Will the Markets Lose Its Steam?

WEBVTT100:00:00.960 --> 00:00:04.919Good morning everybody. It's that timeonce again, it's Money Matter Show right200:00:04.960 --> 00:00:09.240here at eight o'clock A and ST seven ninety am. The markets,300:00:09.320 --> 00:00:12.800we're going to talk about that.Obviously, the big move to this week400:00:12.960 --> 00:00:19.399was all about the Federal Reserve notraising interest rates, but basically also saying500:00:19.879 --> 00:00:24.039we're done right now, things areworking in our direction, and the markets600:00:24.559 --> 00:00:28.800took off. That made the wholetime new high. Actually, how cool700:00:28.879 --> 00:00:32.159is that? And it's only uptwelve percent this year? Can you imagine800:00:32.200 --> 00:00:37.000that they did what S ANDP andand NAZDAC did. Those those indexes are900:00:37.079 --> 00:00:40.679flying. They were up twenty twoon the S and P and NAZDAK forty1000:00:40.679 --> 00:00:44.759one all because of about seven ofstocks or so. They just keep sowing1100:00:45.759 --> 00:00:50.759and getting extended and extended. There. The equal weighted had a good week1200:00:50.799 --> 00:00:55.640also, almost four percent, andthey were up ten point eight percent now1300:00:56.280 --> 00:01:00.679for the for the year. Sowhere do we go from here? Do1400:01:00.759 --> 00:01:06.879you believe Powell? What else isgoing on? These are things that we're1500:01:06.879 --> 00:01:10.959going to discuss today right here onthe Money Matter Show. Well, let's1600:01:10.959 --> 00:01:15.439start off with this. The showis brought to you by Greenberg Financial Group.1700:01:15.840 --> 00:01:21.120Greenberg Financial group is both a residentedinvestment advisory and a brokadale well they're1800:01:21.120 --> 00:01:23.959registered with the SEC, members ofFENUA and members of SEPIK. On the1900:01:25.000 --> 00:01:29.120show, we talk about different products, different strategies, definitely different ideas.2000:01:29.599 --> 00:01:34.719Everything we discussed talk about has sometype of risk. Please understand your risk2100:01:34.760 --> 00:01:42.079tolerance. Please understand the risks thatare involved in things. We cannot over2200:01:42.280 --> 00:01:52.480emphasize enough risk reward strategies, especiallyas we get older and you know the2300:01:52.560 --> 00:01:57.200losses are that need to have timeto take back. You kind of get2400:01:57.239 --> 00:02:01.599more stressed out about it then whenyou're sixty seventy years old than when you're2500:02:01.879 --> 00:02:06.599thirty or forty or fifty years old. Even so, make sure there's quality,2600:02:06.920 --> 00:02:10.319make sure you understand where your risktolerance is and understand the balance of2700:02:10.319 --> 00:02:15.560what's going on right now. Obviouslyyou know would be in a balanced account2800:02:15.599 --> 00:02:20.759fifty to fifty right now. Thepart of the the growth is moving higher,2900:02:21.120 --> 00:02:23.120the part with the bonds is justgiving you the income which is not3000:02:23.199 --> 00:02:28.479bad now four or five percent,which is good over time. But you3100:02:28.479 --> 00:02:30.159don't see the big moves when themarkets move, but you do see it3200:02:30.199 --> 00:02:36.520on half. So hopefully you know, most accounts are up more than half3300:02:36.560 --> 00:02:39.280of what the S and P isand and that's a that's a good moves.3400:02:39.800 --> 00:02:45.759So let's see here. Powell comesout and talks about interest rates and3500:02:45.840 --> 00:02:51.960basically says, we're not done raising. We're not We're not going to raise3600:02:52.479 --> 00:02:57.240anytime soon. What the caveat ishe knows he would if he had to.3700:02:58.240 --> 00:03:01.439The markets took that as if sometimein the next three to six months3800:03:02.280 --> 00:03:09.159they're going to lower interest rates.There's no way they're going to lower interest3900:03:09.240 --> 00:03:15.800rates if everything's working the way itis unless there's a real problem, a4000:03:15.879 --> 00:03:22.759severe recession, something that hurts oureconomic growth that we don't know, a4100:03:22.800 --> 00:03:28.479black Swan event. Those things comeout of nowhere, and I don't believe4200:03:28.599 --> 00:03:32.680or see that happening. But whenthey do happen, do we have enough4300:03:34.479 --> 00:03:37.520what I call some men's stairs andout a house of cars that we keep4400:03:37.520 --> 00:03:39.560falling down? And the answer isno. I mean, we're kind of4500:03:39.560 --> 00:03:45.240blowing up here pretty good. Evaluationsare getting high again. You know,4600:03:45.280 --> 00:03:49.479we're in this December. Nobody wantsto sell this tax selling. Nobody really4700:03:49.759 --> 00:03:53.400wants to sell any of those bigcompanies that would create a bigger move down4800:03:53.639 --> 00:03:58.479because everyone's got gains in them.The dal Jones is not making all time4900:03:58.520 --> 00:04:04.919new highs. You know, it'sit's it's not even environment for the next5000:04:04.919 --> 00:04:11.719few weeks that I see anything reallytaking us down maybe than two or three5100:04:11.759 --> 00:04:15.479percent, and then rally back up, maybe into the end of the year.5200:04:16.319 --> 00:04:19.800My gut is telling me forty seven. You know, we had little5300:04:19.800 --> 00:04:24.720resistance right now. This forty sevento twenty five we get through there.5400:04:24.720 --> 00:04:29.279We got forty seven fifty to fortyeight hundred if we stop moving towards that,5500:04:29.399 --> 00:04:34.000I can easily see with no sellingcoming in, manipulating of the markets,5600:04:34.040 --> 00:04:39.480moving us to all time new highs, which would shock everybody. I5700:04:39.600 --> 00:04:43.120did not believe that this year weget to all time new highs, even5800:04:43.120 --> 00:04:46.639though the thirty of the presidency's usuallygood. But we had Powell out there5900:04:46.680 --> 00:04:53.040pounding the table that he's leaving rateshigher for longer. That's not an environment6000:04:53.079 --> 00:04:56.560you want to go ahead and getall excited about jumping in with both feet.6100:04:58.879 --> 00:05:02.279So absolutely on a risk reward strategy. I never saw the reward to6200:05:02.319 --> 00:05:05.720where we're so over sold, sodown that you have to jump in with6300:05:05.759 --> 00:05:11.560both feet. We got down onthe risk reward barometer, maybe down to6400:05:11.759 --> 00:05:14.680three. When we got down tothirty five hundred thirty six hundred, and6500:05:14.759 --> 00:05:17.680we bought there. But as wegot over four thousand a couple times forty6600:05:17.680 --> 00:05:20.680two forty three hundred, I thoughtwe got a little bit high, but6700:05:20.800 --> 00:05:25.160that's why you never sell, andthen we got back in again. I6800:05:25.240 --> 00:05:30.360would say we'll probably about getting closeto a seven seven and a half right6900:05:30.399 --> 00:05:36.720now on the risk parometers, whereyou maybe have ten as the highest.7000:05:38.639 --> 00:05:41.879Seven seven seven and a half,we're getting to we go over and make7100:05:41.959 --> 00:05:45.959new highs. I think we'll beat about a nine all right, because7200:05:45.959 --> 00:05:47.879I don't see new money coming inand just saying, oh, buy the7300:05:47.920 --> 00:05:53.279market, especially when you can sitthere right now and wait and go get7400:05:53.319 --> 00:05:59.279yourself four four and a half fivepercent in corporate paper money markets things like7500:05:59.319 --> 00:06:03.079that, and wait. There issupport coming in because of money from the7600:06:03.120 --> 00:06:09.600fore one case that that start upagain, from bonus money, from pension7700:06:09.639 --> 00:06:12.959money. There's a lot of moneythat comes into the market in the first7800:06:13.040 --> 00:06:15.160three months of the year, whichis why you usually see a rally.7900:06:15.480 --> 00:06:18.800I would not be surprised to seeprofit take it after the first of the8000:06:18.879 --> 00:06:24.800year people trimming back their positions andbringing the markets down a little bit.8100:06:25.399 --> 00:06:29.279It is an election year, sodon't expect anything to happen that's going to8200:06:29.399 --> 00:06:34.279be that bad. Coming out froma political standpoint, you know that the8300:06:34.319 --> 00:06:38.600Democrats want to be pounding the table. Now that the markets have made new8400:06:38.680 --> 00:06:43.519highs, let's ride it. Weknow that what he's doing is not helping8500:06:43.560 --> 00:06:47.920the under the underlying the economy.People struggling. We all know that.8600:06:48.720 --> 00:06:54.199We know that, and that's what'shappening right now. We know that there8700:06:54.240 --> 00:06:59.920are problems. We know that there'ssituations that can hurt us at any time.8800:07:00.839 --> 00:07:02.879Can inflation come back, of easymoney comes in, it could.8900:07:03.480 --> 00:07:08.199Then the markets are gonna get scaredbecause, let's face it, guys,9000:07:08.439 --> 00:07:12.360unemployments are three point seven percent.People don't want to work, they don't9100:07:12.600 --> 00:07:17.120want to work. There's too manypeople that can work that won't work,9200:07:17.319 --> 00:07:24.759and which is inflating wages and that'sinflationary. My feeling is you're going to9300:07:24.800 --> 00:07:28.639see a pretty good holiday season.I think credit cards are getting up.9400:07:28.680 --> 00:07:31.800We know that, we know thatthe money in savings is going down.9500:07:32.680 --> 00:07:36.199We also know that people say,heck, I'm gonna have a good Christmas.9600:07:36.360 --> 00:07:41.319It's a couple of years removed fromthe pandemic. This is gonna be9700:07:41.319 --> 00:07:43.600a good one, and then we'llslow down. So I think it's true9800:07:43.639 --> 00:07:47.279a consumer discretionary could be a littlebit difficult going into next year, especially9900:07:47.279 --> 00:07:51.199at the beginning. I think retailsales will be soft a little bit in10000:07:51.240 --> 00:07:55.000the first part of the year becausepeople want to pay off those credit cards10100:07:55.439 --> 00:07:59.240that they're going to raise now,because let's face it, interest is so10200:07:59.800 --> 00:08:03.600high on cards when you do notpay them off. I mean, you10300:08:03.680 --> 00:08:09.839got anywhere from fifteen to probably twentyeight percent on the average that people pay,10400:08:09.160 --> 00:08:13.199and that just doesn't allow you toget ahead of the game and get10500:08:13.199 --> 00:08:16.279that paid off. So I seethat. What I do see is the10600:08:16.319 --> 00:08:20.839industry in defense stocks. I don'tthink defense stocks have any reason to be10700:08:20.959 --> 00:08:28.040really not doing well, all right. I know Raytheon Obviously RTX industries got10800:08:28.079 --> 00:08:33.919hit a while, and we'll seewhat happens with that. But you gotta10900:08:33.000 --> 00:08:37.240believe, just like Boeing and allthese other stocks that get beat up because11000:08:37.240 --> 00:08:43.440of certain situations, in rtx's wasthe Pratt and Whitney engines. Guess what11100:08:43.559 --> 00:08:46.080ends up happening. Eventually that allgets fixed, the earnings come back,11200:08:46.279 --> 00:08:50.519and the stock goes back up towhere it was and makes new highs.11300:08:50.559 --> 00:08:54.559I'm not saying that's gonna happen.Don't know if it's gonna happen, but11400:08:54.679 --> 00:09:00.080I don't believe that we're gonna stopbuilding bombs and weaponry. And you know,11500:09:00.200 --> 00:09:03.240Raytheon is right there with it.I mean, think about the in11600:09:03.360 --> 00:09:07.559Israel, the whole uh, thewhole dome to protect them, it's come11700:09:07.600 --> 00:09:11.559out of you and the missiles,it's coming out of Raytheon. They're going11800:09:11.639 --> 00:09:15.399to continue to make money, lotsof money, and it's not gonna stop.11900:09:16.159 --> 00:09:22.799Protection of countries is going to beat an all time high, especially12000:09:22.840 --> 00:09:28.000with the threat of of of ofChina going into Taiwan, Russia moving it12100:09:28.039 --> 00:09:35.200with into into uh Ukraine, andobviously we see the Middle East crisis that's12200:09:35.240 --> 00:09:37.360going on over there too. We'llsee where that goes. All right,12300:09:37.440 --> 00:09:41.960is there gonna be anything else that'shappening? I don't know how can we12400:09:41.039 --> 00:09:45.320defend everything if this is If youdon't think this isn't making us weak,12500:09:46.320 --> 00:09:50.320I think you have another another ideathat I don't because I do think all12600:09:50.399 --> 00:09:56.720this money that we're pouring into allthese other countries helping them is important,12700:09:56.240 --> 00:10:01.120except that we have to worry aboutourselves too. We can not keep having12800:10:01.200 --> 00:10:07.000debt and growing our debt. There'sgot to be a balance here, and12900:10:07.080 --> 00:10:11.639I don't see Congress doing anything tobalance it out. And the biggest fear13000:10:11.720 --> 00:10:16.480I have is when we start gettinghit in the United States with all the13100:10:16.519 --> 00:10:22.000people coming across the border that all, let's put it this way, not13200:10:22.120 --> 00:10:26.799the best citizens in the world.Okay. I know that we've all seen13300:10:26.879 --> 00:10:31.879how many people are coming in fromall those bad countries, bad actors.13400:10:33.440 --> 00:10:37.080Why are twenty four thousand Chinese comingacross the border? What have they got13500:10:37.120 --> 00:10:43.440to come across the border? Allthe illegal people coming in, we're catching13600:10:43.480 --> 00:10:48.120some a lot of them or notthe bad actors. I know a lot13700:10:48.120 --> 00:10:52.759of immigrants that come here are greatpeople. I'm worried about the bad ones.13800:10:52.799 --> 00:10:58.320I'm worried about the infiltration of thebad actors, just like nine to13900:10:58.360 --> 00:11:07.279eleven. Whoever thought that we wouldhave terrorists infiltrating our airline industry and being14000:11:07.320 --> 00:11:11.320able to fly seven forty sevens.Nobody in the imagination thought that would be14100:11:11.360 --> 00:11:16.919the key case. So what arewe planning now? We have an electric14200:11:16.960 --> 00:11:22.120grid, we have a water watersupply, we have so much that can14300:11:22.159 --> 00:11:28.759cripple us. But yet we're notallowed to say anything, do anything until14400:11:28.799 --> 00:11:33.799something happens. And then everyone getsangry and everyone worries. Why is everyone14500:11:33.840 --> 00:11:37.960angry? Except of course when itcomes to Israel. Then it's okay for14600:11:37.240 --> 00:11:43.240people to be angry with Israel andbe pro hamas and protests. That's okay14700:11:43.279 --> 00:11:48.399with this administration. Okay, well, schools, maybe not the administration.14800:11:48.440 --> 00:11:50.559I know there's people there that don'tagree with it, but shut it down.14900:11:52.559 --> 00:11:56.759Call it what it is. It'sterrorist talk. When you want to15000:11:56.759 --> 00:12:01.840genocide a group of people, that'sterrorist talk. When parents are fighting for15100:12:01.919 --> 00:12:07.240the kids for education, they're notdomestic terrorists. Sorry, they're fighting for15200:12:07.320 --> 00:12:11.600their kids' education not to be whatthey don't want it to be, and15300:12:11.639 --> 00:12:15.960they have that right. But thisadministration called them domestic terrorists, but will15400:12:15.960 --> 00:12:20.600not call the people calling for thegenocide of Jews domestic terrorists. Think about15500:12:20.639 --> 00:12:24.639that. So we start going throughall this, where are we going to15600:12:24.679 --> 00:12:28.759be and when it's something going tohappen? I don't want to live in15700:12:28.879 --> 00:12:33.200fear that something's going to happen.But every time you hear from Homeland Security15800:12:33.200 --> 00:12:39.240and everything they tell you they can'tcatch everything, they don't know everything something,15900:12:39.679 --> 00:12:45.679the ability for something to happen getsgreater and greater. So why are16000:12:45.720 --> 00:12:50.480we waiting for that? So youhave this, you have Congress, and16100:12:50.519 --> 00:12:54.360the Republicans are getting beat up forthis, which I think is ridiculous,16200:12:54.639 --> 00:13:00.720that say we don't have a problemgiving money to Ukraine as long as we16300:13:01.279 --> 00:13:07.639include more border security for US,and Biden almost started going with it a16400:13:07.679 --> 00:13:11.759little bit, and then it's goneaway to the point, first of all,16500:13:11.840 --> 00:13:15.679we should have the border secure beforewe're starting to give money away,16600:13:16.039 --> 00:13:18.799and that's why we should be sellingyour creat and everybody else. We'll give16700:13:18.840 --> 00:13:22.679you money, and we don't havea problem giving you money, but we16800:13:22.759 --> 00:13:26.519have to come up with some moneyfor us too to secure our borders,16900:13:26.759 --> 00:13:31.320because otherwise it doesn't make sense.And they continue to look at it that17000:13:31.360 --> 00:13:39.279way, because you know what,our economy will absolutely get hurt if anything17100:13:39.360 --> 00:13:46.000happens from a terrorist attack inside ourown borders, because nobody's gonna believe that17200:13:46.000 --> 00:13:50.879there's not more to come. Thatwill hurt the economy. That will hurt17300:13:50.879 --> 00:13:52.600everything we're doing. And the nextthing, you know, guess what,17400:13:54.399 --> 00:13:58.120he's going to have to lower interestrates to stimulate the economy again. And17500:13:58.159 --> 00:14:03.200if he's force shadow