July 11, 2024 • 42 mins
Inflation numbers are out, the Fed is talking about cutting rates twice in the next 6 months, and the market is hitting record highs. Host John and Giuseppe give us the latest news and more on Mutual Funds, the S&P records, avoiding emotional mistakes to your portfolio. The Wise Money Guys.
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The Wise Money Guys Radio Show isbrought to you by One Source of Wealth
Management SEC licensed three one nine zeroseven eight. For disclosures and more information,
visit our website One Source WM dotcom or call nine one six nine
six seven thirty five hundred. Welcometo the Wise Money Guys Radio Show.
I'm your co host John Scambran.I'm here with my partner spe Visconi,
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and we are certified portfolio managers thatare out of Granite Bay, California,
who specialize in helping people who areretired are about to retire manage their money.
If you like the show and wantmore information, call us at nine
one six nine six seven thirty fivehundred. Again, that number is nine
one six nine six seven thirty fivehundred. Why should you call us?
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Well, Dusseppe and I have beendoing this for a very long time.
You know, we have the educationside, of course, which is very
important, wouldn't you say, However, nothing's more important than the experience,
the long term experience. Is thatbiased comment? Oh, it's totally biased.
You're looking at me. I'm lookingat You're looking at me. You're
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like, we have education and that'simportant. But however, Giuseppe has a
master's in economics and finance, whichI do not have. We were both
certified portfolio Managers, which was verydifficult credential to obtain that we did through
thought program at Columbia University. Enoughfun experience. Although we don't endorse what's
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been going on at Columbia University,but it is one of the top schools
in the country, and the AppliedMathematics department that was the host of the
Certified Portfolio Managers Academy of Certified PortfolioManagers was very prestigious, very difficult to
obtain. And anyway, but Idid look at you when I was thinking
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about that. But to me,you're sitting You're looking at me saying you
have too much hair on your head. You don't have enough experience, and
this is traine. Yeah, whenyou have the proper amount of stress,
you will have less hair than youhave right now. But you've been doing
You've been in the business a longtime since two thousand and eight. I
got in in nineteen ninety two,and you just can't replace the experience.
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I mean, again, educationally important, especially going through really really going through
like the recessions, the bear markets. You know the ups and downs of
war, you know, major conflictsand how that impacts the markets in real
time. And it's having the emotionalcompetence to not get caught up in the
news, especially the short term newsto you know, make you change things,
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but potentially make you change things,you know, at your own detriment.
Most people managing their money in retirement, if you make a couple of
big mistakes, it costs you somuch to where it's so hard to get
back to where you were, especiallyif you're not in your peak earnings years
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anymore. And so when when whentensions are high on the world stage,
when tensions are high on the politicalstage, when the environment you know around
investments and interest rates and the economicyou know data coming out monthly is at
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a high, you know, that'swhen mistakes are made. So, if
you're retired or close to retirement andyour plan is to manage your own money
or continue to manage your own moneythroughout retirement, you know, give us
a call, let us show youwhy. You know that that you might
want to hire professionals like Juseppe andI to help you not go it alone,
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to remove the stress. If you'rethinking that it's expensive to hire people
with Juseppe and I's track record,you'll find that it might be a better
value than what you think, Socall us at nine one six nine six
seven thirty five hundred. Often,because people typically buy mutual funds and exchange
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traded funds, even their advisors dooften have embedded expenses that people aren't aware
of. And when you then getyour own custom portfolio, which is like
having a custom mutual fund, weremove those expenses by you not having those
types of funds, but having individualstocks, bonds, and investments making up
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your own portfolio, and then onlyhaving the management fee for those services.
So call us at nine one sixnine six seven thirty five hundred. So
a lot happened last week. Gosh, a lot happens every week, but
in four we had you said theweek before, Oh god, I'm so
tired of just being in this youknow, oh, you know, news
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driven cycle where I don't even believethe data. To be honest with you,
I think it's very timely that youstart saying, oh see, you
know, my administration, my peoplethat I picked, we're having a soft
landing. But then yet you alwayssee them revise the data you know,
the next month or the month afterthat. They're currently revising their candidate right
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now. That's just that's a hugeBut the reality is it's so misleading to
go, oh see, reflate,inflation has come down, it's now three
percent. Well, that means strippingout you know, some massive essential services,
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food and energy that after the lastthree years of most prices forever,
thing that you need, whether it'sthe utilities, grocery, auto insurance,
home insurance, health insurance that's goneup fifty one hundred, two hundred,
three hundred percent is still going up. It's so misleading that, oh,
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fantastic, inflation has come No,but prices have not come down and they
continue to go higher. What doyou think about that? I think you're
absolutely right, John, that's exactlyNow. I'll keep talking because that's exactly
what I was looking. No,but the reality is is that it's misleading
to go, oh see, inflationhas come down. The world is the
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way they could yeah, the way, and you're talking about the way they
present it. So they're just focusingon the inflation data saying it was higher,
now it's lower, and the trendis continuing lower. This is what
we want. This is what we'veengineered, and it's going the way that
we've you know, kind of putin place based off of our guidelines.
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But the problem is is, andwe talked about before, is the push
pool effect. And you have oneside, which is a fiscal you know,
side of things in the government thatthey're spending, right, which is
supporting inflation. And then you havethe Federal Reserve, which they're independent or
supposed to be independent, battling inflation. But you can only battle inflation so
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much and raise interest rates. Butif they're continuing to spend, it's gonna
it's gonna continue to raise not inflationinflation, but also the assets. And
so there needs to be a conversationof hey, you guys are raising asset
prices, the cost of homes,the cost of food, food, and
energy, but everything cost the costof inputs that go into businesses, the
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outputs, which then the outputs haveto increase because of their margins are squeezed.
And then everything else and then whenit really hurts us here down on
the ground level is then the membershipfees. The description fees, I mean
my gym membership went up. Yep, Okay, that's not going to go
back down. Homeowners insurance went up, home warranty, my home warn ty,
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my rental property also has gone up. Well, you don't need to
blow your biceps up an even further, because then you're gonna look at look
like one of those California bodybuillar dudesthat are all all arms and no legs.
You're talking about, you like mybiceps. But you're right, I
mean, the reality is is thatit's going to be harder for people who
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are retired to keep up with things. Yes, did the rate of inflation,
you know, which is the pricesyear over year are only going up
projected three percent instead of three pointfour percent. That is totally irrelevant to
you if you were about to retireor you're retired on how you're going to
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pay for things for twenty twenty fivethirty years in retirement. Without the type
of investment strategies that we help ourpeople create and utilize to keep up with
these things, you're not going tobe able to do it. And most
advisors at you know firms are woefullyunder skilled and do not have the experience
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and track record like we do tohelp people, you know survive these types
of challenges that aren't going to geteasier, They're going to get harder.
So if you're from the ages offifty to eighty five and you want to,
you know, potentially see how toreduce your stress for battling all things
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financial, come in for a newobligation consultation. Call us at nine one
six ninety six, seven thirty fivehundred. Let us show you how we
do things and how I'm sure theymay be different than how you approach things
yourself, or how even your currentadvisor approaches things. The time is now,
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things are about to change. Interestrate sentiment definitely is changing. I
mean, we were in the youknow, raise, raise, raise,
and then we went you know,higher for longer because we haven't raised FED
funds in what since, Jill,has it been a year? Yep,
Holy moly, I was going tosay seven eight months. It's been a
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year. It's been a year,and now you know, and it's just
so painful. Yeah, it's beenhere that rates have been on pause.
