November 7, 2025 • 42 mins
Here come the Feds.. Get ready for whatever they are going to do. It could be pro economy, or not. Hosts John and Guiseppe help you become prepared from Inflation detection, to Fixed rate vehicles, and Alternative Investments to procted your retirement assets. The Wise Money Guys.
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Episode Transcript
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Speaker 1 (00:00):
The Wise Money Guys Radio Show is brought to you
by One Source of Wealth Management SEC Licensed three one
nine zero seven eight. For disclosures and more information, visit
our website One Source WM dot com.
Speaker 2 (00:13):
It's that time again. It's time for the Wise Money
Guys radio Show, hosted by John Scambray and to Seppie Mascani.
We are certified portfolio managers that specialize in helping people
who are retired are about to retire manage their money.
As always, if you like the show and want to
get on our calendar for no obligation consultation, give us
a call at nine one six ninety six seven thirty
(00:36):
five hundred and stay tuned for the whole show. I
always like to recommend because usually our meat and potatoes
as far as our best strategies, uh, some of the
things that we're doing and like and that we see
out there in the market. Out there in the market,
we usually save for the end. So now what are
(00:58):
we going to talk about today?
Speaker 3 (01:01):
Well, a lot of a lot of activity that happened
this week. We are an earning season. We talked about
that last week, but we had tech companies report this week,
which is huge because it's part of the mag seven,
the Magnificent seven, which is a big, a big waiting
(01:21):
on the S and P five hundred. What's really been
driving the market and part of this responsible for AI euphoria.
We had the f MC meeting, so the Federal Reserve
had their meeting and Jerome Pals spoke on Wednesday and
he cut rates by a quarter percent. We'll dive into that,
how that how that impacted not only a stock market,
(01:42):
but then also how did that impact the interest rates
amongst the different loans that you can borrow, whether it's
for a house, a car, what have You.
Speaker 2 (01:51):
Don't forget the shutdown, the shutdown shut down, the shutdownation,
you know, of current value euation of of the S
and P five hundred, some of those things are are
starting to look a little bit concerning. So we'll we'll
dive into a little dive into the weeds on that
(02:14):
a little bit. But you know, you mentioned earnings and
it never ceases to amaze me. You know when companies
report pretty good earnings, what does amaze you? Lots of
things amazing these days. Actually, well, these companies are just
gigantic and they report, you know, meeting profiting expectations and
(02:37):
then and then the stock goes down, well, because I
think it's what the parskus for partly profit taking.
Speaker 3 (02:44):
Part of that, yeah, could be. I think part of
it too is that the stock, you know, the stock
of a particular company has run up. I mean, in
Nvidio ran up to two dollars.
Speaker 2 (02:54):
Yeah, and that's the one I was thinking of when
I was mentioning that.
Speaker 3 (02:57):
Yeah, so it ran up onto and in Nvidia has
not reported earning yet, right, so it's already running up
because of some of these deals they're doing with these
other tech companies, right that are going to be investing
in Nvidia or Nvidia investing them and doing some sort
of partnership. So it's it's forward it's forward thinking. And
so when earnings come in a little below estimates, then yeah,
(03:21):
it's gonna have a it's gonna have a reaction to
the overall price. So we saw you know, Meta, and
the big thing with Meta is how much they're spending
on AI, right, so they have to take that into account.
That went down I think initially after they reported, it
went down after hours by eleven.
Speaker 2 (03:36):
Percent, and they almost always uh drop initially, but.
Speaker 3 (03:42):
Google went up though Google crushed its earnings on on
both sides and it it went up I think initially
was like five percent after hour.
Speaker 2 (03:51):
In that case, Google's very different because Google was not
trading at the multiples of like a Meta or an
Amazon or a Netflix or those. I mean, when you
look at some of the metrics, like you know, uh,
profit to sales, you know, those sorts of things just
(04:13):
simple you know, the pe price earnings not anywhere near
the multiple that some of these companies have have been
trading at. And I think that's one of the reasons
why you see the ones that initially pop but then
sell off just because gosh, how much how much more
(04:36):
overvalued or or really stretched can they get in their valuation?
Speaker 3 (04:43):
And well, and you have two components happening right now,
two things happening right now. You have the market, which
are is pretty stretched in valuation and how hyat's how
hia it's gone with relatively not much volatility here in
the recent and months. And then you have the individual
companies themselves. So and we've we've talked about this before
(05:06):
an earning season that things have to just continue to
go right, right thing that the earnings really yeah, the earnings,
the profits and so forth. Whatever analyst comes out with
estimates like they need to be met or they need
to be exceeded, and then the Ford guidance as far
as what they say on their their earnings call the
company has on their earnings call of what they're projecting
(05:27):
for the future or what they might be concerned with.