in that andknows that's happening, then I have a17600:14:03.240 --> 00:14:07.039real problem. Our market should notfeel that we're gonna have to lower interest17700:14:07.080 --> 00:14:11.759rates because there's gonna be a problem. We should just be in a normal17800:14:11.840 --> 00:14:18.679economy up and down. Okay,we have we have uh we uh recessions,17900:14:18.679 --> 00:14:22.720and we have acceleration of the economyup and down. That's what always18000:14:22.720 --> 00:14:30.360happens. Let it be natural.Let it be natural. And if we18100:14:30.399 --> 00:14:37.440don't give away so much money,and if so many people can't keep going18200:14:37.480 --> 00:14:41.799to the government and asking for money, we'll be much better off. If18300:14:41.799 --> 00:14:46.440you're able bodied, you need towork. The more workers that are out18400:14:46.440 --> 00:14:50.840there, the better it is foreconomy because more people have more money to18500:14:50.000 --> 00:14:56.919spend. It's better for the corporationsbecause then they wouldn't have to keep raising18600:14:56.960 --> 00:15:01.080wages after wages after wages, becausethey'll have more people working. It'd be18700:15:01.120 --> 00:15:07.679better for our car companies that wherethe unions just can't go on strike and18800:15:07.720 --> 00:15:11.120then the car prices don't go upso much, which is good for us,18900:15:11.440 --> 00:15:16.080the people that live here. Youcan't have it both ways. You19000:15:16.120 --> 00:15:22.039can't keep giving more money to peoplehigher wages. Forget the minimum wage when19100:15:22.039 --> 00:15:26.960it was so far past minimum wagesnot even funny, and expect to have19200:15:28.080 --> 00:15:33.919dollar meals for people that can't affordother food, or to have car prices19300:15:33.000 --> 00:15:37.360not go up, have food pricesthat can't go up at the grocery store,19400:15:39.080 --> 00:15:41.639have every pricing going up. It'simpossible to have it both ways.19500:15:45.519 --> 00:15:50.200Even with inflation down, prices aregonna stay up. It won't be inflation19600:15:50.320 --> 00:15:52.919more than where we are now,but we've already gone up so much.19700:15:54.279 --> 00:15:58.480That's what the administration isn't telling.You say, something that used to cost19800:15:58.480 --> 00:16:03.080one thousand dollars maybe cost fifteen hundrednow, okay, from a few years19900:16:03.080 --> 00:16:07.600ago. With inflation coming down,that's great. It's not going to go20000:16:07.679 --> 00:16:11.559up from fifteen hundred then to seventeento two thousand. It'll stay between fourteen20100:16:11.600 --> 00:16:15.360and fifteen hundred, which is stillso much higher than where it was previous20200:16:15.480 --> 00:16:22.360years ago. And that's where everyone'shaving a tough time living. Grocery prices20300:16:22.440 --> 00:16:26.799aren't going to come back down towhere they were five years ago. They20400:16:26.879 --> 00:16:30.960might not keep going up because inflation'scoming down. But we still have inflation20500:16:32.080 --> 00:16:36.480in the three and a half percentrange, and in some cases, depending20600:16:36.480 --> 00:16:40.440on what it is, it couldbe even higher than that. So that20700:16:40.559 --> 00:16:45.759means guess what things go higher.We've had so much inflation, Social Security20800:16:45.759 --> 00:16:49.840payments, I've all gone up.Great. I like that. That's good20900:16:49.840 --> 00:16:57.679for people, but they're not comingback down when inflation comes down. They'll21000:16:57.720 --> 00:17:03.360go up if we have inflation,but they won't go back down, so21100:17:03.399 --> 00:17:07.279they don't go back down. Westill, as tax payers have to pay21200:17:07.319 --> 00:17:12.000more. The biggest infliction everything isthat people don't realize is how much more21300:17:12.039 --> 00:17:17.960we pay on our debt when weplay maybe an average of two or three21400:17:18.000 --> 00:17:21.839percent before because all interest rates weredown. Now we're going to be paying21500:17:21.880 --> 00:17:30.279five and a half six percent,which is an incredible difference because it's the21600:17:30.319 --> 00:17:34.640same money that pays for expenses,pays for all these congress people that need21700:17:34.680 --> 00:17:40.160money, and all the states thatwant money and for protection, and every21800:17:40.279 --> 00:17:42.640dollar just think about this, everydollar that we had that we give to21900:17:42.799 --> 00:17:48.599Ukraine, how much more that's costingus in raising bonds to do that.22000:17:52.839 --> 00:18:00.960It's amazing to me that people don'trealize how much more it costs us in22100:18:02.359 --> 00:18:07.319just interest. Look at your owncredit cards. If you just pay the22200:18:07.359 --> 00:18:11.480minimum, it'll take you twelve totwenty years to pay off your credit card22300:18:11.759 --> 00:18:17.119if you're in the twenty five totwenty eight percent range. And that's not22400:18:17.279 --> 00:18:22.119usual, not spending on it anymore, just paying the minimum. And so22500:18:22.200 --> 00:18:26.880many people pay the minimum until theymax out their cards and don't pay them22600:18:26.880 --> 00:18:30.079from there. I don't want tosee your economy go to that extent.22700:18:32.000 --> 00:18:37.640I don't want to see the differencebetween the people that both ends of the22800:18:37.680 --> 00:18:42.759spectrum. You know this whole Democratsbelieve that we need the middle class.22900:18:42.799 --> 00:18:48.200I do too, but all they'redoing is separating it. We'll becoming more23000:18:48.200 --> 00:18:53.319of a two class system, richand poor because the people the lower part23100:18:53.480 --> 00:18:59.880of this, of the middle class, are moving into the lower class part23200:19:00.119 --> 00:19:03.400of being able to afford things,and the people at the at the upper23300:19:03.440 --> 00:19:10.319part are not moving higher, they'removing down. The people in the upper23400:19:10.319 --> 00:19:12.000class, yeah, they're still ableto make some money and they're the ones23500:19:12.160 --> 00:19:17.119able to invest and do things.And then there's this jealousy factor that comes23600:19:17.160 --> 00:19:22.720about. But it's gonna be funnyabout it that everyone's gonna tout these immigrants23700:19:22.720 --> 00:19:29.640are gonna tout on how much moneyeveryone's making because of the market making New23800:19:29.720 --> 00:19:32.240High. Well, that was onlythe you know, that's the dow.23900:19:32.359 --> 00:19:34.359The S and P hasn't the nwzachly has it. But they're close.24000:19:37.400 --> 00:19:42.720They're close. And when you thinkabout that, that's great for pension plans.24100:19:45.400 --> 00:19:52.000What's that great for is also yourfalling K plans. That's good stuff24200:19:52.000 --> 00:19:56.960for people. I want a wealthyeconomy. I want to see the markets24300:19:57.039 --> 00:20:00.640higher. I want to see youreconomy strong. A strong economy is a24400:20:00.640 --> 00:20:07.640strong nation. I like it whenpeople feel good about going to work and24500:20:07.680 --> 00:20:12.920earning what they get. Not giventhis mentality of what we just do and24600:20:14.000 --> 00:20:22.799give is not the way you builda strong economy. God forbid. If24700:20:22.799 --> 00:20:26.880we have to go do things,so many people in this country are so24800:20:26.880 --> 00:20:30.839soft they wouldn't even know how tofight. They'd be fighting against us,24900:20:30.920 --> 00:20:34.480fighting even though the people that arethere going out to defend us and all25000:20:34.519 --> 00:20:38.240and actually die for this country.They'll have people going against so, oh,25100:20:38.279 --> 00:20:41.680we shouldn't be here. We shouldn'tbe doing that. They're okay being25200:20:41.759 --> 00:20:48.240mediocre, but America doesn't need tobe mediocre. America needs to be strong.25300:20:48.559 --> 00:20:52.599Our congress people need to fight.They need to get our borders resolved25400:20:53.519 --> 00:20:57.400before we move on and start goingto other places. We do all this,25500:20:57.480 --> 00:21:03.759guess what's gonna happen. Change theimmigration system, Change the social security25600:21:03.759 --> 00:21:07.480system. So in thirty forty yearsfrom now, people aren't dependent on people25700:21:07.519 --> 00:21:11.480paying taxes for them to get paid. They can be putting their own money25800:21:11.480 --> 00:21:15.160away. There's a concept called thefour to one K plan retirement plans,25900:21:15.240 --> 00:21:19.240right, they brought that up inthe seventies for us to put money away.26000:21:19.799 --> 00:21:23.039But why are we dependent on thegovernment to pay us? Why are26100:21:23.079 --> 00:21:26.079we dependent on people working being ableto put money away? And the only26200:21:26.119 --> 00:21:30.440people that the government would have tohelp are those those that need help that26300:21:30.519 --> 00:21:38.279are disabled mentally physically, that's okay, But why are we dependent on able26400:21:38.279 --> 00:21:42.119bodied people for the government to paythem so they can have a retirement.26500:21:45.720 --> 00:21:51.839And the and the hypocrisy and theand the you know, the the falsehoods26600:21:51.839 --> 00:21:57.799of people getting Social Security disability andsome of them you came and claim,26700:21:59.359 --> 00:22:00.640but you know, the mental stuffand all this stuff. It's like,26800:22:02.359 --> 00:22:03.799you can still find some stuff towork. Oh, I'm stressed out.26900:22:03.839 --> 00:22:08.200The one that bothers me the mostis the ones that tell me they can't27000:22:08.240 --> 00:22:15.559work because of anxiety or stress.We all have anxiety, we all have27100:22:15.599 --> 00:22:22.000stress to some extent. And unlessa doctor or somebody says you are mentally27200:22:22.079 --> 00:22:26.519ill, that's a crotch, it'san excuse. It's soft go to work.27300:22:29.319 --> 00:22:36.359But somehow we pay these people,and that costs our country too much27400:22:36.359 --> 00:22:41.480money. And if that's the case, then let's change your immigration system and27500:22:41.599 --> 00:22:45.640let's get people in here on amerit based system so we can replace the27600:22:45.680 --> 00:22:52.480people that don't want to work andhave the people that need to work.27700:22:52.519 --> 00:22:57.680You can't grow an economy with threepoint seven percent unemployment when you have so27800:22:57.720 --> 00:23:03.799many people not participate. Three pointseven percent is because people are not participating.27900:23:03.279 --> 00:23:07.519Every place they go, it's thesame thing I talk to so many28000:23:07.559 --> 00:23:11.759people. They can't find people that, when they do get them to work,28100:23:12.519 --> 00:23:18.000that are good, good employees.The mentality of it is switched to28200:23:18.039 --> 00:23:22.400where the employee thinks they are theones that decide when they should come to28300:23:22.400 --> 00:23:26.160work. The employee is the onethat decides what time they should be here28400:23:26.200 --> 00:23:29.640and how much work they should do, and if they're going to get it28500:23:29.680 --> 00:23:37.279done on time, that's not good. But if you're a good employee,28600:23:37.559 --> 00:23:40.680if you understand what it means tobe on time, if you understand what28700:23:40.720 --> 00:23:42.279it means to work hard, ifyou understand, you will move up so28800:23:42.440 --> 00:23:45.039fast. If the corporate word iswhat you want to do, you'll move28900:23:45.079 --> 00:23:48.839up. If it's independent you wantto be, you'll move up and you'll29000:23:48.880 --> 00:23:51.960do great. If you're an entrepreneur, you'll do great because you'll know what29100:23:52.039 --> 00:23:56.960it takes. There's so many peoplethat buy these franchises, and all them29200:23:56.000 --> 00:24:00.400they think they can work forty hoursa week in these franchises. They're gonna29300:24:00.440 --> 00:24:03.039make money. They forget that thesefranchises, you're gonna have to work sixty29400:24:03.039 --> 00:24:08.240seventy eighty hours a week because youare the franchise. Can't expect other people29500:24:08.240 --> 00:24:11.960that don't own it to go aheadand do what you're gonna do. But29600:24:11.000 --> 00:24:14.359that's what they expect, and theydon't want to work it. They don't29700:24:14.400 --> 00:24:17.880want to put the time and effortin. So for these markets that go29800:24:18.000 --> 00:24:22.200higher, we need to have agreat economy. Interest rates aren't gonna keep29900:24:22.240 --> 00:24:25.240coming down unless there's a real problem, and I don't want to see that30000:24:25.279 --> 00:24:27.000problem. We'll be right back.This is the Money Matter Show, and30100:24:27.039 --> 00:24:41.240I do appreciate everybody listening. Welcomeback, everybody. It's the Money Matter30200:24:41.319 --> 00:24:45.400Show. We got Dave, Dylan, Todd, and myself Dean here to30300:24:45.440 --> 00:24:48.759bring you as much information as wepossibly can rocket ship. You know,30400:24:48.799 --> 00:24:52.880it's the most amazing thing to meand Todd you pointed this out to me30500:24:52.440 --> 00:24:59.880Friday afternoon. The S and Pfive hundred has exploded higher best rally and30600:25:00.039 --> 00:25:03.720two years, all the way backto where it was in November of twenty30700:25:03.960 --> 00:25:10.039twenty one. Yeah. So ifyou had started an account in November of30800:25:10.079 --> 00:25:14.279twenty twenty one that was let's say, a sixty forty sixty percent S and30900:25:14.359 --> 00:25:18.920P five hundred forty percent long termbonds, you're down. Yeah, you're31000:25:18.960 --> 00:25:22.960down. Even after this massive rally, you're down. Well, you have31100:25:22.039 --> 00:25:26.279to be, because their bonds aredefinitely still down from November twenty one,31200:25:26.400 --> 00:25:29.279and the equal weight to S andP five hundred even worse. Oh yeah,31300:25:29.400 --> 00:25:32.279that's definitely back to where it wasin August of twenty one. Yeah,31400:25:32.759 --> 00:25:36.079so this is really exciting, andif you look at your portfolio,31500:25:36.200 --> 00:25:38.000you're going to be excited. Ifyou look back over the last couple of31600:25:38.039 --> 00:25:41.839years, you're gonna say, boy, that we've just done absolutely nothing.31700:25:41.319 --> 00:25:45.559And that'll happen from time to timein the market, and this, this31800:25:45.880 --> 00:25:49.559last six weeks is the reason wesay you don't ever get out. Well,31900:25:49.559 --> 00:25:52.880how many times do you have backto back losses in the market.32000:25:52.960 --> 00:25:56.599I think we've counted it as fourtimes. It's happened in history in seven32100:25:56.640 --> 00:26:00.920to the last eighty years, Ithink, right years in a row.32200:26:00.000 --> 00:26:04.279Last year, write down what Yeah, so you expect this year is going32300:26:04.319 --> 00:26:07.599to be up or at least notgoing to be down. Well, like32400:26:07.599 --> 00:26:11.079you're saying, too, just youdon't get out, you don't fully get32500:26:11.079 --> 00:26:14.680out and rebounce some things. Butit's idea that like August and September just32600:26:14.680 --> 00:26:17.160felt like they took forever. Yougot a lot of calls starting, people32700:26:17.160 --> 00:26:19.440starting to get nervous and everything likethat. All of a sudden, we're32800:26:19.519 --> 00:26:22.279up for two months in a row, and it feels like it's it speeds32900:26:22.279 --> 00:26:25.200by, you know, more callslike that, So you can hold it33000:26:25.200 --> 00:26:26.920out and wait it out. That'swhy we always talk about building portfolio that33100:26:26.920 --> 00:26:30.759you're comfortable with and you can sleepat night with, because then you can33200:26:30.759 --> 00:26:32.960write out those a couple of badmonths so they don't feel like just the33300:26:33.000 --> 00:26:34.720end of the world to you.That's the key. I mean, we33400:26:34.839 --> 00:26:40.319know that stocks over time will outperformmost other assets, if not all other33500:26:40.400 --> 00:26:44.160assets. The reason that you haveany fixed income at all is so like,33600:26:44.240 --> 00:26:47.160don'tes so you can sleep at night. I mean to give you some33700:26:47.240 --> 00:26:51.880peace of mind because the market canbe volatile, and it can be volatile33800:26:52.000 --> 00:26:53.480down, and it can also bevolatile lot. But you know, we33900:26:53.519 --> 00:26:59.240came into this week with this goldielockscenario and we were thinking, boy,34000:26:59.240 --> 00:27:02.039we're going to get the sea,We're gonna get the PPI, We're gonna34100:27:02.039 --> 00:27:06.599get fed Chief Powell statement on interestrates. You know, if nothing else,34200:27:06.680 --> 00:27:10.720goldilocks got more golden. Yeah,And it really stemmed off of what34300:27:10.759 --> 00:27:15.000fed PAL was saying on this pressconference. That was really the only worry34400:27:15.079 --> 00:27:18.839you had from sustaining this rally wasa fed PAL coming out and saying,34500:27:18.880 --> 00:27:22.000you guys have gone up too fast. Inflation really hasn't been one yet.34600:27:22.160 --> 00:27:23.559But it didn't really sound like thatwas his tone. I mean, he34700:27:23.640 --> 00:27:27.759really said, there's still the signsof inflation coming down are welcome. We34800:27:27.839 --> 00:27:32.240know we have more work to do, but the signs are showing. He34900:27:32.279 --> 00:27:34.599doesn't normally say things like well on, and he actually said we expect three35000:27:34.680 --> 00:27:38.000rate cuts next year. Yeah saidit actually said that, which is half35100:27:38.039 --> 00:27:41.079of what the markets were expecting.There was all those