September 30, 2025 • 44 mins
First, we start with Charlie Kirk news. Then hosts John and Giuseppe anticipate Fed Rate hikes, and the economical fallout - good or bad. Plus Proper allocation, Real Estate, and the DST trust alternatives. The Wise Money Guys.
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Episode Transcript
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Speaker 1 (00:00):
The Wise Money Guys radio show is brought to you
by One Source of Wealth Management SEC Licensed three one
nine zero seven eight. For disclosures and more information, visit
our website One Source WM dot com.
Speaker 2 (00:13):
Hello and welcome to the Wise Money Guys radio show.
I'm your co host John Scambray and I'm here with
my partner Jeb Wisconsin. By the way, we're certified portfolio
managers that specialize in helping people who are retired are
about to retire manage their money. If you like our show,
have any questions or want to meet for a no
obligation consultation, give us a call at nine one six
(00:35):
nine six seven thirty five hundred again nine one six
nine six seven thirty five hundred, or you can visit
our website Wysmoneyguys dot com.
Speaker 3 (00:44):
Or search for us on YouTube YEP.
Speaker 2 (00:46):
If you'd like to watch us doing this show, you
can find us on our YouTube channel which is also
Wise Money Guys are at Wise Money Guys. But I
think if you just search the Wise.
Speaker 3 (00:58):
Money Guys also you also and I've also tested it out,
you can actually just put our names John Scambra and
just have to Wisconsin. It'll pull up as well. There
you've got all the permanent disclosures on our website towards
the bottom as well.
Speaker 2 (01:10):
So we got a pretty good agenda for you this morning.
First of all, we absolutely have to mention and just
the horrific event of this last week, which was the assassination,
the brutal assassination of Charlie Kirk. I can't even imagine
(01:32):
we were talking about this when it happened that. You know,
you wake up, you kiss your wife and kids goodbye,
and then you don't come.
Speaker 3 (01:41):
Home, go on about your day thinking it's going to
be a normal day, just a normal day, and then
you don't come home. I mean, just sad.
Speaker 2 (01:47):
Our hearts go out to Charlie Kirk and his family.
Just devastating news and for kids all across You know
what's interesting about that. Now we're students of the news
obviously and research and information being being money managers, so naturally,
as as it happened, we're seeing headlines, you know, scroll
(02:12):
across our screens. But my kids were, My daughter Madison
was like, you know, Charlie Kirk. Seeing Charlie Kirk was
on my bucket list. He was only two years older
than me, and they had a text that we have
a text that we call the scam fam group, and
(02:32):
you know, Jessica, Katie, Maddie, they were all like, oh
my god, this is They all knew who he was,
and they're all in their twenties. And so, Charlie, you
went across all a bunch of college, huge following. You know,
my kids are recent college graduates, you know. And and
so I was just but the point is is, I
(02:53):
was just surprised they knew who didn't know how he
really was Charlie Kirk and yeah, and what impacted me
most of that conversation was that he was huge. I mean,
he had millions of followers and so many kids work.
Speaker 3 (03:07):
I would watch his youtubes because I just enjoyed the
debate aspect of it and just a critical thinking and
also just to kind of see where where kids were
this generation of kids at different college campuses and where
they were at not so much of their opinions or
what side they were on, but more so on how
(03:28):
they handled the debate, how they handled critical thinking, how
they handled logic, just and reason right outside of just
the pure academic book study. Let me look it up.
This is a This is a fact that he and
he did a great job of exposing exercising people's minds.
Speaker 2 (03:47):
Really yeah, my concern is about Turning Point USA and
how do they continue that work they were doing to
you know, help kids in college, you know, learn another
another viewpoint, right because.
Speaker 3 (04:03):
College Stones was out there, Vivek was out there, there
was other people that are out there with him, So
maybe they pick off, pick off, you know from that.
I know Ben Shapiro did a little bit of that
as well at different college campuses. So you know, hopefully
it continues on well because now how many universities was
Turning Point in USA I don't even know had chapters
(04:23):
in I mean hundreds and you know, hundreds of thousands,
if not millions of students, you know, following just his
his conversation and his thought process on family values, on religion,
on having children, on you know, getting a job, on
making money, on on.
Speaker 2 (04:44):
Just what's funny. He really wasn't even though a lot
of his conversations were political, he was more evangelical. I
think he was more like a preacher or a minister
versus you know, a politician, And it's it wasn't pure politics.
Speaker 3 (04:59):
Is also like driving towards faith and family, and I
would say more in family, family, family values. Yeah, but
it's it's it's definitely unfortunate. It's sad whether you agreed
or disagreed with his personal views. I mean, he was
just an overall, just an innocent person who shared ideas
(05:19):
and debated and challenged. And I think the good, the
great thing about it all whether you disagreed or agreed
with them, which is that's what America's made up of, right,
It's it's agreements and disagreements or to agree or to
agree to disassassination.
Speaker 2 (05:34):
You know, we're finding it's going to be out to
shut up, you know, somebody who's trying to teach something
different in college, because for decades, colleges have clearly been
very one sided in their views and and really dislike
of America and American values.
Speaker 3 (05:54):
And I can't say values, I mean not all colleges there. Well,
there's a lot, certainly all that ivy leagues.
Speaker 2 (06:00):
I mean, do we have to go into the Harvard riots,
the Columbia riots, you know.
Speaker 3 (06:06):
You know, but there are other ones out there that
you know are completely on the other side.
Speaker 2 (06:12):
Yeah, but not many more on you know, one side.
Speaker 3 (06:16):
Versus the other.
Speaker 2 (06:17):
But that's and that's the impact Turning Point USA was having,
was just getting a a different voice out there. So
super sad. Hopefully, you know, Turning Point USA goes on,
but you know we life goes on, and here we are,
and let's talk about I mean, inflation numbers came out
(06:41):
this last week. We'll talk a little bit about that.
We'll talk about, of course, the FED and what the
probability of the Fed's cuts are, at least how much
of a cut for next week. Also, we'll talk a
little bit about the seminar that we just had our
retiree seminar this week in Reno, and in fact, I'm
(07:03):
happy to announce that our next one will be in
Conquered at the Old Spaghetti Factory from six to seven
thirty pm. Of course, October fifteenth is a Wednesday. We
always do them on a Wednesday, and so if you'd
like to sign up for that, I do suggest signing
up early. These banquet rooms or whatever you call them
(07:25):
inside of these restaurants aren't huge. I mean, we max
out really somewhere around forty to fifty people. We might
be able to squeeze in fifty, but really thirty to
forty is what's comfortable in these rooms. So unfortunately, we start,
you know, turning people away that call in to register late. So,
(07:47):
if you're retired or you're about to retire and you
want to know more about, you know, what's out there
in the investment world. Is it a good time to
buy stocks here, which we're going to talk about and
the strategies and what our asset allocation looks like in
the show. But is it a good time to buy
stocks at these valuations? Is it a good time to
(08:09):
buy bonds at these interest rates and prices? What are
some of the other investments out there? We'll we'll talk
about some real estate investments that are out there that
are very attractive right now, and so on and so forth,
and some of the.
Speaker 3 (08:24):
Questions and concerns that we got from our audience, and
we'll bring that up. Yeah.
Speaker 2 (08:28):
Absolutely, So again, if you're thinking about retiring, or you're retired,
or you're just concerned about, you know, what's next for investments,
the economy, the world, and how you should you know,
pivot or or rebalance as a result of things. You'll
definitely want to keep listening to the show today and
(08:50):
you'll definitely want to sign up for our seminar our
retirement workshop at the Old Spaghetti Factory, Spaghetti Factory, the
Old Spaghetti Factory in Conquered from six to seven thirty
PM called nine one six nine six seven thirty five hundred.
(09:10):
So let's uh talk a little bit about inflation. I saw,
you know, we had PPI come out this week. CPI
come out this week. You know the read on it
was a little bit hotter course CPI than expected, but
still relatively low. My bigger concern and we really talked
a lot about this last night and in the workshop,
was you know, the effect of increasing unemployment, the effect
(09:35):
of you know.
Speaker 3 (09:38):
Reallynumption unemployment rising. Yes, and that's what it is. It's
a battle between and that's what the FEDGI battling is.
It's between inflation versus price contry employment. Yeah, right, inflation
which is the price stability, which is one of their mandates,
and employment, which is our other mandate. But they're loudfully
(09:59):
you know.
Speaker 2 (09:59):
I I think with the the the retiring let's say,
because I wish it was more of a removal, but
let's say the retiring of the current FED chairman, I
think we will hopefully seem some significant changes to the Federal
Reserve Body and its mandate and how and what control
(10:21):
and power they have over the world's economy, because we
I think we talked about this last week. It just
absolutely is wrong for one person and one committee to
literally control the financial markets around the world. I mean,
it's it's that simple.