There has to be everything that's going right. It's like
a Goldilock situation because the market and some of these
individual names have run up so high with all this Oh,
you know, open ai is doing an investment with in Video,
or open ai is doing an investment with and chat
Rept's doing an investment with Oracle. Oracle went up like
twenty two to twenty three percent once that news came out.
(05:49):
Now it's like, okay, the stock went up twenty two
to twenty three percent. Now in the week's coming, does
it merit that twenty two to twenty three percent jump?
And then when they do earning, you know, do the
earnings represent like we can count on this jump of
twenty three from that initial news that it looks like
it's going to project, you know, to to come to
(06:11):
fruition or not the.
Speaker 2 (06:13):
Real sixty four million dollar question is you know, do
you buy the dips of companies that report at least
in line with expectations and then sell off and and
and my kind of philosophy is is you don't add,
you know, more exposure to something that's already over exposed.
Speaker 3 (06:36):
Yeah, I think, I think, I think what could you know?
What could be a strategy. And obviously this is not
a recommendation because we don't know every individual person who's listening,
your scenario, your risk tolerance, and so on and so forth.
But it's the companies that get dragged down because if
a company within its industry that reported and for some reason,
(07:00):
that dragged that industry down, and so then you have
some other stocks within that say, very same industry that
their fundamentals could be absolutely solid and have great forward guidance,
but they ticked down because of a big behemoth within
that industry. So let's say like in video right let's
say in video reports, and right now you had like Microsoft, Meta, Amazon, Goo,
(07:24):
Google was up after the report, right, but Meta was
down pretty heavy. Microsoft was down a little bit. Google
was the one that was up green the day after
all the reporting. Apple was a little bit down, but
then you look at okay in that space because there
was some big behemoths that came lackluster and maybe drag
(07:45):
some other that could be an opportunity to say, O,
I'm going to add a little bit more to that name,
right because they're fundamentally We saw that with banking, right
in two thousand and eight, Bank of America went down
to three dollars a share, right, WELLS Fargo was pretty
fundamentally sound. JP Morgan was definitely fundamental, but their stock
prices had got decimated in two thousand and eight because
there's a contagion effect and it was a recession. So
(08:05):
there's two big components there. But that was a time
where you say, Okay, you know JP Morgan's fundamentally sound.
Their stock price went down so much because of some
of these other banks that are defaulting or about to
cease to exist. So that could be an opportunity where.
Speaker 2 (08:22):
You add, yeah, I continued to think that the the
not so much the contrarian, but the end around is
really kind of what you're talking about, the end around opportunities,
meaning you know, you still have the big names catching
all the headlines, you know, driving a lot of For example,
(08:43):
you mentioned JP Morgan. If you look at JP Morgan
and a few others, they drove you know, whether I
think it was on Wednesday or Thursday, you know, the
Dow going up quite a bit. It was just a
few companies that did that. And when you're looking on okay,
where where do I put my my cash if I'm
(09:06):
worried that I'm not going to be participating in this
market or participating in the potential projected growth of the
market next year. To me uh and and going back
to and videos of the world, well, I certainly wouldn't
be comfortable, say, buying an Nvidia right here. But then
(09:27):
you look at companies like Core Scientific or core Weave
for example, and I'm not saying by those now, but
the ones that you know, uh uh are run the
data centers, have the data management you know, create the
the stacks of of of equipment, and then the other
(09:48):
company and these two specifically that build the center. And
so so it's really about knowing, you know, how to
find things that still have upside in them, and that
takes a lot of time, effort, research, reading, listening, you know,
(10:09):
over and over again. So the obvious mistake that I
think people will make here is they'll just pile in
to so on and so forth when they're already stretched
way out there. Could they go higher? Yeah, but I
wouldn't really call them a momentum stock or or something
(10:30):
that they are because they did.
Speaker 3 (10:33):
That's what I'm saying. They swing so much. But to
your point, you know, I had a conversation with one
of our clients to Do in a review meeting earlier
this week, and he he was saying he's got an
ex brother in law and he always pings him once
in a while because he's got a video and meta
and some of these big names, right, and he says,
(10:53):
you should have you should have done what I told you.
Look at how how much in video has gone up
and so on and so forth. I was like, yeah,
but did he call you in like March, April and
May when it was down over forty percent? Yeah. He's like,
he's like, yeah, no. And I said, well, there's and
there's other names out there, right, because you've told me
this a couple of different times. I said, but if
we look in your portfolio from some of the models
(11:16):
that we have and we implement with our clients, you know,
one of them was Western Digital WDC and literally from
from the model, right, it triggered to be a candidate
to buy in August. It's from August, and I saw
I showed him. I was like from August this year
until now, right, Well, whenever I met with him this week,
(11:36):
which was Wednesday, actually it was up eighty four percent.