pundits on the media35200:27:41.079 --> 00:27:45.119and stuff saying six rate cuts comingnext year, and then the wheelchairs around35300:27:45.160 --> 00:27:48.319time to off with that, andthey're talking about three rate cuts. What35400:27:48.400 --> 00:27:51.680we've had in the open market withthe ten years, we've already had four35500:27:51.759 --> 00:27:53.400rate cuts. Yeah, and that'sthat's the biggest thing. You know,35600:27:53.440 --> 00:27:57.720it's already accounted for four rate cuts, and the market's always forward thinking about35700:27:57.720 --> 00:28:02.880six months, soquates for that.And it's interesting nowadave I saw an article35800:28:02.880 --> 00:28:06.440where they're talking about the fact thatthe short term curve, so the one,35900:28:06.559 --> 00:28:08.799two, s, the five treasuries, could be moving more than what36000:28:08.960 --> 00:28:14.480actually a ten would be moving becausethe short term is what's going to be36100:28:14.480 --> 00:28:18.720fluctuating based on rate cuts, whereassome of the eventually when you talked about36200:28:18.720 --> 00:28:22.400it too, with the TLT exploding. There's a limit to where long term36300:28:22.480 --> 00:28:25.839rates are going to have to staypinned, where short term rates might be36400:28:25.839 --> 00:28:29.920more volatile. We want that pointto be after you've closed down your house.36500:28:30.759 --> 00:28:34.839Yeah, we talk in my rate. They keep plunging until such time36600:28:34.880 --> 00:28:38.079as you've closed on your house,and then they can do whatever the other36700:28:38.160 --> 00:28:41.039thing. You know, it struckme number one time that what you pointed36800:28:41.039 --> 00:28:45.920out, the market rally simply broughtus back to where we were two years36900:28:45.960 --> 00:28:48.200ago. Yeah, which is crazy. Uh. The other thing that was37000:28:48.279 --> 00:28:52.880so noticeable was that rotation taking place. We started to see that within the37100:28:52.920 --> 00:28:57.200last couple of weeks, where theMagnificent seven were kind of just hanging out,37200:28:57.599 --> 00:29:03.200and away went the Dow. Awaywent Procter and Gambles and Colgate and37300:29:03.279 --> 00:29:07.000Uniliver and all these blue chip stocks. I was for the last week,37400:29:07.079 --> 00:29:12.160just give you an example. Forlast week, the Magnificent seven ETF was37500:29:12.240 --> 00:29:18.079up zero point eight point eight lastweek, the DVY, which is one37600:29:18.119 --> 00:29:23.160of our favorite value indexes, wasup three more than three times what the37700:29:23.200 --> 00:29:27.519Magnificent seven were up. How aboutthis The RSP, the equal weight to37800:29:27.720 --> 00:29:33.400S and P five hundred up fourpercent up more than four times the Magnificent37900:29:33.480 --> 00:29:37.799Seven. So that's what's happening rightnow, and I think that's probably going38000:29:37.839 --> 00:29:41.839to spill into next year where theMagnificent Seven have had such an incredible run38100:29:42.160 --> 00:29:45.319and if your portfolio is loaded upwith them, you are just a happy38200:29:45.359 --> 00:29:49.039camper. But over the last coupleof weeks you're saying, my goodness,38300:29:49.079 --> 00:29:52.039what's going on here. If you'rea citizen in America, you may be38400:29:52.160 --> 00:29:55.680like, well, that should be. This type of stuff is happening everywhere38500:29:55.680 --> 00:29:57.640in the world. No, weare a very unique market because of our38600:29:57.680 --> 00:30:03.119tech. A lot of other countrieshave as much tech, like Silicon Valley,38700:30:03.160 --> 00:30:06.440makes it really different for us.So with that being said, what38800:30:06.559 --> 00:30:11.799we have is value divergence. Sointernationally values really doing well, whereas United38900:30:11.839 --> 00:30:17.359States value was lagging considerably. Andso when you see that, you start39000:30:17.400 --> 00:30:19.240to realize the only reason that isis because all the money is going chasing39100:30:19.319 --> 00:30:23.599the Big seven, chasing those techheavy stocks instead of you know, going39200:30:23.759 --> 00:30:27.799very attractive valuable stocks. And that'sthat rotation. I mean, equal Weight39300:30:27.880 --> 00:30:32.119to this week up three point ninepercent s and P's only up two point39400:30:32.119 --> 00:30:36.240five. So I mean you seethat rotation forming because there is real value39500:30:36.279 --> 00:30:38.359there. I also, we justwent to, you know, a conference.39600:30:38.400 --> 00:30:41.960We'll talk more about what we learnedat the conference, but they talked39700:30:41.960 --> 00:30:45.039a little bit about the Russell twothousand and why they're lagging, and when39800:30:45.079 --> 00:30:48.480you start to you know, eventhough they are lagging, when you start39900:30:48.519 --> 00:30:52.480to put into the fact that they'renot as quality companies, a lot of40000:30:52.480 --> 00:30:55.599them are still not profitable and alot of them have just been propped up40100:30:55.599 --> 00:30:59.759because of all the government spending thathappened through the pandemic. The Russell two40200:30:59.759 --> 00:31:04.400thousands might not have that same divergencerotation that we would see in valuable companies40300:31:04.440 --> 00:31:08.559because the value stocks those are provenquality companies. They're also two thousand they're40400:31:08.599 --> 00:31:12.559not necessarily proven yet, right,they're just small cap stocks. So there's40500:31:12.599 --> 00:31:18.079a difference there, and I thinkthat's important highlight difference to we did.40600:31:18.599 --> 00:31:22.440I need to mention that we didsee the Dow Jones industrial levias hit an40700:31:22.480 --> 00:31:26.759all time high last week, samewith the Nasdaq one hundred hit an all40800:31:26.799 --> 00:31:33.000time the NASDAK one hundred as opposedto the Nasdaq composite. Again, the40900:31:33.039 --> 00:31:37.359S and P five hundred is fivehundred stocks. We're not following the thirty41000:31:37.680 --> 00:31:41.160Dow stocks. It tends to movewith the S and P five hundred,41100:31:41.400 --> 00:31:45.000It tends to move with the equalweight to S and P five hundred.41200:31:45.119 --> 00:31:48.119All three of them tend to movetogether. This year has been a real41300:31:48.200 --> 00:31:52.039one off with that, but anew all time high for the Dow.41400:31:52.640 --> 00:31:57.200But again, probably the best benchmarkto compare yourself to when you're trying to41500:31:57.240 --> 00:32:01.799see how you've done is equal weightedSMP five hundred. That takes away the41600:32:02.759 --> 00:32:07.960few stocks that are moving the Dow, That takes away the magnificence seven and41700:32:07.119 --> 00:32:12.279actually gets you a look at thecore of what's actually going on in the41800:32:12.279 --> 00:32:17.319portfolio. And it was down forthe year six weeks ago. It is41900:32:17.359 --> 00:32:22.680now up ten point eight percent forthe year, but again back to where42000:32:22.720 --> 00:32:27.440it was in September of twenty twentyone. Yeah, I mean talking about42100:32:27.480 --> 00:32:30.079the S and P five hundred,the regular weighted from March twenty twenty to42200:32:30.160 --> 00:32:35.240December twenty twenty one, it wasup one hundred and twenty percent. Wow.42300:32:35.599 --> 00:32:39.440Then from December twenty twenty one toNovember twenty twenty three, basically now42400:32:39.640 --> 00:32:42.880before the you know, the hugerun up in December, we had as42500:32:42.920 --> 00:32:45.599well, down negative six percent.Right then, I will say that that42600:32:45.599 --> 00:32:50.200that that first comparison up one hundredand twenty percent, was it? They42700:32:50.240 --> 00:32:53.240picked the absolute prodom entry point time. Yeah, the bottom of the pandemic42800:32:53.279 --> 00:32:57.319because not you know, oh itwas not a one hundred percent. Well42900:32:57.640 --> 00:33:00.599that's after it dropped fifty percent.Right then it rallied one hundred and twenty43000:33:00.599 --> 00:33:06.839percent. So that's kind of afull disclosure deal there. We had.43100:33:06.880 --> 00:33:10.640The the CPI was up one tenthof one percent, which was in line43200:33:10.680 --> 00:33:15.680the one point two annual rate.Yeah, yeah, yeah, three point43300:33:15.720 --> 00:33:19.319one is the year over year,which is the lowest in two years.43400:33:19.759 --> 00:33:25.400PPI also cooler than expected. Wetalked about the PCEE last month at an43500:33:25.200 --> 00:33:30.200annual rate of what was one pointtwo percent? No, I'm sorry,43600:33:30.240 --> 00:33:32.720it was up. It was twotenths of a percent, so two point43700:33:32.799 --> 00:33:37.200four, which is which is prettyclose to the Fed's target of two.43800:33:37.480 --> 00:33:42.279Next week we get up pce again, and the retail sales right next Friday,43900:33:42.319 --> 00:33:45.440retail sales were good, shockingly good. They come on Tuesday. They44000:33:45.440 --> 00:33:51.440came out last week retail on Friday. Friday, Yeah, Friday was it44100:33:51.440 --> 00:33:53.400Friday? They were shockingly good.They were shockingly good. Yeah, they44200:33:53.400 --> 00:33:57.559expected them to be down a smidgeonand they were actually up a half a44300:33:57.559 --> 00:34:00.720percent or whatever. Well, Iwas, I was very surprised expected it44400:34:00.759 --> 00:34:02.400to be honest, mission when youhave Black Friday in November. Yeah,44500:34:02.480 --> 00:34:06.559you know, well it's compared tohow about Black Friday November? And it's44600:34:06.559 --> 00:34:10.159also just in general spending, holidayspending because honeko was the first week of44700:34:10.199 --> 00:34:13.400December, so you're gonna get aJewish, you gotta get all your gets44800:34:13.440 --> 00:34:15.159there in November. Yeah, Igo, that's a good point. I44900:34:15.199 --> 00:34:17.679was surprised that the expectations was forit to be down. You know,45000:34:17.800 --> 00:34:23.000it would have been the retail salesfor November, right, so comparing to45100:34:23.119 --> 00:34:27.880October. No, it's no doubtain November, I guess it would have45200:34:27.880 --> 00:34:30.000Black Friday in it. Yeah,it would have Black Friday in it.45300:34:30.880 --> 00:34:35.119Speaking of retail, Macy's, didyou see that the shares last week,45400:34:35.159 --> 00:34:38.000the shares with the same price theywere in two thousand and eight? Really45500:34:38.079 --> 00:34:42.880yeah, but they offered to buythem out seventeen percent jump. On Monday,45600:34:43.440 --> 00:34:45.840the Wall Street General reported the twoinvestment firms that offered to buy the45700:34:45.840 --> 00:34:51.440company, and of course Nordtrims andCole's rallied on that as well. But45800:34:51.840 --> 00:34:55.400yeah, Macy's struggling, struggling,and now we got a couple of people45900:34:55.440 --> 00:35:00.519may be interested in buying them.Ten year in straight our benchmark interest rate.46000:35:00.559 --> 00:35:02.119Did you want to say something aboutthat time, Well, I just46100:35:02.119 --> 00:35:05.400wanted you to bring it up.Yeah, yeah, talk a little about46200:35:05.440 --> 00:35:07.679that all four percent for the firsttime. You know, it's interesting we46300:35:07.679 --> 00:35:12.199were talking about this week time.Boy, how long has it been since46400:35:12.239 --> 00:35:15.440the ten years been below four percent? And we were guessing, and we're46500:35:15.480 --> 00:35:20.639guessing like early this year, Ithink one of us guests, twenty twenty46600:35:20.639 --> 00:35:27.519one, how about August August ofthis year, the ten years. That's46700:35:27.519 --> 00:35:29.599how fast it went on. Itmoved up quick, and then it also46800:35:29.719 --> 00:35:34.039hits lowest level since July. Talkabout a mountain peak, you know,46900:35:34.400 --> 00:35:38.199from four to five and back tofour in a period of four months,47000:35:38.519 --> 00:35:42.840Right, in a period of fourmonths, that's incredib that's incredible. I47100:35:42.880 --> 00:35:45.119would have never guessed that it hadbeen four percent of did you wait,47200:35:45.159 --> 00:35:49.559we get we're coming on a breakhere. I'd saved that thought we'll be47300:35:49.639 --> 00:35:52.119back after this break. We thankyou again for listening to us. Like47400:35:52.119 --> 00:35:57.400I said last week, you're notlistening. This whole thing is plentless.47500:35:57.519 --> 00:36:01.920Say it's only then Welcome back tothe Money Matter Show. My name is47600:36:01.920 --> 00:36:07.880Todd Lick. I'm here with DylanGreenberg Dean Greenberg and sure what so before47700:36:07.880 --> 00:36:10.719you ended the last three we're talkingabout the ten year falling below. The47800:36:10.800 --> 00:36:14.559four level now has a three handleon it. The two year is that47900:36:14.800 --> 00:36:17.400four point four to five. Sothe inversion now is around you know,48000:36:19.199 --> 00:36:23.960zero point five around there, soit widened a little bit. It's so48100:36:24.079 --> 00:36:28.159crazy that we can still have aninversion for over I mean at this point48200:36:28.199 --> 00:36:30.920it's two years or eighteen months,I mean pushing two years. It does48300:36:31.000 --> 00:36:37.320seem like the economic blocks are alllining up the way you would like to48400:36:37.360 --> 00:36:39.360see him line up. Except forthat, except for the inversion, you'll48500:36:39.400 --> 00:36:43.840have the inverted yield curve, whichis pointing to a recession. Yeah,48600:36:43.920 --> 00:36:45.800like we always say too, that'sjust one indication of a recession. It's48700:36:45.840 --> 00:36:50.039not the only indication. So maybethis time it's not, but it is48800:36:50.119 --> 00:36:52.320just something to keep in mind thatit has been inverted for almost two years.48900:36:52.400 --> 00:36:57.400I'd just say the inverted yield curvehas predicted twelve of the last six49000:36:57.480 --> 00:37:02.840recessions. Twelve the last one sixrecessions. Oh yeah, so it is.49100:37:05.000 --> 00:37:07.480Yeah, it's a very good one. I'm just saying it is one49200:37:07.639 --> 00:37:10.360indication. It is absolutely that,and you know, again, I continue49300:37:10.400 --> 00:37:14.880to say this. I think Europeis going to be a really interesting test49400:37:14.920 --> 00:37:19.840case for what America is going togo through because Europe's already having slowed economic49500:37:19.920 --> 00:37:22.760numbers. They're going to cut probablyfour times in twenty four at least,49600:37:22.920 --> 00:37:28.000I would say, And that's whatthey've already communicated. So that's really going49700:37:28.039 --> 00:37:30.880to be interesting. How bad theireconomic numbers get. Do they really fall49800:37:30.920 --> 00:37:35.119into recession? If it's only amild recession, I think the Fed did49900:37:35.159 --> 00:37:37.559their job. But if Europe fallsinto a deep recession for some reason,50000:37:37.719 --> 00:37:42.119that could have spillover effects and thenlead to us having more of us severe50100:37:42.119 --> 00:37:45.360instead of a mild recession, andyou would expect a recession of some form.50200:37:45.719 --> 00:37:49.239Yes. Yeah, And our discussionsas money managers, which is pretty50300:37:49.280 --> 00:37:55.920do we are thinking that twenty twentyfour is going to be value oriented and50400:37:57.039 --> 00:38:02.880less growth, less tech, morevalue we're moving in that direction. I50500:38:02.920 --> 00:38:07.480think we'll probably tweak some of ourmodels internationally. Dave, I'm interested.50600:38:07.679 --> 00:38:10.519Are your thoughts there were you?Are you thinking for twenty four there are50700:38:10.559 --> 00:38:14.400pockets you want to stay away frompockets you're interested in. Well, boy,50800:38:14.440 --> 00:38:16.440that's that's too wide of a questionto answer. Well, I know,50900:38:16.800 --> 00:38:20.320I know you don't like in theUkraine. No, you don't like51000:38:20.320 --> 00:38:28.119to stay away from Gaza. Youhave to go all all in the US.51100:38:28.280 --> 00:38:32.639Right. We do international, Wedo have some international exposure from time51200:38:32.679 --> 00:38:37.719to time, but we are predominantlya domestic money manager. And the primary51300:38:37.760 --> 00:38:44.599reason we are is because of thetransparency. United States companies, because of51400:38:44.679 --> 00:38:49.639regulations, have transparency requirements that youdon't see in many parts of the world,51500:38:50.039 --> 00:38:54.159and you can get in and it'sit's also somewhat awkward to invest in51600:38:54.280 --> 00:38:58.719different parts of the world unless youuse an ETF or mutual fund something like51700:38:58.760 --> 00:39:04.360that. So we're dominantly domestic moneymanagers, and I continue to focus most51800:39:04.360 --> 00:39:07.920of my attention on the US.So we had Gold over the last week.51900:39:08.199 --> 00:39:10.519How that perform It went up alittle bit, right, Yeah,52000:39:10.599 --> 00:39:15.719Gold was up thirty three dollars totwenty thirty one. Oil finished a week52100:39:15.800 --> 00:39:19.400unchanged a seventy one fifty, spenta good bit of the week under seventy.52200:39:19.559 --> 00:39:22.360Yeah, I think it developed anice base though it looks like it52300:39:22.360 --> 00:39:25.480seems like there's some buying interest inthe sixty eight sixty nine rall. You52400:39:25.519 --> 00:39:29.320have the SBI. Every time itgoes under seventies, you can see the52500:39:29.400 --> 00:39:31.559volumes just spiking, so you cantell something's happening at that level. Yeah,52600:39:31.599 --> 00:39:36.239Exon hit a new fifty two weeklow. That's rare to see Exon52700:39:36.320 --> 00:39:39.519at a fifty two week low.I think it's