October 31, 2024 • 43 mins
The Election is approaching while a lot of economic news being released at the same time. Hosts John and Giuseppe help us inderstand the new consumer spending numbers. Plus Interest rates are moving, Alternative Investments, Investment returns, and a golden nugget. The Wise Money Guys
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Speaker 1 (00:00):
The Wise Money Guys Radio Show is brought to you
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Speaker 2 (00:13):
Welcome to the Wise Money Guys Radio Show. I'm your
co host John Scambra. I'm here with my partner Just
Hope you Wisconsin. We are certified portfolio managers that specialize
in helping people who are retired or about to retire,
or quite frankly, even if you're not about to retire,
help you manage your money. If you like our show
and have questions or want to get together for a
(00:35):
no obligation consultation, call us at nine one six nine
six seven thirty five hundred or seven seven five four
one five two six seven seven. Boy oh boy, I've
got to say we've been talking about being cautious, talking
about heeding some of our concerns, locking in pros when
(01:01):
markets rally and reach new highs, and here we are.
We had one of the biggest selloff days you know,
during the week last week. For example, many companies you
know had really good earnings and they gave really good
forward guidance, but others that you wouldn't expect to not
(01:24):
meet earnings or give good guidance. Didn't for example, like Microsoft, Microsoft,
you know, took a big hit down almost six percent
during the day on Thursday, And strangely, other companies that
even beat both earnings and revenue but then guided that, hey,
(01:49):
we might not have the same amount of revenue in
a particular product line of theirs like Regeneron, sold off massively.
So here's a company that had a strong buy by
many analysts. It was predicted to beat earnings and beat revenue,
beat both and then sells off massively. But when we say,
(02:11):
you know, as the S and P, the Nasdaq, the Dow,
when they start getting towards all time record highs lock
in profit, you will regret it if you don't. Let's
take Nvidia for example, and Vidia, you know, was a
week or two ago in the mid or close to
(02:33):
the mid one forties. It didn't stay there long. That
was a record high the multiples. If you start looking
at the financials of Nvidia, we're starting to get kind
of out a whack with respect to its competitors, with
respect to its sector. And there's other companies that are
(02:53):
at a better valuation to buy. And sure enough, Nvidia
took a bit, big, big hit last week, going from
you know, one forty four in change, which was its
all time record, to down to one thirty and somewhere thereabouts,
(03:14):
a massive, massive sell off, and so we started saying,
especially I think we talked about it last week, it's
so important to still get together. Now, let us take
a look at what you're doing. We're not going to
look at your portfolio and your retirement and your investments
(03:35):
with the same lens. We're going to try to reduce
your risk. We're going to try to help you increase
your dividends and interest, increased the fixed investments in your portfolio,
and more importantly, we're going to do it incorporated in
a plan that helps you understand what level of returns
(03:58):
you need to make versus says want to make, and
thereby you use that as our roadmap, like Giuseppe likes
to say, going forward. Final At this time of year,
what I always say is how you begin the year
really is indicative of how you end the year. So
(04:18):
it's super important to be set up for a good
year as soon as possible and incorporating some of the
things that we'll talk about today like reducing risk, locking
in profits, increasing dividends and interest increasing fixed income investments
while you still can. But more importantly, how important Giuseppe,
(04:42):
is it to have a plan right now versus hey
just doing it, going it alone or working with another
advisory firm where you don't have a plan and they're
not active managers. I mean, what is your thoughts as
we wind down to the end of the year, get
past the election.
Speaker 4 (05:02):
I think one of them.
Speaker 3 (05:03):
I think one of the lessons is, you know, and
what we've seen is people who go go it alone,
they get cut up on the fomo fear of missing
out and chasing the gains or chasing the performance. Because
S and P. Five hundred has had a great year
this year so far years not over has had a
good year last year, and I think a lot of
(05:25):
it it's been climbing the wall of worry is the
phrase right?
Speaker 2 (05:29):
Right?
Speaker 3 (05:30):
There's all these things that are going on, global conflicts
in the Middle East and Russia and Ukraine. We have
inflation that we're continuing to battle. We now are in
an election that is like black and white as far
as the policies between the both of them. So there's
all these things that could you know, these uncertainties out
(05:51):
there that what if this shoe drops or that one,
and how's it going to impact? But then on the
other side, you have these tech stocks you named some.
Speaker 2 (06:00):
Yeah, with massive profits in them that you never take
because you don't want to pay tax. Yeah, Or you
have the FOMO like you said, do you think it's
going to They're going to go way higher?
Speaker 3 (06:10):
Right and you say, oh my gosh, I've underperformed. I
gotta I gotta put more money into stocks. I got
to put more money in the SMP five hundred. I'm
going to put more money into these you know, more aggressive,
riskier stocks.
Speaker 2 (06:21):
Or pay no dividends or interest by the way, and
typically and where are we at right now?
Speaker 3 (06:27):
You know, as far as valuation wise, I mean SMP
five hundred is at twenty five point eight times and
that is the highest since we've seen since two thousand.
You know, the mean or the average if we go
back a decade, is about seventeen point two. So you
know that's a sign. Does it continue on going from
(06:50):
where it's at Right now? We're in earning season. We
had Microsoft, you mentioned Google, Google did well? Google beat
you know as far as EPs and rep New had
good forward guidance, they they soared. I think it was
like six percent, you know, the day after. But then
Microsoft and Meta and the big thing that was weighing
with weighing them down was expenses on AI. And so
(07:12):
all these expenses that are going towards AI. How soon
do these profits from all the R and D and
expenses that are putting towards AI. Are we gonna realize
that now next year, the next two years? Is it
going to take five years?
Speaker 4 (07:26):
So we're starting to see this AI.
Speaker 2 (07:30):
I don't want to kind of rotate, really rotate and
rebalance if you think about it, from you know, ones
that are priced super high to potentially ones that haven't
you know, And in fact, I'll mention an AI company
at the end of the show that I think could
be from what I've read and the financials I've looked
(07:51):
at and the research that I've looked at, then you know,
a company that could get to megacap size and currently
is nowhere near megacap size. That's super speculative, but a
fun conversation to have.
Speaker 3 (08:05):
But sorry, I think I think the other you know
metrics to look at as economic indicators. We had our
first rate cut after no rate cuts in four years,
right at half a point. Did the Feds make the
right call? And so we're starting to see that and
we've had a kinet. We've had a slew of economic
data come come through this week. And one that was
(08:25):
really focused upon and put some pressure on the markets
on Thursday, as we saw, was the core PCE and
that's something that the FEDS focus on, which extracts the
volatile fuel and energy. But that came in at two
point seven versus estimated two point six, and so that's
closer to the three percent than they're two percent. Yeah,
(08:46):
and so and we've had pretty pretty good job numbers,
you know, unemployment actually went down, went down, it's actually
the lowest in five months. And consumer spending is still
showing pretty so the economy is being pretty resilient. And
these economic indication as far as inflation, is making it
(09:08):
tough for the fence to continue to come well.
Speaker 2 (09:10):
And I don't want to get on my normal soapbox,
but maybe I do a little bit here in rant.
You cannot trust the the agencies that report financial data
for the nation. They they manipulate the numbers there's so
(09:31):
much politics involved. I mean, here we got a rate
cut because you know, our central our head central banker said, oh,
there are signs of the economy slowing. I said many
times on this show what signs of the economy showing?
(09:52):
There is no signs. Use your eyeballs, Use earnings, use unemployment,
you know, use the fact that show me a price
that has gone down or returned to pre you know,
pandemic levels. Show me where the government spending has stopped.
Beyond the tax revenue that the government is bringing in.
(10:14):
Show me where the printing of more treasuries and putting
those on the national debt is going down. There is
zero signs of prices, you know, coming down because of
something that the government is doing. The only thing that
the government is doing is going to cause more hyper
(10:34):
inflation here down the road, especially as we approach thirty
seven trillion dollars in debt by the end of the year.