It's been two years that the yieldcurve has been inverted. So we're getting
kind of a long in the toothand all this, and what that really
means is the timing is coming toan end here very quickly. Whether you
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believe that interest rates should be cutor not, and I don't, because
we have not controlled or stopped.Not only have we not stopped, you
know, uh, borrowing money andspending money we don't have, we're continuing
to increase the projected amount of borrowingand spending of money that we don't have,
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which means that year over year,we're still taking especially the non essential
surfaces line items and going, Okay, next year, we're going to spend
twelve percent more, fifteen percent more, you know. So not only were
we not cutting, we're not evencutting the rate of increase so which continues
to mean that the value of thedollar will continue to go down because the
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overall quality and the overall cost ofthe dollars will continue to be higher.
And so the reality is is thatwe're still going to no matter what,
you know, mislead the public thatwe now need to be cutting rates in
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fear of a recession. There isno recession. You can't have a recession
when unemployment is still at record lows. No. Is it at three point
five percent? No? But isit at five, six, seven,
eight, nine, ten percent?No? It's like at four point one
percent, which is still giving theconsumer the ability to meet their obligations and
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consume goods and services. So there'sno reason, you know, to cut
and devalue the dollar, you know, even further. But we're going to
do it because it's an election year, you know, however you want to
you know, well, the otherstok at it. The other thing is
that. But but I want youto talk about the timing and what that
means to fixed income and why thatwindow is closing. Yes, yeah,
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because very simple markets already moving therates down, so the window to go
out there buy individual bonds that havegreat rates like five or five and a
half percent, even six percent ayear. Okay, even when rates go
down, you continue to collect thatinterest rate. That windows closing market.
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We got inflation data on Thursday thatcame in softer than estimates, gave optimism
more optimism that there's going to bea rate cut in September and potentially a
RIT cut in December. So thatis coming back, and we see yields
or interest rates starting to come down. The market is bringing them down.
Yeah, the ten year treasury youknow now is closer to four percent.
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It was about four point three.You know, it's bounced as high as
five. It did break four alittle bit. I think it was around
April of this year. And nowwe're potentially, you know, in a
scenario where the ten year treasury,which mortgages tend to follow more closely exactly,
you know, it gets below fourbecause I think we're now seeing mortgage
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rates that have come from gosh atthe high eight to seven, then to
high sixes, now to low sixes. And I think if we get into
a fives, boy, it willdo just the opposite. You'll see inflation
to asset prices make things go upeven more because again, if money is
cheaper to borrow, then people willbuy more goods, and if they buy
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more goods, that means demand isgoing up, and a supply doesn't keep
up with demand, then you getthat imbalance that triggers hyper inflation. And
so this could do the same mistakethat other Federal Reserve Board people have done,
is they start cutting rates too soon, and then not only does it
not you know, solve the inflationcrisis that we were in, it rears
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its head even uglier, you know, after making an interest rate uglier.
Yeah, doesn't that make sense?Are you uglier? Ye? Me?
Well, I mean inflation's an uglything, and so if it's uglier,
it means it's higher. But youknow, and and too. In defense
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of Jerome Powllock, I would notwant to be in his position because they're
on thin ice right now. They'veraised rates at a rapid pace, they've
held them at a high level tobattle inflation, and now they're on a
precipice right they're trying to finesse it. They don't want to cut rates too
soon, because yes, it canreignite inflation, then they have this problem
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over be worse. But then onthe other side of things, they also
focusing on like how long do wekeep these rates as high as they are?
And we don't want to keep themtoo high too long because then eventually,
and based off of their track recordin history, something within the financial
system breaks and then a recession ensuesand then they have to lower it.
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The reality is, if they're good, if there was any honesty in Washington,
which we all probably agree there isnot. The reality is until they
stop spending money, meaning until Congressand the power of the people that we
elect stop spending tax payer money thatwe don't have. Stop subsidy, stop
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giving money away around the world.Stop fighting Europe's wars. How about that?
Why not have Europe fight its ownwar. Just the spending on that
alone, you know, would bea massive savings. Stop battling, you
know, things that we don't needto battle. And or more importantly,
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go to the sources of the problemslike this this uh, you know,
forgiveness of student loans. Well,the problem isn't the student loan. It's
the problem that the universities have overchargedfor types of education that they deliver that
are worthless, that are worthless whenit comes to getting a job. In
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paying back that student loan, that'sthe problem. So go to the university
and say, hey, you needto refund money to all these kids that
you charge the same amount of moneyfor getting a a I don't know,
a history or a poetry degree,or a philosophy degree, which you know,
that's that's good information, but reallydoes that give you the same potential
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to earn what a doctor, alawyer, a dentist, an engineer,
you know, and and but thosethose things should be you know, it
shouldn't be discouraged like you. Anybodythat wants to go to school and study
whatever subject matter they want to study, great, but it should be all
these schools have counselors, and thetypical protocol is you go to a new
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school and then you meet with acounselor and you say, Hey, I'm
interested in majoring in philosophy or majoringto be an engineer or a doctor.
What's the route, what are theclasses I need to take? Kind of
map this out for me within thatsession should be mandatory and required that that
counselor also has some training that theygo through and say, okay, perfect,
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here's the chart, here's what worksout majoring in XYZ. Okay,
this is this is the probability toget a job in that field, and
this is how much that field pays. Also, this is how much debt
you will have or how much schooltuition you'll be paying by the end of
four years or however long it's goingto take you six years or eight years.
What are you doing and how longit's going to take you to pay
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that debt off with a typical costof living and then paying your loan back.
My point exactly, it's the responsibilityof the university that if they've overcharged
somebody for not properly educating them,Because what you're talking about is educating a
student that the degree they're about topay two hundred thousand dollars or three hundred
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thousand dollars for will be very hardto pay that school back, to pay
that government back, the government back, because the job you're going to get,
if you get a job in philosophyor or with a company doing whatever,
is going to give you the excessincome, especially with the inflation,
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beyond the cost of education for againjust living and common living expenses, you're
not going to have the money topay that back. Well, it's not
the responsibility of a taxpayer that maybehas paid for their school or didn't or
didn't go to school to pay backthe person that went and got a history
or philosophy or a liberal studies orsome you know, irrelevant degree today but
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paid the same thing that a doctor, a lawyer, a dentist, an
engineer, a computer programmer, ablah blah. You know, But that's
that's been the pattern. Look intwo thousand and eight, when we had
the financial crisis, what do theydo once a tax payer they had tarp.
They build out the institutions that weremismanaging their finances and then didn't didn't
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didn't manage risk and apply stress teststo figure out, hey, if this
happens, that happens, can wesurvive that we have enough? And so
then they bail them out. Wejust saw this last year with a mini
banking crisis that we had Silicon ValleyBank, Signature Bank, right first,
first Republic Bank, and then whathappens ft I c steps in, the
government steps in, they bail themout. Again. Boeing is going through
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asis kind of a crisis right now. Do we think that if it got,
you know, push come to shove, do we think that they're going
to let them fail their garments?No, no way, They're too big
to fail. And this is aproblem. They create a moral hazard.