a combination of oil prices52800:39:39.559 --> 00:39:46.079being down and there's there's a lotof chatter about this premium base and purchase52900:39:46.119 --> 00:39:51.400they made a Pine or natural ResourcesI believe agolled be extended. Yeah,53000:39:51.880 --> 00:39:54.960yeah, that they've agreed to acquire, you know, and we had another53100:39:55.000 --> 00:40:00.800one of those acquisitions this past week. And it really is telling you Occidental53200:40:00.800 --> 00:40:06.320Petroleum, which is one of WarrenBuffett's largest holdings. You know, it's53300:40:06.320 --> 00:40:10.400funny, Warren is a value guy, right, this is pretty much value.53400:40:10.599 --> 00:40:14.920Occidental Petroleum is trading at the sameprice it was in two thousand and53500:40:14.960 --> 00:40:16.840seven. And he Kee's buying.He keeps buying a lot of it,53600:40:16.920 --> 00:40:21.280and it doesn't seem nobody seems tocare that he's buying it. Usually,53700:40:21.559 --> 00:40:24.119if you hear that Warren Buffett isbuying shares of a company, up,53800:40:24.159 --> 00:40:27.800it goes. See, this isjust making me more bullish on Oxy.53900:40:28.599 --> 00:40:31.840Everything you're saying, right is whatyou want to hear. Morgan Stanley upgraded54000:40:32.519 --> 00:40:38.480the company because they're going to acquirea privately owned Crown Rock, which is54100:40:38.480 --> 00:40:45.239a premium basing company. And againthis follows the Exon's Pioneer Natural Resources purchase,54200:40:45.440 --> 00:40:47.280and it made me think, ifyou're an oil company and you want54300:40:47.280 --> 00:40:52.679to grow and you can't drill anywhere, buying somebody as a way to do54400:40:52.719 --> 00:41:00.119it, and if Exxon is somehowprohibited from buying Pioneer Natural Resources, then54500:41:00.159 --> 00:41:04.280there's a good chance Oxy's prohibited frombuying Crown Rock, and there goes your54600:41:04.280 --> 00:41:07.800growth. The dollar plummeted right thisweek. I was down. I didn't54700:41:08.400 --> 00:41:12.480I didn't look at it right now, I'm pretty sure it had a really54800:41:12.480 --> 00:41:15.800tough week obviously because rates are plumbting. That's kind of how that's correlated.54900:41:15.880 --> 00:41:19.079Absolutely, absolutely, dollar tends tomove with a sense that gold had a55000:41:19.079 --> 00:41:22.840little bit of a bid this weekbecause there really wasn't any geopolitical tensions that55100:41:22.880 --> 00:41:25.719would cause it to move up.That's the thing that's so silly about gold55200:41:25.800 --> 00:41:30.719being inflation hedge, right, becauseas interest rates move up, the dollar55300:41:30.800 --> 00:41:34.039moves up, which caused gold tomove down. If you have inflation,55400:41:34.159 --> 00:41:36.719you're going to have interest rates movingup, which is going to have gold55500:41:36.800 --> 00:41:39.079moving down. Its just it's neverbeen a good inflation hedge. It is55600:41:39.280 --> 00:41:44.679now, you know, I thinkbitcoin's better inflation. Now. Bitcoin was55700:41:44.719 --> 00:41:50.400down three percent on the week soundIt depends if you use weekends or not.55800:41:50.599 --> 00:41:52.199That's true because it takes twenty fourto seven. Yeah, it's it55900:41:52.280 --> 00:41:54.480just depends on where you was.I was looking at the five day right56000:41:54.519 --> 00:41:59.199now. You're probably right, Dave, what I'm I used the ETF simply56100:41:59.280 --> 00:42:01.840because, like you said, thebitcoin trades over the weekend. So where56200:42:01.840 --> 00:42:05.400where do you pick your point?Well, even the ETF, you got56300:42:05.440 --> 00:42:07.840to make sure that's not at adiscount or something, you know, because56400:42:07.840 --> 00:42:10.280it may not be well. Efets don't go to discounts and premiums because56500:42:10.280 --> 00:42:15.559they're ETFs closing. I mean,I have an ETF that I have my56600:42:15.599 --> 00:42:17.599own account. It's at forty onewhen bitcoin was at forty four thousand,56700:42:17.639 --> 00:42:21.599and it should be at forty four, So it lacks it, doesn't I56800:42:21.880 --> 00:42:24.519have. It's a forty one dollars. No, I have seen performance of56900:42:24.639 --> 00:42:30.199ETF's lag the actual bitcoin price,and it's because the cost of futures.57000:42:30.760 --> 00:42:35.960They can't I understand. That's howthe et because ETFs don't have actual bitcoin.57100:42:36.000 --> 00:42:38.000That's the whole thing about black Rockhaving the spot ETF. You could57200:42:38.039 --> 00:42:42.760actually track it, but you can'ttrack it with futures perfectly. I get57300:42:42.760 --> 00:42:46.239that. Roll the options and thereyou will never have the actual true performance57400:42:46.639 --> 00:42:51.719using an ETF. Right, Becausethe term they use is contagion. There's57500:42:52.280 --> 00:42:54.800when you have to roll futures contractsmonth to month, especially when there's a57600:42:54.800 --> 00:42:59.320big move. Yes, it createscontagion, which is which is essentially an57700:42:59.360 --> 00:43:04.960erosion. Erosion would be another wordfor contasion. I guess contasion is a57800:43:05.000 --> 00:43:08.280cooler word than erosion. I thinkboth cool words. Yeah, they're both57900:43:08.280 --> 00:43:13.679cool, cool words, cool words. There you go, do shame any58000:43:13.719 --> 00:43:20.039Christmas. Wow. Wow. Oneof the interesting things is the the election58100:43:20.199 --> 00:43:24.920cycle, though twelve months preceding theelection, the average ratio turn historically has58200:43:24.960 --> 00:43:29.599been four percent. Well, let'ssee, we're up what twelve in the58300:43:29.679 --> 00:43:32.880last sense the first week in November. Yep, so we got to give58400:43:32.880 --> 00:43:37.119eight back. Is that how it'sgoing to work to get to our four58500:43:37.760 --> 00:43:42.119it's an average day. Well,this is a one off. We'll hope58600:43:42.119 --> 00:43:45.960after after the next twelve months,that the average will now be five instead58700:43:45.960 --> 00:43:47.320of four before we talked about itlast year. The third year in the58800:43:47.360 --> 00:43:52.159presidency is normally the best year forthe mark yes on average, and turns58900:43:52.199 --> 00:43:57.360out it is, you know yesfor whatever reason, that China is considering59000:43:57.400 --> 00:44:01.400one hundred and thirty seven billion dollarpackage to boost housing. The Moodies downgraded59100:44:01.400 --> 00:44:05.880the outlook a couple of weeks agofrom stable to negative. May recall that59200:44:07.199 --> 00:44:13.079they have a tremendous housing bubble inChina. They have entire cities that are59300:44:13.079 --> 00:44:16.719empty that they built that no onecame. Well, yeah, I mean59400:44:16.760 --> 00:44:20.519we found out a while ago thatthese like part of the culture is do59500:44:20.519 --> 00:44:24.119you have to have two houses inorder to be like, yeah, a59600:44:24.119 --> 00:44:29.679good suitor. Okay, so theseguys were just buying lake houses. They59700:44:29.719 --> 00:44:31.320never saw them, never went tothem, just saw the picture online and59800:44:31.360 --> 00:44:34.480bottom, but never went to them. But then they go to the girls59900:44:34.559 --> 00:44:36.760parents and be like, hey,look I got a vacation home. This60000:44:36.840 --> 00:44:38.519is what I got. Never goto don't even know if it's built.60100:44:38.960 --> 00:44:40.960And that's been a It's a commonthing that was going on, and that's60200:44:42.000 --> 00:44:44.480part of the reason this bubble's therebecause it can't afford it either. It60300:44:44.519 --> 00:44:46.960was interesting too. I saw areport over the week saying US and Chinese60400:44:46.960 --> 00:44:52.119manufacturing. Obviously we've talked a littlebit about how Chinese manufacturing has been moving60500:44:52.159 --> 00:44:55.639near shore to Mexico and some hasit also been moved to Vietnam and places60600:44:55.719 --> 00:44:59.719like that around their area. Theysay, though, that because of the60700:44:59.760 --> 00:45:04.719fact that China's manufacturing really rely isproduct, we rely on Chinese manufacturing for60800:45:04.800 --> 00:45:10.960inputs, not manufacturing, and thatby saying that you would have to move60900:45:12.000 --> 00:45:14.599a lot of the inputs away fromChina, what does that mean? So,61000:45:14.800 --> 00:45:19.440I mean if I'm creating a toythe inputs of the toy versus actually61100:45:19.480 --> 00:45:25.119creating the toy with the inputs,okay. So yeah, like you're building61200:45:25.159 --> 00:45:30.840like a Barbie doll, okay,and just his hypothetic. The plastics.61300:45:30.039 --> 00:45:34.440The plastics and like the arms aremade at this warehouse, the head is61400:45:34.480 --> 00:45:36.880made at this warehouse. You bringit to a different warehouse to put it61500:45:36.920 --> 00:45:38.440all together and sell it and shipit out. That's one. That's how61600:45:38.440 --> 00:45:40.960those companies do it. So likeif they're creating a chip and they need61700:45:42.000 --> 00:45:44.320silicon and they need you know,motherboards, and they need all this,61800:45:44.679 --> 00:45:47.559they're sourcing all those materials to oneplace to then put all those materials together61900:45:47.639 --> 00:45:52.519to create the end product. Somost of the input manufacturings in China,62000:45:52.840 --> 00:45:58.440a lot of the actual manufacturing isdone elsewhere. So doing that near shoring,62100:45:58.840 --> 00:46:00.639they say in this report, wewouldn't make much of a difference in62200:46:00.719 --> 00:46:06.320terms of having supply shocks in thefuture because they still control all the inputs.62300:46:06.519 --> 00:46:10.039An awful lot of manufacturing moved awayfrom China. I just hope it62400:46:10.079 --> 00:46:14.599actually makes a difference, because ifthey do continuously just control the inputs,62500:46:15.559 --> 00:46:17.519you would think, yeah, itdoesn't really make a difference. That's interesting62600:46:17.519 --> 00:46:22.199if that's it. The obesity drugthing continues to be all the rage.62700:46:22.719 --> 00:46:28.320Swiss pharmaceutical giant Roache entered the arenawith a takeover of us Karmot, who62800:46:28.360 --> 00:46:34.119is in late stage development of anoral obesity treatment, but Faizer abandoned their62900:46:34.119 --> 00:46:37.559attempt to develop an oral treatment.I think that's probably more appealing than that63000:46:37.599 --> 00:46:43.840weekly injectable that people are doing.This is interesting. Eli Lilly sold off63100:46:43.920 --> 00:46:51.000last week on a report that peoplewho stopped taking the medication would regain fifty63200:46:51.039 --> 00:46:53.159percent of the weight that they'd lost. Now, that was seen as a63300:46:53.199 --> 00:47:00.599negative, but I think it probablywas a positive because up until now we63400:47:00.599 --> 00:47:02.679were believing that if you were onthese drugs, you were on these drugs63500:47:02.679 --> 00:47:06.760for life. And what they're sayingis, hey, take the drug.63600:47:06.760 --> 00:47:09.360If you're one hundred pounds overweight,and you lose one hundred pounds and you63700:47:09.400 --> 00:47:12.639quit taking it, now you're fiftypounds overweight, that's the heck of a63800:47:12.639 --> 00:47:15.599lot better than one hundred pounds overweight. So it was perceived by the market63900:47:15.639 --> 00:47:21.039to be bad news, which causedLily to sell off. And it's got64000:47:21.039 --> 00:47:23.800such a high pee that it's easyto it doesn't take much when you have64100:47:23.840 --> 00:47:29.159a pe as high as Lily.It's price for perfection, and you know64200:47:29.239 --> 00:47:32.599perfection is hard to achieve, butthey're working hard at it. And their64300:47:32.679 --> 00:47:38.159new drug Major No majarro, Ithink it is Mojarrow got a lot of64400:47:38.159 --> 00:47:42.280promise. Anyway, We'll be backwith the second half of the Money Matter64500:47:42.320 --> 00:47:52.599Show right after this break. Sayit's only a name. Welcome back you64600:47:52.719 --> 00:47:55.760listen to the second hour of theMoney Matter Show. I'm Dylan Greenberg.64700:47:55.800 --> 00:48:00.599I'm here with Dave Sherwood, ToddGlick, and Dean Greenberg. For those64800:48:00.639 --> 00:48:02.480of you just tuning in, TheDow was up three percent for the week.64900:48:02.559 --> 00:48:05.599The S and P five hundred wasup two and a half percent,65000:48:05.920 --> 00:48:08.599the NASDAK composite was up two pointeight percent, and the Russell two thousand,65100:48:08.599 --> 00:48:10.639which is a small cap, wasup five and a half percent.65200:48:10.719 --> 00:48:14.719That was up the most. TheRSP, which is the equal weighted SMP65300:48:14.840 --> 00:48:17.480five hundred, was up three pointnine percent, and for the year,65400:48:17.840 --> 00:48:22.039the Nazak is now at forty twopercent for the year. That's crazy,65500:48:22.199 --> 00:48:24.360Yep, that's high being driven bythose seven stocks. It is even though65600:48:24.400 --> 00:48:28.159I mean, yeah, and videospushing five hundred again, so those are65700:48:28.239 --> 00:48:30.719up for the week. Yeah,then I mean the S and P five65800:48:30.800 --> 00:48:34.159hundred as a whole was up twentythree percent for the year. Dolls up65900:48:34.239 --> 00:48:37.840thirteen percent for the year, Russelltwo thousand is now thirteen percent, and66000:48:37.920 --> 00:48:40.480even the equal weighted SMP five hundredis up eleven percent for the year.66100:48:40.719 --> 00:48:44.800Right, so you would expect youraccount to be up. You would expect66200:48:44.840 --> 00:48:46.639it to be up. Obviously,if you're only in SMP five hundred,66300:48:46.639 --> 00:48:50.599do you expected to be a twentythree percent? But most people with retirement66400:48:50.719 --> 00:48:53.840counts are roughly a sixty forty.You're not gonna get all of that game.66500:48:53.920 --> 00:48:58.400You're gonna be up about sixty percent. Well, I think if you66600:48:58.559 --> 00:49:01.159if if you take the equal weighteds and P five hundred as being your66700:49:01.159 --> 00:49:07.159stock exposure, and you're sixty forty, well that would be six percent would66800:49:07.159 --> 00:49:09.280come from the stocks. And thenyou have to look at the bond component66900:49:09.639 --> 00:49:14.239and the bond components. Because we'vehad higher interest rates, it's probably not67000:49:14.360 --> 00:49:19.400too far from from unchanged on theyear. Even though we've seen a race67100:49:19.519 --> 00:49:23.039spike and then come back down,bonds net on the year are probably down.67200:49:23.239 --> 00:49:27.039If you put the interest in there, you probably could make a case67300:49:27.119 --> 00:49:30.280that their flat, So that wouldmake you up six percent less whatever management67400:49:30.320 --> 00:49:34.480for your pain. And that's whereyou are for the year. So with67500:49:34.639 --> 00:49:38.360the Nasdaq got forty one percent,your accounts up five six seven percent.67600:49:38.519 --> 00:49:43.679That's actually pretty good. That's aboutwhere you should be. And this is67700:49:43.719 --> 00:49:47.679a segment we always have our friendsSebastian Borscini come in and people have been67800:49:47.760 --> 00:49:52.800emailing questions to contact at Greenberg Financialdot com. You got it. We67900:49:52.840 --> 00:49:58.440only got one this week, soplease infiltrates our inbox with them. We'd68000:49:58.519 --> 00:50:01.079love to We'd love to have morequestions. We enjoy answering them. This68100:50:01.159 --> 00:50:05.320one comes in from Mark good questionfor the end of the year. What68200:50:05.360 --> 00:50:08.880happens if I don't take my rmD required minimum distribution? Wow, you68300:50:08.880 --> 00:50:14.719get a penalty. What's the penaltynow? It used to be fifty changed68400:50:14.719 --> 00:50:19.639the twenty five changed to make ita little nicer, but still a penalty.68500:50:19.679 --> 00:50:22.400And it's just really it's just becauseyou're not taking the money, and68600:50:22.440 --> 00:50:23.360I don't know why people put itoff to the end of the year.68700:50:23.440 --> 00:50:27.440It's something you have to take otherwiseyou're gonna get penalized. You have to68800:50:27.440 --> 00:50:30.159take more out of your account.Can you find yourself in this position?68900:50:30.400 --> 00:50:34.320You should take the distribution as soonas you can, and at the same69000:50:34.360 --> 00:50:37.920time. I think that you wereable to file a Form fifty three twenty69100:50:37.000 --> 00:50:43.480nine with IRS if you have anyif you want to get the penalty waved,69200:50:43.480 --> 00:50:45.039if you had a reasonable cause,you are able to get a waived.69300:50:45.079 --> 00:50:49.199But you have twelve months to takeit. You should just take it.69400:50:49.199 --> 00:50:51.280In that sense, I mean it'salways pushed off because a lot of69500:50:51.320 --> 00:50:52.920people don't need the rm D sothey forget about it. That too,69600:50:53.039 --> 00:50:57.079that happens too, but it's somethingyou have to take, and it's something69700:50:57.079 --> 00:51:00.880the IRS will make you take otherwiseyou get penalized. And those are listening69800:51:00.960 --> 00:51:04.920who don't know what and rm Dis. It's a required minimum distribution.69900:51:05.039 --> 00:51:08.280If you have a traditional IRA accountand you have money in that after seventy70000:51:08.320 --> 00:51:13.480three, currently you have to takemoney out each year. You don't get70100:51:13.480 --> 00:51:15.039a choice whether you get to ornot. You have to and you have70200:51:15.119 --> 00:51:19.199to pay. And it's a factorbased on your age roughly four percent of70300:51:19.239 --> 00:51:22.239the account total. But