So where am I going with that? It's crucial to
have an active plan that's going to help you stay
you know, in line or above inflation as far as
your total return is concerned. And so when we come back,
(10:58):
we'll talk a little bit more about out total return
strategies that are crucial to employ right now, some of
which we've already talked about. But you're listening to the
wise money guys, and we are certified portfolio managers that
specialize in building custom actively managed portfolios for our clients
based on their goals, based on their needs, based on
(11:22):
you know, not pie in the sky numbers, based on reality.
And the reality is is that the markets are priced
still at all time highs, very close to them, even
with some of the large cap names or megacap names
coming down while others have gone up. And if you
(11:43):
put it into perspective, what is going on in the nation.
Is the economy really slowing? Maybe there are a couple
of indicators that say so. But from a reality, you know,
we're not seeing the price the prices of goods and services,
at least the ones that we have to have going down.
(12:04):
In fact, they're still going up and they're going to
go drastically higher. Now what does that mean.
Speaker 4 (12:10):
Means credit card balances are also going higher?
Speaker 2 (12:12):
Yeah, but but as far as a whole one, you know,
one trillion dollars in student loans and credit card debt
in a in a massive multi trillion dollar you know economy,
a multi trillion dollar you know nation that brings in
somewhere around five trillion dollars in taxes are ready, you know,
(12:36):
isn't isn't that unusual given that we had one hundred
percent to three hundred percent or more inflation over the
last you know, four or five years in the goods
and services that we need. The real issue is that
wages haven't kept up with inflation at the same level.
Speaker 4 (12:57):
Therefore credit card balance and therefore.
Speaker 2 (12:58):
The credit card balances.
Speaker 3 (13:00):
But yeah, just showing that people it's harder and harder
for people to keep up with just a regular lifestyle expenses.
Speaker 2 (13:08):
And that's where we come in because you've got to
have at least your portfolio keep up with the rising
cost of goods and services so that you can mirror,
you know, what things cost will cost you in the future.
So that is crucial. And again, as we approach the
end of the year, you know, having that plan, you know,
(13:30):
to help you start off next year on the right
path with the least amount of risk you can get
for the amount of return you need. That is crucial.
And so strategically, you know, you need to be taking
advantage of what has happened already this year, and that
(13:50):
is stocks have gone way up and bonds have still
remained relatively priced well, which means that should interest rates
at some point actually go down because they need to
go down versus what we've seen, which is rates have
gone up higher since the FED cut, then you know
(14:11):
you want to be, you know, in a position to
capitalize on some higher rates which are starting to happen again.
So right now we thought the five percent range was
dead and gone, but rotating out of or a portion
of your stocks into fixed investments i e. Bonds, you
can now get good, healthy rates back in the mid
(14:34):
to high fives. We might even see six if the
ten year treasury continues to go up.
Speaker 3 (14:41):
And we'll see what happens next week with an FMC meeting.
I mean, the CME FED watch tool is saying that
they're pricing in a twenty five basis point or a
quarter point rate cut come come next week. But they
just cut a half was the ten year yield was
at three point sixty five, yeah, and now it's at
for point over four point three yeah, just in that
(15:02):
period of time and just a little over a month,
So they're in a pickle. They're in a tough spot.
I would not want to be in Jerome Pal's spot
right now.
Speaker 2 (15:08):
Mark my words. If Jerome Powell is a moron enough,
which I believe he is, and I believe he is
a political figure that has way too much unelected power,
he will still cut rates. And by cutting rates, the
hyper inflation that we will see will be way worse.
Which is why you don't want to be or have
(15:31):
one hundred percent of your money or even seventy or
eighty percent of your money in stocks, especially if you're retired,
because another rate cut, in my opinion, will only cause
rates to actually go higher. Everybody that we talk to
that isn't you know, a professional in this business like
we are over the last you know, almost fifty years combined,
(15:55):
thinks that it's a one for one relationship. Oh isn't
it great that the the Central Bank, you know, cut
rates and then they expect that, Oh, mortgages went down,
you know, car loans went down, credit card rates went down. No, no, no, no.
If you're if you're not buying treasuries because you believe
(16:15):
the Fed made a mistake, that makes the yields go
higher because the prices go lower or on goods and services.
If if the demand for goods and services goes higher,
you know, when supply goes lower, prices continue to go up.
And that's indicative to the government still printing money and
(16:37):
giving all these subsidies. The people coming to the country
by the tens of millions illegally, they are criminals by
the way, getting money that they didn't earn, buying up
our goods and services, crowding our hospitals, crowding our schools.
Is why prices will go even higher.
Speaker 3 (16:56):
And they have to control the spending because if they
don't control the spending, they're just going to there and
they're going to be forced to refinance your debt I
meaning they're going to have to cut rates. So you're
either going to have to refinance your debt lower interest rates,
or are you're going to have to find ways to
cut spending and increase revenues. And right now they're not
cutting spending and finding ways to increase revenues. They're just
(17:17):
trying to put out more programs in just like California,
for example, you know, giving the giving the incentives for
first time home buyers.
Speaker 2 (17:25):
Not first time or or or non citizen, non citizens
that pay nothing to buy a house exactly.
Speaker 3 (17:31):
So how is that going to create more affordable housing?
I mean, that's wacko economics. That just increases demand. Therefore,
I mean, as a homeowner, that's just going to be
great for me and every other homeowner out there. Is
just going to create more demand and drive prices further up.
Speaker 2 (17:46):
Ladies and gentlemen, mark my words, if you don't have
a plan for addressing what's going to happen over the
next couple of years with our debt and deficits, with inflation,
with interest rates, with the fact that it will take
way more money to be able to live, especially in
(18:08):
the state of California, over the coming you know decade,
you are going to be very sorry. And if this
sounds like we're trying to scare you, we are because
we want you to call us so that we can
help you not be a victim financially of the mistakes
that this government has made financially, for its actual taxpayers,
(18:32):
for its hard working now retired citizens that deserve, you know,
to be able to make a great living and to
be able to afford to live here, not get everything
for free. Give us a call at nine one six, nine,
six seven thirty five hundred or seven seven five four
(18:55):
one five two six seven seven. Whether you're somewhere in
northern California, Reno, it doesn't matter. We have an office
near you that we will do a free consultation plus
do some written analysis for you to let you and
help you discover what sort of rate of returns you
(19:16):
need to make versus you know, some pie in the
sky a plan or or goals without a plan, or.
Speaker 4 (19:24):
Buy, buy and hold.
Speaker 3 (19:26):
And then you have some volatility and uncertainty in the
market and some warning signs and say, oh, you're fine
and we'll just ride the wave and continue on.
Speaker 2 (19:36):
Yeah, you look at what happened this week where you know,
two of the major mag seven stocks which affect the indices,
which affect mutual funds and ETFs went down massively. I
don't know what rate of return that is when you
go from off the top of my head from one
forty five to call it one thirty, but that fifty
(20:00):
teen you know dollars is about a you know, a
twenty percent you know, downturn in Nvidia off the top
of my head.
Speaker 3 (20:07):
On that same day on Thursday, just to give you
a perspective. Peloton, which used to be the hot stock
during COVID. It was all over the news and financial
news network. Up it was up like over twenty five
or twenty six percent on Thursday.
Speaker 2 (20:21):
Wow.
Speaker 3 (20:21):
Didn't have a little spec yeah, on the overall impact
of the market.
Speaker 2 (20:25):
And then you look at another AI darling that has
some projected corporate I don't know if you say projected,
but some potential malfeasance in its accounting numbers, basically has
lost about seventy five percent of its stock its market cap.
So again I can't stress enough if you're sitting on
(20:46):
mutual funds or ETFs that own megacap stocks and you
have not taken profit or you actually own you know,
some of these large AI tech companies and have not
taken profit it, come in and see us. That doesn't
mean you won't make money next year. Let us show
you how we will make you money next year. Give
(21:09):
us a call at nine to one six ninety six
seven thirty five hundred or seven seven five four one
five two six seven seven. And we are certified portfolio managers,
so that means we are experts when it comes to
building people custom portfolios. Based on their goals, and we're
(21:29):
going to talk about, you know, what our client's portfolios
consist of right now, not specifically, but it's very important
to know that stocks don't make you know, aren't the
top performing investment asset every year, now, over a long
period of time, they outperform just about everything. But sometimes
(21:54):
it's other investment categories that outperform stocks. So a balance
or a diversified, a truly diversified portfolio that is diversified
amongst the various asset classes, which are stocks, bonds, real estate, alternatives,
(22:14):
and alternative strategies, cash and cash equivalents.