Speaker 2 (11:40):
Yeah, and that's and Western Digital is a great example
of the end around, right, And I think, you know,
we need to explore that a little bit more. So
let's back up. I mean, because you know, economically at
a macro level, I mean there's some big things going on.
I mean, like the government shut down. Now I think
(12:01):
it it will maybe have an effect on on some
GDP and and maybe might have some effect on some
of the consumption.
Speaker 3 (12:11):
November November first is a big day, right because from
from my understanding, like EBT cards and that's today today
today it is I'm like, this week has gone by
so fat. I mean, I was telling my kids the
middle of this week, I said, oh my gosh, it's
gonna be Halloween on Friday.
Speaker 2 (12:33):
It's just it November or was it November sixth? I mean,
obviously we're not looking at things on the weekend, but
where the snap program runs out well.
Speaker 3 (12:44):
And just government employees aren't you know that are furlough
they're not getting They got paid in October, right, but
they're not getting so now hopefully they have. That's kind
of why it's important, you know, and you see it
and just reading articles in the past. I haven't seen
an article late, but just a savings rate that people have.
They don't have much in savings, they don't have much
(13:05):
in sidelines. We just actually talked to a prospect which
is potentially going to be a new client. She's going
to retire in April. Most of her money is tied
up in a pension. I think this is going to
be a good topic to talk about in this in
this radio show as well too. She has a healthy
monthly benefit that she can get from her pension from Kaiser,
(13:27):
but when asking what her other assets are, it's not
a whole lot. She's got a four to one K
that wasn't so much built up for it because she
put a lot of dedication in just you know, working
for Kaiser for so many years and raising her family.
She was a single mom, so good for her, but
most of it and so the discussion we had was
(13:48):
do I take the monthly benefit when I retire, but
then the draw the downside to that is that's what
you get. You can't call hey, mister pension, I need
twenty five thousand dollars because something came up with my house,
my car or whatever. You can't do that. So then
we were discussing, well, another strategy because you have the
option to do a lump some rollover and put it
(14:08):
in s anira and then you have full control over it.
So we can generate the income for you, but then
you have full control that should something come up. Or
the other thing is you pass away, what happens to
your pension? Does it go to your beneficiaries?
Speaker 2 (14:22):
Does it not in the case of where you're a
single person and you don't have somebody of same age
because a lot of people don't know that. And now
we're into a little bit more technical side of a
defined benefit plan versus a defined contribution plan. Define contribution
plan being like your four oh one K define benefit
(14:44):
plan just being based on you know, compensation age and
years of service and that then that defines your benefit.
Speaker 3 (14:53):
You know.
Speaker 2 (14:53):
The reality is is that it's very expensive to pass
on your income to an air even if it's your
your spouse, your partner, whatever the case may be, because
now they're guaranteeing some level of income for more than
one life exactly. And so when you look at a
(15:17):
modified benefit, then it just really comes down to the math.
And what we were showing this client is that, Okay,
you know, if fifty four hundred is your unmodified benefit,
that's the income you will receive from your pension. But
(15:38):
if you die the next day after receiving one check,
the money's gone the lump side.
Speaker 3 (15:43):
Nobody benefits from their history from that point on, and.
Speaker 2 (15:46):
Then people will think, oh, well, I'll leave it to
my kids. Well, what happens is your kids are much
younger than you, so their life expectancy from a mortality
table is much longer than yours. So then they go, okay, great,
your un modified is going to be fifty four hundred.
But now that you want to pass on your income
to somebody who's thirty years younger than you, now your
(16:08):
modified benefit is going to be two thousand dollars a month,
so that they can get two thousand dollars a month
for the rest of their lives. And these are all
kinds of things that we look at and examine and
run calculations on to determine are you better off, you know,
taking the unmodified benefit, a modified benefit which is just
(16:30):
a different insurance choice, or rolling over the lump sum.
And we'll be brutally honest. I mean, if you're in
a position where the income that you're going they're gonna
pay you.
Speaker 3 (16:42):
Yeah. And let me let me just chime in real
quick about the honesty part is Initially, when we were
going through the numbers on our pension, because we kind
of dove into that first and we were doing the
math on that, we initially said, that's actually pretty good
outcome and the raaid to return was actually pretty good
based off of them out that you have in the
pension of a lump sum if you rolled it over.
(17:03):
But then when we dug further and had more discovery
and found out her situation, the things that she wants
to be able to do with her money, you know,
new cars, her car's really old, she's gonna have to
buy a new car. She wants to help out some
of her kids.
Speaker 2 (17:17):
And then and then she doesn't have much beneficiary or
her same age, don't.
Speaker 3 (17:22):
For you that as well? And then she doesn't have
much in savings outside of the other accounts. It changed it.