that alsogoes for your four oh one K if70400:51:22.239 --> 00:51:27.119you're retired. Say you're retired andyou're seventy three, but you left your70500:51:27.119 --> 00:51:30.960money and your old your old company'sfour oh one k planning you're just leaving70600:51:30.000 --> 00:51:34.079it there. You will have totake the R and D from there.70700:51:34.199 --> 00:51:39.480There are weird provisions while you're stillworking. There's certain they are. That's70800:51:39.480 --> 00:51:42.599what I'm saying. If you areretired but you left it in there,70900:51:42.679 --> 00:51:45.000you're seventy three, you have totake it. Yeah, I did talk71000:51:45.000 --> 00:51:47.440to your account. If you're stillworking and still funding your four after seventy71100:51:47.440 --> 00:51:51.639three, yeah, that's a rarescenario, but you can. You don't71200:51:51.639 --> 00:51:53.320have to take it. But thensay you retired at age seventy four,71300:51:53.440 --> 00:51:55.719you got to take it immediately.It's not like you get to wait.71400:51:57.039 --> 00:52:00.480And also with that, you cannotuse that requirement and distribution money as a71500:52:00.559 --> 00:52:05.519rough conversion. Not allowed to dothat IRS. But you can do something71600:52:05.559 --> 00:52:10.239called a qualified charitable distribution that canthat takes care of your R and D,71700:52:10.320 --> 00:52:15.239and so people will call them qcds. There's a lot of acronyms out71800:52:15.280 --> 00:52:20.079there. Add that to your alphabetsoup. Qcds can be something that can71900:52:20.119 --> 00:52:22.800cover your rm ds and you cansend that money to an organization that you72000:52:22.800 --> 00:52:27.480you care about and instead of themhave instead of you having to pay a72100:52:27.559 --> 00:52:30.039tax and given to Uncle Sam,they don't have to pay any of the72200:52:30.079 --> 00:52:32.199taxes and they get to keep themoney, but you do not get the72300:52:32.280 --> 00:52:37.079deduction for the deductions. The otherside of that, your deduction is not72400:52:37.119 --> 00:52:39.079having to pay the taxes. That'sright. You can't get you can't get72500:52:39.119 --> 00:52:45.719both sides. And I think mostof our clients not only don't need the72600:52:45.920 --> 00:52:49.599for the R and D. ByDylan said, they don't want it,72700:52:49.960 --> 00:52:52.320they'll love not to have to takethe R and D. So a way72800:52:52.360 --> 00:52:55.199to do that. If you've gotmoney that you've got to have come out,72900:52:55.199 --> 00:52:58.679and you've got a favorite charity thatyou want to donate to, you73000:52:58.719 --> 00:53:00.360certainly can do that if you doyou need the rm D, though you73100:53:00.400 --> 00:53:04.599can also do it in the senseof a monthly distribution to you and I'll73200:53:04.599 --> 00:53:07.960be taken out and given to youas income throughout the year. That's another73300:53:07.000 --> 00:53:08.599way to do it. Yeah,if you know, if you don't know73400:53:08.599 --> 00:53:12.639any good charities, call us up. We know a lot that could use73500:53:12.679 --> 00:53:15.719them. Now, this this,this, this segment is one that I'm73600:53:15.760 --> 00:53:21.239going to preface by saying it couldbe a little boring because it's economic.73700:53:21.599 --> 00:53:25.199It's economic terms. Ev garage isnever born. I get comments on that73800:53:25.239 --> 00:53:28.719all the time. All right,let's go this is this is So.73900:53:29.119 --> 00:53:32.039It struck me that we use alot of terms on this show, and74000:53:32.159 --> 00:53:37.079you hear a lot of terms onCNBC or the New what is that?74100:53:37.599 --> 00:53:42.880And many of you may know whatthese terms are. Now, I just74200:53:42.960 --> 00:53:46.599as a as kind of a primer. I went through I googled economic terms74300:53:46.639 --> 00:53:50.199just to see if there was somethingI was not. I only have a74400:53:50.239 --> 00:53:52.719couple of them. You're telling meyou didn't use chat to do this.74500:53:52.840 --> 00:53:54.679I did not use Chat BDC,but I googled and and there were one74600:53:54.760 --> 00:54:00.679hundred and seven pages of economic terms, so you could spend some time.74700:54:00.800 --> 00:54:04.639But a couple of things we talkabout on the show quite often, what's74800:54:04.679 --> 00:54:07.960a basis point? You know,we mentioned basis points and a basis point74900:54:08.320 --> 00:54:12.000which is also called a bip.You say, well, you know,75000:54:12.079 --> 00:54:15.800interest rates went up ten basis points, interest rates went up twenty basis points.75100:54:15.880 --> 00:54:20.639When the heck is a basis pointone hundred basis points is one percent.75200:54:21.239 --> 00:54:25.400So a basis point is one onehundredth of one percent point zero one75300:54:25.559 --> 00:54:29.679yep. So that's that's a basispoint. And when you hear you hear75400:54:29.719 --> 00:54:34.039people on the CNBC and on radioshows and different talk shows talking about basis75500:54:34.079 --> 00:54:37.159points all the time, like everybodyknows what the basis point is. So75600:54:37.360 --> 00:54:39.760again, one hundred basis points isone percent. If it goes up ten75700:54:39.800 --> 00:54:45.199basis points, it's one tenth toone percent. Uh. Another term you75800:54:45.199 --> 00:54:49.679hear a lot about is beta.Beta is the volatility of a stock.75900:54:50.199 --> 00:54:52.400A beta of one means that thestock moves with the market. If a76000:54:52.400 --> 00:54:57.000stock has a beta of one,and this is good when you're looking at76100:54:57.239 --> 00:55:01.079stocks you may want to purchase andyou want volatility stocks, so you want76200:55:01.119 --> 00:55:06.639to stock with a number with abeta number under one. Again, just76300:55:06.719 --> 00:55:09.400keep in mind one is the samevolatility as the market, and you can76400:55:09.480 --> 00:55:13.239use that same idea with your portfolioas a whole. If you have a76500:55:13.280 --> 00:55:16.000more conservative portfolio, your beta willbe less than one. It won't move76600:55:16.039 --> 00:55:20.199with the market like it would withthe S and P five hundred if it76700:55:20.239 --> 00:55:23.760was at one. Absolutely absolutely.Another word you hear bantered about a lot76800:55:23.840 --> 00:55:29.400is coupon coupon. This is anotherword for interest rate on a bond.76900:55:29.679 --> 00:55:34.119The coupon is the interest rate.If you buy a five percent US Treasury,77000:55:34.559 --> 00:55:37.239you might buy it at a discount. You might buy it at a77100:55:37.840 --> 00:55:43.639premium, but the coupon is alwaysfive percent. David, It's like I'm77200:55:43.679 --> 00:55:46.880studying for my series sixty five.That's what I'm thinking. That's that's the77300:55:46.920 --> 00:55:50.639whole chapter. There's a couple ofthings here that you hear a lot on77400:55:50.719 --> 00:55:53.400TV, and that I think thatthere are people out there that don't know77500:55:53.400 --> 00:55:59.599what these are. Where do theyget the term coupon? Mister smarty pants,77600:56:00.079 --> 00:56:02.679you just passed your sixty five?What is it? Yeah, I77700:56:02.760 --> 00:56:07.320couldn't tell you. You know,Todd, where's the term coupon? Bonds77800:56:07.400 --> 00:56:09.280used to actually be where you rippedoff the coupils, isn't that something?77900:56:09.599 --> 00:56:12.639Yeah? You and I used tosee these. I mean I've been in78000:56:12.679 --> 00:56:15.679the business for a while and Iused people actually used to come in with78100:56:15.760 --> 00:56:20.920these and they would actually have littlecoupons like green stamps at the bottom of78200:56:20.960 --> 00:56:24.280the attached to the bond, andyou would when it was interest payment dat78300:56:24.280 --> 00:56:27.280it was up to you to remember. Yeah, it was like a stock78400:56:27.280 --> 00:56:30.800certificate. Is like to tear offcertificate toa with that little coupon and take78500:56:30.840 --> 00:56:34.599it to the bank and get yourmoney. That's why it's a coupon,78600:56:34.639 --> 00:56:37.719because they actually did have a coupon, and one of the last one.78700:56:37.800 --> 00:56:42.000The PE ratio. Uh, youhear that a lot. It's very common78800:56:42.079 --> 00:56:45.719measure of value simply takes the priceof stock and divides it by the earnings78900:56:45.719 --> 00:56:50.760for share. All right, So, uh, money managers typically look at79000:56:51.039 --> 00:56:54.719forward pe. In other words,we'd like to kind of guess what the79100:56:54.760 --> 00:56:58.280growth rate is going to be,and then that would be times the year79200:56:58.360 --> 00:57:00.760we'll talking about PE. I mean, that's really the next issue for the79300:57:00.800 --> 00:57:06.519market is valuations, because now we'regetting to the point where how can you79400:57:06.679 --> 00:57:10.440justify certain valuations with the environment thatseems to be kind of what we're going79500:57:10.480 --> 00:57:15.039to be going into next year,So that you know, again we're very79600:57:15.360 --> 00:57:20.119overvalued in terms of history. Iwould say it's aid, I would I79700:57:20.119 --> 00:57:24.760would counter that with it. Itis extended, but not ridiculous if you79800:57:24.880 --> 00:57:29.239take away the magnificence exactly. That'sthe thing. We have to do that79900:57:29.320 --> 00:57:32.000though, and find that core pe. What is the pe of the other80000:57:32.199 --> 00:57:36.599four hundred and ninety three socks?Much different? You know, it's much80100:57:36.639 --> 00:57:39.079different, yeah, than if youhave those magnificence seven in there. So80200:57:39.320 --> 00:57:45.599yes, we are at rich levels. We are just tough valuations. Magnificent80300:57:45.639 --> 00:57:47.800seven is, you know, athird of the economy at this point in80400:57:49.000 --> 00:57:51.400an S and P. Five hundred, it is. But to take them80500:57:51.400 --> 00:57:55.039out is just it's a tough thingto really be able to do and justify80600:57:55.079 --> 00:57:59.039it. It is. But Ithink if you're trying to determine whether the80700:57:59.079 --> 00:58:04.599market is fairly valued or overvalued froma pe point of view, you kind80800:58:04.599 --> 00:58:08.119of have to Yeah, because thosestocks have such excessive valuations. Yeah,80900:58:08.159 --> 00:58:12.599well, I guess what we're sayingis those seven stocks will have a hard81000:58:12.639 --> 00:58:15.440time in twenty four because of theircurrent valuations, where the rest of the81100:58:15.440 --> 00:58:20.480stocks, the value stocks, theyare still kind of undervalued. So that's81200:58:20.519 --> 00:58:23.599why it's just really attractive for themin going into twenty twenty four because they81300:58:23.639 --> 00:58:28.880still have room to get the growththat they haven't gotten in twenty three.81400:58:28.920 --> 00:58:31.199Because all the attention has been onthe Big seven, it feels like we81500:58:31.599 --> 00:58:36.679are believers, are starting to believein our discussions, and you know,81600:58:36.719 --> 00:58:39.320again we're trying to We try todo the impossible here, right, We81700:58:39.360 --> 00:58:42.880try to predict the future, andevery now and then we get it right.81800:58:43.800 --> 00:58:46.599Hopefully, more often than not.But in trying to look at twenty81900:58:46.639 --> 00:58:51.800twenty four, what we've seen overthe last three or four weeks, where82000:58:51.920 --> 00:58:55.880the Magnificent seven have stalled out andthe rest of the market is starting to82100:58:55.920 --> 00:59:00.480catch up, we think that probablyis going to be a fairly decent theme82200:59:01.239 --> 00:59:05.800for twenty twenty four, especially ifwe get into a recessionary environment, because82300:59:05.840 --> 00:59:09.119those guys have very high pee ratios, they'll be very vulnerable. Well,82400:59:09.119 --> 00:59:12.840it's also the idea. I mean, these socks are just hyper growth,82500:59:13.159 --> 00:59:15.639and right now it feels like they'llnever stop going up. But remember Tesla,82600:59:16.360 --> 00:59:19.880it felt like that a few yearsago, just never stopped going up.82700:59:19.920 --> 00:59:24.400They even had to do a stockcut. The stock d a blank82800:59:24.480 --> 00:59:28.280Yeah, jeez, I think abrain part too. They had to do82900:59:28.480 --> 00:59:30.320stock splits because it was just goingso high, and everybody's like, Okay,83000:59:30.320 --> 00:59:34.039we'll never stop going up, up, up, it doesn't matter about83100:59:34.079 --> 00:59:37.559us PE being way over valued.And then it came back down the earth83200:59:37.800 --> 00:59:40.000and now it's pee and then itstarted mattering. And this could easily happen83300:59:40.039 --> 00:59:45.199with an Nvidia type of stock.Speaking of Tesla, it's a good segue83400:59:45.239 --> 00:59:47.159here. The company's recalling. Youprobably saw it was in all the papers,83500:59:47.159 --> 00:59:52.280the companies recalling every single vehicle they'veever stole in the United States,83600:59:52.360 --> 00:59:55.679right, more than two million tofix a defective system that's supposed to ensure83700:59:55.760 --> 01:00:00.360drivers pay attention when you using anautopilot, if you're stupid enough to out83801:00:00.320 --> 01:00:02.599a pile. And I would neverdo that. Their recalls are just software83901:00:02.639 --> 01:00:06.960updates, so they don't actually bringthe car into the shop. I want84001:00:07.000 --> 01:00:09.199to give you my experience. Thestock went down three percent and a camera84101:00:09.239 --> 01:00:14.679right back. So on Tuesday afternoon, I got on my phone the Tesla84201:00:14.760 --> 01:00:19.719app and put in that I neededservice for the for the recall. Right84301:00:20.199 --> 01:00:22.880on Thursday morning at eight thirty,the guy walks into my office, he84401:00:22.920 --> 01:00:25.840takes my key, he goes down, he does the software update, he84501:00:25.880 --> 01:00:29.679brings the key back up, andhe leaves. Thirty minutes. That's pretty84601:00:29.679 --> 01:00:31.480cool. Thirty minutes, Maxelin thatcome to you too, that service.84701:00:31.519 --> 01:00:36.199They came right to my office andI didn't go anywhere. Imagine if you84801:00:36.239 --> 01:00:39.159had a recall for any other car, you're going to be taking it.84901:00:39.320 --> 01:00:42.920You're making an appointment, taking itdown to the deal or trying to get85001:00:42.920 --> 01:00:49.039a ride home Mayway. It wasa nice experience and I'll seguey that right85101:00:49.079 --> 01:00:54.079into the TV garage. Eighty threeGet this, guys, eighty three percent85201:00:54.119 --> 01:01:00.199of people buy their internal combustion vehiclerather than lease them because they I know85301:01:00.239 --> 01:01:05.199what to expect. But we're seeinga very different story with electric vehicles.85401:01:05.480 --> 01:01:09.039Currently about forty percent of people buyingevs are leasing, which is interesting because85501:01:09.079 --> 01:01:13.880with a lease you do not getthe rebate. The rebate goes to the85601:01:13.920 --> 01:01:19.559dealer. Various reports expect leation ofevs to grow to maybe as high as85701:01:19.599 --> 01:01:22.480fifty percent within the next few months. I saw a report from Ford saying85801:01:22.480 --> 01:01:27.199they're running at sixty percent. Soyou have to ask yourself, why are85901:01:27.280 --> 01:01:30.360EV buyers willing to give up thatrebate. They don't know if they like86001:01:30.400 --> 01:01:34.880it yet. When I was ayoung band on Sebastian about your age,86101:01:35.400 --> 01:01:39.039someone told me, if it appreciates, buy it, if it depreciates,86201:01:39.440 --> 01:01:45.519rented. I leased my Tesla becauseI was concerned the rapidly changing technology could86301:01:45.599 --> 01:01:52.519dramatically reduce the value of the car. And apparently I'm not alone. Ford86401:01:52.559 --> 01:01:55.280struggling in general. They're cutting theirplant production of its F one fifty electric86501:01:55.719 --> 01:01:59.119whatever it's called. Cut in half, cut in half, right. Yeah,86601:01:59.159 --> 01:02:00.880and the new production, I meanit's good. Are planning on producing86701:02:01.000 --> 01:02:07.119sixteen hundred trucks per week, andit's refocusing its strategy around hybrids because the86801:02:07.159 --> 01:02:12.199hybrids are profitable. Hybrids are numberone. They're a better seller than the86901:02:12.199 --> 01:02:15.920electric vehicles because you have seventy fivepercent year over year. Yeah, I87001:02:15.920 --> 01:02:17.960mean it's kind of a its kindof a half step, right if you87101:02:19.039 --> 01:02:22.400want to do something different than internalcombustion, but you're not all in on87201:02:22.440 --> 01:02:28.159the electric hybrids are nice, youknow, baby Stap. More than anything,87301:02:28.199 --> 01:02:30.000it's it's affordable. And not onlyis it affordable, it gives you87401:02:30.079 --> 01:02:35.199getter gas mileage, which no onelikes paying for gas prices when they skyrock,87501:02:35.280 --> 01:02:39.280and hybrids make it very efficient ongas mileage. I've never quite understood87601:02:39.320 --> 01:02:45.079the electric pickup thing. I don'tthink number one, that the pickup crowd87701:02:45.239 --> 01:02:50.039is necessarily esg you will if youwill, or definitely a woke they're not.87801:02:51.119 --> 01:02:54.280I don't know that the the pickupcrowds looking for electric vehicles. That's87901:02:54.360 --> 01:02:58.400number one, and number two,if I've got to if I've got to88001:02:58.440 --> 01:03:00.199pick up. I'm going to bedoing work with hard, work with it88101:03:00.280 --> 01:03:04.679right. I want something I knowhow it's going to perform. I want88201:03:04.719 --> 01:03:07.159something that will give me mileage.You give