Speaker 4 (22:17):
That's it.
Speaker 2 (22:18):
There is nothing else that you could potentially invest in.
It doesn't matter what it is. It falls in one
of those five categories. And each year, you know, some
of those categories perform better than other categories. Now mostly
every year cash underperforms. However, is next year a twenty
(22:42):
twenty two where you'd be wished where you'd be wishing
where you wish you had cash as your largest percentage
in the various asset classes or asset categories. Rather? Maybe
maybe not this year it certainly was stocks. Do we
(23:03):
finish the year with stocks being you know, the best
performing asset maybe maybe not, maybe it's private credit. So
Giuseppe and I have been rolling out of profitable positions
of stocks into fixed income and alternatives, especially private credit, especially,
(23:26):
you know, things that have hedging strategies in them. If
you don't know what I'm talking about, and you're managing
your own money, meaning you're retired, or maybe you're not
even retired, and you're just you know, humming along, you know,
happy with twenty twenty three, happy with twenty twenty four,
(23:47):
and you're don't have a plan for what if stocks
actually have a negative year next year or the following year,
or so on and so forth. You need to give
us a call and now nine six seven thirty five
hundred or seven seven five four one five two six
(24:08):
seven seven. We love the alternative space. I mean, is
such a great potential, you know, classification of investments to
protect yourself or to at least, you know, protect your
returns potentially from you know, a stock market or a
bond market that is returning potentially negative returns. You want
(24:31):
things that aren't perfectly correlated together. That's what true diversification is.
It's not Oh, I have five different brands of mutual funds,
and then in each brand of mutual fund or ETF
or closed end fund, I have four or five funds
you know, within that same you know brand, and then
I have five different brands. And oh and this is
(24:53):
the one we see all the time, diversification of firm
I have, you know, I have Morgan Stanley Fidelity, E
Trade Schwab. By the way, we're Schwab affiliates, So when
you work with us, you have a Schwab account and
platform at your disposal through us. So that is not diversification.
(25:16):
That is usually a portfolio that lacks a plan and
that overlaps each other in its investments by what is
owned inside of those things. And that's the point of
diversification amongst the five categories of assets is to lower
your potential downside risk to outperform the markets when they're
(25:41):
going down. If the market goes down ten percent in
this last quarter, wouldn't you rather go down one percent
two percent, or how about maybe not even at all,
because you're not all tied to stocks.
Speaker 3 (25:55):
And the other thing and the important thing is getting
away from chasing the performance and figuring out what is
it that you actually need based off of your goals,
your timeline. Do you need a averaging annual five, six, seven, ten, fifteen, twenty.
I mean, if you're chasing performance and looking at you know,
the financial news, MSNBC or.
Speaker 2 (26:16):
Whatever it is that you watch, foxtils not MSNBC. If
you want stake news, listen to MSNBC.
Speaker 3 (26:25):
But you know, if you if you're watching that and
all day, you know a lot of times that they
post is SMP five hundred, the Dow Jones, the NASDAC, right,
and what is it doing is it's hitting all time
highs and SMP five hundred it's over forty five times
it's hit it's all time high this year and you're
looking at your portfolio, you're like, oh my gosh, I'm
not doing as much as sm P five hundred. I
need to be more aggressive and put it on.
Speaker 2 (26:47):
That's not plan.
Speaker 3 (26:48):
But the other side of that is if things go wrong,
then you're also taking a more aggressive side. When things
fall apart and you're going to be you could be
losing ten or twenty percent, and now your portfolio has
got to work even harder just to get back to even.
So it's a balanced portfolio and having asset classes that
(27:09):
complement each other or are are not correlated. Some of
these alternatives alternats for a period of time in the
mid you know, to I'd say twenty twenty, thirteen, fourteen,
fifteen six, they weren't that great. But now, especially with
all the uncertainty out there in the world, their economy,
geopolitical environment, and the dividends that these alternate investments pay out.
(27:32):
I mean, you know, whether you're needing cash flow from
your portfolio or you need a little bit of average
or a buffer.
Speaker 4 (27:38):
The use are a great tool.
Speaker 2 (27:39):
Seven to ten percent monthly, that alternative investment annually, but
it annualize frequency. Yeah, don't we wish it paid seven
to ten percent every month. No, that's an annualized I
appreciate you pointing that out. That's an annualized way to return,
which would potentially keep up with average inflation average inflation
(28:00):
now these last couple of years, isn't And and again,
don't get caught up in the fake news from our
government that, oh, somehow prices are going to cut or
have come down. If you go from where they were
in twenty nineteen where they are now, in some cases,
it's it's not ten percent, it's not fifty percent. It
(28:22):
could be up to three hundred percent, five hundred under percent.
Speaker 3 (28:26):
I don't think anybody's really realizing or or thinking that.
I mean everybody, unless anybody, nobody's unless somebody's staying home
and they're not using their wallet and buying anything out there.
It's prevalent. I mean anything you go, you get gas,
you get food, you get you know, your insurance bill
comes in, you got to pay that for the six
month or annual print. All of it's gone up. So
(28:46):
I mean everybody's realizing it. They're they're focusing on the
rate of growth, but it's just saying that the rate
of growth in that house, yeah on a year over
year or a month or a month or a quarter
of a quarter is coming down. And that's what in
this last week on Thursday morning was core PCE. And
you know, I'm wondering, I'd love to I'd love to
be a fly on the wall because in the beginning,
(29:08):
when inflation was really running rampant, you know, we were
focused on CPI, which is just a headline, it includes everything, right,
and then the Feds were steering and they're saying, well,
we're going to focus on core PCE and core this
and core that, which extrapolates the food and energy prices
because more volatile. But those numbers in the beginning were
lower than the headline, so it was actually beneficial for them.
(29:30):
Now it's flip flop exactly. The headline CPI is actually lower,
and the core the core CPE, core CPI or PCE
and the CPI they're actually higher than the headline. I'm
wondering if at some point they flip flop.
Speaker 2 (29:43):
Of course they will. It's they're kicking in the beginning.
You cannot trust what comes out of the Treasury Secretary
or are Federal Reserve Board Chairman Jerome Powell's mouths. They
will manipulate the data through their you know, methods to
make it sound like they're doing a good job in
(30:05):
spite of addressing the real issue, which is you can't
keep printing and borrowing more money than the country takes
in revenue. And if you want a healthy economy, the
answer isn't to just go, oh, let's just find a
way to tax whatever taxpayers are left in the US
(30:25):
to make up for the shortfall. The answer is to
not spend money on people that don't contribute to our society.
End of story period. That is the solution, which so
far has not happened, and God willing it does happen,
but who knows.
Speaker 4 (30:44):
So that's let's say, do you think they're going to
cut rates next week?
Speaker 2 (30:47):
Yeah, yes, I bet that they'll They'll cut that quarter
and they absolutely should not. Now, if if Jerome Powell
has any brain and isn't isn't polite, and any of
the FED presidents aren't political, which you know that you
think are if.
Speaker 3 (31:04):
You think it's more political or it is more just
because they're trying to refinance it out, well, but if
you know what has more pressure now, But here's the thing,
if you know that you're not trusted, which they are
not clearly in the numbers, right, if the FED was
proven that had inflation, they were saying it was transatory.
Speaker 2 (31:20):
If the FED was trusted, then when they cut rates,
people would not have flown out of bonds because bonds
prices would have gone up and you would have made
a profit. Instead, they didn't care about making a profit
because they didn't trust the government, so they bailed on bonds,
(31:41):
which made interest rates actually go higher. Nobody trusts this government.
And if that's not the biggest sign that we need
and administrative change that we need changes in Washington. Everything
is driven by you know, uh, a healthy you know
(32:01):
big what's the word I'm looking for, big bird? Prosperous
was the word I was looking for, A prosperous you know, citizenry.