It changed that scenario where we said, okay, we have
to take some of the things into consideration, and that's
that's important. It's important to build towards your retirement, but
not just one hundred percent focus on that you have
(17:42):
to have because there are these scenarios like this government
shut down that you can't you can never predict the future,
but at least have a few months worth of expenses
set aside in something.
Speaker 2 (17:52):
Yeah, I really think it should be longer, right, the
rule of thumbs three to six months, three to six months,
But I really think probably nowadays, with volatility of the market,
volatility of employment, volatility of the economy, volatility of geopolitical thing,
on and on, you really need to have six to
twelve months.
Speaker 3 (18:11):
I guess it really be six months. Really, you know,
I I battle this. I'm probably more conservative than I
than I need to be for my age because I have,
you know, more than the three six months set aside.
But if I think back, what was the worst time
in my life that I lost a job and I
needed to go find another job? Right, Because that's what
(18:32):
it really comes down to. Is what if, for whatever reason,
you have a situation where your income stops. Right, And
for some people now that are in government jobs, their
income is stopping because because politicians are finding back and
forth and can't agree, and you know, they're not getting
a paycheck in November. But you know, for me it
(18:53):
was two thousand and eight, I lost a job. I
was a brand new financial advisor. They're paying I was
on this new training program, so I was part salary
on that, and they just were cutting expenses and Bank
of America bought Merrilynch or you know, kind of forced
to buy Merrill Lynch and then let go all of
us new guys. Right. But when I think, I think
(19:13):
back on that, and as crazy as a market was
at that point in time, in high unemployment, it took
me four months before I got a job.
Speaker 2 (19:20):
Yeah, you know, so I would say I think jobs
are I mean, if you've got a good job, especially
if you're you know, a younger person in your in
your twenties or thirties or even forties, well you don't
want to quit in this environment because you know, many
a lot of the hiring is some sort of government
(19:41):
you know, or or entity that gets its revenue from
the government. It might be a good or services that
sold or contracted with the government. And so boy, I
wouldn't I wouldn't put myself in the in the job
searching category right now if I have a job and
you're just maybe again you're younger and you don't like it.
(20:02):
But that's that's a small, you know, uh segment, and
certainly not the segment that we specialize in helping, which
is people who you know, are on passive Yeah, finding
people that are on passive income versus versus earn income,
because that's all really retirement is is do you have
the ability to go to passive income from what you
(20:25):
w two income or self employment income, whatever the case
may be, right, And and so does the government shut
down have an effect on that? Maybe? I mean if
it really did on you know, the majority of the
of the country's economy, I don't think we would see
you know, companies going up in spite of of you know,
(20:51):
what's going on with the shutdown, And we certainly wouldn't
see you know, luxury real estate just hit, you know,
some amazing growth.
Speaker 3 (21:01):
You think government government employees are buying luxury.
Speaker 2 (21:04):
There not, That's my point so the government shut down
because it's it's more, it is white collar and a
lot of aspects.
Speaker 3 (21:13):
Yeah, I think I think the biggest is just depending
on the percentage and I don't know off the top
of my head the percentage of government employees, and right,
it's gonna it's going to hurt their spending. Right, So,
and we're in the holiday season now, So how long
does this drag on for? And now that they're actually
starting to miss paychecks, that's they're not going to be
spending that money. So does it impact that next quarter
(21:34):
of consumer spending by how much?
Speaker 2 (21:37):
At this at this number of days, it'll have no effect.
But to your point, if it continues, it might have
some minor effect.
Speaker 3 (21:45):
It's December's income.
Speaker 2 (21:47):
And yeah, here's my prediction. My prediction is that this
shut down ends with a continuing resolution, which is what
all these worthless politicians always do. The can down the road.
They'll go, okay, we'll get back to the budget, trying
to pass a budget, which they haven't done in years
(22:07):
and years and years. The big problem we've been operating
on borrowed and printed money and crs continuing resolutions where
they just go, okay, we're gonna We're gonna fund the
government for a number of months and then we'll battle
it again in a number of months. So health wise,
(22:28):
we should not and the shutdown to just do it
another continuing. But my prediction is because both sides will
start going, oh, is this going to affect the midterms?
Are we going to lose our seat in Congress or
or or.
Speaker 3 (22:44):
Or there's leverage to be had and it's not really
in the best interest of the citizens.
Speaker 2 (22:49):
So and that's what the mainstream media will start focusing
on as, Oh, you're not gonna win your you're you know,
if you're up for real.
Speaker 3 (22:56):
Said, you know, that's sad, that's that's bs really.
Speaker 2 (22:58):
Instead of doing your job, which is let's finally balance
the budget, because that's what this is all about. That's
why there's a shutdown. Focus all these sound bites, all
these subsidies. So, you know, Republicans want to get rid
of the subsidies that should have been gotten rid of,
you know years ago. Democrats not only want to keep
(23:19):
the subody subsidies, they want to increase even more free
stuff to people who don't actually pay in to our society.