Speaker 3 (10:40):
You know.
Speaker 2 (10:40):
You could argue and say, oh no, but they only
they only have control of a few things here in
the United States, but their policies literally affect everybody looks
markets around the world because they.
Speaker 3 (10:52):
Fall all markets will be well next week in the
FMC meeting and Jerome Pouse speech on Wednesday, all the
all the world markets are going to be paying attention
to me.
Speaker 2 (11:01):
So I hope there's a big shake up next May
when he retires and they name somebody who's more of
a true capitalist, more of a true free market mentality
when it comes to well and.
Speaker 3 (11:17):
They have a friend and it's responsibilities well, and they
have a framework and process that they go about and
they don't keep changing it and be like, we're going
to be data independent, you know, data dependent. No, we're
going to be forecasting and what we think is going
to happen, So we're going to make decisions based off
of that. In flip flopping, it's what are you going
to actually do? All right?
Speaker 2 (11:34):
So these things are important because they affect your money,
and we're going to talk about how we do things
to help you be ahead of the curve and be proactive.
Give us a call it nine one six nine six
seven thirty five hundred again nine one six, nine six
seven thirty five hundred, or you can visit our website
whysmooney guys dot com. You know, one other thing we
(11:58):
should mention, just resting back to the Charlie Kirk thing,
is it's kind of interesting that it was the day
before nine to eleven. Yeah, you know, and I wonder
if there's some sort of significance there, you know what
a sad, tragic day obviously nine to eleven was, and
then we have an assassination. You know, I wonder if
(12:18):
that thought, you know, had any sort of bearing.
Speaker 3 (12:21):
Who knows. There's so much information, That's what that's the
problem is. There's so much information, conspiracy theories, rumors, all
that's already. Yes, two days, that's crazy, how many days?
Three four days? It's crazy, it's crazy.
Speaker 2 (12:36):
So getting back to the Fed. Here's what here's what
scares me. You know, the market, the probability, the the
the options market is betting on a quarter of one
percent cut off.
Speaker 3 (12:52):
Of the Fed.
Speaker 2 (12:53):
Fest pretty much cemented in right, but we say that
and a small.
Speaker 3 (12:58):
Probability out there on that's that they'll cut half a percent.
Speaker 2 (13:02):
But there is also a small even smaller probability that
he cuts none. Because you were just saying how the
FED is flip flopping from data dependent to forecasting and
making their decisions, you know, when they're supposed to be
data dependent according to out of I mean, how many
times does that come out of Jerome Powell's mouth? And
(13:22):
so a couple of concerns there and something you should
watch for if it's a quarter, And that's what the
probability is predicting, and what the market thinks and what
guys like to set me up. I think that manage
large sum sums of money. Okay, then the market's just
gonna ho hum along and probably continue that. You know
(13:44):
this year that it's having to be a distant year.
Speaker 3 (13:48):
Well it depends on that, but also future potential cuts
in the dot plot. Yeah, so if there's an increase
on that, then that will continue to quote unquote melt up.
Speaker 2 (14:00):
But here's what I'm looking at for next week is
if we get a fifty basis point cut, I think
the market actually sells off. And the reason being so
two scenarios where I think the bubble the stock market bubble,
because we'll talk about that later in the show, that
we certainly could be in a stock market bubble based
(14:22):
on the valuations of the S and P the average
evaluations of the S and P five hundred companies. Is
if we get a fifty basis point cut when the
market is expecting a quarter, then that might scare people
into seeing, well, what does the FED see what's really
wrong with the economy, And that will be the catalysts
(14:43):
for some profit taken, which we've been recommending as a
strategy to reduce your stock exposure and lock in some profits.
By the way, and we still are on that same path.
We don't think get out of stocks because you know,
there's some great ones out there, and there's still great values, and.
Speaker 3 (15:02):
And well they kid stocks to buy and they can
continue to climb up even the valuations are high.
Speaker 2 (15:06):
Yeah, And then the other side is what if there's
no rate cut and so, And the fact of the
matter is are you prepared will your portfolio substantially change
depending on one of those three scenarios? And if it is,
then you're probably not. You know, you probably don't have
the right portfolio. You certainly probably don't have diversification. And
(15:33):
being in just mutual funds is not diversification.
Speaker 3 (15:37):
You know that if you have a meaningful account where
you have enough money, you can create your own exactly right.
If it's a smaller account size and mutual funds can be,
you know, fine, because then that's the only way you
can really diversify.
Speaker 2 (15:49):
And we talked about that a lot. What is true diversification?
Do you know your goals, your minimum return to objective?
Are you in investments that pay you for something for
your time as ie dividends and interest? Are you over
betting in any one sector like stocks, bonds, real estate,
(16:12):
you know, alternatives, cat you know? Are you weighted too
much in anyone sector? Are you weighted too much in
anyone position? All of these things are crucial when it
comes to who you have helping you, or if you're
not having anybody help you, the decisions you make in
(16:33):
the portfolio you build and how you change it based
on economic events, based on geopolitical events, based on you know,
how your situation has changed or might be changing, And
if you're not taking things to that level, then you
should definitely give us a call at nine one six
(16:54):
ninety six, seven thirty five hundred. I think you might
be surprised to find out that you know, you're over
bedding on and have more risk than you thought you had,
and you don't have you know, some of the investments
that are out there, which we're going to talk about next,
(17:15):
that you know, are paying great rates of consistently with
less volatility than stocks and bonds in some cases even
less volatile, less of a roller coaster ride than even bonds.
Speaker 3 (17:31):
And so I think I think on top of that,
you know, going back to the FED and having that
as a component to be conscious of of like what
what do I why do I need to be concerned
on where interest rates are at, what the Fed might
or might not do, how that could how that could
impact the market, and also the interest rate market because
(17:54):
there's timely investments and there's investments out there that are
great opportunities. But if you know, depending on the Fed's
actions and how the interest rate market reacts to it.
It could become a greater opportunity than what it is
right now, or or or worse, and now you've lost
out on that opportunity when you have the opportunity now,
(18:15):
and most of those are going to be some of
the alternatives that John has reference to and fixed income
and the bonds, and you know, it'll be interesting to
see just dialing back a little bit on the on
the Federal Reserve and Jerome Pal and what he says
within his speech and why if they do take action
and why they did take action, because you know, and
(18:36):
what we were talking of talking around the during the
break was, you know, they have two mandates that they
need that they follow, and it's price stability, which is
dealing with inflation right now, which some of the measurements,
even though they're softer, they're closer to three percent than
they are two percent, which is our target. But they've indicated,
and Jerome pal is indicated in this last speech during
(18:57):
the Jackson Hole summit and Wyoming is is that they're
going to be putting more of a focus on the
labor right and an employment and those numbers have come
in soft especially with the revisions. Right, it's not current,
but the revisions from April of last year through March
of this year. But they're going to have that more
(19:19):
as a phone. And I think that gave him and
he did that on purpose, to give him a window
to say, Hey, I'm gonna go ahead and cut a
quarter point to kind of make everybody happy, right, because
if you didn't and if the if the if the
emphasis was truly on Hey, unemployments at four point three,
it's ticked up, but we're still fine based off of
the current data.
Speaker 2 (19:39):
That's one of the regularly show is employments relationship to recession,
and generally when unemployment is at or above five, it
tends to warner. It's a warning flag that the economy
might go into recession because obviously, if millions of people
(19:59):
are unemployed, they're consuming less. And if they're consuming less,
it means companies are making less revenue and less profit.
And while that may be less revenue and profit, the
stock price goes down.
Speaker 3 (20:11):
Well, and if that's happening and interest rates are still
interust rate levels are still high, that's that's that's not
a good recipe. But oh it's a terriblest inflation over all,
the different measurements. Even though they became a software, they're
still stuck closer to three percent overall than they are
to two percent. So you know, do they forecast and say, well,
it's going to continue to come down and eventually get
(20:31):
to two percent, or do they say and right now
I think the focus is more on, well, we're at
four point three percent of employment. That's good, but we
think it's going to continue to increase and get to
a point where it could be a warning, and so
we're going to preemptively act and cut interest rates.
Speaker 2 (20:48):
So the reality is, as you're looking at your investment portfolio,
do you have investments in there that aren't going to
be subject to the whims and I do say whims
of interest rates, Fed policy, whether the FED cuts or not,
How much does the FED cut whether or not. You know,
(21:09):
some of these economic things and geopolitical things that are
going to continue to happen, may even get worse. Are
your investments ones that will still do very well as
far as the interest or dividends that they pay you
and the price, the valuation, and what your statements look
(21:33):
like after whatever events happen for the rest of these
this year, and if you don't know, if you're unsure,
then you definitely want to give us a call. It
nine one six nine six seven thirty five hundred, get
on our calendar for a no obligation consultation or register
(21:53):
for our October fifteenth workshop in Conquered from six to
seven thirty PM at the old spaghetti factory called nine
one six ninety six seven thirty five hundred.