me power, I don't.88301:03:07.400 --> 01:03:10.280I've just never understood the whole electricpick up. Well, the number one88401:03:10.280 --> 01:03:15.400selling hybrid in the US is afour F one fifty's number two everything it88501:03:15.480 --> 01:03:22.039is the Maverick. So both arepickup trucks. Hybrid hybrid cybertruck though,88601:03:22.239 --> 01:03:24.000same thing as ESG. It'll beinteresting to see what happens. I don't88701:03:24.039 --> 01:03:29.079think they care about ESG. Isaw video of the cyber truck racing a88801:03:29.199 --> 01:03:34.840Porsche, and the cyber truck hada Porsche. It was pulling a porch88901:03:35.159 --> 01:03:37.280at the same Porsche was racing andit beat it. It was racing a89001:03:37.360 --> 01:03:40.719Porsche, well, pulling a portcheand oneone ye same, yeah that.89101:03:42.119 --> 01:03:45.280You know, you just can't getaway from the speed of the electric cars.89201:03:45.280 --> 01:03:49.960It's all these it's all these traditionalcar companies that are trying to keep89301:03:50.079 --> 01:03:52.440up with the growth of the newindustry, of the ev of the autonomous89401:03:52.519 --> 01:03:57.480driving, but they're starting to runin some issues. GM owns a subsidiary.89501:03:57.840 --> 01:04:00.760It was the main owner of itcalled Cruise, and they're the ones89601:04:00.800 --> 01:04:05.320that had that issue over in SanFrancisco back in October where it's autonomous car89701:04:05.400 --> 01:04:10.079drag somebody twenty feet because it obviouslydoesn't know what it's a robot. That89801:04:10.119 --> 01:04:13.159costs nine people their job, ninepeople their job. The co founders quit89901:04:13.239 --> 01:04:16.599and now GM is saying there arenow Cruises laying off twenty four percent of90001:04:16.639 --> 01:04:19.920its workforce. As a Friday,GM says it still sees light at the90101:04:20.000 --> 01:04:24.840end of the tunnel, but they'reslowing down on all this growth initiative where90201:04:24.840 --> 01:04:29.000they put in eighty billion dollars innew businesses by the twenty thirty because they're90301:04:29.039 --> 01:04:31.480just kind of falling on their faceand we're finding that everywhere. And these90401:04:31.599 --> 01:04:35.119autonomous driving cars, which I thinkare crazy. We saw one up in90501:04:35.159 --> 01:04:39.679Phoenix last week when we were upthere. Yeah. Uh, they do90601:04:39.760 --> 01:04:42.920have those issues because they aren't They'renot a person. They can't just stop.90701:04:43.000 --> 01:04:45.760If you see somebody right now,this is the ones in Phoenix are90801:04:45.840 --> 01:04:48.639waymoo, that's what you saw.I'm just saying, I just saw it.90901:04:48.880 --> 01:04:51.760Yeah, Wemo hasn't any issues andI have seen it. I think91001:04:53.719 --> 01:04:56.480I don't know that I have seenthe cruise up there. Would you get91101:04:56.480 --> 01:05:00.159in one? I don't have seenthe cruises up there? Created one?91201:05:00.000 --> 01:05:04.320I would get in Aeimo. Yeah, I'm not afraid of technology. I'm91301:05:04.320 --> 01:05:10.199not afraid of technology. I'm afraidof dying. That is contract day if91401:05:10.199 --> 01:05:14.800you're afraid of technology, because thecars controlled by technology. So when you91501:05:14.800 --> 01:05:17.840produce lithium ion batteries, will wrapup your EV section with this because I91601:05:17.960 --> 01:05:21.280found this report and it's an MITstudy, which we all know what MIT91701:05:21.480 --> 01:05:26.280is on the spectrum, but whenthey did this report, they found that91801:05:26.320 --> 01:05:30.519for every ton of mind lithium,it produces fifteen tons of CO two emitted91901:05:30.559 --> 01:05:36.800in the air. That causes aEV production vehicle to produce eighty percent more92001:05:36.960 --> 01:05:42.760CO two than what is comparable toa regular combustion car. So when you92101:05:42.800 --> 01:05:45.639get that car to market, it'seighty percent more CO two emissions than a92201:05:45.679 --> 01:05:49.760regular combustion car. Now we knowonce the car is alive, the EV92301:05:49.920 --> 01:05:55.159is gonna not do as much COtwo than the combustionable car because it's sixty92401:05:55.199 --> 01:05:58.199six percent of it is only onfossil fuels compared to one hundred percent.92501:05:58.800 --> 01:06:02.360Now that's the big thing, becauseit's your energy grid that supplies the EV92601:06:02.480 --> 01:06:05.679over the life of the EV's vehicle. That will depend on whether it helps92701:06:05.719 --> 01:06:10.519the world's emissions problems. And that'swhy when you say, for the fact92801:06:10.519 --> 01:06:14.440that even this report, this professorfrom MIT, he said, if we92901:06:14.480 --> 01:06:18.079don't change how we make materials,how we make chemicals, how we manufacture,93001:06:18.519 --> 01:06:23.800everything will essentially stay the same.And I think that's a very true93101:06:23.800 --> 01:06:25.920thing to say. No, Iget that. I mean, in a93201:06:25.960 --> 01:06:29.119perfect world, you'd be Norway,right. Would we find out about Norway93301:06:29.239 --> 01:06:33.880last week? Norway is predominantly usedby hydro power their energy grid eight which93401:06:33.880 --> 01:06:39.079percent of the sales are EV.Yes, But I'm not looking at it93501:06:39.119 --> 01:06:41.760from why people are buying EV's,Dave. I'm looking at it will it93601:06:41.800 --> 01:06:44.599help the world? Or what you'resaying from I think you pointed out that93701:06:44.679 --> 01:06:47.280Norway. Yeah, eighty percent ofthe power is generated by from hydro power.93801:06:47.320 --> 01:06:50.920So if you've got eighty percent hydropower and everybody driving electory vehicles,93901:06:50.920 --> 01:06:54.199their emissions are going to be great. You've got to be really good.94001:06:54.400 --> 01:06:59.039And but again, we could getall of China on the EV's tomorrow and94101:06:59.079 --> 01:07:02.599it would be a net deficit interms of our CO two penalty because China's94201:07:02.639 --> 01:07:06.599predominant energy sources what coal, coal? Yeah, so you use coal,94301:07:08.199 --> 01:07:12.280use coal to power EV, you'reactually making it worse because coal takes two94401:07:12.320 --> 01:07:15.239times the amount of energy to heatit up and produce into energy than it94501:07:15.239 --> 01:07:18.360does fossil fuels. So you're literallycreating a bigger problem by if you got94601:07:18.400 --> 01:07:23.199all of China onto EV tomorrow.That's why it's so crucial for things like94701:07:23.239 --> 01:07:28.400to Toyota's solid state battery to comeon the line for EV's production and manufacturing94801:07:28.559 --> 01:07:31.599become more efficient in terms of creatingthe CO two. The vast majority of94901:07:31.639 --> 01:07:36.719lithium is mine from places like theMidic, the Congo, and they have95001:07:36.840 --> 01:07:41.159huge human rights issues. I mean, there's so much problems with the actual95101:07:41.199 --> 01:07:44.199inputs of our these ee right,some of the biggest lithium minds. Of95201:07:44.199 --> 01:07:46.320course, one of the biggest lethiumveins in the in the world on the95301:07:46.320 --> 01:07:48.760planet is in Nevada, Nevada,and that's going to be a fun that95401:07:48.880 --> 01:07:51.960up and run and that would bereally nice. But you're right, and95501:07:53.000 --> 01:07:57.039the EV do not come without problems. But it's It's funny though, because95601:07:57.320 --> 01:08:00.199if you do it in coal heavyWest Virginia, the EV actually created more95701:08:00.199 --> 01:08:05.000carbon emissions than the hybrid did.But if you if you ran that hybrid95801:08:05.760 --> 01:08:10.800in the Washington state, which ishydro power heavy, they found that the95901:08:10.840 --> 01:08:15.960EV would admit sixty one percent lesscarbon than the hybrid. So it's so96001:08:15.159 --> 01:08:18.600crucial on the energy grid on whetherit actually is a net benefit or cost96101:08:18.640 --> 01:08:21.199to the world. I agree.It seems like we spend a lot of96201:08:21.319 --> 01:08:26.520time talking about electric vehicles, andif you're a I don't give a darn96301:08:26.560 --> 01:08:29.279about electric vehicles out there, I'msorry, but it is. There's a96401:08:29.319 --> 01:08:32.359lot of electric vehicle news. There'sa lot of things going on in that96501:08:32.439 --> 01:08:35.560space. So we try to bringyou what we're hearing, what we know.96601:08:35.640 --> 01:08:40.199As far from an investment point ofview. C Ford got back above96701:08:40.239 --> 01:08:44.439twelve dollars last week. That's agood move, and that is because they96801:08:44.439 --> 01:08:48.039cut back on this their electric footprintYEP and went to the hybrid because they've96901:08:48.079 --> 01:08:51.039been struggling with it. So wetalked about twenty twenty four possibly in the97001:08:51.079 --> 01:08:55.760Year of value. Do you knowwho the father of value investing is or97101:08:55.760 --> 01:09:01.960who they say Bernard Baruch No Benjaminso Benjamin Graham is the author of The97201:09:02.000 --> 01:09:05.760Intelligent Investor Holly's, a highly solidafter value investing book, as well as97301:09:05.800 --> 01:09:10.439Security Analysis, the original security analysisbook that you wrote with David Dodd.97401:09:11.560 --> 01:09:14.359He had this really good quote thatI ran across this last week, and97501:09:14.439 --> 01:09:16.479it's going to segue into why financialplanning is so important. He says,97601:09:16.840 --> 01:09:20.920the best way to measure your investingsuccess is not by whether you are beating97701:09:20.960 --> 01:09:25.880the market, but by whether you'veput in place a financial plan and a97801:09:25.920 --> 01:09:30.479behavioral discipline that are likely to getyou where you want to go in the97901:09:30.600 --> 01:09:33.640end. What matters isn't crossing thefinish line before anybody else, but just98001:09:33.680 --> 01:09:38.840making sure that you do cross it. And I think it's so important when98101:09:38.880 --> 01:09:43.159people look at the s and p. Five hundred and saying am I keeping98201:09:43.239 --> 01:09:46.680up with everyone else? That's notwhat is important. The important is do98301:09:46.760 --> 01:09:51.239you have a financial plan and doyou have the behavioral discipline, the emotional98401:09:51.239 --> 01:09:56.760discipline to stick with that plan thatwill cause you across the finish line.98501:09:56.800 --> 01:10:00.079I was having a discussion with ayoung friend of mine last weekend in that98601:10:00.720 --> 01:10:04.399we were talking about He was talkingabout the amount of time it took him98701:10:04.439 --> 01:10:09.600to climb to Moulmak Hill, andI said, at my age, I'm98801:10:09.640 --> 01:10:13.439not concerned about the amount of time. I'm concerned about getting to the top98901:10:13.479 --> 01:10:17.680of the hill. Sounds like it'spretty similar. Again, I'm beyond the99001:10:17.720 --> 01:10:21.760point in my life when I workfor time. I simply want to finish99101:10:23.319 --> 01:10:28.319the task unharmed, unhurt. Walkingfor your life, yeah, by walking99201:10:28.319 --> 01:10:30.039from my life. But you know, it is funny as you get older.99301:10:30.399 --> 01:10:33.159I had a eighty five year oldguy that was in the office last99401:10:33.199 --> 01:10:36.279week and he said, yeah,he said, and he's pretty healthy guy.99501:10:36.960 --> 01:10:40.319He said, yeah, I'm I'mdoing fine. He said. I99601:10:40.319 --> 01:10:42.920did fall in the shower last weekfor the first time. And he said,99701:10:43.159 --> 01:10:47.560I find myself using handrails when Igo upstairs. Absolutely. You know,99801:10:47.680 --> 01:10:50.800we'd like to thank everyone who cameup to our Federal Employee seminar this99901:10:50.920 --> 01:10:55.279last weekend. Last week on Wednesdaywas a great seminar. A lot of100001:10:55.279 --> 01:10:59.159people got a lot of questions answeredand a lot of great information. So100101:10:59.600 --> 01:11:02.039we'll probably be having one of thoseseminars again going into next year, probably100201:11:02.079 --> 01:11:04.720around Aprilarrey. Yeah, that's whatwe're thinking. Yeah, that's all.100301:11:04.720 --> 01:11:09.079The feedback we received during that daywas just how beneficial it was and how100401:11:09.239 --> 01:11:12.800educated it was, all the stuffthat goes into the federal benefit. Yeah,100501:11:13.279 --> 01:11:15.319we had a lot of people thatwere a couple of years out from100601:11:15.359 --> 01:11:17.399retirement. If it's not an eventthat's you know, I need to be100701:11:17.479 --> 01:11:21.159retiring in the next year or two, it's yeah, you could be five,100801:11:21.159 --> 01:11:24.520ten years out. It's just somethingto start thinking about it. That's100901:11:24.520 --> 01:11:27.399why we do it right. Yeah, the financial plan I think is so101001:11:27.439 --> 01:11:30.119important for anyone listening that hasn't.I mean, when markets run up like101101:11:30.159 --> 01:11:34.119this, that's when you need tolook at your plan because it's likely that101201:11:34.199 --> 01:11:36.640they could come down. After yousee a huge run up. If it101301:11:36.680 --> 01:11:41.840can come down, revisit risk tolerances, revisit the plan, make sure everything101401:11:41.920 --> 01:11:44.760is looking like how you want itto be. If you haven't made as101501:11:44.840 --> 01:11:46.600much money in this last two months, do you need to be more risky,101601:11:46.640 --> 01:11:48.960Well, we'll talk about it,but that doesn't necessarily mean you should101701:11:48.960 --> 01:11:51.640be. Right. A lot ofthings should be talked about when you see101801:11:51.640 --> 01:11:57.920big moves, and there's a realdesire to be really aggressive when you see101901:11:57.920 --> 01:12:00.640this, right, and there's areal desire to go to cash when it's102001:12:00.680 --> 01:12:03.520going the other way. Neither oneof those things are the right thing to102101:12:03.560 --> 01:12:08.159do. And if you come seees, we can help you decide what's102201:12:08.199 --> 01:12:11.560the right thing to do for you. Coming to the end of this segment,102301:12:11.760 --> 01:12:14.800we'll be back with two more segments. Thank you again for joining us.102401:12:15.119 --> 01:12:29.560Say it's only a name, Welcomeback to the Money Matters Show.102501:12:29.560 --> 01:12:31.359My name is Sebastian Bors. Sethim here with Dave Sherwood, Todd Glick102601:12:31.520 --> 01:12:35.960and still in Greenberg. I wantin the house, but that was in102701:12:36.039 --> 01:12:39.920the house. I wanted to bringup the fact that we're talking about rates102801:12:39.960 --> 01:12:42.840dropping, and that's a really crucialthing because a lot of people have taken102901:12:42.880 --> 01:12:45.239advantage of money market funds, whichare all good in all when rates are103001:12:45.239 --> 01:12:47.520staying where they are, but whenthey're dropping, it's not where you want103101:12:47.520 --> 01:12:51.399to be. Here's why those moneymarket rates will drop very quickly as well.103201:12:51.800 --> 01:12:55.760What you want to do is tryto look at extending your long duration.103301:12:55.920 --> 01:12:59.159What that means is looking out lookingat five year products, ten year103401:12:59.159 --> 01:13:01.760products like a treasure or a corporatebond. An annuity is something that can103501:13:01.880 --> 01:13:06.319give you guaranteed interest for a fixedtime. That's where that coupon payment that103601:13:06.359 --> 01:13:10.880you just kind of talked about,Right, myga rates we talked about on103701:13:10.920 --> 01:13:14.119the show a lot. The highestI saw them was at six point four103801:13:14.159 --> 01:13:17.960percent. They have dropped now tofive point four percent. That is something103901:13:17.960 --> 01:13:24.159that will continuously drop if rates continuouslydrop. Five point four percent locked in104001:13:24.199 --> 01:13:27.000for five years is still a reallygood rate. I just bring that up104101:13:27.039 --> 01:13:30.000because people who still haven't moved moneyout of their checkings, that haven't talked104201:13:30.560 --> 01:13:34.119took an advantage of this interest.For people who think that they're taking advantage104301:13:34.119 --> 01:13:36.319of the interest, but it's reallyjust in money market funds. It's not104401:13:36.359 --> 01:13:40.640a locked in rate, and thatcould change any day. Those type of104501:13:40.680 --> 01:13:44.359people need to really be considering lookingat longer duration and getting that locked in104601:13:44.359 --> 01:13:47.960interest because it will not be hereforever. Right. We've been saying for104701:13:48.039 --> 01:13:51.840the last three weeks, you've gotto the rates were at a sixteen year104801:13:51.960 --> 01:13:57.119high. You've got to lock someof that in. And I think I104901:13:57.439 --> 01:14:00.239mentioned that. Clients said said,oh, yeah, I'll go, I105001:14:00.399 --> 01:14:01.560can go longer term. I gotit. One year. I went to105101:14:01.600 --> 01:14:04.319one year. No no no,no, no, no, I mean,105201:14:04.399 --> 01:14:09.720if you're at the you go backto the early eighties. I remember105301:14:10.479 --> 01:14:14.479interest rates peaked at that point atseventeen and a half percent, and you105401:14:14.600 --> 01:14:17.640could are seventeen I think it was, you could get seventeen percent for a105501:14:17.680 --> 01:14:21.439minimum of two and a half yearsup to ten years. You could have105601:14:21.520 --> 01:14:28.319locked in a ten year CD federallyinsured for seventeen percent. And what did105701:14:28.359 --> 01:14:30.960everybody take two and a half yearsbecause they knew in two and a half105801:14:31.039 --> 01:14:34.960years races were going to be evenhigher. Little common sense would