But at the end of the day, we're going to
end up with a continuing resolution and kicking the can
down the road. That's my prediction. The market won't really
care either way and has not. And let's touch upon
(23:41):
the interest rates or in freshion the I mean, yeah,
he's really starting to get beat up, you know, more
so now as he gets closer Drone pal the chairman,
as he gets closer to not being reinstituted coming up
(24:03):
in May.
Speaker 3 (24:04):
I mean, if you or him, would you want to
be reinstitution But God does he need to?
Speaker 2 (24:11):
These worthless FED presidents, Fed board members, I mean, they
think growth is a bad thing, right, Oh God, if
you get growth, you'll have inflation. And that's just not
the case.
Speaker 3 (24:25):
You know.
Speaker 2 (24:26):
They don't understand the you know, supply side economics, and
they should not have the mandate that they have. They
definitely shouldn't have the power, uh that they have, you know,
you know, because again they they their their job has
become one that they have way too much. It's like
(24:49):
the power of school masters of the universe. But but really,
at the end of the day, what the FED has done,
you know, through its errors, is they've they've really destroyed
the dollar and and and that's where we we keep
getting inflation mistakes because at the end of the day,
(25:12):
if you stabilize your currency, you won't have inflation, and
then you can have growth without inflation. And so I
think the FED needs to be completely revamped. But Congress
can't even pass a budget like what.
Speaker 3 (25:28):
You mean, like a new ballroom and a pain.
Speaker 2 (25:31):
Which now comes out. You know who one of the
big anonymous donors was, or is UH and video what? Yeah,
three hundred million it uh is being paid for by Nvidia. Wow,
So you know they're dropping the bucket there, buddy, buddy,
But but it's just laughable. And now you got me
(25:54):
on a tangent that oh or you know, there's Democrats
out there going god when Trump's gone gonna tear it down.
But yet they don't look at the money that that
Biden spent, and more importantly Obama spent on renovating the
White House and what they did to it. Fdr put
(26:14):
an indoor swimming pool that was purely for his benefit,
spending the equivalent of tens of millions of dollars. No
back then, people don't know that. So, you know, presidents
all have put money into the White House. But President
Trump is the only one doing something for the White
(26:35):
House that doesn't benefit him exclusively. The money that Biden spent,
that Obama spent, going back to FDR spent was to
their benefit and paid for by taxpayers.
Speaker 3 (26:47):
That's the big part. So that's a big part. I mean,
come on, the big part. The big part is using
taxpayer money for stuff like that, which doesn't matter what
the guy does.
Speaker 2 (26:56):
You know, he stops wars, No, no Nobel Peace Prize,
he gets you know, uh, companies, entities to spend money
on our country and invest in our country. Nope, still
hate him, Still Trump demarrangement syndrome. You know, it doesn't matter.
Speaker 3 (27:16):
But back back to the back to the back, back
to the back to the ground level, back to the
so so, some of the takeaways I had from from
the f MC meeting. Uh one, and this has been
plastered all over the place too, is the December rate cut.
And so there was question questioning around, you know, the
next cut, and he said that's not a foregone issue,
(27:38):
far from it. So market reacted negatively to that because
it was pretty much baked in that he was going
to do quarter point cut, which they did this week,
and that they were going to be you know, high
probability a quarter point rate cut in December, but that
probability dropped from his you know, rhetoric from a speech
(27:59):
on Wednesday. That's one. The other is you had to
centers on both sides of the spectrum of you know,
rate cuts or no rate cuts. And and primarily because
you're battling because the inflation you know that they look
at is at three percent and it's kind of staying
steady at three percent. And then they're looking at the
labor force and the you know, employment environment, and that
(28:24):
is still showing some softness, although we are currently at
a really good rate of employment because at four point
unemployment right, four point three percent. So I think he
just did it as okay, I'm gonna throw another rate
cut in there. I don't know if it's baked in.
I mean I didn't. I didn't think he was gonna
(28:44):
actually cut this this you know, this most recent meeting,
and and he did. We'll see what happens in December.
But the market has been bake baking that in, and
we have a little bit of a pullback and some
volatility that spiked up a little bit in the market,
and I think that's warranted, and I think it's needed
just because it's gotten stretched too far. I mean it's
like thirteen percent from its moving averages, so it just
(29:08):
gets a little bit too stretch, stretcher individual names and
the market itself. You know, he did make a comment
about dot Com because you know, there was some questioning around,
like do do we think we're two valuations too high?
We're to He says, you know, I don't. I don't
think that AI is the same as dot Com, you know,
(29:32):
with a spending and the profits of the haven.
Speaker 2 (29:34):
If you look at the dot com industrial revolution, dot
com was very different because most of those companies, the
only revenue they had was from their I P O
and and and or any sort of capital rays and
their burn rate and and their ability to survive because
(29:59):
they did and actually have a profitable product or company.