Speaker 3 (22:06):
So you know, one of the things that.
Speaker 2 (22:10):
You know we can just take a little bit further
is what our asset allocation looks like right now, because.
Speaker 3 (22:17):
The important one, the important important ones of the ACID
allocation based off of what's going on in the interest
rate environment and what could change next week is fixed
income and some of the alternatives that we do use
in the acid allocation because they can drive. And where
are we seeing right now, I mean rates have alred
the more interest rate market has already been ticked down,
I mean ten, Your treasury is now close to just
(22:38):
four closer four where it was not that long ago
four and a half.
Speaker 2 (22:42):
Yeah, and and and that is impacted when we were
when the economy and when the markets were selling off.
It's because the ten year hit five, right, and so
we're on the other end of that now. And if
you look, mortgage rates have gone down quite a bit,
which is which is good for you know, first time
buyers and home buyers, bad for sellers because you know,
(23:04):
you're starting to see no.
Speaker 3 (23:05):
Good for sellers, well people, there's more people in the
market that can afford.
Speaker 2 (23:10):
But you'll get more inventory on the market, so you
know you'll have more choice as a buyer typically, and
so either way, lower mortgage rates helped the economy then
hurt the economy. But we'll talk about more specifically how
much money our clients typically have in stocks, bonds, alternatives, cash,
(23:32):
so on and so forth. You're listening to the wise
money guys, John Scamberan. I'm here with my partner de
Seppi Viscani, and if you like our show, have any
questions or want to meet for a no obligation consultation,
give us a call at nine one six nine six
seven thirty five hundred. You know, one of the big
and most important things that we talk about in our
seminars is what our asset allocation looks like and what
(23:56):
that means. If you're new to you know, investment terminology,
which I doubt you are, but if you are, it
just means what percentage of each category do you have
of investments in your portfolio. So in this case, we
we pretty much put everything in five categories. That's stocks,
(24:18):
that's bonds, that's alternatives, real estate, and cash or cash
equivalents like money market funds, so on and so forth.
And so you know, it's important to know that when
you're retired, especially if you're on a fixed income, especially
if your risk adverse or you're more moderate to conservative,
(24:43):
then your portfolio and what waiting it has in each
of the categories, what your asset allocation is really matters.
And what we were showing and what I'm proud to
say that Joseppi's been really good at modeling is not
having you definitely aren't gonna model down.
Speaker 3 (25:06):
We both did choose nice white shirts today and that
wasn't on purpose. We have a weird thing going on.
Speaker 2 (25:13):
And I'm telling you, when I looked at what we
were wearing yesterday and the day before and the day before,
we don't call each other and say, hey, what color
shirt are you wearing? But we almost match every single day.
It's a bizarre thing. But nevertheless models the models. Giuseppe
(25:34):
has done a really good job at reducing stock exposure
here without sacrificing cash flow or growth. So if you
could get you know, good upside of ten percent or
more and cash flow of six percent or more, that's
(25:54):
the type of model that most people would want, or
should have or need when they're retired. And it does
a couple of things. It reduces your risk, okay, it
reduces that volatility, It keeps up with inflation. It has
you sleeping better at night, has you taking less stress
(26:19):
or experiencing less stress. Especially, nobody wants to take stress, right,
nobody wants to take away in the morning.
Speaker 3 (26:26):
Let me take a stress pill.
Speaker 2 (26:28):
But if you're between the ages of fifty and ninety,
why would you be and you've worked hard your whole life,
and you've amassed you know, hundreds of thousands to millions
of dollars, why in the heck for a small annual
fee would you go it alone and have to worry
about the things that we worry about for you, that
(26:50):
we help you establish you know, what sort of risks
you should be taking, What sort of investments will help
you accomplish whatever you're and I'm on return to objective
is with again without having to stress, without having to
lose sleep, without having to sacrifice, you know, your lifestyle
(27:12):
over a long period of time in retirement. So basically,
what is our asset allocation typically right now?
Speaker 3 (27:20):
No idea, I knew you would say something like set.
It was a layup. Yeah. So on what we discussed
in our renal workshop is because it's hard to just
have a bunch of slides in all the different models,
and there's different flavors and some people are more conservatives,
some people are more aggressive, and we have more growth
(27:40):
oriented portfolios and obviously more conservative portfolios. But when we
look across the board, on average, most of our clients
who are nearing retirement or in retirement typically have a
conservative or conservative moderate portfolio allocation. And that mix up
right now is about twenty five percent exposure stocks, forty
two and a half percent exposure to exposure to bonds,
(28:02):
twenty percent alternatives, seven and a half percent in real
estate type investments, and then five percent in leverage income.
And the mix of that and its current yield and
what I say yield, what either dividends or interests or
biose investments are paying out and when you average it
(28:24):
out on that mix up and albeit even though it's
twenty five percent exposed to stocks, it spits out right
now is six percent yield average yield in dividends and interest.
So that's the cash flow that at that particular asset
allocation is spitting out, which is pretty good because when
you look at just a general market, which we haven't
(28:44):
had a general market in a long time. But you know,
when I started in the business in two thousand and
eight and used financial planning tools and software and went
through classes and training through the different institutions that I
worked at in the beginning, you know, they looked at
and said, well, you know, you're gonna have clients sort
are conservative, moderate, and aggressive, and in general, you know,
(29:06):
a conservative allocated portfolio, which typically is gonna have more
exposure bonds less to stocks, you can expect anywhere from
maybe like a one to four percent average on the return.
Now that sounds very low, like, how would you only
earn a one percent? Well, back then, interest rates were
at zero, so literally funds was basically effectively at zero. Yeah,
so money market was paying nothing, Savings accounts were.
Speaker 2 (29:29):
Paying nothing, paid ten basis points yeah, one tenth of
one percent.
Speaker 3 (29:33):
Yeah, CDs, if you're lucky, you can find one for
like one percent. So that's why a conservative portfolio at
that time in a general market was one all the
way up to maybe four percent annualized return. A moderate
risk portfolio would would generally return, you know, on average,
from like four or five percent to maybe six seven
percent on average annual return as far as the performance,
(29:56):
and then aggressive was anything seven percent or higher right
on an average on the return. So right now in
the current environment which we have in and we talked
about this in our last workshop in Reno, is to
find fixed income and conservative investments at pay a five
or five and a half or six or north of
that and dividends and interest and if the investment, the
(30:18):
market value of that investment did absolutely nothing and all
you got was just the interest or dividend, as we
and you're getting five or six percent. That's what you
would expect in a moderate portfolio back then when interest
rates were zero and we hadn't been we haven't been
in this environment since two thousand and six, two thousand
and seven where you can find these higher interest rates
on these conservetive investments.
Speaker 2 (30:39):
Yeah, So again what you're talking about here is timing.
Don't procrastinate, don't let this time go by where you
can still get good fixed guaranteed bond rates in the fives.
And when when if interest win and if interest rates
(30:59):
go down, then you'll get priced out of adding bond
exposure to your portfolio. And then to get a six
or seven percent, you know, average annual return on your investment,
you're going to have to have more dividend pain stocks,
more risky or at least in the risk reward profile.
(31:21):
You need to look at growth. You're going to be
more growth oriented. And when you're retire, the whole goal
for us is actually to help you reduce your exposure
to investments that have substantial risk while getting you a
decent rate of return, you know net that helps you
(31:41):
accomplish whatever your needs are, whether their income needs or
legacy needs, or whatever the case may be. You know
this opportunity. Again, like Joseppe said, prior to two thousand
and six, there was decent high fixed interest rates. But
from basically two thousand and eight till twenty and twenty two,
(32:05):
for fourteen years, the effective funds FED the FED funds
rate was zero and so you know, you love that.
As you were working borrow money, borrowing money, you had
car payments and mortgages and things like that. But when
you're retired, you don't want to miss out on high rates.
(32:26):
I can't tell you how many times our older clients
have come in and go, oh boy, I remember when
I got you know, ten percent, twelve percent, you know,
sixteen percent.
Speaker 3 (32:38):
Mortgages were ridiculous at that time too.
Speaker 2 (32:40):
But if you had no debt, so you know, quite
frankly five six percent fixed interest rates. Again, it's been
fourteen years since we had those levels. They've been higher,
but they were tremendously lower for a very long time.
And we would hate to see you miss out on that.
(33:02):
Give us a call at nine one six nine six
seven thirty five hundred for more information or an absolutely
no obligation consultation. I promise you you will walk away
from that appointment going that was a very good use
of our time. I've never had anybody, well we say
whether they hired us or not.