Why is Boeing in the position thatit's in because of the decisions that they
made and they put profits over safety, innovation and engineering to make their planes
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better and better, and they weretrying to squeeze and make a bigger and
bigger margin and profit. It's amoral hazard. It's a good it's a
good conversation to have because the realityis is all of these things going on
right now, you know, takea lot more skill and effort to be
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able to not make a mistake financiallywhen it comes to, you know,
managing your money to be able toyou know, whatever the outcome is of
all of these things, whether it'suniversities overcharging you know, whether it's you
know, the government making a mistakeon monetary policy, whether whether it's you
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know, impacts you or not.It will eventually and the way it will
eventually is is that at some pointit's going to take a big bite out
of your investments and the return onyour investments or the return on you know,
your your your your what is theword I'm looking for on your cash
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flow? Basically, so the longevityof your portfolio and make it and you're
you know, your overall retirement spendinggoals. Let's actually talk about how and
why. You know, having yourplan in place and altering that plan right
now is super important. So ifyou want to get a hold of us
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for a question or come in fora no obligation consultation called nine one six
nine six seven thirty five hundred.So how important is it have a plan
of attack a roadmap? If youwill for what's going on right now,
or just for retirement in general.I mean, I mean that's it's it's
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ellential, right, It's essential.It's it's it's essential for two main reasons.
One to figure out figure out whereare you at and where are you
going? And how do you getfrom point A to point b? You
know, putting that putting does diningand putting that roadmap out there. But
then also while you have that planor roadmap and you're going along your journey
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to get you from point A topoint B, to have something that you
can periodically check and say, hey, am I on track? Am I
actually getting closer and closer to mydestination? Or did I take a wrong
turn and this fork in the roadand I'm veering off into some other right?
Right? You know a lot ofpeople probably have a plan, but
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more importantly, the the inflation andassumptions. We're probably way off, you
know, when we when we youknow, do our modeling or or the
if it annualized, future return couldbe different than what it was a few
years ago. Yeah. And it'sinteresting because if it doesn't even have to
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be that long ago. I mean, if you just if you had a
financial plan. Say, you know, two years ago, average inflation was
probably projected and put into your planat maybe one or two percent. Now
when you create a plan, averageinflation, instead of being one, one
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and a half or two percent,is being projected at two and a half
percent. Now, we all knowthat over the last three years the cost
of goods and services has gone up, you know trip you know, in
some cases triple digits. But again, just that one percent difference in average
in the average inflation increase being atone percent drastically changes your plan if it's
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projected at two and a half versusone and a half over a twenty thirty
year period. So what you seeis then when you stress test your your
finance at a higher inflation rate itnow and what we find it shows many
people by age eighty, eighty fiveninety no longer having a legacy and running
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out of money because their probability ofnot running out of money drops down into
you know, ten, twenty,thirty, forty percent or zero. When
you put in real inflation, youknow data and or project inflation to be
higher than what you might have originallydone when you had your plan done for
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you. Now we update our plansat least annually. And that is the
reason why we do it is because, as Joseppi said, you've got to
check into it and stress test itand make sure that you're on track on
an ongoing basis. So our moneymanagement process includes planning. We don't have
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a separate fee for it. Whenwe build you your custom portfolio to accomplish
whatever the goals and objectives are ofyour plan, that is included and we
constantly update that plan as necessary whenyour situation changes or when we're sitting down
to do our reviews to make surewe're on track. And as I said,
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it's part of the process. Webelieve it to be crucial. It's
included in in our charges. Itmay be separate in in where you're working,
h you know, or who they'reworking or maybe they don't even do
it or maybe and a lot oftimes that's that's fifty percent of the time.
We find that people more than that. I mean, there's a lot
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of times, you know, weand the nice thing is we've had you
know, through your experience. Weworked through through a lot of these big
firms in the past, and alot of times they focus on they work
in silos, meaning they have oneaccount. You may have a few different
accounts. You may have a coupleof you know, a few different rental
properties, three different investment accounts,a pension, maybe some partnership in a
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business, all these different things.But they're working in a silo and they
have maybe one brokerage account, investmentaccount, and that's all they're focused on,
and then they leave everything else outthere and you and you really want
to take a comprehensive look and putall of those different pieces to your overall
pie in the plan because it allcounts. Yeah. Well, it just
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reminds me how many times we seethat people have firm diversification, and that
does not help you when you haveoh and often in retirement. One of
the first things that we do ishelp people consolidate things and simplify because having
you know, accounts at five differentplaces generally hurts your performance. Generally,
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it hurts you know, your youryour expense is meaning you pay you know,
unnecessary expenses. Generally you don't haveyou know, true diversification, especially
if you just have brand A fundsover here and brand B funds over there.
Often those funds have the same thingsinside of them, and they're expensive
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and you don't even realize what theembedded expenses are dragging your returns down,
and that you have overlap, andyou don't actually have true diversification, which
is about correlation. It's kind oflike it's kind of like you have a
Toyota Camri and then you have auh, I don't even know American cars,
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a Nissan Ultima Ultima. Right,yeah, they're both. They're both
cars. But then all of asudden you say, hey, I need
to go off road because there's thistrail in my map and it needs to
take me off. There's a bumpin my plan and I need to be
able to get over it. Yeah, so you have two different brands,
but they're both cars and they don'tand you need a you need a truck
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with off road capability. Yes,you need to handle all those speed bumps,
yes, exactly, and rocks andboulder like that. Great analogy.
No, that is the reality isthat people don't understand, and most advisors
don't understand, especially if they ifthey haven't been in the industry long enough.
That correlation is what true diversification isabout. It's how does one fund
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react, you know, to anotherfund when say the stock market is going
down, when the bond market orinterest rates are changing. That is how
you diversify your money. And youwant things that are either low correlated or
negatively correlated to have true diversification.And if that doesn't, you know,
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make sense, or if you're notsure you know, if you're truly diversified,
call us at nine one six ninesix seven thirty five hundred. Come
in, sit down with us.Let's have a conversation. Doesn't cost anything.
I promise it'll be a good useof your time, and we'll look
into things like that. We'll showyou, we'll we'll we'll show us,
you know, whatever you comfortable showingus, and we'll pull up those investments
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and show what, show you whatyou're paying. And then we'll show you
if you actually are truly diversified,and or if you're hurting yourself from a
potential return and net return or perspective, or you have a lot of duplication.
You have like four or five differentfunds, but they have a lot
of the same stuff in them.Yeah, so often, you know,
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we see a growth fund at Fidelity, and then a growth fund at Vanguard,
and then a growth fund at att row or it doesn't matter.
And then you look at what's insideof them and the top ten holdings are
the same. And so that isan example of you know, company diversification,
meaning you know, Fidelity is differentthan Vanguard, but it's not an
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example of investment diversification. And sothat is crucial during times right now when
you know there's so many things thatpotentially could put you in a a risk
perspective that you just don't need.And when when things change and they're about
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to change drastically, you know,you got to be prepared and you've got
to not make a mistake right nowthat could cost you, you know,
tens of thousands, hundreds of thousandsand set you back years in your retirement.
So call nine one six nine sixseven thirty five hundred. Again,
that number is nine one six ninetysix seven thirty five hundred. You know,
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we've we've seen a lot of runup in the market, but it's
so misleading. You know, ifyou look at the valuation and the records
that are being set. You wereshowing me this, this this heat map
that really, to me, apicture is definitely worth a thousand words.
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When you look at this thing andyou go wow seven times read roughly,
and there was actually today even thoughyou see the indissy going down last weeksday.