I mean that's why so many of those and and
the valuations that they received were just worse than just
pie in the sky. It was just nonsense. I mean,
these companies were getting you know, a billion dollars in
(30:20):
there in their initial public offering and they made nothing,
generated no profit, hired hundreds to that ample and in
the hopes you know that maybe it was a unicorn
for you know, it would would be the next whatever apple,
so on and so forth, And that's very different. The
(30:42):
AI spend is primarily coming from companies that have billions
in assets, billions in reserves, you know, billions in profits
yea and so forth.
Speaker 3 (30:55):
So far different it is. But I think it's okay
for them out that they're spending and the amount of
infrastructure it's going to take, right and the and the
capital expenditures that's needed and that that they've been doing,
how much of that is actually going to turn into profits?
And is it the right amount? Is it too much? Right? So,
(31:16):
part of why Meta went down based off of its
earnings was one thing that was looked at was the
amount of spend.
Speaker 2 (31:22):
Spending right not in line with so.
Speaker 3 (31:26):
So has the stock price got a little bit ahead
of itself with all these you know, future projections of
what it could be and do and so on and
so forth, But then you come back to reality and say, like, oh,
we're spending a ton of money. Okay, what's your actual profit?
You know from from all of this so far? The
other thing is open to eye, and we talked about
(31:46):
that before they're making a lot of investing deals, but
they're not showing much of a profit. For as much
as they're promising to invest in these companies over the
next three to five years.
Speaker 2 (31:58):
Their revenue has own. They have ways to uh remunerate
it's offering into you know, a meaningful level of of
of money. However, their spend is way out of whack compared.
I mean, they they're completely underwater, you know, and but
(32:20):
yet the billions being thrown at company. That's kind of
similar to the dot com bubble. But right now, you know,
most of the spend is from companies who can afford
to spend it. And then the other part of that
which might hurt their stock price just because the the
(32:41):
increase in in earthing profits don't match the spend. But
all that would mean is just a temporary you know, down.
Speaker 3 (32:52):
To their stock price until.
Speaker 2 (32:55):
Or they stop that that same level of spending.
Speaker 3 (32:58):
Right It's kind of like the spending we been doing
in the country. Does that slow down? Do we catch
up at some point?
Speaker 2 (33:04):
It never not at the government level, not at the
federal government.
Speaker 3 (33:08):
I mean, the difference is is a corporation we'll start
realizing it and then they start turning things around.
Speaker 2 (33:12):
Right, That's the thing. I mean, a corporation is how
the federal government needs to be run. It needs to
be about, or at least run like you know, a
personal household that if you don't have money to spend.
Speaker 3 (33:26):
They can't keep borrowing it. You can't.
Speaker 2 (33:28):
I mean eventually they go, you're you're a bad bet, right.
Speaker 3 (33:31):
Yeah. And so your credit score, your credit score, Yeah,
your credit score is no longer seven forty oh the
US six twenty.
Speaker 2 (33:40):
It's not even six twenty, it's like four ninety five.
Speaker 3 (33:44):
No. No, because if if you look at it and
figure all the assets, right, I mean that that's but yeah.
Speaker 2 (33:50):
Well and the fact that how much that's actually a
good idea.
Speaker 3 (33:53):
We should give a like political credit score to all
these politicians, right, and they start off with great credit score, right, right,
like an eight hundred or eight fifty whatever. Right, they
start off when they get an office. But then through
all of the things that they from their efforts, whether
it's some bill that they pass or some act or
something that they you know, had some heavy participation in
(34:16):
of like oh we need to do this and raise
taxes on that, Oh we need to do this and
have a bill and spending on this blah blah. We
have successful for this and just have just metrics, right,
no rhetoric, but just metrics and data to say like,
how well did that pan out? What did you tell
the people it was going to do, and what actually
happened and if and if it had a you know,
(34:36):
if it didn't work out, if it fell on its head,
like your credit score is impacted.
Speaker 2 (34:41):
We're probably giving somebody a great idea and for an
app or a website whatever can think about it. It
could have a neat acronym like fycop for example, or
fair eyes.
Speaker 3 (34:51):
Hiko hiko political interests exactly.
Speaker 2 (34:56):
So, but no that but that's that's the reality. Government
needs to run more like a for profit entity. We
order we have for profit Well yeah, I mean so
the GDP is yeah, well, but it's not translating into
any common sense with you know, balancing the budget and
(35:19):
spending more than we're taking than the US government is
taking in.
Speaker 3 (35:23):
Right.
Speaker 2 (35:23):
I mean again, you can't fund the world's you know,
lack of prosperity. We have to focus on our prosperity
and our citizens and our well you to grow and thrive.
Speaker 3 (35:39):
Just a frivolous wasteful spending, right.