If your citizen re isn't prosperous and they don't trust you,
you know, that's that's why we're seeing right so right now,
that is why you need to call us. None of
(32:22):
these moves that our government is making is in your
best interests. We are true fiduciaries, meaning we have to
work in your best interests. We have to help you
and show you ways to reduce risk but still accomplish
your your minimum returns to objective. And if you've been listening,
(32:44):
you know we've mostly been talking about why we're doing
what we're doing in reaction and pro action of what
our government is doing and what our economy is doing.
And if you don't do that for yourself, if you
are not a true student of the markets of the
economy of finance, I ask you to give us a
(33:08):
call at nine one six ninety sixty seven thirty five
hundred or seven seven, five, four, one, five, two, six
seven seven. So right before we went to break, I
mentioned MRO minimum return to objective, and I think that's
crucial as we approach the end of the year and
(33:28):
as we go into twenty twenty five. And what that
means is having a portfolio that takes no more risk
than you need to take in order to accomplish your goals.
That's what minimum return to objective means. And it's simple.
If I have a half a million dollars or a
million dollars like many retirees do, then if I need
(33:51):
a forty thousand dollars return, you know, to supplement my pension,
to supplement Social Security, to maintain my lifestyle in retirement
projected for the rest of my life, then I need
a net eight percent return to generate that forty thousand
off of five hundred thousand, or if it's eighty thousand,
(34:13):
you know that I need on a million, still an
eight percent return, or it's only obviously a four percent
return if I need forty thousand on a million. But
the point is is we help you establish what those
benchmarks are quantitatively.
Speaker 3 (34:28):
And don't and that's in very simple terms. So don't
take that information and say, oh, well, you know, I'm
looking at a portfolio and I'm up ten percent this year,
and all I need is in eight So I'm right
on track. Because the things that we take into account
behind the scenes, and whether your blueprint or your financial
(34:49):
plan as then we factor in inflation, because forty thousand
today of what you may need may not be enough
five years from today, right, you may need forty five
thousand or fifty thousand at that point. So your portfolio
has to grow, and you have to have a compound
an annual growth rate, and not just a simple rate
of return. The other is, what if you just invested
(35:11):
aggressively and you went into one of the index funds
like SMP five hundred eight percent or ten percent return. Yeah,
and if you look at the past few years, given
even twenty twenty twenty twenty two downturn, and if you
started in the beginning of twenty twenty, you know you
had an average annual return of eight percent. The problem is,
and we've mentioned this on a previous radio show, and
(35:33):
we've had this exact discussion with one of our clients,
is depends on when you start. It's all on the
sequence of returns. You could put it in SMP five
hundred and say, well, hey, in the past decade, SMP
five hundred has had like a double digit return average
annual return, So why don't I just put it in that.
I don't have to pay anybody, I don't have to
even think about it. I can close my eyes and
I know I can pull out about eight percent a year. Well,
(35:55):
if you started that in two thousand and seven, you
would have ran out of money by twenty eighteen versus
if you started in twenty ten. I mean your portfolio
look way different night and day.
Speaker 2 (36:05):
Yeah, And to you know, extend that conversation a little bit,
I bet you the majority of our clients come to
us in down months, in down quarters, in down years
because they do the exact opposite. Right again, if you're
going it, if you're managing your money, or or you're
(36:29):
using an investment advisor at one of the other firms,
we don't consider ourselves financial advisors. We're portfolio managers and planners,
which is drastically more important in my opinion. And as
I mentioned, we're fiduciaries, which means we have your best
interest as our goal, not ours. But you know what
happens often is no matter what investments you have, like
(36:52):
these couple of new clients that we got recently, you know,
they've done very well. But then what happens is when
things start going down drastically, they panic and sell at
the wrong time. And then when they see things start
going back up, like you said in the beginning of
the show, you know, fomof you're missing out, they hop
(37:13):
in when things have gone back up, and then you
end up, even in a good year, losing money. Let
us take that emotion out of what you're doing, and
in fact, you know, give you the tools with our
help which will help you not make the wrong decisions,
because are you making that wrong decision today? You know,
(37:37):
did you see things you know, drastically go down that
you bought recently or added to recently and then you
sold them at a loss, or did you get you know,
in on some of these mag seven stocks or the
S and P when it was at all time record
hot highs and now you're going down you know, from there,
(37:57):
whatever the case may be, you know, going into the
end of twenty twenty four, but more importantly starting twenty
twenty five with a plan and knowing your minimum returns
to objectives and having you know, portfolios that match your
goals from a risk tolerance perspective is crucial. So give
(38:19):
us a call at nine to one six ninety six
seven thirty five hundred or seven seven five four one
five two six seven seven. So I mentioned one of
the stocks that I think, again, this is absolutely no guarantee.
We have no crystal ball, But from a long term
(38:40):
hold perspective and some dollar cost averaging, is it does
it become a top performer? Maybe I don't know. But
if you're looking at the mag seven and that's Nvidia, Apple, Microsoft, Google, Amazon,
and Tesla, and you're going, man, I wish I would
have bought one of those, maybe this is one of them.
(39:02):
And what I'm talking about is z Scaler, and the
symbol is ZS. This thing it has gone up, but
it has come down off of its highs. And more importantly,
it's in the cyber security space of cloud computing and
security for artificial intelligence investments, and I think it's a
(39:25):
good way to invest in something that is going to
be crucial in the future. Right with new ways to
steal from people, to cheat people, to commit fraud with AI,
it's going to be important to be working with an
investment or have an investment. That goal is to reduce
(39:48):
fraud and so on and so forth. For AI, the
AI future, the artificial intelligence future. And that's why I
like z scaler is for you know, what they're focusing
on is how to protect us from this world that's
going to be run by machines that learn That's what
(40:10):
artificial intelligence is. It's machines that learned well. I also
like robotics companies, and you know, because if you're thinking
that science fiction.
Speaker 4 (40:21):
Szill did you see those Tesla robots?
Speaker 2 (40:23):
They're there, They're crazy, they're unbelievable. And there's other companies
like like Boston Scientific and what was the one that
hasn't been doing good In fact, it's gone way down.
But but who knows. There's other companies UI Path A
Path that company is not doing well, but it's in
(40:46):
you know, making robotics and chips for robotics and so
on and so forth. And it's early, right, but that's
the thing everybody with hindsight goes man, I wish I
would have bought Nvidia, for example, and and people who
were early did and they held onto it and so
there's lots of companies that will will benefit from the
(41:08):
new you know AI world that will be living in.
It's just nobody knows which one exactly. So I'm just
given one that I've read about and read the researched
and looked into what they actually make. And do you
know these these new tech type companies, Boy do they
swing in price?
Speaker 4 (41:28):
And that's all and.
Speaker 3 (41:29):
Especially if the big AI darlings like Nvidia, who has
you know, gone way up and if they I mean
we haven't seen their earnings report, but if they report
like Microsoft or Meta where their stock prices came down
after reporting and expenses on AI, think about that, they
can have an impact AI plays.
Speaker 2 (41:49):
That is a lot of the trend. By the way,
these megacap are big or large size companies reporting good
earnings like Regeneron, but it's not earned to perfection or
not earnings that you can't sustain well. And that's why
the price goes down even though they beat their earnings.
Speaker 3 (42:09):
But the other part of that is the revisions and
the estimates have continued to come down, so the bar
has been lowered. Some more trophies can be handed out.
So does that realization start coming into play, or the
other side of it is and Vida continues to beat
and so on and so forth, right or how long
(42:32):
and how sustainable can they continue to blow out these earnings?
Speaker 4 (42:36):
Those are the two things, yep.
Speaker 2 (42:37):
These are the questions you need to be asking yourself
if you feel like the person you're working with isn't
doing things at the same level that will do things
for you, or isn't a fiduciary meaning they're an insurance agent,
or they're an advisor that sold you commission products and
we still see that often. Give us a call at
(42:58):
nine one six seven thirty five hundred or seven seven
five four one five two six seven seven. Hope you
enjoyed listening to the wise many guys, John Scambray, ju
Seppe Piscani, give us a call and have a great weekend.