Speaker 3 (33:23):
We actually had people come up and tell us that,
which if anything else, if we didn't even gain any
new clients out of it, or anything like that like
that makes me feel like it's worthwhile, right when they're saying, oh,
you know, you guys did a great presentation. We learned
a lot of good things. I didn't know about this.
Speaker 2 (33:37):
I learned about this and say you did or I did,
because I think it was I did a great presentation.
Speaker 3 (33:43):
They were looking at you, they were looking at me.
They stood next to you to make you feel good
at me. No, but I but I agree.
Speaker 2 (33:51):
I mean, listen, most of the time that we spend
on the radio or in front of audiences, you know,
giving you know, our our our years are decades worth
of experience and knowledge out it's for free. Yeah, we're
not hard salespeople. We're not asking anybody that.
Speaker 3 (34:09):
Oh, to do this, you have to do that or
meet with No everybody from the workshop, though, did walk
away with a set against your knives. I'm joking. I'm joking.
But we can definitely in our next segment talk about
some of the questions that we did receive from the
audience and you know, our feedback, just because you know
that that showed some interest.
Speaker 2 (34:30):
Yeah, so let's do that when we come back. We'll
also talk about I want to talk we've spent a
little bit of time talking about this real estate investment
that is just spectacular. So let's give out some more
information on that. And you know, we were talking that
we talk an awful lot about bonds, especially as of late,
and that's because of the rates and and we don't
(34:53):
want to see people not take advantage of that. However,
that doesn't mean that our equity are stock clients aren't
doing equally as well or have it benefited from the
run up. And we did mention we were going to
talk about whether or not we're in a bubble. True,
(35:14):
but you know, when we look at our stock portfolio,
so we really have two models that we utilize for
the stock piece of your asset allocation. And again we're
mostly using individual stocks individual bonds when we're building your
custom actively managed portfolio. But but just specifically referring to
(35:38):
the stock piece, you know, we're proud to say that
it has outperformed the S and P five hundred this year.
Speaker 3 (35:47):
That wasn't the intense well, no, sin's actually since we
since first put it in place and started tracking it live,
which was April first of last year, which if you
remember it, so if you remember April, and it's kind
of funny April April of last year, we had a
pullback that started in the market, and then April of
this year obviously we had a massive pullback.
Speaker 2 (36:07):
But you've actually had we've actually had clients in this
model since what twenty twenty two.
Speaker 3 (36:12):
Well, yeah, there's another one that's more aggressive than S
and P ten, right, and that's been going on since
twenty twenty two. But this more core one that is
focused a little more focused on divid in pain stocks.
Speaker 2 (36:24):
Being more moderate in your risk profile.
Speaker 3 (36:26):
You're not as aggressive, right exactly.
Speaker 2 (36:29):
Yeah, but still the good news is is that you
know we're not ignoring stocks. We're not telling you to
get out of all stocks. We're saying, know your risk tolerance,
you know what you know return and what number is
is success meaning is that number six percent? Well, if
(36:49):
it's six percent, you're going to have a lot less
stocks in your portfolio. Meaning if you need a six
percent return on your money to say that you're happy
it's accomplished your return to objective, Well, you're not going
to have a whole lot of stocks in your portfolio.
If you need eight, nine or ten percent annually, then
you're going to have more stocks in your portfolio. And
(37:09):
more alternatives in your portfolio, one of which we'll talk about,
but we should mention we did. I did say are
we in a bubble? And one of the slides we
showed our audience was if we look at the valuation
of the S and P five hundred prior to each
(37:31):
collapse and crash, we're at that level.
Speaker 3 (37:35):
Rett. We hit an all time high end of August.
Speaker 2 (37:38):
So what that basically means is when you take all
five hundred companies in the S and P five hundred
and you see that, and you take their stock price
and you do some basic math to see what level
of multiple they're trading above their earnings, then that's a
simple valuation tool to then say, whatever that momultiple is,
(38:01):
it's either very high traditionally it's kind of in line
with an average market, or it's very low and it's
undervalue and it's a good time to get in. Right now,
it's very high and indicative of a bubble and a
precursor to the market, the stock market substantially going down.
(38:24):
It doesn't mean it's going to happen.
Speaker 3 (38:26):
Well, yeah, it will happen. Just when will it happen,
that's the question, Right, it will always happen, but when
will it happen? And you know it can continue. The
term that's used quite a bit is melt up. It's
these valuations, these higher valuations and lofty levels can continue
to build upon itself, especially if we have the FED
(38:48):
rate cut a quarter percent and then also indicate maybe
more cuts in the future than what was expressed in
previous meetings. That's going to continue to feed the market,
right and to continue to pricing higher evaluations of and
especially with the AI euphoria back in play, So all
these things can continue to bring up the valuations of
(39:11):
the market. Mark can continue to climb. But on the
other side is if it continues to climbing and get
higher and higher and hire as far as evaluation and
gets away from the averages, and that means when it
does correct and pull back, and that's going to just
be a harder fall.
Speaker 2 (39:29):
So again, let's just kind of regurgitate, you know, because
maybe it's subtle or maybe it's obvious, but we do
believe that you should be reducing your exposure to stocks.
It doesn't mean get out of stocks, but it definitely
means take an active approach, a proactive approach to what
(39:50):
portion of your investment portfolio is exposed to a potential
S and P pullback.
Speaker 3 (39:58):
Especially overall, especially if you have an allocation that you
haven't touched and it's grown. So if you had a
balanced portfolio and it was fifty percent, now it's sixty
percent because your stock sided portfolio has grown, that's a
good time to rebalance. And the other thing is it's
really important to be choosy of which stocks you own
within your portfolio.
Speaker 2 (40:17):
Again, if these are things you are not doing, and
you're managing your money yourself and you're retired, you are
missing out. I know we seldom use the word guarantee,
but I guarantee we will show you a better mousetrap
investments that you probably aren't even aware that exists, that
(40:41):
have lower volatility than stocks and bonds, but pay at
a way above inflation average divid in or or or
distribution rate, then you know is even out there.
Speaker 3 (40:57):
We had that question or actually comment up from one
of the attendees at the workshop that they weren't aware,
and we were going over the structured investment and displayed
on the screen how it works and what you can
expect from it and kind of the pros and cons,
and you know, it was a real estate investor and
they have some you know, more of their investments are
(41:18):
in real estate, and they said, but we have some
cash and we've just been putting in money market because
we're not sure what to do with it. I had
no idea that this type of investment existed out there.
Speaker 2 (41:26):
Yeah, so so let's let's talk about one of the
specific real estate investments that we talked about. It's a
it's a it's a DST is the main one that
we spent a lot of time about, which stands for
Delaware Statutory Trust, and that's just the wrapper over the
(41:47):
actual real estate holdings inside of the portfolio. So when
you invest in this, you are actually a real estate owner.
So it is a way to you know, take a percentage,
albeit a small percentage, of a much bigger level of
real estate holdings than just having say one single family
(42:11):
home or multiple single family homes, or maybe you got
to duplex or something, or maybe a small commercial property
of some kind. This gives you a lot more choice
as far as you know, because there's not just one
of these. We have multiple of these that we like
for different purposes, with different types of property inside of them.
(42:36):
And the good news is this DST one that you
absolutely can call or come in to get more information on,
has paid about a six percent just under a six
percent distribution state.
Speaker 3 (42:51):
Six to little over six actually for the time.
Speaker 2 (42:53):
So that's your cash flow. But the wonderful part about
this is you can ten thirty one into it, which
means you can get out of your capital gains tax
on whatever property property you currently have and exchange it
into this portfolio. But the best part is the return
(43:14):
on investment. The distribution rate. Ninety plus percent of it
is not taxable because they pass on depreciation, they pass
on expense. Even though you're not directly taking that, you
still get the benefit of the six percent return being
(43:35):
mostly not taxable, and that is gigantic. You cannot do
that in your single family home or your baskets, sure.
Speaker 3 (43:45):
Unless you're personally managing a whole portfolio and take advantage
and have a great CPA. But on top of that,
when you look at the total return and the annualize
basis what.
Speaker 2 (43:53):
The value of the holdings grew to too, is what you're.
Speaker 3 (43:56):
Including the dividend. Yeah, the total return, which is dividends
and the growth of the investment itself. The total return
is just under thirteen percent a year and what it's
achieved annually over the past five years.
Speaker 2 (44:08):
So keep in mind that you know their past performance
isn't a guarantee of future results. But if you like
our show, have any questions or want to meet for
a no obligation consultation, give us a call at nine
one six nine six seven thirty five hundred again nine
one six ninety six seven thirty five hundred. You know,
(44:29):
if you like real estate, this is an investment that
you absolutely would want a piece of your money in
your portfolio, especially if you have a property that you
want to exchange into it. That's all the time we have.