But when you were showing me thatheat map today and you're looking at
those that heat map and you're going, wait a minute, you know this
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is mostly green. Most of thefive hundred companies are up, yet the
induses are down. Why? Yeah? And so the heat map, what
we're talking about, is what itdoes is you know, you you hear
on the news the stock markets up, the stock market's down, and lately
it's been the stock market hit atall time high, the stock market hit
all time sm P five hundred hitall time high, NASDEK hit all time
high day after day. S andP five hundred has is what it says,
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five hundred or about five hundred companieswithin it. And so there's five
hundred constituents. And so the heatmap what it does is it looks at
all of the constituents that make upthe S and P five hundred. And
so Thursday, inflation data came insofter than estimates, and it did a
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couple things. S and P fivehundred, Nasdaq were going down, the
small cap index, the Russell twothousand actually went up because optimism with interest
rates coming down is going to begiving more of a relief to smaller companies.
But we've had quite a run upin S and P five hundred and
NASDAC, but more so in ahandful of names Nvidia, Microsoft, Google,
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Apple, so on and so forth. And these are the companies that
have a bigger weighting than the otherfive hundred companies and carry a lot of
the weight and drag the overall indicythe S and P five hundred up or
down. So when we looked atthe heat map, you saw probably about
in the morning and Thursday, whenthe market was down a half percent,
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you know, going down about onepercent, you see probably sixty seventy percent
of all of those companies green positivegoing up. But the big ones,
there's these big squares because it's basedoff of how much you're waiting. Yeah,
you know again, Apple and Video, Microsoft, they're all down right,
(34:20):
and they're big red squares. Andso it's like, does it really
matter if you know, four hundredof the five hundred or four hundred and
fifty of the five hundred S andP five ninety three, Yeah, companies
of the five hundred exactly are actuallydoing okay that day or positive. If
those big seven are down, thenit's dragging the rest of it down.
(34:44):
So here's here's what that really means. If you're thinking that you missed out
on making money in stocks because youdidn't own or take the risk when Nvidia
was cheap, when Apple was tradingcheaply, when Micsoft was trading cheaply,
so on and so forth, andyou think you missed you know, stock
(35:05):
market opportunity, you have not becauseso many of the companies that we like,
you know, and again don't don'tdon't get me wrong here. We
we have clients, many clients thathave you know, benefited from the run
up in the AI sector. However, you know the majority of our retired
(35:27):
clients they know what return they needto accomplish their goals and to be happy.
And there's many companies and many typesof investments that don't have the risk
of a high flying you know,tech company that are still out there and
available, and we'll talk about someof those when we come back. I'm
your co host, John Scambray,and I'm here with my partner, Viscontin,
(35:52):
and we are certified portfolio managers outof Grant Bay, California that specialize
in helping people who are retired orabout to retire manage their money. If
you liked this show, or anyshow for that matter, call us at
nine one six ninety six, seventhirty five hundred. So we started to
(36:12):
get into the S and P alittle bit, started to look at you
know, that the the records thatthe indices have been breaking are misleading,
and that there's still tremendous opportunity instocks. And earlier we were talking about
the opportunity that's coming to an endin bonds. Should interest rates and interest
(36:38):
rate policy start to change and wesee interest rates go down further, especially
the treasury, then we'll see theprices of bonds go up, and then
it wouldn't be good time to getthose anymore. However, you know,
when we when we pick a stock, yes, we look at sector,
(36:58):
but more important we look evaluation,and more importantly we also look at the
technicals and then does it pay adividend? Does it pay you, you
know, while you're in it,something for being in it? And those
are the positions that I really like, you know, as growth and income
(37:19):
specialists, we really focus on totalreturn, which is not only what price
you paid and does that particular investmenthave the potential to go up in price,
but also what return does it giveme from a cash flow perspective while
I'm in it. And when youput those two things together annually, it
(37:43):
does make our job a bit easierwhen we're in a higher interest rate environment.
When we're in an environment spake theportfolio's job easier, whether it's us
or anybody else, really, andespecially if there's more volatility in the markets,
right, because then the dividends helpbuffer that blow exactly right. And
(38:04):
when we know what your rate ofreturn needs ore, because we've gotten to
know you, we know what yourplan is, and we know what's necessary
to accomplish your plan. So somethingas simple as okay, on my money,
I need a net seven percent ornet eight percent return, then we
(38:29):
look at the types of investments thatgive us the best chance of consistently getting
you that rate of return on yourmoney. You know, as long as
that's the amount of return that youneed and taking a distribution to supplement,
you know, they're they're they're exactlySo again, we have this window where
(38:51):
fixed interest rates are still above five. We have this window where very profitable,
large companies are still at you know, seven eight nine percent, and
I think that window is coming toa quick close, especially on the fixed
income side. And if rates aswe've been seeing, you know what happened
(39:15):
on Thursday, and so that windowwill be closed even before because sometimes we'll
wait until actually the fence cut rates. No, it might be actually too
late at that point because if itlooks like they're going to cut rates and
they have every reason to cut rates, and give them an excuse, actually
every excuse to cut rates, notevery reason to do it in September put
(39:35):
it because really, and you andI have talked about it, I think
September is really the last list point. Yeah, you're not going to make
a rate cut in December. Isthe Federal Reserve really independent or you just
you know, at the heels ofthe current administration and it's election year and
so on and so forth, andthey say no. So September I believe
is kind of the make or breakfor you know, proving that narrative or
(40:00):
false. You know, if theydo it closer to the election, and
I think that that it's going tosupport Oh yeah, they're not exactly until
the timing is imperative. It iscrucial, you know, we we we
know we're in a situation where stocksare and especially a few and and the
(40:22):
ones fueling certain funds and ETFs areovervalued, and we're starting to see,
you know, reasons to sell.You know those right? You have to
be proactive and ahead of when thingshappen before it's too late. Called nine
one six nine six seven thirty fivehundred. What are you looking at?
(40:45):
I just got some uh I waslooking at some data. What does the
market do? How does it react? And it ranges anywhere from down twenty
percent to plus fifteen percent six monthsfollowing the first rate cut? I mean,
how think of the dichotomy of that. True diversification is so important because
(41:07):
nobody has a crystal ball to knowis it going to be the up fifteen
or the down twenty. I thinkit'll be the down twenty well, and
if it's down twenty, then youneed twenty four percent on the upside just
to get back to even. Andthat is the mistake that the market goes
down and then they panic and thenthey sell versus or they hold on and
(41:28):
say, oh it'll come back up, and then it goes down further.
I don't want to sell. Ihad a great profit and now I'm gonna
loss. Well, maybe it'll comebackup. I'm gonna hold on to it.
So the reality is, if you'vecalled your advisor and that advisor always
tells you, no matter what,stay the course, then you know it's
time to call and get a secondopinion. Or if you just can't make
the decision yourself because you're too emotionallyattached, called nine one six nine six
(41:53):
seven thirty five hundred. Don't procrastinateand wait till it's too late, call
nine six ninety six seven thirty fivehundred. Come on in and see us
and hope you enjoyed listening to thewise money guys. That's all we have
for this weekend. Come back andlisten to us next weekend. Have ever
great weekend. Bye all,
The Wise Money Guys Radio Show isbrought to you by One Source of Wealth
Management SEC licensed three one nine zeroseven eight. For disclosures and more information,
visit our website One Source WM dotcom or call nine one six nine
six seven thirty five hundred. Welcometo the Wise Money Guys Radio Show.
I'm your co host John Scambran.I'm here with my partner spe Visconi,
(00:23):
and we are certified portfolio managers thatare out of Granite Bay, California,
who specialize in helping people who areretired are about to retire manage their money.