Speaker 4 (43:12):
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):
Welcome to the Wise Money Guys Radio Show. I'm your
co host John Scambra. I'm here with my partner Just
Hope you Wisconsin. We are certified portfolio managers that specialize
in helping people who are retired or about to retire,
or quite frankly, even if you're not about to retire,
help you manage your money. If you like our show
and have questions or want to get together for a
(00:35):
no obligation consultation, call us at nine one six nine
six seven thirty five hundred or seven seven five four
one five two six seven seven. Boy oh boy, I've
got to say we've been talking about being cautious, talking
about heeding some of our concerns, locking in pros when
(01:01):
markets rally and reach new highs, and here we are.
We had one of the biggest selloff days you know,
during the week last week. For example, many companies you
know had really good earnings and they gave really good
forward guidance, but others that you wouldn't expect to not
(01:24):
meet earnings or give good guidance. Didn't for example, like Microsoft, Microsoft,
you know, took a big hit down almost six percent
during the day on Thursday, And strangely, other companies that
even beat both earnings and revenue but then guided that, hey,
(01:49):
we might not have the same amount of revenue in
a particular product line of theirs like Regeneron, sold off massively.
So here's a company that had a strong buy by
many analysts. It was predicted to beat earnings and beat revenue,
beat both and then sells off massively. But when we say,
(02:11):
you know, as the S and P, the Nasdaq, the Dow,
when they start getting towards all time record highs lock
in profit, you will regret it if you don't. Let's
take Nvidia for example, and Vidia, you know, was a
week or two ago in the mid or close to
(02:33):
the mid one forties. It didn't stay there long. That
was a record high the multiples. If you start looking
at the financials of Nvidia, we're starting to get kind
of out a whack with respect to its competitors, with
respect to its sector. And there's other companies that are
(02:53):
at a better valuation to buy. And sure enough, Nvidia
took a bit, big, big hit last week, going from
you know, one forty four in change, which was its
all time record, to down to one thirty and somewhere thereabouts,
(03:14):
a massive, massive sell off, and so we started saying,
especially I think we talked about it last week, it's
so important to still get together. Now, let us take
a look at what you're doing. We're not going to
look at your portfolio and your retirement and your investments
(03:35):
with the same lens. We're going to try to reduce
your risk. We're going to try to help you increase
your dividends and interest, increased the fixed investments in your portfolio,
and more importantly, we're going to do it incorporated in
a plan that helps you understand what level of returns
(03:58):
you need to make versus says want to make, and
thereby you use that as our roadmap, like Giuseppe likes
to say, going forward. Final At this time of year,
what I always say is how you begin the year
really is indicative of how you end the year. So
(04:18):
it's super important to be set up for a good
year as soon as possible and incorporating some of the
things that we'll talk about today like reducing risk, locking
in profits, increasing dividends and interest increasing fixed income investments
while you still can. But more importantly, how important Giuseppe,
(04:42):
is it to have a plan right now versus hey
just doing it, going it alone or working with another
advisory firm where you don't have a plan and they're
not active managers. I mean, what is your thoughts as
we wind down to the end of the year, get
past the election.
Speaker 4 (05:02):
I think one of them.
Speaker 3 (05:03):
I think one of the lessons is, you know, and
what we've seen is people who go go it alone,
they get cut up on the fomo fear of missing
out and chasing the gains or chasing the performance. Because
S and P. Five hundred has had a great year
this year so far years not over has had a
good year last year, and I think a lot of
(05:25):
it it's been climbing the wall of worry is the
phrase right?
Speaker 2 (05:29):
Right?
Speaker 3 (05:30):
There's all these things that are going on, global conflicts
in the Middle East and Russia and Ukraine. We have
inflation that we're continuing to battle. We now are in
an election that is like black and white as far
as the policies between the both of them. So there's
all these things that could you know, these uncertainties out
(05:51):
there that what if this shoe drops or that one,
and how's it going to impact? But then on the
other side, you have these tech stocks you named some.
Speaker 2 (06:00):
Yeah, with massive profits in them that you never take
because you don't want to pay tax. Yeah, Or you
have the FOMO like you said, do you think it's
going to They're going to go way higher?
Speaker 3 (06:10):
Right and you say, oh my gosh, I've underperformed. I
gotta I gotta put more money into stocks. I got
to put more money in the SMP five hundred. I'm
going to put more money into these you know, more aggressive,
riskier stocks.
Speaker 2 (06:21):
Or pay no dividends or interest by the way, and
typically and where are we at right now?
Speaker 3 (06:27):
You know, as far as valuation wise, I mean SMP
five hundred is at twenty five point eight times and
that is the highest since we've seen since two thousand.
You know, the mean or the average if we go
back a decade, is about seventeen point two. So you
know that's a sign. Does it continue on going from
(06:50):
where it's at Right now? We're in earning season. We
had Microsoft, you mentioned Google, Google did well? Google beat
you know as far as EPs and rep New had
good forward guidance, they they soared. I think it was
like six percent, you know, the day after. But then
Microsoft and Meta and the big thing that was weighing
with weighing them down was expenses on AI. And so
(07:12):
all these expenses that are going towards AI. How soon
do these profits from all the R and D and
expenses that are putting towards AI. Are we gonna realize
that now next year, the next two years? Is it
going to take five years?
Speaker 4 (07:26):
So we're starting to see this AI.
Speaker 2 (07:30):
I don't want to kind of rotate, really rotate and
rebalance if you think about it, from you know, ones
that are priced super high to potentially ones that haven't
you know, And in fact, I'll mention an AI company
at the end of the show that I think could
be from what I've read and the financials I've looked
(07:51):
at and the research that I've looked at, then you know,
a company that could get to megacap size and currently
is nowhere near megacap size. That's super speculative, but a
fun conversation to have.
Speaker 3 (08:05):
But sorry, I think I think the other you know
metrics to look at as economic indicators. We had our
first rate cut after no rate cuts in four years,
right at half a point. Did the Feds make the
right call? And so we're starting to see that and
we've had a kinet. We've had a slew of economic
data come come through this week. And one that was
(08:25):
really focused upon and put some pressure on the markets
on Thursday, as we saw, was the core PCE and
that's something that the FEDS focus on, which extracts the
volatile fuel and energy. But that came in at two
point seven versus estimated two point six, and so that's
closer to the three percent than they're two percent. Yeah,
(08:46):
and so and we've had pretty pretty good job numbers,
you know, unemployment actually went down, went down, it's actually
the lowest in five months. And consumer spending is still
showing pretty so the economy is being pretty resilient. And
these economic indication as far as inflation, is making it
(09:08):
tough for the fence to continue to come well.
Speaker 2 (09:10):
And I don't want to get on my normal soapbox,
but maybe I do a little bit here in rant.
You cannot trust the the agencies that report financial data
for the nation. They they manipulate the numbers there's so
(09:31):
much politics involved. I mean, here we got a rate
cut because you know, our central our head central banker said, oh,
there are signs of the economy slowing. I said many
times on this show what signs of the economy showing?
(09:52):
There is no signs. Use your eyeballs, Use earnings, use unemployment,
you know, use the fact that show me a price
that has gone down or returned to pre you know,
pandemic levels. Show me where the government spending has stopped.
Beyond the tax revenue that the government is bringing in.
(10:14):
Show me where the printing of more treasuries and putting
those on the national debt is going down. There is
zero signs of prices, you know, coming down because of
something that the government is doing. The only thing that
the government is doing is going to cause more hyper
(10:34):
inflation here down the road, especially as we approach thirty
seven trillion dollars in debt by the end of the year.
So where am I going with that? It's crucial to
have an active plan that's going to help you stay
you know, in line or above inflation as far as
your total return is concerned. And so when we come back,
(10:58):
we'll talk a little bit more about out total return
strategies that are crucial to employ right now, some of
which we've already talked about. But you're listening to the
wise money guys, and we are certified portfolio managers that
specialize in building custom actively managed portfolios for our clients
based on their goals, based on their needs, based on
(11:22):
you know, not pie in the sky numbers, based on reality.