You've been listening to John Scamry to Stepi Piscanni, the
Wise Money guys.
Speaker 3 (44:46):
Have a great weekend. Have great weekend. Talk to you
next week.
The Wise Money Guys radio show is brought to you
by One Source of Wealth Management SEC Licensed three one
nine zero seven eight. For disclosures and more information, visit
our website One Source WM dot com.
Speaker 2 (00:13):
Hello and welcome to the Wise Money Guys radio show.
I'm your co host John Scambray and I'm here with
my partner Jeb Wisconsin. By the way, we're certified portfolio
managers that specialize in helping people who are retired are
about to retire manage their money. If you like our show,
have any questions or want to meet for a no
obligation consultation, give us a call at nine one six
(00:35):
nine six seven thirty five hundred again nine one six
nine six seven thirty five hundred, or you can visit
our website Wysmoneyguys dot com.
Speaker 3 (00:44):
Or search for us on YouTube YEP.
Speaker 2 (00:46):
If you'd like to watch us doing this show, you
can find us on our YouTube channel which is also
Wise Money Guys are at Wise Money Guys. But I
think if you just search the Wise.
Speaker 3 (00:58):
Money Guys also you also and I've also tested it out,
you can actually just put our names John Scambra and
just have to Wisconsin. It'll pull up as well. There
you've got all the permanent disclosures on our website towards
the bottom as well.
Speaker 2 (01:10):
So we got a pretty good agenda for you this morning.
First of all, we absolutely have to mention and just
the horrific event of this last week, which was the assassination,
the brutal assassination of Charlie Kirk. I can't even imagine
(01:32):
we were talking about this when it happened that. You know,
you wake up, you kiss your wife and kids goodbye,
and then you don't come.
Speaker 3 (01:41):
Home, go on about your day thinking it's going to
be a normal day, just a normal day, and then
you don't come home. I mean, just sad.
Speaker 2 (01:47):
Our hearts go out to Charlie Kirk and his family.
Just devastating news and for kids all across You know
what's interesting about that. Now we're students of the news
obviously and research and information being being money managers, so naturally,
as as it happened, we're seeing headlines, you know, scroll
(02:12):
across our screens. But my kids were, My daughter Madison
was like, you know, Charlie Kirk. Seeing Charlie Kirk was
on my bucket list. He was only two years older
than me, and they had a text that we have
a text that we call the scam fam group, and
(02:32):
you know, Jessica, Katie, Maddie, they were all like, oh
my god, this is They all knew who he was,
and they're all in their twenties. And so, Charlie, you
went across all a bunch of college, huge following. You know,
my kids are recent college graduates, you know. And and
so I was just but the point is is, I
(02:53):
was just surprised they knew who didn't know how he
really was Charlie Kirk and yeah, and what impacted me
most of that conversation was that he was huge. I mean,
he had millions of followers and so many kids work.
Speaker 3 (03:07):
I would watch his youtubes because I just enjoyed the
debate aspect of it and just a critical thinking and
also just to kind of see where where kids were
this generation of kids at different college campuses and where
they were at not so much of their opinions or
what side they were on, but more so on how
(03:28):
they handled the debate, how they handled critical thinking, how
they handled logic, just and reason right outside of just
the pure academic book study. Let me look it up.
This is a This is a fact that he and
he did a great job of exposing exercising people's minds.
Speaker 2 (03:47):
Really yeah, my concern is about Turning Point USA and
how do they continue that work they were doing to
you know, help kids in college, you know, learn another
another viewpoint, right because.
Speaker 3 (04:03):
College Stones was out there, Vivek was out there, there
was other people that are out there with him, So
maybe they pick off, pick off, you know from that.
I know Ben Shapiro did a little bit of that
as well at different college campuses. So you know, hopefully
it continues on well because now how many universities was
Turning Point in USA I don't even know had chapters
(04:23):
in I mean hundreds and you know, hundreds of thousands,
if not millions of students, you know, following just his
his conversation and his thought process on family values, on religion,
on having children, on you know, getting a job, on
making money, on on.
Speaker 2 (04:44):
Just what's funny. He really wasn't even though a lot
of his conversations were political, he was more evangelical. I
think he was more like a preacher or a minister
versus you know, a politician, And it's it wasn't pure politics.
Speaker 3 (04:59):
Is also like driving towards faith and family, and I
would say more in family, family, family values. Yeah, but
it's it's it's definitely unfortunate. It's sad whether you agreed
or disagreed with his personal views. I mean, he was
just an overall, just an innocent person who shared ideas
(05:19):
and debated and challenged. And I think the good, the
great thing about it all whether you disagreed or agreed
with them, which is that's what America's made up of, right,
It's it's agreements and disagreements or to agree or to
agree to disassassination.
Speaker 2 (05:34):
You know, we're finding it's going to be out to
shut up, you know, somebody who's trying to teach something
different in college, because for decades, colleges have clearly been
very one sided in their views and and really dislike
of America and American values.
Speaker 3 (05:54):
And I can't say values, I mean not all colleges there. Well,
there's a lot, certainly all that ivy leagues.
Speaker 2 (06:00):
I mean, do we have to go into the Harvard riots,
the Columbia riots, you know.
Speaker 3 (06:06):
You know, but there are other ones out there that
you know are completely on the other side.
Speaker 2 (06:12):
Yeah, but not many more on you know, one side.
Speaker 3 (06:16):
Versus the other.
Speaker 2 (06:17):
But that's and that's the impact Turning Point USA was having,
was just getting a a different voice out there. So
super sad. Hopefully, you know, Turning Point USA goes on,
but you know we life goes on, and here we are,
and let's talk about I mean, inflation numbers came out
(06:41):
this last week. We'll talk a little bit about that.
We'll talk about, of course, the FED and what the
probability of the Fed's cuts are, at least how much
of a cut for next week. Also, we'll talk a
little bit about the seminar that we just had our
retiree seminar this week in Reno, and in fact, I'm
(07:03):
happy to announce that our next one will be in
Conquered at the Old Spaghetti Factory from six to seven
thirty pm. Of course, October fifteenth is a Wednesday. We
always do them on a Wednesday, and so if you'd
like to sign up for that, I do suggest signing
up early. These banquet rooms or whatever you call them
(07:25):
inside of these restaurants aren't huge. I mean, we max
out really somewhere around forty to fifty people. We might
be able to squeeze in fifty, but really thirty to
forty is what's comfortable in these rooms. So unfortunately, we start,
you know, turning people away that call in to register late. So,
(07:47):
if you're retired or you're about to retire and you
want to know more about, you know, what's out there
in the investment world. Is it a good time to
buy stocks here, which we're going to talk about and
the strategies and what our asset allocation looks like in
the show. But is it a good time to buy
stocks at these valuations? Is it a good time to
(08:09):
buy bonds at these interest rates and prices? What are
some of the other investments out there? We'll we'll talk
about some real estate investments that are out there that
are very attractive right now, and so on and so forth,
and some of the.
Speaker 3 (08:24):
Questions and concerns that we got from our audience, and
we'll bring that up. Yeah.
Speaker 2 (08:28):
Absolutely, So again, if you're thinking about retiring, or you're retired,
or you're just concerned about, you know, what's next for investments,
the economy, the world, and how you should you know,
pivot or or rebalance as a result of things. You'll
definitely want to keep listening to the show today and
(08:50):
you'll definitely want to sign up for our seminar our
retirement workshop at the Old Spaghetti Factory, Spaghetti Factory, the
Old Spaghetti Factory in Conquered from six to seven thirty
PM called nine one six nine six seven thirty five hundred.
(09:10):
So let's uh talk a little bit about inflation. I saw,
you know, we had PPI come out this week. CPI
come out this week. You know the read on it
was a little bit hotter course CPI than expected, but
still relatively low. My bigger concern and we really talked
a lot about this last night and in the workshop,
was you know, the effect of increasing unemployment, the effect
(09:35):
of you know.
Speaker 3 (09:38):
Reallynumption unemployment rising. Yes, and that's what it is. It's
a battle between and that's what the FEDGI battling is.
It's between inflation versus price contry employment. Yeah, right, inflation
which is the price stability, which is one of their mandates,
and employment, which is our other mandate. But they're loudfully
(09:59):
you know.
Speaker 2 (09:59):
I I think with the the the retiring let's say,
because I wish it was more of a removal, but
let's say the retiring of the current FED chairman, I
think we will hopefully seem some significant changes to the Federal
Reserve Body and its mandate and how and what control
(10:21):
and power they have over the world's economy, because we
I think we talked about this last week. It just
absolutely is wrong for one person and one committee to
literally control the financial markets around the world. I mean,
it's it's that simple.
Speaker 3 (10:40):
You know.
Speaker 2 (10:40):
You could argue and say, oh no, but they only
they only have control of a few things here in
the United States, but their policies literally affect everybody looks
markets around the world because they.