If you like the show and wantmore information, call us at nine
one six nine six seven thirty fivehundred. Again, that number is nine
one six nine six seven thirty fivehundred. Why should you call us?
(00:46):
Well, Dusseppe and I have beendoing this for a very long time.
You know, we have the educationside, of course, which is very
important, wouldn't you say, However, nothing's more important than the experience,
the long term experience. Is thatbiased comment? Oh, it's totally biased.
You're looking at me. I'm lookingat You're looking at me. You're
(01:07):
like, we have education and that'simportant. But however, Giuseppe has a
master's in economics and finance, whichI do not have. We were both
certified portfolio Managers, which was verydifficult credential to obtain that we did through
thought program at Columbia University. Enoughfun experience. Although we don't endorse what's
(01:27):
been going on at Columbia University,but it is one of the top schools
in the country, and the AppliedMathematics department that was the host of the
Certified Portfolio Managers Academy of Certified PortfolioManagers was very prestigious, very difficult to
obtain. And anyway, but Idid look at you when I was thinking
(01:52):
about that. But to me,you're sitting You're looking at me saying you
have too much hair on your head. You don't have enough experience, and
this is traine. Yeah, whenyou have the proper amount of stress,
you will have less hair than youhave right now. But you've been doing
You've been in the business a longtime since two thousand and eight. I
got in in nineteen ninety two,and you just can't replace the experience.
(02:19):
I mean, again, educationally important, especially going through really really going through
like the recessions, the bear markets. You know the ups and downs of
war, you know, major conflictsand how that impacts the markets in real
time. And it's having the emotionalcompetence to not get caught up in the
news, especially the short term newsto you know, make you change things,
(02:46):
but potentially make you change things,you know, at your own detriment.
Most people managing their money in retirement, if you make a couple of
big mistakes, it costs you somuch to where it's so hard to get
back to where you were, especiallyif you're not in your peak earnings years
(03:09):
anymore. And so when when whentensions are high on the world stage,
when tensions are high on the politicalstage, when the environment you know around
investments and interest rates and the economicyou know data coming out monthly is at
(03:29):
a high, you know, that'swhen mistakes are made. So, if
you're retired or close to retirement andyour plan is to manage your own money
or continue to manage your own moneythroughout retirement, you know, give us
a call, let us show youwhy. You know that that you might
want to hire professionals like Juseppe andI to help you not go it alone,
(03:53):
to remove the stress. If you'rethinking that it's expensive to hire people
with Juseppe and I's track record,you'll find that it might be a better
value than what you think, Socall us at nine one six nine six
seven thirty five hundred. Often,because people typically buy mutual funds and exchange
(04:15):
traded funds, even their advisors dooften have embedded expenses that people aren't aware
of. And when you then getyour own custom portfolio, which is like
having a custom mutual fund, weremove those expenses by you not having those
types of funds, but having individualstocks, bonds, and investments making up
(04:42):
your own portfolio, and then onlyhaving the management fee for those services.
So call us at nine one sixnine six seven thirty five hundred. So
a lot happened last week. Gosh, a lot happens every week, but
in four we had you said theweek before, Oh god, I'm so
tired of just being in this youknow, oh, you know, news
(05:05):
driven cycle where I don't even believethe data. To be honest with you,
I think it's very timely that youstart saying, oh see, you
know, my administration, my peoplethat I picked, we're having a soft
landing. But then yet you alwayssee them revise the data you know,
the next month or the month afterthat. They're currently revising their candidate right
(05:30):
now. That's just that's a hugeBut the reality is it's so misleading to
go, oh see, reflate,inflation has come down, it's now three
percent. Well, that means strippingout you know, some massive essential services,
(05:51):
food and energy that after the lastthree years of most prices forever,
thing that you need, whether it'sthe utilities, grocery, auto insurance,
home insurance, health insurance that's goneup fifty one hundred, two hundred,
three hundred percent is still going up. It's so misleading that, oh,
(06:15):
fantastic, inflation has come No,but prices have not come down and they
continue to go higher. What doyou think about that? I think you're
absolutely right, John, that's exactlyNow. I'll keep talking because that's exactly
what I was looking. No,but the reality is is that it's misleading
to go, oh see, inflationhas come down. The world is the
(06:39):
way they could yeah, the way, and you're talking about the way they
present it. So they're just focusingon the inflation data saying it was higher,
now it's lower, and the trendis continuing lower. This is what
we want. This is what we'veengineered, and it's going the way that
we've you know, kind of putin place based off of our guidelines.
(07:00):
But the problem is is, andwe talked about before, is the push
pool effect. And you have oneside, which is a fiscal you know,
side of things in the government thatthey're spending, right, which is
supporting inflation. And then you havethe Federal Reserve, which they're independent or
supposed to be independent, battling inflation. But you can only battle inflation so
(07:21):
much and raise interest rates. Butif they're continuing to spend, it's gonna
it's gonna continue to raise not inflationinflation, but also the assets. And
so there needs to be a conversationof hey, you guys are raising asset
prices, the cost of homes,the cost of food, food, and
energy, but everything cost the costof inputs that go into businesses, the
(07:46):
outputs, which then the outputs haveto increase because of their margins are squeezed.
And then everything else and then whenit really hurts us here down on
the ground level is then the membershipfees. The description fees, I mean
my gym membership went up. Yep, Okay, that's not going to go
back down. Homeowners insurance went up, home warranty, my home warn ty,
(08:09):
my rental property also has gone up. Well, you don't need to
blow your biceps up an even further, because then you're gonna look at look
like one of those California bodybuillar dudesthat are all all arms and no legs.
You're talking about, you like mybiceps. But you're right, I
mean, the reality is is thatit's going to be harder for people who
(08:31):
are retired to keep up with things. Yes, did the rate of inflation,
you know, which is the pricesyear over year are only going up
projected three percent instead of three pointfour percent. That is totally irrelevant to
you if you were about to retireor you're retired on how you're going to
(08:52):
pay for things for twenty twenty fivethirty years in retirement. Without the type
of investment strategies that we help ourpeople create and utilize to keep up with
these things, you're not going tobe able to do it. And most
advisors at you know firms are woefullyunder skilled and do not have the experience
(09:16):
and track record like we do tohelp people, you know survive these types
of challenges that aren't going to geteasier, They're going to get harder.
So if you're from the ages offifty to eighty five and you want to,
you know, potentially see how toreduce your stress for battling all things
(09:37):
financial, come in for a newobligation consultation. Call us at nine one
six ninety six, seven thirty fivehundred. Let us show you how we
do things and how I'm sure theymay be different than how you approach things
yourself, or how even your currentadvisor approaches things. The time is now,
(10:00):
things are about to change. Interestrate sentiment definitely is changing. I
mean, we were in the youknow, raise, raise, raise,
and then we went you know,higher for longer because we haven't raised FED
funds in what since, Jill,has it been a year? Yep,
Holy moly, I was going tosay seven eight months. It's been a
(10:20):
year. It's been a year,and now you know, and it's just
so painful. Yeah, it's beenhere that rates have been on pause.