help here,105901:14:35.319 --> 01:14:39.239and we got raced back to asixteen And if you're one of these106001:14:39.279 --> 01:14:41.960to say, well, well whatif we go back to sixteen seventeen percent?106101:14:42.119 --> 01:14:45.920Monetary policy was totally different then thanit is now. It was a106201:14:45.960 --> 01:14:48.199totally different world. That's just youdidn't have as much debt in the world.106301:14:48.359 --> 01:14:50.600But no, they'll and the debtcould have sustain it. Yeah,106401:14:50.640 --> 01:14:56.199and Todd, they'll shut the economydown before they let interest rates get that106501:14:56.279 --> 01:15:00.359high. And it's just not goingto happen again because of the way that106601:15:00.560 --> 01:15:04.359you already saw what happened. Inflationgot to nine percent, interest rates started106701:15:04.399 --> 01:15:09.920to move higher, you get interestrates up around five percent. Now inflation's106801:15:09.960 --> 01:15:12.800back down to three. Well,Also, the Fed didn't have half their106901:15:12.800 --> 01:15:16.039tools back then now where they wouldtoday. They can set floors and ceilings107001:15:16.079 --> 01:15:18.960on rates the way they can neverdo back in the day. So it's107101:15:19.199 --> 01:15:24.119so to turn about that. Butwhen we start to talk about longer term107201:15:24.239 --> 01:15:27.159maturities, and no one knows whereinterest rates are going to be in a107301:15:27.239 --> 01:15:30.319year, year and a half,two years, but there is a likelihood107401:15:30.319 --> 01:15:33.399that sometime in the next one totwo years we're going to have an economic107501:15:33.479 --> 01:15:39.000slowdown, and when we have aneconomic slowdown, interest rates are going to107601:15:39.079 --> 01:15:45.000decline, and you're not going tosee the rates that are available even today107701:15:44.680 --> 01:15:50.600at that period. So take aportion of your fixed income portfolio, which107801:15:50.640 --> 01:15:56.039we've done, and lock in somethinglonger term. It's easy to do,107901:15:56.159 --> 01:16:00.000Todd. You've got the twenty fiveyear and ETF that mimics the twenty five108001:16:00.079 --> 01:16:03.680your treasury. Yeah, that's theeDV Ernie dog Victor. There you go,108101:16:03.720 --> 01:16:08.159it's a vanguard. And then thetwenty years is the twenty years of108201:16:08.199 --> 01:16:12.520TLT. Thanks telling the twenty yearsof TLT. So there are easy ways108301:16:12.600 --> 01:16:18.239to get exposure to longer term treasurybonds, and it probably is something that108401:16:18.279 --> 01:16:24.239would make some sense here. Wewere so convinced in March up twenty one108501:16:24.279 --> 01:16:27.560that interest rates were going to risethat we went out of every long term108601:16:27.560 --> 01:16:30.880bond. But I think now withinterest rates probably having peaked, and I108701:16:30.880 --> 01:16:35.640think Powell intoed last week that theywere they have peaked and that they're going108801:16:35.720 --> 01:16:40.359to be dropping, you can startto look at preferred stocks. Again,108901:16:40.439 --> 01:16:45.920we were completely away from preferred stocks. There are some exchange traded funds that109001:16:45.359 --> 01:16:49.720have baskets of preferreds. If that'sthe way you play. PFF Paul Frank109101:16:49.760 --> 01:16:55.640Frank is a preferred stock. There'sa VRP, which is a floating rate109201:16:55.680 --> 01:17:00.119preferred. These are things that willbenefit by lower interest rates, and I109301:17:00.159 --> 01:17:06.000think that's where we're going. Wealso have a fairly significant portion of our109401:17:06.039 --> 01:17:11.319assets in short term treasuries one,two, three years. When those come109501:17:11.359 --> 01:17:16.279do, we'll probably renew them tolonger term and or it'd be something in109601:17:16.319 --> 01:17:19.159the internet. We're still talking aboutit. I shouldn't say what we're going109701:17:19.199 --> 01:17:24.520to do. As money managers,we talk all the time, and we109801:17:24.600 --> 01:17:29.720haven't. We started in March oftwenty one with short term ETFs and closed109901:17:29.760 --> 01:17:34.119in funds, and then in earlytwenty two we decided to go to individual110001:17:34.199 --> 01:17:41.560bonds, most of them two threefour years. So the biggest bunch of110101:17:41.720 --> 01:17:45.840those really haven't started mature yet,so we'll have to decide what we're going110201:17:45.880 --> 01:17:48.479to do with those assets once thathappens. Yeah, I mean, then110301:17:48.560 --> 01:17:54.079that was just taking full advantage ofthe treasuries, paying four for a year110401:17:54.319 --> 01:17:57.319to got a lot of five percenttreasures. I have no risk in the110501:17:57.359 --> 01:18:00.680bond fund going down something like that. So it did. It helped a110601:18:00.720 --> 01:18:04.920lot of accounts, and we've gottens of millions of short term Had we110701:18:04.960 --> 01:18:11.079not done anything, we probably wouldhave lost twenty percent of the fixed income110801:18:11.159 --> 01:18:15.399portion. And I'm being conservative,probably would have lost twenty percent of our110901:18:15.399 --> 01:18:20.840fixed income portion of our business.If the average fixed income is let's say111001:18:20.840 --> 01:18:26.000thirty percent, right, we'd losta minimum of six percent of our entire111101:18:26.039 --> 01:18:30.159business. Nobody, Well, that'swhat the sit and weaight investment approach does111201:18:30.439 --> 01:18:33.199did last year. You just sitand wait. You just wait out the111301:18:33.199 --> 01:18:36.479bond funds to come back, becauseobviously a bond fund you lose the principle111401:18:36.479 --> 01:18:39.920if you sell it, if yousit there and wait for the bond fund111501:18:39.960 --> 01:18:42.800to come back, because it's trick. Start lowering, bond funds, start111601:18:42.800 --> 01:18:45.359gaining, you can go back toeven. But that's we just weren't that111701:18:45.439 --> 01:18:47.560passive and investing. We didn't wantto sit and wait because we did think111801:18:47.600 --> 01:18:50.600that this was going to happen.And that's just comes from your your experience111901:18:50.680 --> 01:18:54.840of being in the business for thirtyforty years of thinking that. I mean,112001:18:54.880 --> 01:18:58.119we were a little premature. We'veare admitted that, yep. But112101:18:58.159 --> 01:19:00.920it turned out to be a goodmove. And that's what we try and112201:19:00.920 --> 01:19:04.199do is just active management. Wherecan we best serve our clients as their112301:19:04.279 --> 01:19:10.439better avenues with the upcoming climate ofthe economy. I think the beautiful part112401:19:10.439 --> 01:19:15.880about you guys doing their financial planand then all the sitting down and deciding112501:19:15.920 --> 01:19:21.560on allocations is you really help peopledetermine a comfortable level for them. And112601:19:21.640 --> 01:19:26.880each one is different, each oneis distinctly, uniquely different, and that's112701:19:26.920 --> 01:19:30.840the main thing is their comfortability levelof investing. Some people are eighty,112801:19:30.119 --> 01:19:33.560which is very risky. Some peopleare thirty, which is very conservative.112901:19:33.880 --> 01:19:38.399But it's all about their risk leveland that's how we build their portfolios because113001:19:38.399 --> 01:19:41.920we're not a cookie cutter builder inunderportfolios. We want to be able to113101:19:41.960 --> 01:19:45.640build it towards your comfortability level.Yeah, what we hear constantly is people113201:19:45.079 --> 01:19:48.560really care about our tactical approach.You know, so many people they do113301:19:48.760 --> 01:19:51.880just kind of put it together amodel and just let us sit. We113401:19:51.960 --> 01:19:56.399take a more tactical approach to things, and so I think people really appreciate113501:19:56.760 --> 01:20:00.760the flexibility we have as an independentfirm and not being part of the big113601:20:00.760 --> 01:20:03.600wirehouse, so we're not subject tothose big corporate policies that we have to113701:20:03.640 --> 01:20:08.960follow. The the you know alot of those big companies, the advisors113801:20:09.000 --> 01:20:12.319don't have a choice about how theycan invest certain ways. They have to113901:20:12.359 --> 01:20:16.800follow a certain you know, paradigmper se. So our flexibility I think114001:20:16.800 --> 01:20:20.640a lot of clients really see avalue in that as well as obviously just114101:20:20.680 --> 01:20:25.760the customer services on parallel. Absolutely, I feel like there's more attention paid114201:20:25.800 --> 01:20:29.359to their money when they're doing thatbecause we're customizing the portfolio more for them.114301:20:29.600 --> 01:20:31.319And the only way we do thatis by going through the financial plan,114401:20:31.560 --> 01:20:33.640figuring out what your goals are,what your long term goals are,114501:20:33.680 --> 01:20:36.840short term goals are what are yourexpected expenses? Are you expecting to move114601:20:36.920 --> 01:20:42.359during retirement? Anything like that takesinto account what you're doing with your money114701:20:42.359 --> 01:20:45.279as a retirement, and that's whatwe do. Yes, I can't say114801:20:45.760 --> 01:20:47.920tried to hit it on a goodpoint. I cannot say our customer service114901:20:48.000 --> 01:20:53.960is better than anybody else in town. What I will say is, if115001:20:54.000 --> 01:20:56.840it were as good as anybody elsein town, we take pride in it.115101:20:57.279 --> 01:21:00.760We really take pride in our customerservice. Often said, if you115201:21:00.800 --> 01:21:03.680email me and I don't email youback, I've died. The phone rings115301:21:03.680 --> 01:21:06.199three times, it kind of irksus all in the office. Yeah.115401:21:06.279 --> 01:21:10.359Yeah, the phone is not supposedto ring three times and off with caller115501:21:10.399 --> 01:21:14.760idea. Generally the broker that youtypically have been dealing with, the money115601:21:14.760 --> 01:21:18.640manager who typically talk to, willpick it up and that saves the step.115701:21:18.760 --> 01:21:25.000There's a kind of an old adjugeninvesting where you should have as much115801:21:25.239 --> 01:21:29.920fixed income as your age, soas you get older, right as you115901:21:29.960 --> 01:21:32.279get to fifty, while you shouldbe fifty percent fixed income, sixty at116001:21:32.319 --> 01:21:39.920sixty blah blah blah. Each oneof our clients has a portfolio that is116101:21:40.119 --> 01:21:45.520individually designed for them. We've satdown, we've had the conversation. They've116201:21:45.520 --> 01:21:48.880got either gone through the financial planningsoftware with Dean and Dylan, or they've116301:21:48.920 --> 01:21:54.880gone through a meeting with me andour questionnaires. And I've been asked questions116401:21:54.960 --> 01:21:57.560like do you have a motorcycle?You know how fast you're drive and you116501:21:57.560 --> 01:22:00.279go to Phoenix. I mean thingsthat really tell me what your true risk116601:22:00.600 --> 01:22:05.960profile is, and then the portfoliois built around you. I have people116701:22:06.119 --> 01:22:12.199in their thirties who would prefer tobe one hundred percent in bonds. I116801:22:12.319 --> 01:22:16.239have people in One guy in particular, ninety seven years old, just thinks116901:22:16.239 --> 01:22:21.119that we just are not aggressive enough, and he's pushing me constantly to be117001:22:21.239 --> 01:22:25.920more aggressive with his account. Andof course, as a fiduciary, you117101:22:26.039 --> 01:22:30.039really can't. You take a ninetyseven year old person and go go one117201:22:30.119 --> 01:22:32.600hundred percent pedal to the medal.But he pushes me all the time.117301:22:32.720 --> 01:22:35.159Ninety seven years old, he goes, I think I'll have some more end117401:22:35.199 --> 01:22:39.960video, you know, Okay,okay. And a story I'd like to117501:22:40.000 --> 01:22:44.399share that happened over this week waswith a client. It came in and117601:22:44.399 --> 01:22:47.039we were gonna I was gonna we'regonna do an annuity product. And then117701:22:47.079 --> 01:22:53.560I explained to him about why theannuity you're really paying for the word guarantee.117801:22:53.720 --> 01:22:56.600This annuity perfect. I mean,it was given you nine percent,117901:22:56.640 --> 01:22:59.800which are alrighty, something we couldnever match as a money manager. But118001:22:59.880 --> 01:23:02.199it's because the cap on that annuityone percent. You can never make more118101:23:02.239 --> 01:23:04.840than one percent. And you didn'tgive a year Dave the writer fee for118201:23:04.920 --> 01:23:09.720income one point one five percent,so you're guaranteed to lose money and then118301:23:10.359 --> 01:23:14.039you can't make money. I getto ye, but you're gonna get nine118401:23:14.039 --> 01:23:15.600percent an income and the money's gonnabe zero when you're done, and it's118501:23:15.640 --> 01:23:18.680going to be zero in ten yearsfor sure. And I said, if118601:23:18.680 --> 01:23:23.000that's what you want, we cando it. But no, you are118701:23:23.039 --> 01:23:26.840paying You are going to lose thismoney. It's not a it's going to118801:23:26.880 --> 01:23:30.119happen at for ten years. Youwill if you continue to live, fine,118901:23:30.159 --> 01:23:31.880you get the money, but isthat truly what you want? And119001:23:31.960 --> 01:23:33.760you started thinking about it, he'slike, I don't even think I'll live119101:23:33.760 --> 01:23:39.560twenty years. He goes through itand he realizes, all I'm paying so119201:23:39.720 --> 01:23:43.920much for that word guarantee. Iwould rather have the flexibility and liquidity.119301:23:43.960 --> 01:23:47.039And I think that's so crucial becauseso many annuity salesmen they would never make119401:23:47.079 --> 01:23:50.680the product sound bad. They'd alwaysmake it sound good. And I always119501:23:50.720 --> 01:23:53.920try to make the products sound bad. And if you love it when it119601:23:53.920 --> 01:23:57.199looks bad, you're gonna love itwhen it looks great. But if you119701:23:57.359 --> 01:23:59.479hate it when it looks bad andonly love it when it looks great,119801:24:00.039 --> 01:24:01.960then you have a problem. Right. I want you to know the worst119901:24:01.960 --> 01:24:04.800case scenario and if you like that, we can go with it. If120001:24:04.800 --> 01:24:08.279you want the word guarantee and you'reokay paying for it, let's fine.120101:24:08.640 --> 01:24:12.079But just know what those annuities.If you have a word guarantee in there,120201:24:12.479 --> 01:24:15.920you are paying for it good andit's not cheap. Very good,120301:24:15.000 --> 01:24:17.279very good point. And we're oftenasked you, I have enough money to120401:24:17.319 --> 01:24:21.119live comfortably the rest of my life, and the course of the obvious answer120501:24:21.199 --> 01:24:23.720is how do you want to live? You know? Do you want to120601:24:23.760 --> 01:24:26.520live in in a tanta out inthe desert? Yeah, absolutely, no120701:24:26.600 --> 01:24:29.479problem. You want to live ina million dollar house? Maybe not?120801:24:30.159 --> 01:24:33.840You know, but I've for yearsand years I've had this. I've told120901:24:33.840 --> 01:24:36.680clients, and I'm just not gettinga lot of cooperation on this. But121001:24:36.680 --> 01:24:40.279I always tell them, if you'llgive us your day to death, we121101:24:40.319 --> 01:24:43.680can do a heck of a lotbetter job. We'll be back right after121201:24:43.720 --> 01:24:54.079this break. Say it's only aman. Welcome back to the Money Matter121301:24:54.119 --> 01:24:56.920Show. My name is tug Lick. I'm here with Sebastian Boorscini, Dylan121401:24:56.920 --> 01:25:01.079Greenberg and John Sabilia are state planningthat we always love to refer our clients121501:25:01.079 --> 01:25:05.520too, because you have a greatway of explaining complex things into a simple121601:25:05.560 --> 01:25:10.359matter, which in a state planningis, you know, something people really121701:25:10.439 --> 01:25:13.399need because first of all, peopledon't like loss. Second of all,121801:25:13.399 --> 01:25:15.239they don't like reading. So Imean you do that job for them.121901:25:15.359 --> 01:25:18.960Yeah, I tried to at leastI do my best. So a little122001:25:18.960 --> 01:25:23.840bit last week we talked about howif you came into a large lump sum122101:25:23.840 --> 01:25:26.880of inheritance, whether it be alottery, whether it be a you know,122201:25:26.960 --> 01:25:29.960a very wealthy family member passing andpassing you long money, what do122301:25:30.039 --> 01:25:32.039you do with that money? Andwe kind of talked about what we would,122401:25:32.119 --> 01:25:35.760you know, spend on not alwaysprobably the fiduciary thing They did Dylan122501:25:36.319 --> 01:25:41.319to Vegas, with a little portionof it. Put the majority of it122601:25:41.399 --> 01:25:45.039in something smart and then and thenenjoy a life a little bit not over122701:25:45.079 --> 01:25:48.560here. Wanted to take two percentand make it four percent of the winning122801:25:48.600 --> 01:25:53.600of the ten million, he saidtwo two fifty on the I'm black see122901:25:53.680 --> 01:25:56.079so that yeah, yeah, butthat it's a little portion of it.123001:25:56.119 --> 01:25:58.760You have fun, you got ajoy of life, but not with the123101:25:58.800 --> 01:26:01.319majority of it. And then thisweek we're going to talk about, you123201:26:01.359 --> 01:26:08.800know, debts and the important thingto consider with debts. Oh yeah,123301:26:08.880 --> 01:26:11.760So you know, if you cameinto money, it doesn't have to necessarily123401:26:11.800 --> 01:26:15.600be in