Speaker 3 (10:52):
Fall all markets will be well next week in the
FMC meeting and Jerome Pouse speech on Wednesday, all the
all the world markets are going to be paying attention
to me.
Speaker 2 (11:01):
So I hope there's a big shake up next May
when he retires and they name somebody who's more of
a true capitalist, more of a true free market mentality
when it comes to well and.
Speaker 3 (11:17):
They have a friend and it's responsibilities well, and they
have a framework and process that they go about and
they don't keep changing it and be like, we're going
to be data independent, you know, data dependent. No, we're
going to be forecasting and what we think is going
to happen, So we're going to make decisions based off
of that. In flip flopping, it's what are you going
to actually do? All right?
Speaker 2 (11:34):
So these things are important because they affect your money,
and we're going to talk about how we do things
to help you be ahead of the curve and be proactive.
Give us a call it nine one six nine six
seven thirty five hundred again nine one six, nine six
seven thirty five hundred, or you can visit our website
whysmooney guys dot com. You know, one other thing we
(11:58):
should mention, just resting back to the Charlie Kirk thing,
is it's kind of interesting that it was the day
before nine to eleven. Yeah, you know, and I wonder
if there's some sort of significance there, you know what
a sad, tragic day obviously nine to eleven was, and
then we have an assassination. You know, I wonder if
(12:18):
that thought, you know, had any sort of bearing.
Speaker 3 (12:21):
Who knows. There's so much information, That's what that's the
problem is. There's so much information, conspiracy theories, rumors, all
that's already. Yes, two days, that's crazy, how many days?
Three four days? It's crazy, it's crazy.
Speaker 2 (12:36):
So getting back to the Fed. Here's what here's what
scares me. You know, the market, the probability, the the
the options market is betting on a quarter of one
percent cut off.
Speaker 3 (12:52):
Of the Fed.
Speaker 2 (12:53):
Fest pretty much cemented in right, but we say that
and a small.
Speaker 3 (12:58):
Probability out there on that's that they'll cut half a percent.
Speaker 2 (13:02):
But there is also a small even smaller probability that
he cuts none. Because you were just saying how the
FED is flip flopping from data dependent to forecasting and
making their decisions, you know, when they're supposed to be
data dependent according to out of I mean, how many
times does that come out of Jerome Powell's mouth? And
(13:22):
so a couple of concerns there and something you should
watch for if it's a quarter, And that's what the
probability is predicting, and what the market thinks and what
guys like to set me up. I think that manage
large sum sums of money. Okay, then the market's just
gonna ho hum along and probably continue that. You know
(13:44):
this year that it's having to be a distant year.
Speaker 3 (13:48):
Well it depends on that, but also future potential cuts
in the dot plot. Yeah, so if there's an increase
on that, then that will continue to quote unquote melt up.
Speaker 2 (14:00):
But here's what I'm looking at for next week is
if we get a fifty basis point cut, I think
the market actually sells off. And the reason being so
two scenarios where I think the bubble the stock market bubble,
because we'll talk about that later in the show, that
we certainly could be in a stock market bubble based
(14:22):
on the valuations of the S and P the average
evaluations of the S and P five hundred companies. Is
if we get a fifty basis point cut when the
market is expecting a quarter, then that might scare people
into seeing, well, what does the FED see what's really
wrong with the economy, And that will be the catalysts
(14:43):
for some profit taken, which we've been recommending as a
strategy to reduce your stock exposure and lock in some profits.
By the way, and we still are on that same path.
We don't think get out of stocks because you know,
there's some great ones out there, and there's still great values, and.
Speaker 3 (15:02):
And well they kid stocks to buy and they can
continue to climb up even the valuations are high.
Speaker 2 (15:06):
Yeah, And then the other side is what if there's
no rate cut and so, And the fact of the
matter is are you prepared will your portfolio substantially change
depending on one of those three scenarios? And if it is,
then you're probably not. You know, you probably don't have
the right portfolio. You certainly probably don't have diversification. And
(15:33):
being in just mutual funds is not diversification.
Speaker 3 (15:37):
You know that if you have a meaningful account where
you have enough money, you can create your own exactly right.
If it's a smaller account size and mutual funds can be,
you know, fine, because then that's the only way you
can really diversify.
Speaker 2 (15:49):
And we talked about that a lot. What is true diversification?
Do you know your goals, your minimum return to objective?
Are you in investments that pay you for something for
your time as ie dividends and interest? Are you over
betting in any one sector like stocks, bonds, real estate,
(16:12):
you know, alternatives, cat you know? Are you weighted too
much in anyone sector? Are you weighted too much in
anyone position? All of these things are crucial when it
comes to who you have helping you, or if you're
not having anybody help you, the decisions you make in
(16:33):
the portfolio you build and how you change it based
on economic events, based on geopolitical events, based on you know,
how your situation has changed or might be changing, And
if you're not taking things to that level, then you
should definitely give us a call at nine one six
(16:54):
ninety six, seven thirty five hundred. I think you might
be surprised to find out that you know, you're over
bedding on and have more risk than you thought you had,
and you don't have you know, some of the investments
that are out there, which we're going to talk about next,
(17:15):
that you know, are paying great rates of consistently with
less volatility than stocks and bonds in some cases even
less volatile, less of a roller coaster ride than even bonds.
Speaker 3 (17:31):
And so I think I think on top of that,
you know, going back to the FED and having that
as a component to be conscious of of like what
what do I why do I need to be concerned
on where interest rates are at, what the Fed might
or might not do, how that could how that could
impact the market, and also the interest rate market because
(17:54):
there's timely investments and there's investments out there that are
great opportunities. But if you know, depending on the Fed's
actions and how the interest rate market reacts to it.
It could become a greater opportunity than what it is
right now, or or or worse, and now you've lost
out on that opportunity when you have the opportunity now,
(18:15):
and most of those are going to be some of
the alternatives that John has reference to and fixed income
and the bonds, and you know, it'll be interesting to
see just dialing back a little bit on the on
the Federal Reserve and Jerome Pal and what he says
within his speech and why if they do take action
and why they did take action, because you know, and
(18:36):
what we were talking of talking around the during the
break was, you know, they have two mandates that they
need that they follow, and it's price stability, which is
dealing with inflation right now, which some of the measurements,
even though they're softer, they're closer to three percent than
they are two percent, which is our target. But they've indicated,
and Jerome pal is indicated in this last speech during
(18:57):
the Jackson Hole summit and Wyoming is is that they're
going to be putting more of a focus on the
labor right and an employment and those numbers have come
in soft especially with the revisions. Right, it's not current,
but the revisions from April of last year through March
of this year. But they're going to have that more
(19:19):
as a phone. And I think that gave him and
he did that on purpose, to give him a window
to say, Hey, I'm gonna go ahead and cut a
quarter point to kind of make everybody happy, right, because
if you didn't and if the if the if the
emphasis was truly on Hey, unemployments at four point three,
it's ticked up, but we're still fine based off of
the current data.
Speaker 2 (19:39):
That's one of the regularly show is employments relationship to recession,
and generally when unemployment is at or above five, it
tends to warner. It's a warning flag that the economy
might go into recession because obviously, if millions of people
(19:59):
are unemployed, they're consuming less. And if they're consuming less,
it means companies are making less revenue and less profit.
And while that may be less revenue and profit, the
stock price goes down.
Speaker 3 (20:11):
Well, and if that's happening and interest rates are still
interust rate levels are still high, that's that's that's not
a good recipe. But oh it's a terriblest inflation over all,
the different measurements. Even though they became a software, they're
still stuck closer to three percent overall than they are
to two percent. So you know, do they forecast and say, well,
it's going to continue to come down and eventually get
(20:31):
to two percent, or do they say and right now
I think the focus is more on, well, we're at
four point three percent of employment. That's good, but we
think it's going to continue to increase and get to
a point where it could be a warning, and so
we're going to preemptively act and cut interest rates.
Speaker 2 (20:48):
So the reality is, as you're looking at your investment portfolio,
do you have investments in there that aren't going to
be subject to the whims and I do say whims
of interest rates, Fed policy, whether the FED cuts or not,
How much does the FED cut whether or not. You know,
(21:09):
some of these economic things and geopolitical things that are
going to continue to happen, may even get worse. Are
your investments ones that will still do very well as
far as the interest or dividends that they pay you
and the price, the valuation, and what your statements look
(21:33):
like after whatever events happen for the rest of these
this year, and if you don't know, if you're unsure,
then you definitely want to give us a call. It
nine one six nine six seven thirty five hundred, get
on our calendar for a no obligation consultation or register
(21:53):
for our October fifteenth workshop in Conquered from six to
seven thirty PM at the old spaghetti factory called nine
one six ninety six seven thirty five hundred.