It's been two years that the yieldcurve has been inverted. So we're getting
kind of a long in the toothand all this, and what that really
means is the timing is coming toan end here very quickly. Whether you
(10:41):
believe that interest rates should be cutor not, and I don't, because
we have not controlled or stopped.Not only have we not stopped, you
know, uh, borrowing money andspending money we don't have, we're continuing
to increase the projected amount of borrowingand spending of money that we don't have,
(11:05):
which means that year over year,we're still taking especially the non essential
surfaces line items and going, Okay, next year, we're going to spend
twelve percent more, fifteen percent more, you know. So not only were
we not cutting, we're not evencutting the rate of increase so which continues
to mean that the value of thedollar will continue to go down because the
(11:31):
overall quality and the overall cost ofthe dollars will continue to be higher.
And so the reality is is thatwe're still going to no matter what,
you know, mislead the public thatwe now need to be cutting rates in
(11:52):
fear of a recession. There isno recession. You can't have a recession
when unemployment is still at record lows. No. Is it at three point
five percent? No? But isit at five, six, seven,
eight, nine, ten percent?No? It's like at four point one
percent, which is still giving theconsumer the ability to meet their obligations and
(12:20):
consume goods and services. So there'sno reason, you know, to cut
and devalue the dollar, you know, even further. But we're going to
do it because it's an election year, you know, however you want to
you know, well, the otherstok at it. The other thing is
that. But but I want youto talk about the timing and what that
means to fixed income and why thatwindow is closing. Yes, yeah,
(12:45):
because very simple markets already moving therates down, so the window to go
out there buy individual bonds that havegreat rates like five or five and a
half percent, even six percent ayear. Okay, even when rates go
down, you continue to collect thatinterest rate. That windows closing market.
(13:09):
We got inflation data on Thursday thatcame in softer than estimates, gave optimism
more optimism that there's going to bea rate cut in September and potentially a
RIT cut in December. So thatis coming back, and we see yields
or interest rates starting to come down. The market is bringing them down.
Yeah, the ten year treasury youknow now is closer to four percent.
(13:33):
It was about four point three.You know, it's bounced as high as
five. It did break four alittle bit. I think it was around
April of this year. And nowwe're potentially, you know, in a
scenario where the ten year treasury,which mortgages tend to follow more closely exactly,
you know, it gets below fourbecause I think we're now seeing mortgage
(13:54):
rates that have come from gosh atthe high eight to seven, then to
high sixes, now to low sixes. And I think if we get into
a fives, boy, it willdo just the opposite. You'll see inflation
to asset prices make things go upeven more because again, if money is
cheaper to borrow, then people willbuy more goods, and if they buy
(14:20):
more goods, that means demand isgoing up, and a supply doesn't keep
up with demand, then you getthat imbalance that triggers hyper inflation. And
so this could do the same mistakethat other Federal Reserve Board people have done,
is they start cutting rates too soon, and then not only does it
not you know, solve the inflationcrisis that we were in, it rears
(14:45):
its head even uglier, you know, after making an interest rate uglier.
Yeah, doesn't that make sense?Are you uglier? Ye? Me?
Well, I mean inflation's an uglything, and so if it's uglier,
it means it's higher. But youknow, and and too. In defense
(15:05):
of Jerome Powllock, I would notwant to be in his position because they're
on thin ice right now. They'veraised rates at a rapid pace, they've
held them at a high level tobattle inflation, and now they're on a
precipice right they're trying to finesse it. They don't want to cut rates too
soon, because yes, it canreignite inflation, then they have this problem
(15:26):
over be worse. But then onthe other side of things, they also
focusing on like how long do wekeep these rates as high as they are?
And we don't want to keep themtoo high too long because then eventually,
and based off of their track recordin history, something within the financial
system breaks and then a recession ensuesand then they have to lower it.
(15:48):
The reality is, if they're good, if there was any honesty in Washington,
which we all probably agree there isnot. The reality is until they
stop spending money, meaning until Congressand the power of the people that we
elect stop spending tax payer money thatwe don't have. Stop subsidy, stop
(16:15):
giving money away around the world.Stop fighting Europe's wars. How about that?
Why not have Europe fight its ownwar. Just the spending on that
alone, you know, would bea massive savings. Stop battling, you
know, things that we don't needto battle. And or more importantly,
(16:37):
go to the sources of the problemslike this this uh, you know,
forgiveness of student loans. Well,the problem isn't the student loan. It's
the problem that the universities have overchargedfor types of education that they deliver that
are worthless, that are worthless whenit comes to getting a job. In
(16:59):
paying back that student loan, that'sthe problem. So go to the university
and say, hey, you needto refund money to all these kids that
you charge the same amount of moneyfor getting a a I don't know,
a history or a poetry degree,or a philosophy degree, which you know,
that's that's good information, but reallydoes that give you the same potential
(17:23):
to earn what a doctor, alawyer, a dentist, an engineer,
you know, and and but thosethose things should be you know, it
shouldn't be discouraged like you. Anybodythat wants to go to school and study
whatever subject matter they want to study, great, but it should be all
these schools have counselors, and thetypical protocol is you go to a new
(17:45):
school and then you meet with acounselor and you say, Hey, I'm
interested in majoring in philosophy or majoringto be an engineer or a doctor.
What's the route, what are theclasses I need to take? Kind of
map this out for me within thatsession should be mandatory and required that that
counselor also has some training that theygo through and say, okay, perfect,
(18:07):
here's the chart, here's what worksout majoring in XYZ. Okay,
this is this is the probability toget a job in that field, and
this is how much that field pays. Also, this is how much debt
you will have or how much schooltuition you'll be paying by the end of
four years or however long it's goingto take you six years or eight years.
What are you doing and how longit's going to take you to pay
(18:30):
that debt off with a typical costof living and then paying your loan back.
My point exactly, it's the responsibilityof the university that if they've overcharged
somebody for not properly educating them,Because what you're talking about is educating a
student that the degree they're about topay two hundred thousand dollars or three hundred
(18:52):
thousand dollars for will be very hardto pay that school back, to pay
that government back, the government back, because the job you're going to get,
if you get a job in philosophyor or with a company doing whatever,
is going to give you the excessincome, especially with the inflation,
(19:15):
beyond the cost of education for againjust living and common living expenses, you're
not going to have the money topay that back. Well, it's not
the responsibility of a taxpayer that maybehas paid for their school or didn't or
didn't go to school to pay backthe person that went and got a history
or philosophy or a liberal studies orsome you know, irrelevant degree today but
(19:41):
paid the same thing that a doctor, a lawyer, a dentist, an
engineer, a computer programmer, ablah blah. You know, But that's
that's been the pattern. Look intwo thousand and eight, when we had
the financial crisis, what do theydo once a tax payer they had tarp.
They build out the institutions that weremismanaging their finances and then didn't didn't
(20:03):
didn't manage risk and apply stress teststo figure out, hey, if this
happens, that happens, can wesurvive that we have enough? And so
then they bail them out. Wejust saw this last year with a mini
banking crisis that we had Silicon ValleyBank, Signature Bank, right first,
first Republic Bank, and then whathappens ft I c steps in, the
government steps in, they bail themout. Again. Boeing is going through
(20:26):
asis kind of a crisis right now. Do we think that if it got,
you know, push come to shove, do we think that they're going
to let them fail their garments?No, no way, They're too big
to fail. And this is aproblem. They create a moral hazard.