Speaker 2 (35:43):
Yeah, it's out of control. Well all right, So at
the end of the day, again, what's most important is
is how you react to these things and and and
not panic or over react. And you know, my big
concern about all of this is that people make the
(36:05):
wrong decision when it comes to you know, timing investments,
and a.
Speaker 3 (36:11):
Lot of times it's emotional.
Speaker 2 (36:12):
It's emotional and it's the exact opposite of timing that
you should be utilizing, which is you know, most people
they get in now to things because right they're just
like we're getting calls and going, you know, oh I
(36:33):
made XYZ maybe it's eight, nine, ten percent, but I
your example, earlier, I see an Nvidia or whatever is
up forty percent year to date, and then they buy
into those things that have already run up, and then
when something negative comes out and then they go down,
then they panic and sell out. So they actually buy
(36:55):
high and sell low. Here and at the end of
the day, there's always going to be good years, there's
always going to be bad years, and it matters what
you average through all of them, and to not overreact,
but more have.
Speaker 3 (37:11):
A goal and not focus on one quarter or one
year and build your strategy around that or more or
change your strategy around that, because you know, a quarter
is like, oh there's some names out there that just
ran up in this last quarter, and now we're going
to change our strategy around that. When your strategy needs
to last you twenty years.
Speaker 2 (37:33):
Yeah, it's funny. I had a client ask me about Alumina.
I wish we would have stayed in Alumina. Well, when
Alumina was down like seventy five percent in twenty twenty two,
he definitely wanted nothing to do with Alumina. And then
it was down again in April of this year, again
(37:57):
nothing about Illumina. But now all of a sudden, since
Alumina is now back up, it's like, oh, we should
have kept Alumina, and you can't. You can't. You can't
do those things. You know, it just matters overall. And
this is a person that you know is averaging per year,
(38:19):
good good years and bad years, over eight percent cash
flow on his money, and that is phenomenal. That's almost
in line with what stocks average just from a price appreciation.
Speaker 3 (38:33):
For long term average of S and P five and
so you're just not having the roller coaster ride and
I think that's a I think that's a good point.
Is because it's easy, especially in the good times and
when there's euphouri out there and there's a name, and
that's like what happened with dot com, right, people want
to pile in pets dot com or whatever, right, remember, Yeah,
(38:56):
And I've talked about this example before. I had a
client yours go who was working for Cisco, had a
couple million dollars worth of Cisco stock and was you know,
pre dot com or before the crash in two thousand
and his wife told him like, maybe we should sell someone,
maybe we should and he didn't. He's like, no, this
is a Cisco or he can't. Even the stock was
(39:17):
doing great and Cisco's like the it was like the
Apple back then of today, and man, dot com crash
happened and he lost a ton of it and it
took forever for Cisco to climb back out of out
of the hole that it was in. And that's hindsight
twenty twenty, right. So it's you don't want to change
your strategy around because you're trying to chase something because
(39:38):
of fomo, right, fear of missing out, or you just
want to participate in what happened. You can do a
small portion, you know, if you want to take a
small portion of your portfolio, and we've we've advised that
to some clients who get really caught up with this.
We say, hey, look, this is your financial plan. These
are the goals that you're trying to achieve in the
long run, and we're trying to build something that has
longevity around it. Okay, we're not building some trying to
(40:00):
chase like oh, this stock or sector is hot now,
next month it's this, and next year it's that or whatever.
We want something that's going to do good overall, but
it's going to go after achieving your goals and make
you financially successful on average over a long, long term.
Because if not, and you just get caught up in
the moment, right whether it's a month or a year
(40:22):
or whatever, and you change your whole strategy around that,
then there could be very well years or time time
periods where it's down. Then what do you do. Do
you stick to it and say I'm just gonna wait
till it goes back up, especially if it goes down
forty percent or fifty percent or whatever most likely or
not it's going to be very stressful.
Speaker 2 (40:41):
So our humble advice is really based on the importance
of having a game plan, a financial plan, Knowing you
know a number or a need that's most important to you,
achieving you know, whatever your goal or objective is, and
(41:03):
then building something, having something that is designed to accomplish
that at the least amount of risk possible. So just
simply have a plan. If you are ready have a plan,
it's time to review that plan, especially as we go
into the end of the year, for obvious things like
(41:23):
taking out your rmds, how will that impact your taxes?
You know what rebalancing should be done to lock in
some profits, harvest some losses, and really set yourself up
for hopefully kicking off twenty twenty six in a good
first month, good first quarter, because often how you begin
(41:45):
the year really sets the tone for what type of
year you'll have overall. So I highly recommend you know
you come in for a no obligation consultation. Let us
take a look at you know what it is done.
If you have a plan, well will help you update
and do a plan review. If you don't, we'll actually
(42:08):
give you the questionnaire to create your first plan all
with no obligation.