Speaker 3 (22:06):
So you know, one of the things that.
Speaker 2 (22:10):
You know we can just take a little bit further
is what our asset allocation looks like right now, because.
Speaker 3 (22:17):
The important one, the important important ones of the ACID
allocation based off of what's going on in the interest
rate environment and what could change next week is fixed
income and some of the alternatives that we do use
in the acid allocation because they can drive. And where
are we seeing right now, I mean rates have alred
the more interest rate market has already been ticked down,
I mean ten, Your treasury is now close to just
(22:38):
four closer four where it was not that long ago
four and a half.
Speaker 2 (22:42):
Yeah, and and and that is impacted when we were
when the economy and when the markets were selling off.
It's because the ten year hit five, right, and so
we're on the other end of that now. And if
you look, mortgage rates have gone down quite a bit,
which is which is good for you know, first time
buyers and home buyers, bad for sellers because you know,
(23:04):
you're starting to see no.
Speaker 3 (23:05):
Good for sellers, well people, there's more people in the
market that can afford.
Speaker 2 (23:10):
But you'll get more inventory on the market, so you
know you'll have more choice as a buyer typically, and
so either way, lower mortgage rates helped the economy then
hurt the economy. But we'll talk about more specifically how
much money our clients typically have in stocks, bonds, alternatives, cash,
(23:32):
so on and so forth. You're listening to the wise
money guys, John Scamberan. I'm here with my partner de
Seppi Viscani, and if you like our show, have any
questions or want to meet for a no obligation consultation,
give us a call at nine one six nine six
seven thirty five hundred. You know, one of the big
and most important things that we talk about in our
seminars is what our asset allocation looks like and what
(23:56):
that means. If you're new to you know, investment terminology,
which I doubt you are, but if you are, it
just means what percentage of each category do you have
of investments in your portfolio. So in this case, we
we pretty much put everything in five categories. That's stocks,
(24:18):
that's bonds, that's alternatives, real estate, and cash or cash
equivalents like money market funds, so on and so forth.
And so you know, it's important to know that when
you're retired, especially if you're on a fixed income, especially
if your risk adverse or you're more moderate to conservative,
(24:43):
then your portfolio and what waiting it has in each
of the categories, what your asset allocation is really matters.
And what we were showing and what I'm proud to
say that Joseppi's been really good at modeling is not
having you definitely aren't gonna model down.
Speaker 3 (25:06):
We both did choose nice white shirts today and that
wasn't on purpose. We have a weird thing going on.
Speaker 2 (25:13):
And I'm telling you, when I looked at what we
were wearing yesterday and the day before and the day before,
we don't call each other and say, hey, what color
shirt are you wearing? But we almost match every single day.
It's a bizarre thing. But nevertheless models the models. Giuseppe
(25:34):
has done a really good job at reducing stock exposure
here without sacrificing cash flow or growth. So if you
could get you know, good upside of ten percent or
more and cash flow of six percent or more, that's
(25:54):
the type of model that most people would want, or
should have or need when they're retired. And it does
a couple of things. It reduces your risk, okay, it
reduces that volatility, It keeps up with inflation. It has
you sleeping better at night, has you taking less stress
(26:19):
or experiencing less stress. Especially, nobody wants to take stress, right,
nobody wants to take away in the morning.
Speaker 3 (26:26):
Let me take a stress pill.
Speaker 2 (26:28):
But if you're between the ages of fifty and ninety,
why would you be and you've worked hard your whole life,
and you've amassed you know, hundreds of thousands to millions
of dollars, why in the heck for a small annual
fee would you go it alone and have to worry
about the things that we worry about for you, that
(26:50):
we help you establish you know, what sort of risks
you should be taking, What sort of investments will help
you accomplish whatever you're and I'm on return to objective
is with again without having to stress, without having to
lose sleep, without having to sacrifice, you know, your lifestyle
(27:12):
over a long period of time in retirement. So basically,
what is our asset allocation typically right now?
Speaker 3 (27:20):
No idea, I knew you would say something like set.
It was a layup. Yeah. So on what we discussed
in our renal workshop is because it's hard to just
have a bunch of slides in all the different models,
and there's different flavors and some people are more conservatives,
some people are more aggressive, and we have more growth
(27:40):
oriented portfolios and obviously more conservative portfolios. But when we
look across the board, on average, most of our clients
who are nearing retirement or in retirement typically have a
conservative or conservative moderate portfolio allocation. And that mix up
right now is about twenty five percent exposure stocks, forty
two and a half percent exposure to exposure to bonds,
(28:02):
twenty percent alternatives, seven and a half percent in real
estate type investments, and then five percent in leverage income.
And the mix of that and its current yield and
what I say yield, what either dividends or interests or
biose investments are paying out and when you average it
(28:24):
out on that mix up and albeit even though it's
twenty five percent exposed to stocks, it spits out right
now is six percent yield average yield in dividends and interest.
So that's the cash flow that at that particular asset
allocation is spitting out, which is pretty good because when
you look at just a general market, which we haven't
(28:44):
had a general market in a long time. But you know,
when I started in the business in two thousand and
eight and used financial planning tools and software and went
through classes and training through the different institutions that I
worked at in the beginning, you know, they looked at
and said, well, you know, you're gonna have clients sort
are conservative, moderate, and aggressive, and in general, you know,
(29:06):
a conservative allocated portfolio, which typically is gonna have more
exposure bonds less to stocks, you can expect anywhere from
maybe like a one to four percent average on the return.
Now that sounds very low, like, how would you only
earn a one percent? Well, back then, interest rates were
at zero, so literally funds was basically effectively at zero. Yeah,
so money market was paying nothing, Savings accounts were.
Speaker 2 (29:29):
Paying nothing, paid ten basis points yeah, one tenth of
one percent.
Speaker 3 (29:33):
Yeah, CDs, if you're lucky, you can find one for
like one percent. So that's why a conservative portfolio at
that time in a general market was one all the
way up to maybe four percent annualized return. A moderate
risk portfolio would would generally return, you know, on average,
from like four or five percent to maybe six seven
percent on average annual return as far as the performance,
(29:56):
and then aggressive was anything seven percent or higher right
on an average on the return. So right now in
the current environment which we have in and we talked
about this in our last workshop in Reno, is to
find fixed income and conservative investments at pay a five
or five and a half or six or north of
that and dividends and interest and if the investment, the
(30:18):
market value of that investment did absolutely nothing and all
you got was just the interest or dividend, as we
and you're getting five or six percent. That's what you
would expect in a moderate portfolio back then when interest
rates were zero and we hadn't been we haven't been
in this environment since two thousand and six, two thousand
and seven where you can find these higher interest rates
on these conservetive investments.
Speaker 2 (30:39):
Yeah, So again what you're talking about here is timing.
Don't procrastinate, don't let this time go by where you
can still get good fixed guaranteed bond rates in the fives.
And when when if interest win and if interest rates
(30:59):
go down, then you'll get priced out of adding bond
exposure to your portfolio. And then to get a six
or seven percent, you know, average annual return on your investment,
you're going to have to have more dividend pain stocks,
more risky or at least in the risk reward profile.
(31:21):
You need to look at growth. You're going to be
more growth oriented. And when you're retire, the whole goal
for us is actually to help you reduce your exposure
to investments that have substantial risk while getting you a
decent rate of return, you know net that helps you
(31:41):
accomplish whatever your needs are, whether their income needs or
legacy needs, or whatever the case may be. You know
this opportunity. Again, like Joseppe said, prior to two thousand
and six, there was decent high fixed interest rates. But
from basically two thousand and eight till twenty and twenty two,
(32:05):
for fourteen years, the effective funds FED the FED funds
rate was zero and so you know, you love that.
As you were working borrow money, borrowing money, you had
car payments and mortgages and things like that. But when
you're retired, you don't want to miss out on high rates.
(32:26):
I can't tell you how many times our older clients
have come in and go, oh boy, I remember when
I got you know, ten percent, twelve percent, you know,
sixteen percent.
Speaker 3 (32:38):
Mortgages were ridiculous at that time too.
Speaker 2 (32:40):
But if you had no debt, so you know, quite
frankly five six percent fixed interest rates. Again, it's been
fourteen years since we had those levels. They've been higher,
but they were tremendously lower for a very long time.
And we would hate to see you miss out on that.
(33:02):
Give us a call at nine one six nine six
seven thirty five hundred for more information or an absolutely
no obligation consultation. I promise you you will walk away
from that appointment going that was a very good use
of our time. I've never had anybody, well we say
whether they hired us or not.
Speaker 3 (33:23):
We actually had people come up and tell us that,
which if anything else, if we didn't even gain any
new clients out of it, or anything like that like
that makes me feel like it's worthwhile, right when they're saying, oh,
you know, you guys did a great presentation. We learned
a lot of good things. I didn't know about this.