And the reality is is that the markets are priced
still at all time highs, very close to them, even
with some of the large cap names or megacap names
coming down while others have gone up. And if you
(11:43):
put it into perspective, what is going on in the nation.
Is the economy really slowing? Maybe there are a couple
of indicators that say so. But from a reality, you know,
we're not seeing the price the prices of goods and services,
at least the ones that we have to have going down.
(12:04):
In fact, they're still going up and they're going to
go drastically higher. Now what does that mean.
Speaker 4 (12:10):
Means credit card balances are also going higher?
Speaker 2 (12:12):
Yeah, but but as far as a whole one, you know,
one trillion dollars in student loans and credit card debt
in a in a massive multi trillion dollar you know economy,
a multi trillion dollar you know nation that brings in
somewhere around five trillion dollars in taxes are ready, you know,
(12:36):
isn't isn't that unusual given that we had one hundred
percent to three hundred percent or more inflation over the
last you know, four or five years in the goods
and services that we need. The real issue is that
wages haven't kept up with inflation at the same level.
Speaker 4 (12:57):
Therefore credit card balance and therefore.
Speaker 2 (12:58):
The credit card balances.
Speaker 3 (13:00):
But yeah, just showing that people it's harder and harder
for people to keep up with just a regular lifestyle expenses.
Speaker 2 (13:08):
And that's where we come in because you've got to
have at least your portfolio keep up with the rising
cost of goods and services so that you can mirror,
you know, what things cost will cost you in the future.
So that is crucial. And again, as we approach the
end of the year, you know, having that plan, you know,
(13:30):
to help you start off next year on the right
path with the least amount of risk you can get
for the amount of return you need. That is crucial.
And so strategically, you know, you need to be taking
advantage of what has happened already this year, and that
(13:50):
is stocks have gone way up and bonds have still
remained relatively priced well, which means that should interest rates
at some point actually go down because they need to
go down versus what we've seen, which is rates have
gone up higher since the FED cut, then you know
(14:11):
you want to be, you know, in a position to
capitalize on some higher rates which are starting to happen again.
So right now we thought the five percent range was
dead and gone, but rotating out of or a portion
of your stocks into fixed investments i e. Bonds, you
can now get good, healthy rates back in the mid
(14:34):
to high fives. We might even see six if the
ten year treasury continues to go up.
Speaker 3 (14:41):
And we'll see what happens next week with an FMC meeting.
I mean, the CME FED watch tool is saying that
they're pricing in a twenty five basis point or a
quarter point rate cut come come next week. But they
just cut a half was the ten year yield was
at three point sixty five, yeah, and now it's at
for point over four point three yeah, just in that
(15:02):
period of time and just a little over a month,
So they're in a pickle. They're in a tough spot.
I would not want to be in Jerome Pal's spot
right now.
Speaker 2 (15:08):
Mark my words. If Jerome Powell is a moron enough,
which I believe he is, and I believe he is
a political figure that has way too much unelected power,
he will still cut rates. And by cutting rates, the
hyper inflation that we will see will be way worse.
Which is why you don't want to be or have
(15:31):
one hundred percent of your money or even seventy or
eighty percent of your money in stocks, especially if you're retired,
because another rate cut, in my opinion, will only cause
rates to actually go higher. Everybody that we talk to
that isn't you know, a professional in this business like
we are over the last you know, almost fifty years combined,
(15:55):
thinks that it's a one for one relationship. Oh isn't
it great that the the Central Bank, you know, cut
rates and then they expect that, Oh, mortgages went down,
you know, car loans went down, credit card rates went down. No, no, no, no.
If you're if you're not buying treasuries because you believe
(16:15):
the Fed made a mistake, that makes the yields go
higher because the prices go lower or on goods and services.
If if the demand for goods and services goes higher,
you know, when supply goes lower, prices continue to go up.
And that's indicative to the government still printing money and
(16:37):
giving all these subsidies. The people coming to the country
by the tens of millions illegally, they are criminals by
the way, getting money that they didn't earn, buying up
our goods and services, crowding our hospitals, crowding our schools.
Is why prices will go even higher.
Speaker 3 (16:56):
And they have to control the spending because if they
don't control the spending, they're just going to there and
they're going to be forced to refinance your debt I
meaning they're going to have to cut rates. So you're
either going to have to refinance your debt lower interest rates,
or are you're going to have to find ways to
cut spending and increase revenues. And right now they're not
cutting spending and finding ways to increase revenues. They're just
(17:17):
trying to put out more programs in just like California,
for example, you know, giving the giving the incentives for
first time home buyers.
Speaker 2 (17:25):
Not first time or or or non citizen, non citizens
that pay nothing to buy a house exactly.
Speaker 3 (17:31):
So how is that going to create more affordable housing?
I mean, that's wacko economics. That just increases demand. Therefore,
I mean, as a homeowner, that's just going to be
great for me and every other homeowner out there. Is
just going to create more demand and drive prices further up.
Speaker 2 (17:46):
Ladies and gentlemen, mark my words, if you don't have
a plan for addressing what's going to happen over the
next couple of years with our debt and deficits, with inflation,
with interest rates, with the fact that it will take
way more money to be able to live, especially in
(18:08):
the state of California, over the coming you know decade,
you are going to be very sorry. And if this
sounds like we're trying to scare you, we are because
we want you to call us so that we can
help you not be a victim financially of the mistakes
that this government has made financially, for its actual taxpayers,
(18:32):
for its hard working now retired citizens that deserve, you know,
to be able to make a great living and to
be able to afford to live here, not get everything
for free. Give us a call at nine one six, nine,
six seven thirty five hundred or seven seven five four
(18:55):
one five two six seven seven. Whether you're somewhere in
northern California, Reno, it doesn't matter. We have an office
near you that we will do a free consultation plus
do some written analysis for you to let you and
help you discover what sort of rate of returns you
(19:16):
need to make versus you know, some pie in the
sky a plan or or goals without a plan, or.
Speaker 4 (19:24):
Buy, buy and hold.
Speaker 3 (19:26):
And then you have some volatility and uncertainty in the
market and some warning signs and say, oh, you're fine
and we'll just ride the wave and continue on.
Speaker 2 (19:36):
Yeah, you look at what happened this week where you know,
two of the major mag seven stocks which affect the indices,
which affect mutual funds and ETFs went down massively. I
don't know what rate of return that is when you
go from off the top of my head from one
forty five to call it one thirty, but that fifty
(20:00):
teen you know dollars is about a you know, a
twenty percent you know, downturn in Nvidia off the top
of my head.
Speaker 3 (20:07):
On that same day on Thursday, just to give you
a perspective. Peloton, which used to be the hot stock
during COVID. It was all over the news and financial
news network. Up it was up like over twenty five
or twenty six percent on Thursday.
Speaker 2 (20:21):
Wow.
Speaker 3 (20:21):
Didn't have a little spec yeah, on the overall impact
of the market.
Speaker 2 (20:25):
And then you look at another AI darling that has
some projected corporate I don't know if you say projected,
but some potential malfeasance in its accounting numbers, basically has
lost about seventy five percent of its stock its market cap.
So again I can't stress enough if you're sitting on
(20:46):
mutual funds or ETFs that own megacap stocks and you
have not taken profit or you actually own you know,
some of these large AI tech companies and have not
taken profit it, come in and see us. That doesn't
mean you won't make money next year. Let us show
you how we will make you money next year. Give
(21:09):
us a call at nine to one six ninety six
seven thirty five hundred or seven seven five four one
five two six seven seven. And we are certified portfolio managers,
so that means we are experts when it comes to
building people custom portfolios. Based on their goals, and we're
(21:29):
going to talk about, you know, what our client's portfolios
consist of right now, not specifically, but it's very important
to know that stocks don't make you know, aren't the
top performing investment asset every year, now, over a long
period of time, they outperform just about everything. But sometimes
(21:54):
it's other investment categories that outperform stocks. So a balance
or a diversified, a truly diversified portfolio that is diversified
amongst the various asset classes, which are stocks, bonds, real estate, alternatives,
(22:14):
and alternative strategies, cash and cash equivalents.