winning the lottery. It'sinheritance. And you know, I think123501:26:15.640 --> 01:26:16.680to myself, okay, so ifI came into some money, what do123601:26:16.720 --> 01:26:19.399I want to do? And Ihate my mortgage? Man, do I123701:26:19.439 --> 01:26:24.079hate it? You know, especiallynow it's close to eight percent now it's123801:26:24.119 --> 01:26:29.000about seven. But irregardless, it'sa lot of money going out and it's123901:26:29.039 --> 01:26:30.960money that I don't want to spend. So if you know, is it124001:26:31.000 --> 01:26:34.640a good idea to take that moneyand just pay down that mortgage and have124101:26:34.680 --> 01:26:40.319all that you know, money thatmonthly payments that I don't have to make124201:26:40.439 --> 01:26:44.119in my pocket every month. Yeah, right, But you guys kind of124301:26:44.159 --> 01:26:47.239like look at good debt and baddebt. Right. So I do own124401:26:47.279 --> 01:26:50.199another house and I have that attwo percent, right, and I could124501:26:50.279 --> 01:26:54.359sell that house and try to payoff some of this mortgage. But I'm124601:26:54.359 --> 01:26:58.720getting a ten percent return on thathouse. So what is good debt?124701:26:58.920 --> 01:27:01.159You know? Debt is taking money, you know, taking money out,124801:27:01.319 --> 01:27:05.880investing it and using that money toget a higher rate of return than the124901:27:05.960 --> 01:27:10.159interest you are paying. And believeit or not, that's you know,125001:27:10.359 --> 01:27:13.359involved in a state planning, peoplealways put their plans in front of me.125101:27:14.199 --> 01:27:15.640Here's what we have. I'm comingin inherentance. I want to pay125201:27:15.640 --> 01:27:18.199it down this mortgage. You know, is that a good idea? Or125301:27:18.239 --> 01:27:21.159maybe it's a good idea to youknow, buy some more real estate,125401:27:21.680 --> 01:27:27.439have an increase. If that increaseis faster and higher than your interest rate,125501:27:27.760 --> 01:27:30.680then why not? Right? Orthey take that inheritance. Let's say125601:27:30.680 --> 01:27:34.840they have a mortgage of four percentfive percent, all right, and they125701:27:34.840 --> 01:27:38.800come in inherance. Should they payoff that mortgage or should they give it125801:27:38.800 --> 01:27:45.439to you guys? Five to sixrange is like the fence like, if125901:27:45.439 --> 01:27:47.880it's below five, I would personallynever pay it off unless it's just a126001:27:47.880 --> 01:27:51.319behavioral thing. It's an idea thatyou wanted to one day have your house126101:27:51.359 --> 01:27:56.439paid off. Some people like reallylove that idea of being debt free definite,126201:27:56.720 --> 01:27:59.760psychological and right, and so theyjust need it. Whether it's the126301:28:00.159 --> 01:28:02.479best economic decision is regardless, right, they just look at it from a126401:28:02.479 --> 01:28:08.720behavioral standpoint. If it's above six, I definitely think paying off it makes126501:28:08.760 --> 01:28:13.399sense. Even though it is agood debt. How certain are you that126601:28:13.439 --> 01:28:16.079you're gonna make more than six percentin the market. So that's where you126701:28:16.079 --> 01:28:18.199need to be smart about it,and that's where they come to you guys126801:28:18.279 --> 01:28:20.560and the chat. But even still, I mean S and P. Right,126901:28:20.600 --> 01:28:24.199it's average ten percent over a fortyyear periods, So you would think,127001:28:24.239 --> 01:28:25.720you know, put it on inthe S and P you're gonna be127101:28:25.760 --> 01:28:30.680fine, But there is never guarantee. It is a lot of emotional things127201:28:30.680 --> 01:28:33.000that will happen in that thirty yearperiod of that return. Right, that's127301:28:33.039 --> 01:28:36.560the average return. Can you withstandit? You'll live longer if you paid127401:28:36.600 --> 01:28:41.960on that debt, for sure,because there is that psychologic dress. There's127501:28:42.000 --> 01:28:45.159a lot of stress. I paidon mortgage yesterday, Yeah, and seeing127601:28:45.159 --> 01:28:48.119that money come out of my accountbit hard. It's such a hybrid question,127701:28:48.239 --> 01:28:50.680you know, it's a dynamic question. Well, you got to think127801:28:50.680 --> 01:28:54.079about like the number way, likeJohn was just talking about. If you127901:28:54.079 --> 01:28:56.760think about it that way, thenit might make sense to do it.128001:28:56.800 --> 01:28:59.359But also it's the emotional side.But that's like us talking about Sochi.128101:28:59.560 --> 01:29:00.720I was just gonna say solid securityto the same idea. You can look128201:29:00.720 --> 01:29:04.239at it the economic side. We'rewaiting until seventy is the most brutent way.128301:29:04.439 --> 01:29:06.640But also you're like, Okay,I paid it into it my entire128401:29:06.680 --> 01:29:10.760life, I'm taking it sixty two. Screw the government type of thing.128501:29:10.880 --> 01:29:14.359So it's all different ideas. Butit's just if you look at the numbers128601:29:14.399 --> 01:29:17.600alone. What we know in thisworld is people don't just look at the128701:29:17.680 --> 01:29:23.359numbers. People are behavioral. Andthat's why this whole behavioral economics branch of128801:29:23.439 --> 01:29:26.600economics is starting and it's so bigin this market today. It's because,128901:29:27.600 --> 01:29:31.880yeah, the markets are ninety ninepercent efficient, but there's still a large129001:29:31.880 --> 01:29:36.399majority of people that make behavioral decisionsthat are not rational. They're irrational decisions129101:29:36.399 --> 01:29:41.520for whatever reason though, you knowthat's why I it's so hard for us129201:29:41.520 --> 01:29:44.800where it really comes down to theplan. You know, do you have129301:29:44.880 --> 01:29:47.640other assets that can make up forthat? I mean, there's just I129401:29:47.680 --> 01:29:50.239try to come up with answer,but yeah, there's too money. That's129501:29:50.279 --> 01:29:53.560what that's what's all about. Andare you willing to take that risk?129601:29:53.640 --> 01:29:58.520And yeah, I'm not by anystretch advocating ever to do that, But129701:29:58.760 --> 01:30:00.199it's not even it's like, doyou you want to make the behavioral risk129801:30:00.319 --> 01:30:04.079or the economic risks? Right?Exactly which side hurts you more psychologically?129901:30:05.000 --> 01:30:08.720If you're wrong, I want tostart a little early. You don't want130001:30:08.800 --> 01:30:11.479to you know, maybe it'll bea couple of years that you do this130101:30:11.520 --> 01:30:14.079type of investment. Maybe it's goingto be a long run type of thing.130201:30:15.319 --> 01:30:16.239But you know, I had awell, when I was doing taxes,130301:30:16.239 --> 01:30:20.279I had a guy. He wouldsee a house go in the foreclosure130401:30:20.680 --> 01:30:25.479and he would be one of afew people that would have the ability to130501:30:25.479 --> 01:30:28.319buy this house. And he hada friend that would loan call hard money130601:30:28.319 --> 01:30:31.239guy that would loan him the moneyand within a day of it going into130701:30:31.279 --> 01:30:39.119foreclosure or whatever. This mechanism washe would get the hard money guarantee buy130801:30:39.159 --> 01:30:42.560the house, and he never eventook the money from the hard money guy130901:30:42.640 --> 01:30:45.479because he would turn around to sellthat house within thirty days. And so,131001:30:45.640 --> 01:30:49.079but he was able to use thatdebt as some sort of collateral and131101:30:49.119 --> 01:30:53.239he's able to make money on that, and we was doing his tax really131201:30:53.239 --> 01:30:59.199interesting money money way of generating money. Yeah, but you know, that's131301:30:59.239 --> 01:31:01.159just a way of using your debt. And like I said, you know131401:31:01.760 --> 01:31:05.680my spreadsheet that I give the clientsand they give it back, first thing131501:31:05.680 --> 01:31:09.359I look at it is their debt, right, I look at their equity131601:31:09.399 --> 01:31:14.520in their house, and I lookat their risk tolerance, and I'll say,131701:31:14.600 --> 01:31:16.079okay, you know you're coming inthis money or you have this type131801:31:16.119 --> 01:31:19.079of equity, you know, maybeyou should talk to some financial planners.131901:31:19.479 --> 01:31:24.000I think what's important is you canwait debts. So like say you have132001:31:24.039 --> 01:31:27.960a ten thousand dollars credit card that'sat you know, ten percent, but132101:31:28.079 --> 01:31:30.640one hundred thousand dollars credit card atfive percent. You may say, well132201:31:30.640 --> 01:31:32.640the five percent is better, I'mgonna do the ten thousand first. But132301:31:32.680 --> 01:31:38.640if you wait it, you'll findwhat's really you know, five percent times132401:31:38.680 --> 01:31:42.000one hundred, you'll see what yourinterest cost would be compared to the tenenty132501:31:42.279 --> 01:31:45.119ten. So you can actually startto find a best strategy for paying off132601:31:45.279 --> 01:31:48.439debt, and you can snowball intothe next debts and really start paying them132701:31:48.479 --> 01:31:51.600off instead of just saying I'm gonnago to the highest coupon, you know,132801:31:51.640 --> 01:31:55.079highest rate and start paying that oneoff. Like that's not always the132901:31:55.119 --> 01:32:00.600best way to go, right,there are more efficient avenues. Talk switch133001:32:00.640 --> 01:32:02.279gears a little bit about businesses,right, So, I think so many133101:32:02.319 --> 01:32:06.560businesses, especially here in Arizona becauseit hasn't been mandated yet, is they133201:32:06.600 --> 01:32:11.119don't offer retirement benefits. And alot of times I feel like business owners133301:32:11.159 --> 01:32:15.159think it's like a benefit for theemployee and not really for themselves. But133401:32:15.279 --> 01:32:17.840I push back on that because there'sa lot of benefits for a business owner133501:32:18.119 --> 01:32:21.560in terms of you know, especiallyif they're sole proper you know, they're133601:32:21.560 --> 01:32:26.479not an escorp yet. Not onlythere are certain tax savings just from that133701:32:26.560 --> 01:32:31.039classification, but also the tax savingsof giving off the employee match and using133801:32:31.039 --> 01:32:36.640that as a deduction on your businesses, giving yourself an opportunity right to having133901:32:36.640 --> 01:32:41.239a retirement and have that ability togrow and things like that, and there's134001:32:41.239 --> 01:32:43.840a lot of good will you buildwith your employees. They're gonna want to134101:32:43.880 --> 01:32:45.239stay. Yeah, And that's nottalked about. It's hard to tell a134201:32:45.239 --> 01:32:48.199business owner like you're going to keepyour employee based around if you get offer134301:32:48.199 --> 01:32:49.880an A four one, kay,And all the business owners are like,134401:32:50.119 --> 01:32:53.239yeah, yeah, I'm sure youknow, but it really is you know,134501:32:53.399 --> 01:32:55.239Yeah, there's a lot. Imean, we talk to people all134601:32:55.239 --> 01:32:56.920the time. They're like, yeah, my company, guys, is really134701:32:56.920 --> 01:33:00.520good match six percent or whatever itis. And they just they're happy about134801:33:00.560 --> 01:33:01.960it. They want to stay atthe company because they're paying such a good134901:33:01.960 --> 01:33:06.079match, right, yeah, Andit's uh, and there's a lot.135001:33:06.520 --> 01:33:11.039It's a tax deferred asset for everybody, right, it's a tax deferred asset135101:33:11.039 --> 01:33:13.880for the employee. And the moremoney they put in, the more money135201:33:13.920 --> 01:33:16.720they can push down the road becauseeventually, you know, when you're putting135301:33:16.720 --> 01:33:20.199that money in a way, you'reprobably making the most money you'll ever make135401:33:20.239 --> 01:33:24.199in your life because then later onin life, when you're in a lower135501:33:24.239 --> 01:33:26.560tax bracket, then you can startpulling that money out. Yeah, you135601:33:26.600 --> 01:33:28.880know, And what's it like,I always, you know, always an135701:33:28.920 --> 01:33:32.000example, what is fifteen percent orten percent of a million bucks, that's135801:33:32.039 --> 01:33:34.439one hundred thousand dollars in tax eavy. Well, now, a lot of135901:33:34.439 --> 01:33:38.640phone k's have Wroth options where youjust say, you know what, I'll136001:33:38.680 --> 01:33:42.119just pay taxes now, you know, And for certain individuals below fifty,136101:33:42.159 --> 01:33:44.560I think that's kind of the wayto go, you know, yeah,136201:33:44.640 --> 01:33:46.199you you know, but usually forpeople with fifty that haven't hit their high136301:33:46.239 --> 01:33:48.800certain income years yet, right becausethey're still inflation, they're still going to136401:33:48.960 --> 01:33:51.920keep getting raises. So, youknow, below fifty, I really like136501:33:53.000 --> 01:33:56.359the Wroth option because you get thattax free growth over a ten to fifteen136601:33:56.399 --> 01:34:00.159year period. I mean, that'sthat's really something that you can't match with136701:34:00.239 --> 01:34:02.319that TAXI you said, I likebelow fit. It's just a number,136801:34:02.479 --> 01:34:06.319you know, not necessarily, Ithink every person's different. But after fifty136901:34:06.399 --> 01:34:10.880years old, it just it's notas much of a benefit because you don't137001:34:10.880 --> 01:34:15.800get that tax free long term growthcompared to so but I just think so137101:34:15.880 --> 01:34:19.000many employers aren't taking advantage of that. If you were to roll over,137201:34:19.439 --> 01:34:23.479if you have a four to onek, you know, and for everybody,137301:34:23.520 --> 01:34:26.279that for everybody that needs to know. If you have a four toh137401:34:26.319 --> 01:34:30.159one K. Let's say you're gettingready to retire around fifty nine or sixty137501:34:30.199 --> 01:34:33.439and you want to roll it intoa wroth. How much can you roll137601:34:33.479 --> 01:34:38.680at one time? Well, backto a roth conversion. There's no limits,137701:34:38.760 --> 01:34:42.000no limits. No, yeah,you I mean you just paying taxes.137801:34:42.199 --> 01:34:44.960Do you pay penalties on it?No penalties, You're just paying tax137901:34:45.039 --> 01:34:47.279into the next tax level. Yeah, it's earned income. It's earned income.138001:34:47.279 --> 01:34:50.439In the year you convert it,it just keeps raising your tax right,138101:34:50.560 --> 01:34:53.560and so you work with CPAs totry and get you not to the138201:34:53.600 --> 01:34:56.439next And here's the other important thingto consider. Say I'm sixty three,138301:34:56.520 --> 01:34:58.079right, and I'm like, oh, I want to do a big Wroth138401:34:58.119 --> 01:35:00.239conversion, and then boom, sixtyfive comes around to turn on Medicare.138501:35:00.600 --> 01:35:03.239Well they do it two year lookback yep. So they're gonna look at138601:35:03.279 --> 01:35:08.079two years ago what my income was, and then that whole Roth conversion is138701:35:08.079 --> 01:35:10.319going to show up as earned income. So I'm going to be in the138801:35:10.359 --> 01:35:13.720highest Medicare bracket paying four to fifteenset of one seventy. So one you138901:35:13.760 --> 01:35:18.319recommend doing aversion, you know that'sdynamic. I'm not going to put an139001:35:18.359 --> 01:35:20.439age out there. You got tocome in and see the financial plan.139101:35:20.960 --> 01:35:24.239But it's also not just the age, it's the amount. I mean,139201:35:24.239 --> 01:35:26.560if you could do a rock conversionevery year but not put it into the139301:35:26.560 --> 01:35:30.359next tax bracket, your care premiumswon't matten. That's too dynamic. We139401:35:30.399 --> 01:35:32.560look at and we have a toolon our financial planning software that shows us139501:35:32.600 --> 01:35:36.319each of the brackets and shows howmuch they increase each year with inflation and139601:35:36.359 --> 01:35:40.399so how we can kind of tailorit and create a strategy for it.139701:35:40.800 --> 01:35:45.479So that's the crucial thing with thefinancial planning and actually being able to see.139801:35:45.520 --> 01:35:48.239We also do that with qualified charitabledistributions and see instead of doing roth139901:35:48.239 --> 01:35:50.399conversion, let's say we're just youknow, sending it to an organization.140001:35:50.479 --> 01:35:55.239How much does that save us inlifetime tax savings and things like that.140101:35:55.359 --> 01:35:58.119So there's a lot of cool thingswith the financial plan and there's a lot140201:35:58.159 --> 01:36:00.000of cool things with the estate planningthing that you do. I mean,140301:36:00.039 --> 01:36:03.800you literally give a free consultation tothese people. If they have any questions140401:36:03.800 --> 01:36:08.239on a will trust, anything ona state planning needs, please give us140501:36:08.279 --> 01:36:11.039a call. Five two zero fivefour four four nine zero nine. We'll140601:36:11.079 --> 01:36:15.640get you in touch with John andagain complimentary meeting. There's no obligation to140701:36:15.680 --> 01:36:17.760do anything that he is here totruly educate and that's really what we're all140801:36:17.800 --> 01:36:20.199here to do. If you everwant a free financial plan, please give140901:36:20.279 --> 01:36:24.840us a call as well, andhere at green Brook Financial. You know141001:36:24.960 --> 01:36:29.479we all try to be happy,we all strive to be healthy, but141101:36:29.560 --> 01:36:33.079at the end of the day,would really try to be is profitable see141201:36:33.119 --> 01:36:38.600you next week. Say it's onlyable