Speaker 2 (33:37):
I learned about this and say you did or I did,
because I think it was I did a great presentation.
Speaker 3 (33:43):
They were looking at you, they were looking at me.
They stood next to you to make you feel good
at me. No, but I but I agree.
Speaker 2 (33:51):
I mean, listen, most of the time that we spend
on the radio or in front of audiences, you know,
giving you know, our our our years are decades worth
of experience and knowledge out it's for free. Yeah, we're
not hard salespeople. We're not asking anybody that.
Speaker 3 (34:09):
Oh, to do this, you have to do that or
meet with No everybody from the workshop, though, did walk
away with a set against your knives. I'm joking. I'm joking.
But we can definitely in our next segment talk about
some of the questions that we did receive from the
audience and you know, our feedback, just because you know
that that showed some interest.
Speaker 2 (34:30):
Yeah, so let's do that when we come back. We'll
also talk about I want to talk we've spent a
little bit of time talking about this real estate investment
that is just spectacular. So let's give out some more
information on that. And you know, we were talking that
we talk an awful lot about bonds, especially as of late,
and that's because of the rates and and we don't
(34:53):
want to see people not take advantage of that. However,
that doesn't mean that our equity are stock clients aren't
doing equally as well or have it benefited from the
run up. And we did mention we were going to
talk about whether or not we're in a bubble. True,
(35:14):
but you know, when we look at our stock portfolio,
so we really have two models that we utilize for
the stock piece of your asset allocation. And again we're
mostly using individual stocks individual bonds when we're building your
custom actively managed portfolio. But but just specifically referring to
(35:38):
the stock piece, you know, we're proud to say that
it has outperformed the S and P five hundred this year.
Speaker 3 (35:47):
That wasn't the intense well, no, sin's actually since we
since first put it in place and started tracking it live,
which was April first of last year, which if you
remember it, so if you remember April, and it's kind
of funny April April of last year, we had a
pullback that started in the market, and then April of
this year obviously we had a massive pullback.
Speaker 2 (36:07):
But you've actually had we've actually had clients in this
model since what twenty twenty two.
Speaker 3 (36:12):
Well, yeah, there's another one that's more aggressive than S
and P ten, right, and that's been going on since
twenty twenty two. But this more core one that is
focused a little more focused on divid in pain stocks.
Speaker 2 (36:24):
Being more moderate in your risk profile.
Speaker 3 (36:26):
You're not as aggressive, right exactly.
Speaker 2 (36:29):
Yeah, but still the good news is is that you
know we're not ignoring stocks. We're not telling you to
get out of all stocks. We're saying, know your risk tolerance,
you know what you know return and what number is
is success meaning is that number six percent? Well, if
(36:49):
it's six percent, you're going to have a lot less
stocks in your portfolio. Meaning if you need a six
percent return on your money to say that you're happy
it's accomplished your return to objective, Well, you're not going
to have a whole lot of stocks in your portfolio.
If you need eight, nine or ten percent annually, then
you're going to have more stocks in your portfolio. And
(37:09):
more alternatives in your portfolio, one of which we'll talk about,
but we should mention we did. I did say are
we in a bubble? And one of the slides we
showed our audience was if we look at the valuation
of the S and P five hundred prior to each
(37:31):
collapse and crash, we're at that level.
Speaker 3 (37:35):
Rett. We hit an all time high end of August.
Speaker 2 (37:38):
So what that basically means is when you take all
five hundred companies in the S and P five hundred
and you see that, and you take their stock price
and you do some basic math to see what level
of multiple they're trading above their earnings, then that's a
simple valuation tool to then say, whatever that momultiple is,
(38:01):
it's either very high traditionally it's kind of in line
with an average market, or it's very low and it's
undervalue and it's a good time to get in. Right now,
it's very high and indicative of a bubble and a
precursor to the market, the stock market substantially going down.
(38:24):
It doesn't mean it's going to happen.
Speaker 3 (38:26):
Well, yeah, it will happen. Just when will it happen,
that's the question, Right, it will always happen, but when
will it happen? And you know it can continue. The
term that's used quite a bit is melt up. It's
these valuations, these higher valuations and lofty levels can continue
to build upon itself, especially if we have the FED
(38:48):
rate cut a quarter percent and then also indicate maybe
more cuts in the future than what was expressed in
previous meetings. That's going to continue to feed the market,
right and to continue to pricing higher evaluations of and
especially with the AI euphoria back in play, So all
these things can continue to bring up the valuations of
(39:11):
the market. Mark can continue to climb. But on the
other side is if it continues to climbing and get
higher and higher and hire as far as evaluation and
gets away from the averages, and that means when it
does correct and pull back, and that's going to just
be a harder fall.
Speaker 2 (39:29):
So again, let's just kind of regurgitate, you know, because
maybe it's subtle or maybe it's obvious, but we do
believe that you should be reducing your exposure to stocks.
It doesn't mean get out of stocks, but it definitely
means take an active approach, a proactive approach to what
(39:50):
portion of your investment portfolio is exposed to a potential
S and P pullback.
Speaker 3 (39:58):
Especially overall, especially if you have an allocation that you
haven't touched and it's grown. So if you had a
balanced portfolio and it was fifty percent, now it's sixty
percent because your stock sided portfolio has grown, that's a
good time to rebalance. And the other thing is it's
really important to be choosy of which stocks you own
within your portfolio.
Speaker 2 (40:17):
Again, if these are things you are not doing, and
you're managing your money yourself and you're retired, you are
missing out. I know we seldom use the word guarantee,
but I guarantee we will show you a better mousetrap
investments that you probably aren't even aware that exists, that
(40:41):
have lower volatility than stocks and bonds, but pay at
a way above inflation average divid in or or or
distribution rate, then you know is even out there.
Speaker 3 (40:57):
We had that question or actually comment up from one
of the attendees at the workshop that they weren't aware,
and we were going over the structured investment and displayed
on the screen how it works and what you can
expect from it and kind of the pros and cons,
and you know, it was a real estate investor and
they have some you know, more of their investments are
(41:18):
in real estate, and they said, but we have some
cash and we've just been putting in money market because
we're not sure what to do with it. I had
no idea that this type of investment existed out there.
Speaker 2 (41:26):
Yeah, so so let's let's talk about one of the
specific real estate investments that we talked about. It's a
it's a it's a DST is the main one that
we spent a lot of time about, which stands for
Delaware Statutory Trust, and that's just the wrapper over the
(41:47):
actual real estate holdings inside of the portfolio. So when
you invest in this, you are actually a real estate owner.
So it is a way to you know, take a percentage,
albeit a small percentage, of a much bigger level of
real estate holdings than just having say one single family
(42:11):
home or multiple single family homes, or maybe you got
to duplex or something, or maybe a small commercial property
of some kind. This gives you a lot more choice
as far as you know, because there's not just one
of these. We have multiple of these that we like
for different purposes, with different types of property inside of them.
(42:36):
And the good news is this DST one that you
absolutely can call or come in to get more information on,
has paid about a six percent just under a six
percent distribution state.
Speaker 3 (42:51):
Six to little over six actually for the time.
Speaker 2 (42:53):
So that's your cash flow. But the wonderful part about
this is you can ten thirty one into it, which
means you can get out of your capital gains tax
on whatever property property you currently have and exchange it
into this portfolio. But the best part is the return
(43:14):
on investment. The distribution rate. Ninety plus percent of it
is not taxable because they pass on depreciation, they pass
on expense. Even though you're not directly taking that, you
still get the benefit of the six percent return being
(43:35):
mostly not taxable, and that is gigantic. You cannot do
that in your single family home or your baskets, sure.
Speaker 3 (43:45):
Unless you're personally managing a whole portfolio and take advantage
and have a great CPA. But on top of that,
when you look at the total return and the annualize
basis what.
Speaker 2 (43:53):
The value of the holdings grew to too, is what you're.
Speaker 3 (43:56):
Including the dividend. Yeah, the total return, which is dividends
and the growth of the investment itself. The total return
is just under thirteen percent a year and what it's
achieved annually over the past five years.
Speaker 2 (44:08):
So keep in mind that you know their past performance
isn't a guarantee of future results. But if you like
our show, have any questions or want to meet for
a no obligation consultation, give us a call at nine
one six nine six seven thirty five hundred again nine
one six ninety six seven thirty five hundred. You know,
(44:29):
if you like real estate, this is an investment that
you absolutely would want a piece of your money in
your portfolio, especially if you have a property that you
want to exchange into it. That's all the time we have.
You've been listening to John Scamry to Stepi Piscanni, the
Wise Money guys.
Speaker 3 (44:46):
Have a great weekend. Have great weekend. Talk to you
next week.
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