Why is Boeing in the position thatit's in because of the decisions that they
made and they put profits over safety, innovation and engineering to make their planes
(20:51):
better and better, and they weretrying to squeeze and make a bigger and
bigger margin and profit. It's amoral hazard. It's a good it's a
good conversation to have because the realityis is all of these things going on
right now, you know, takea lot more skill and effort to be
(21:11):
able to not make a mistake financiallywhen it comes to, you know,
managing your money to be able toyou know, whatever the outcome is of
all of these things, whether it'suniversities overcharging you know, whether it's you
know, the government making a mistakeon monetary policy, whether whether it's you
(21:34):
know, impacts you or not.It will eventually and the way it will
eventually is is that at some pointit's going to take a big bite out
of your investments and the return onyour investments or the return on you know,
your your your your what is theword I'm looking for on your cash
(22:00):
flow? Basically, so the longevityof your portfolio and make it and you're
you know, your overall retirement spendinggoals. Let's actually talk about how and
why. You know, having yourplan in place and altering that plan right
now is super important. So ifyou want to get a hold of us
(22:21):
for a question or come in fora no obligation consultation called nine one six
nine six seven thirty five hundred.So how important is it have a plan
of attack a roadmap? If youwill for what's going on right now,
or just for retirement in general.I mean, I mean that's it's it's
(22:42):
ellential, right, It's essential.It's it's it's essential for two main reasons.
One to figure out figure out whereare you at and where are you
going? And how do you getfrom point A to point b? You
know, putting that putting does diningand putting that roadmap out there. But
then also while you have that planor roadmap and you're going along your journey
(23:07):
to get you from point A topoint B, to have something that you
can periodically check and say, hey, am I on track? Am I
actually getting closer and closer to mydestination? Or did I take a wrong
turn and this fork in the roadand I'm veering off into some other right?
Right? You know a lot ofpeople probably have a plan, but
(23:36):
more importantly, the the inflation andassumptions. We're probably way off, you
know, when we when we youknow, do our modeling or or the
if it annualized, future return couldbe different than what it was a few
years ago. Yeah. And it'sinteresting because if it doesn't even have to
(23:56):
be that long ago. I mean, if you just if you had a
financial plan. Say, you know, two years ago, average inflation was
probably projected and put into your planat maybe one or two percent. Now
when you create a plan, averageinflation, instead of being one, one
(24:19):
and a half or two percent,is being projected at two and a half
percent. Now, we all knowthat over the last three years the cost
of goods and services has gone up, you know trip you know, in
some cases triple digits. But again, just that one percent difference in average
in the average inflation increase being atone percent drastically changes your plan if it's
(24:48):
projected at two and a half versusone and a half over a twenty thirty
year period. So what you seeis then when you stress test your your
finance at a higher inflation rate itnow and what we find it shows many
people by age eighty, eighty fiveninety no longer having a legacy and running
(25:14):
out of money because their probability ofnot running out of money drops down into
you know, ten, twenty,thirty, forty percent or zero. When
you put in real inflation, youknow data and or project inflation to be
higher than what you might have originallydone when you had your plan done for
(25:36):
you. Now we update our plansat least annually. And that is the
reason why we do it is because, as Joseppi said, you've got to
check into it and stress test itand make sure that you're on track on
an ongoing basis. So our moneymanagement process includes planning. We don't have
(25:59):
a separate fee for it. Whenwe build you your custom portfolio to accomplish
whatever the goals and objectives are ofyour plan, that is included and we
constantly update that plan as necessary whenyour situation changes or when we're sitting down
to do our reviews to make surewe're on track. And as I said,
(26:23):
it's part of the process. Webelieve it to be crucial. It's
included in in our charges. Itmay be separate in in where you're working,
h you know, or who they'reworking or maybe they don't even do
it or maybe and a lot oftimes that's that's fifty percent of the time.
We find that people more than that. I mean, there's a lot
(26:45):
of times, you know, weand the nice thing is we've had you
know, through your experience. Weworked through through a lot of these big
firms in the past, and alot of times they focus on they work
in silos, meaning they have oneaccount. You may have a few different
accounts. You may have a coupleof you know, a few different rental
properties, three different investment accounts,a pension, maybe some partnership in a
(27:08):
business, all these different things.But they're working in a silo and they
have maybe one brokerage account, investmentaccount, and that's all they're focused on,
and then they leave everything else outthere and you and you really want
to take a comprehensive look and putall of those different pieces to your overall
pie in the plan because it allcounts. Yeah. Well, it just
(27:32):
reminds me how many times we seethat people have firm diversification, and that
does not help you when you haveoh and often in retirement. One of
the first things that we do ishelp people consolidate things and simplify because having
you know, accounts at five differentplaces generally hurts your performance. Generally,
(27:56):
it hurts you know, your youryour expense is meaning you pay you know,
unnecessary expenses. Generally you don't haveyou know, true diversification, especially
if you just have brand A fundsover here and brand B funds over there.
Often those funds have the same thingsinside of them, and they're expensive
(28:19):
and you don't even realize what theembedded expenses are dragging your returns down,
and that you have overlap, andyou don't actually have true diversification, which
is about correlation. It's kind oflike it's kind of like you have a
Toyota Camri and then you have auh, I don't even know American cars,
(28:40):
a Nissan Ultima Ultima. Right,yeah, they're both. They're both
cars. But then all of asudden you say, hey, I need
to go off road because there's thistrail in my map and it needs to
take me off. There's a bumpin my plan and I need to be
able to get over it. Yeah, so you have two different brands,
but they're both cars and they don'tand you need a you need a truck
(29:03):
with off road capability. Yes,you need to handle all those speed bumps,
yes, exactly, and rocks andboulder like that. Great analogy.
No, that is the reality isthat people don't understand, and most advisors
don't understand, especially if they ifthey haven't been in the industry long enough.
That correlation is what true diversification isabout. It's how does one fund
(29:27):
react, you know, to anotherfund when say the stock market is going
down, when the bond market orinterest rates are changing. That is how
you diversify your money. And youwant things that are either low correlated or
negatively correlated to have true diversification.And if that doesn't, you know,
(29:51):
make sense, or if you're notsure you know, if you're truly diversified,
call us at nine one six ninesix seven thirty five hundred. Come
in, sit down with us.Let's have a conversation. Doesn't cost anything.
I promise it'll be a good useof your time, and we'll look
into things like that. We'll showyou, we'll we'll we'll show us,
you know, whatever you comfortable showingus, and we'll pull up those investments
(30:15):
and show what, show you whatyou're paying. And then we'll show you
if you actually are truly diversified,and or if you're hurting yourself from a
potential return and net return or perspective, or you have a lot of duplication.
You have like four or five differentfunds, but they have a lot
of the same stuff in them.Yeah, so often, you know,
(30:37):
we see a growth fund at Fidelity, and then a growth fund at Vanguard,
and then a growth fund at att row or it doesn't matter.
And then you look at what's insideof them and the top ten holdings are
the same. And so that isan example of you know, company diversification,
meaning you know, Fidelity is differentthan Vanguard, but it's not an
(31:00):
example of investment diversification. And sothat is crucial during times right now when
you know there's so many things thatpotentially could put you in a a risk
perspective that you just don't need.And when when things change and they're about
(31:23):
to change drastically, you know,you got to be prepared and you've got
to not make a mistake right nowthat could cost you, you know,
tens of thousands, hundreds of thousandsand set you back years in your retirement.
So call nine one six nine sixseven thirty five hundred. Again,
that number is nine one six ninetysix seven thirty five hundred. You know,
(31:47):
we've we've seen a lot of runup in the market, but it's
so misleading. You know, ifyou look at the valuation and the records
that are being set. You wereshowing me this, this this heat map
that really, to me, apicture is definitely worth a thousand words.