Speaker 4 (22:17):
That's it.
Speaker 2 (22:18):
There is nothing else that you could potentially invest in.
It doesn't matter what it is. It falls in one
of those five categories. And each year, you know, some
of those categories perform better than other categories. Now mostly
every year cash underperforms. However, is next year a twenty
(22:42):
twenty two where you'd be wished where you'd be wishing
where you wish you had cash as your largest percentage
in the various asset classes or asset categories. Rather? Maybe
maybe not this year it certainly was stocks. Do we
(23:03):
finish the year with stocks being you know, the best
performing asset maybe maybe not, maybe it's private credit. So
Giuseppe and I have been rolling out of profitable positions
of stocks into fixed income and alternatives, especially private credit, especially,
(23:26):
you know, things that have hedging strategies in them. If
you don't know what I'm talking about, and you're managing
your own money, meaning you're retired, or maybe you're not
even retired, and you're just you know, humming along, you know,
happy with twenty twenty three, happy with twenty twenty four,
(23:47):
and you're don't have a plan for what if stocks
actually have a negative year next year or the following year,
or so on and so forth. You need to give
us a call and now nine six seven thirty five
hundred or seven seven five four one five two six
(24:08):
seven seven. We love the alternative space. I mean, is
such a great potential, you know, classification of investments to
protect yourself or to at least, you know, protect your
returns potentially from you know, a stock market or a
bond market that is returning potentially negative returns. You want
(24:31):
things that aren't perfectly correlated together. That's what true diversification is.
It's not Oh, I have five different brands of mutual funds,
and then in each brand of mutual fund or ETF
or closed end fund, I have four or five funds
you know, within that same you know brand, and then
I have five different brands. And oh and this is
(24:53):
the one we see all the time, diversification of firm
I have, you know, I have Morgan Stanley Fidelity, E
Trade Schwab. By the way, we're Schwab affiliates, So when
you work with us, you have a Schwab account and
platform at your disposal through us. So that is not diversification.
(25:16):
That is usually a portfolio that lacks a plan and
that overlaps each other in its investments by what is
owned inside of those things. And that's the point of
diversification amongst the five categories of assets is to lower
your potential downside risk to outperform the markets when they're
(25:41):
going down. If the market goes down ten percent in
this last quarter, wouldn't you rather go down one percent
two percent, or how about maybe not even at all,
because you're not all tied to stocks.
Speaker 3 (25:55):
And the other thing and the important thing is getting
away from chasing the performance and figuring out what is
it that you actually need based off of your goals,
your timeline. Do you need a averaging annual five, six, seven, ten, fifteen, twenty.
I mean, if you're chasing performance and looking at you know,
the financial news, MSNBC or.
Speaker 2 (26:16):
Whatever it is that you watch, foxtils not MSNBC. If
you want stake news, listen to MSNBC.
Speaker 3 (26:25):
But you know, if you if you're watching that and
all day, you know a lot of times that they
post is SMP five hundred, the Dow Jones, the NASDAC, right,
and what is it doing is it's hitting all time
highs and SMP five hundred it's over forty five times
it's hit it's all time high this year and you're
looking at your portfolio, you're like, oh my gosh, I'm
not doing as much as sm P five hundred. I
need to be more aggressive and put it on.
Speaker 2 (26:47):
That's not plan.
Speaker 3 (26:48):
But the other side of that is if things go wrong,
then you're also taking a more aggressive side. When things
fall apart and you're going to be you could be
losing ten or twenty percent, and now your portfolio has
got to work even harder just to get back to even.
So it's a balanced portfolio and having asset classes that
(27:09):
complement each other or are are not correlated. Some of
these alternatives alternats for a period of time in the
mid you know, to I'd say twenty twenty, thirteen, fourteen,
fifteen six, they weren't that great. But now, especially with
all the uncertainty out there in the world, their economy,
geopolitical environment, and the dividends that these alternate investments pay out.
(27:32):
I mean, you know, whether you're needing cash flow from
your portfolio or you need a little bit of average
or a buffer.
Speaker 4 (27:38):
The use are a great tool.
Speaker 2 (27:39):
Seven to ten percent monthly, that alternative investment annually, but
it annualize frequency. Yeah, don't we wish it paid seven
to ten percent every month. No, that's an annualized I
appreciate you pointing that out. That's an annualized way to return,
which would potentially keep up with average inflation average inflation
(28:00):
now these last couple of years, isn't And and again,
don't get caught up in the fake news from our
government that, oh, somehow prices are going to cut or
have come down. If you go from where they were
in twenty nineteen where they are now, in some cases,
it's it's not ten percent, it's not fifty percent. It
(28:22):
could be up to three hundred percent, five hundred under percent.
Speaker 3 (28:26):
I don't think anybody's really realizing or or thinking that.
I mean everybody, unless anybody, nobody's unless somebody's staying home
and they're not using their wallet and buying anything out there.
It's prevalent. I mean anything you go, you get gas,
you get food, you get you know, your insurance bill
comes in, you got to pay that for the six
month or annual print. All of it's gone up. So
(28:46):
I mean everybody's realizing it. They're they're focusing on the
rate of growth, but it's just saying that the rate
of growth in that house, yeah on a year over
year or a month or a month or a quarter
of a quarter is coming down. And that's what in
this last week on Thursday morning was core PCE. And
you know, I'm wondering, I'd love to I'd love to
be a fly on the wall because in the beginning,
(29:08):
when inflation was really running rampant, you know, we were
focused on CPI, which is just a headline, it includes everything, right,
and then the Feds were steering and they're saying, well,
we're going to focus on core PCE and core this
and core that, which extrapolates the food and energy prices
because more volatile. But those numbers in the beginning were
lower than the headline, so it was actually beneficial for them.
(29:30):
Now it's flip flop exactly. The headline CPI is actually lower,
and the core the core CPE, core CPI or PCE
and the CPI they're actually higher than the headline. I'm
wondering if at some point they flip flop.
Speaker 2 (29:43):
Of course they will. It's they're kicking in the beginning.
You cannot trust what comes out of the Treasury Secretary
or are Federal Reserve Board Chairman Jerome Powell's mouths. They
will manipulate the data through their you know, methods to
make it sound like they're doing a good job in
(30:05):
spite of addressing the real issue, which is you can't
keep printing and borrowing more money than the country takes
in revenue. And if you want a healthy economy, the
answer isn't to just go, oh, let's just find a
way to tax whatever taxpayers are left in the US
(30:25):
to make up for the shortfall. The answer is to
not spend money on people that don't contribute to our society.
End of story period. That is the solution, which so
far has not happened, and God willing it does happen,
but who knows.
Speaker 4 (30:44):
So that's let's say, do you think they're going to
cut rates next week?
Speaker 2 (30:47):
Yeah, yes, I bet that they'll They'll cut that quarter
and they absolutely should not. Now, if if Jerome Powell
has any brain and isn't isn't polite, and any of
the FED presidents aren't political, which you know that you
think are if.
Speaker 3 (31:04):
You think it's more political or it is more just
because they're trying to refinance it out, well, but if
you know what has more pressure now, But here's the thing,
if you know that you're not trusted, which they are
not clearly in the numbers, right, if the FED was
proven that had inflation, they were saying it was transatory.
Speaker 2 (31:20):
If the FED was trusted, then when they cut rates,
people would not have flown out of bonds because bonds
prices would have gone up and you would have made
a profit. Instead, they didn't care about making a profit
because they didn't trust the government, so they bailed on bonds,
(31:41):
which made interest rates actually go higher. Nobody trusts this government.
And if that's not the biggest sign that we need
and administrative change that we need changes in Washington. Everything
is driven by you know, uh, a healthy you know
(32:01):
big what's the word I'm looking for, big bird? Prosperous
was the word I was looking for, A prosperous you know, citizenry.
