We’re gonna double down on the roll of a dice.

Ryan Isaac:
Roll the dice, folks. Mattie, thanks.

Matt Mulcock:
Thanks, Ryan.

Ryan Isaac:
All you listening, thanks. We’ll catch you next time on another episode of Dentist Money Show. Take care now. Bye-bye.

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