(32:08):
When you look at this thing andyou go wow seven times read roughly,
and there was actually today even thoughyou see the indissy going down last weeksday.
But when you were showing me thatheat map today and you're looking at
those that heat map and you're going, wait a minute, you know this
(32:30):
is mostly green. Most of thefive hundred companies are up, yet the
induses are down. Why? Yeah? And so the heat map, what
we're talking about, is what itdoes is you know, you you hear
on the news the stock markets up, the stock market's down, and lately
it's been the stock market hit atall time high, the stock market hit
all time sm P five hundred hitall time high, NASDEK hit all time
high day after day. S andP five hundred has is what it says,
(32:54):
five hundred or about five hundred companieswithin it. And so there's five
hundred constituents. And so the heatmap what it does is it looks at
all of the constituents that make upthe S and P five hundred. And
so Thursday, inflation data came insofter than estimates, and it did a
(33:15):
couple things. S and P fivehundred, Nasdaq were going down, the
small cap index, the Russell twothousand actually went up because optimism with interest
rates coming down is going to begiving more of a relief to smaller companies.
But we've had quite a run upin S and P five hundred and
NASDAC, but more so in ahandful of names Nvidia, Microsoft, Google,
(33:39):
Apple, so on and so forth. And these are the companies that
have a bigger weighting than the otherfive hundred companies and carry a lot of
the weight and drag the overall indicythe S and P five hundred up or
down. So when we looked atthe heat map, you saw probably about
in the morning and Thursday, whenthe market was down a half percent,
(34:00):
you know, going down about onepercent, you see probably sixty seventy percent
of all of those companies green positivegoing up. But the big ones,
there's these big squares because it's basedoff of how much you're waiting. Yeah,
you know again, Apple and Video, Microsoft, they're all down right,
(34:20):
and they're big red squares. Andso it's like, does it really
matter if you know, four hundredof the five hundred or four hundred and
fifty of the five hundred S andP five ninety three, Yeah, companies
of the five hundred exactly are actuallydoing okay that day or positive. If
those big seven are down, thenit's dragging the rest of it down.
(34:44):
So here's here's what that really means. If you're thinking that you missed out
on making money in stocks because youdidn't own or take the risk when Nvidia
was cheap, when Apple was tradingcheaply, when Micsoft was trading cheaply,
so on and so forth, andyou think you missed you know, stock
(35:05):
market opportunity, you have not becauseso many of the companies that we like,
you know, and again don't don'tdon't get me wrong here. We
we have clients, many clients thathave you know, benefited from the run
up in the AI sector. However, you know the majority of our retired
(35:27):
clients they know what return they needto accomplish their goals and to be happy.
And there's many companies and many typesof investments that don't have the risk
of a high flying you know,tech company that are still out there and
available, and we'll talk about someof those when we come back. I'm
your co host, John Scambray,and I'm here with my partner, Viscontin,
(35:52):
and we are certified portfolio managers outof Grant Bay, California that specialize
in helping people who are retired orabout to retire manage their money. If
you liked this show, or anyshow for that matter, call us at
nine one six ninety six, seventhirty five hundred. So we started to
(36:12):
get into the S and P alittle bit, started to look at you
know, that the the records thatthe indices have been breaking are misleading,
and that there's still tremendous opportunity instocks. And earlier we were talking about
the opportunity that's coming to an endin bonds. Should interest rates and interest
(36:38):
rate policy start to change and wesee interest rates go down further, especially
the treasury, then we'll see theprices of bonds go up, and then
it wouldn't be good time to getthose anymore. However, you know,
when we when we pick a stock, yes, we look at sector,
(36:58):
but more important we look evaluation,and more importantly we also look at the
technicals and then does it pay adividend? Does it pay you, you
know, while you're in it,something for being in it? And those
are the positions that I really like, you know, as growth and income
(37:19):
specialists, we really focus on totalreturn, which is not only what price
you paid and does that particular investmenthave the potential to go up in price,
but also what return does it giveme from a cash flow perspective while
I'm in it. And when youput those two things together annually, it
(37:43):
does make our job a bit easierwhen we're in a higher interest rate environment.
When we're in an environment spake theportfolio's job easier, whether it's us
or anybody else, really, andespecially if there's more volatility in the markets,
right, because then the dividends helpbuffer that blow exactly right. And
(38:04):
when we know what your rate ofreturn needs ore, because we've gotten to
know you, we know what yourplan is, and we know what's necessary
to accomplish your plan. So somethingas simple as okay, on my money,
I need a net seven percent ornet eight percent return, then we
(38:29):
look at the types of investments thatgive us the best chance of consistently getting
you that rate of return on yourmoney. You know, as long as
that's the amount of return that youneed and taking a distribution to supplement,
you know, they're they're they're exactlySo again, we have this window where
(38:51):
fixed interest rates are still above five. We have this window where very profitable,
large companies are still at you know, seven eight nine percent, and
I think that window is coming toa quick close, especially on the fixed
income side. And if rates aswe've been seeing, you know what happened
(39:15):
on Thursday, and so that windowwill be closed even before because sometimes we'll
wait until actually the fence cut rates. No, it might be actually too
late at that point because if itlooks like they're going to cut rates and
they have every reason to cut rates, and give them an excuse, actually
every excuse to cut rates, notevery reason to do it in September put
(39:35):
it because really, and you andI have talked about it, I think
September is really the last list point. Yeah, you're not going to make
a rate cut in December. Isthe Federal Reserve really independent or you just
you know, at the heels ofthe current administration and it's election year and
so on and so forth, andthey say no. So September I believe
is kind of the make or breakfor you know, proving that narrative or
(40:00):
false. You know, if theydo it closer to the election, and
I think that that it's going tosupport Oh yeah, they're not exactly until
the timing is imperative. It iscrucial, you know, we we we
know we're in a situation where stocksare and especially a few and and the
(40:22):
ones fueling certain funds and ETFs areovervalued, and we're starting to see,
you know, reasons to sell.You know those right? You have to
be proactive and ahead of when thingshappen before it's too late. Called nine
one six nine six seven thirty fivehundred. What are you looking at?
(40:45):
I just got some uh I waslooking at some data. What does the
market do? How does it react? And it ranges anywhere from down twenty
percent to plus fifteen percent six monthsfollowing the first rate cut? I mean,
how think of the dichotomy of that. True diversification is so important because
(41:07):
nobody has a crystal ball to knowis it going to be the up fifteen
or the down twenty. I thinkit'll be the down twenty well, and
if it's down twenty, then youneed twenty four percent on the upside just
to get back to even. Andthat is the mistake that the market goes
down and then they panic and thenthey sell versus or they hold on and
(41:28):
say, oh it'll come back up, and then it goes down further.
I don't want to sell. Ihad a great profit and now I'm gonna
loss. Well, maybe it'll comebackup. I'm gonna hold on to it.
So the reality is, if you'vecalled your advisor and that advisor always
tells you, no matter what,stay the course, then you know it's
time to call and get a secondopinion. Or if you just can't make
the decision yourself because you're too emotionallyattached, called nine one six nine six
(41:53):
seven thirty five hundred. Don't procrastinateand wait till it's too late, call
nine six ninety six seven thirty fivehundred. Come on in and see us
and hope you enjoyed listening to thewise money guys. That's all we have
for this weekend. Come back andlisten to us next weekend. Have ever
great weekend. Bye all,
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