If your citizen re isn't prosperous and they don't trust you,
you know, that's that's why we're seeing right so right now,
that is why you need to call us. None of
(32:22):
these moves that our government is making is in your
best interests. We are true fiduciaries, meaning we have to
work in your best interests. We have to help you
and show you ways to reduce risk but still accomplish
your your minimum returns to objective. And if you've been listening,
(32:44):
you know we've mostly been talking about why we're doing
what we're doing in reaction and pro action of what
our government is doing and what our economy is doing.
And if you don't do that for yourself, if you
are not a true student of the markets of the
economy of finance, I ask you to give us a
(33:08):
call at nine one six ninety sixty seven thirty five
hundred or seven seven, five, four, one, five, two, six
seven seven. So right before we went to break, I
mentioned MRO minimum return to objective, and I think that's
crucial as we approach the end of the year and
(33:28):
as we go into twenty twenty five. And what that
means is having a portfolio that takes no more risk
than you need to take in order to accomplish your goals.
That's what minimum return to objective means. And it's simple.
If I have a half a million dollars or a
million dollars like many retirees do, then if I need
(33:51):
a forty thousand dollars return, you know, to supplement my pension,
to supplement Social Security, to maintain my lifestyle in retirement
projected for the rest of my life, then I need
a net eight percent return to generate that forty thousand
off of five hundred thousand, or if it's eighty thousand,
(34:13):
you know that I need on a million, still an
eight percent return, or it's only obviously a four percent
return if I need forty thousand on a million. But
the point is is we help you establish what those
benchmarks are quantitatively.
Speaker 3 (34:28):
And don't and that's in very simple terms. So don't
take that information and say, oh, well, you know, I'm
looking at a portfolio and I'm up ten percent this year,
and all I need is in eight So I'm right
on track. Because the things that we take into account
behind the scenes, and whether your blueprint or your financial
(34:49):
plan as then we factor in inflation, because forty thousand
today of what you may need may not be enough
five years from today, right, you may need forty five
thousand or fifty thousand at that point. So your portfolio
has to grow, and you have to have a compound
an annual growth rate, and not just a simple rate
of return. The other is, what if you just invested
(35:11):
aggressively and you went into one of the index funds
like SMP five hundred eight percent or ten percent return. Yeah,
and if you look at the past few years, given
even twenty twenty twenty twenty two downturn, and if you
started in the beginning of twenty twenty, you know you
had an average annual return of eight percent. The problem is,
and we've mentioned this on a previous radio show, and
(35:33):
we've had this exact discussion with one of our clients,
is depends on when you start. It's all on the
sequence of returns. You could put it in SMP five
hundred and say, well, hey, in the past decade, SMP
five hundred has had like a double digit return average
annual return, So why don't I just put it in that.
I don't have to pay anybody, I don't have to
even think about it. I can close my eyes and
I know I can pull out about eight percent a year. Well,
(35:55):
if you started that in two thousand and seven, you
would have ran out of money by twenty eighteen versus
if you started in twenty ten. I mean your portfolio
look way different night and day.
Speaker 2 (36:05):
Yeah, And to you know, extend that conversation a little bit,
I bet you the majority of our clients come to
us in down months, in down quarters, in down years
because they do the exact opposite. Right again, if you're
going it, if you're managing your money, or or you're
(36:29):
using an investment advisor at one of the other firms,
we don't consider ourselves financial advisors. We're portfolio managers and planners,
which is drastically more important in my opinion. And as
I mentioned, we're fiduciaries, which means we have your best
interest as our goal, not ours. But you know what
happens often is no matter what investments you have, like
(36:52):
these couple of new clients that we got recently, you know,
they've done very well. But then what happens is when
things start going down drastically, they panic and sell at
the wrong time. And then when they see things start
going back up, like you said in the beginning of
the show, you know, fomof you're missing out, they hop
(37:13):
in when things have gone back up, and then you
end up, even in a good year, losing money. Let
us take that emotion out of what you're doing, and
in fact, you know, give you the tools with our
help which will help you not make the wrong decisions,
because are you making that wrong decision today? You know,
(37:37):
did you see things you know, drastically go down that
you bought recently or added to recently and then you
sold them at a loss, or did you get you know,
in on some of these mag seven stocks or the
S and P when it was at all time record
hot highs and now you're going down you know, from there,
(37:57):
whatever the case may be, you know, going into the
end of twenty twenty four, but more importantly starting twenty
twenty five with a plan and knowing your minimum returns
to objectives and having you know, portfolios that match your
goals from a risk tolerance perspective is crucial. So give
(38:19):
us a call at nine to one six ninety six
seven thirty five hundred or seven seven five four one
five two six seven seven. So I mentioned one of
the stocks that I think, again, this is absolutely no guarantee.
We have no crystal ball, But from a long term
(38:40):
hold perspective and some dollar cost averaging, is it does
it become a top performer? Maybe I don't know. But
if you're looking at the mag seven and that's Nvidia, Apple, Microsoft, Google, Amazon,
and Tesla, and you're going, man, I wish I would
have bought one of those, maybe this is one of them.
(39:02):
And what I'm talking about is z Scaler, and the
symbol is ZS. This thing it has gone up, but
it has come down off of its highs. And more importantly,
it's in the cyber security space of cloud computing and
security for artificial intelligence investments, and I think it's a
(39:25):
good way to invest in something that is going to
be crucial in the future. Right with new ways to
steal from people, to cheat people, to commit fraud with AI,
it's going to be important to be working with an
investment or have an investment. That goal is to reduce
(39:48):
fraud and so on and so forth. For AI, the
AI future, the artificial intelligence future. And that's why I
like z scaler is for you know, what they're focusing
on is how to protect us from this world that's
going to be run by machines that learn That's what
(40:10):
artificial intelligence is. It's machines that learned well. I also
like robotics companies, and you know, because if you're thinking
that science fiction.
Speaker 4 (40:21):
Szill did you see those Tesla robots?
Speaker 2 (40:23):
They're there, They're crazy, they're unbelievable. And there's other companies
like like Boston Scientific and what was the one that
hasn't been doing good In fact, it's gone way down.
But but who knows. There's other companies UI Path A
Path that company is not doing well, but it's in
(40:46):
you know, making robotics and chips for robotics and so
on and so forth. And it's early, right, but that's
the thing everybody with hindsight goes man, I wish I
would have bought Nvidia, for example, and and people who
were early did and they held onto it and so
there's lots of companies that will will benefit from the
(41:08):
new you know AI world that will be living in.
It's just nobody knows which one exactly. So I'm just
given one that I've read about and read the researched
and looked into what they actually make. And do you
know these these new tech type companies, Boy do they
swing in price?
Speaker 4 (41:28):
And that's all and.
Speaker 3 (41:29):
Especially if the big AI darlings like Nvidia, who has
you know, gone way up and if they I mean
we haven't seen their earnings report, but if they report
like Microsoft or Meta where their stock prices came down
after reporting and expenses on AI, think about that, they
can have an impact AI plays.
Speaker 2 (41:49):
That is a lot of the trend. By the way,
these megacap are big or large size companies reporting good
earnings like Regeneron, but it's not earned to perfection or
not earnings that you can't sustain well. And that's why
the price goes down even though they beat their earnings.
Speaker 3 (42:09):
But the other part of that is the revisions and
the estimates have continued to come down, so the bar
has been lowered. Some more trophies can be handed out.
So does that realization start coming into play, or the
other side of it is and Vida continues to beat
and so on and so forth, right or how long
(42:32):
and how sustainable can they continue to blow out these earnings?
Speaker 4 (42:36):
Those are the two things, yep.
Speaker 2 (42:37):
These are the questions you need to be asking yourself
if you feel like the person you're working with isn't
doing things at the same level that will do things
for you, or isn't a fiduciary meaning they're an insurance agent,
or they're an advisor that sold you commission products and
we still see that often. Give us a call at
(42:58):
nine one six seven thirty five hundred or seven seven
five four one five two six seven seven. Hope you
enjoyed listening to the wise many guys, John Scambray, ju
Seppe Piscani, give us a call and have a great weekend.
Speaker 4 (43:12):
Talk to you next week.
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