Speaker 3 (42:15):
And how do you do that?
Speaker 2 (42:17):
You say, jis eppy, how do.
Speaker 3 (42:19):
You do that? There you go.
Speaker 2 (42:20):
You called NIX nine six seven thirty five hundred. Again
that number is NIX nine six seven thirty five hundred.
Speaker 3 (42:31):
Kathy will get you set up and then we'll get
we can send you a link with a questionnaire and
then that's how we can get started and set up
the follow up meeting.
Speaker 2 (42:39):
So we're out of time. I hope you enjoyed listening
to the wise money guys. As always, have a wonderful afternoon.
Come back and give us a listen next week.
Speaker 3 (42:47):
Have great weekends.
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):
It's that time again. It's time for the Wise Money
Guys radio Show, hosted by John Scambray and to Seppie Mascani.
We are certified portfolio managers that specialize in helping people
who are retired are about to retire manage their money.
As always, if you like the show and want to
get on our calendar for no obligation consultation, give us
a call at nine one six ninety six seven thirty
(00:36):
five hundred and stay tuned for the whole show. I
always like to recommend because usually our meat and potatoes
as far as our best strategies, uh, some of the
things that we're doing and like and that we see
out there in the market. Out there in the market,
we usually save for the end. So now what are
(00:58):
we going to talk about today?
Speaker 3 (01:01):
Well, a lot of a lot of activity that happened
this week. We are an earning season. We talked about
that last week, but we had tech companies report this week,
which is huge because it's part of the mag seven,
the Magnificent seven, which is a big, a big waiting
(01:21):
on the S and P five hundred. What's really been
driving the market and part of this responsible for AI euphoria.
We had the f MC meeting, so the Federal Reserve
had their meeting and Jerome Pals spoke on Wednesday and
he cut rates by a quarter percent. We'll dive into that,
how that how that impacted not only a stock market,
(01:42):
but then also how did that impact the interest rates
amongst the different loans that you can borrow, whether it's
for a house, a car, what have You.
Speaker 2 (01:51):
Don't forget the shutdown, the shutdown shut down, the shutdownation,
you know, of current value euation of of the S
and P five hundred, some of those things are are
starting to look a little bit concerning. So we'll we'll
dive into a little dive into the weeds on that
(02:14):
a little bit. But you know, you mentioned earnings and
it never ceases to amaze me. You know when companies
report pretty good earnings, what does amaze you? Lots of
things amazing these days. Actually, well, these companies are just
gigantic and they report, you know, meeting profiting expectations and
(02:37):
then and then the stock goes down, well, because I
think it's what the parskus for partly profit taking.
Speaker 3 (02:44):
Part of that, yeah, could be. I think part of
it too is that the stock, you know, the stock
of a particular company has run up. I mean, in
Nvidio ran up to two dollars.
Speaker 2 (02:54):
Yeah, and that's the one I was thinking of when
I was mentioning that.
Speaker 3 (02:57):
Yeah, so it ran up onto and in Nvidia has
not reported earning yet, right, so it's already running up
because of some of these deals they're doing with these
other tech companies, right that are going to be investing
in Nvidia or Nvidia investing them and doing some sort
of partnership. So it's it's forward it's forward thinking. And
so when earnings come in a little below estimates, then yeah,
(03:21):
it's gonna have a it's gonna have a reaction to
the overall price. So we saw you know, Meta, and
the big thing with Meta is how much they're spending
on AI, right, so they have to take that into account.
That went down I think initially after they reported, it
went down after hours by eleven.
Speaker 2 (03:36):
Percent, and they almost always uh drop initially, but.
Speaker 3 (03:42):
Google went up though Google crushed its earnings on on
both sides and it it went up I think initially
was like five percent after hour.
Speaker 2 (03:51):
In that case, Google's very different because Google was not
trading at the multiples of like a Meta or an
Amazon or a Netflix or those. I mean, when you
look at some of the metrics, like you know, uh,
profit to sales, you know, those sorts of things just
(04:13):
simple you know, the pe price earnings not anywhere near
the multiple that some of these companies have have been
trading at. And I think that's one of the reasons
why you see the ones that initially pop but then
sell off just because gosh, how much how much more
(04:36):
overvalued or or really stretched can they get in their valuation?
Speaker 3 (04:43):
And well, and you have two components happening right now,
two things happening right now. You have the market, which
are is pretty stretched in valuation and how hyat's how
hia it's gone with relatively not much volatility here in
the recent and months. And then you have the individual
companies themselves. So and we've we've talked about this before
(05:06):
an earning season that things have to just continue to
go right, right thing that the earnings really yeah, the earnings,
the profits and so forth. Whatever analyst comes out with
estimates like they need to be met or they need
to be exceeded, and then the Ford guidance as far
as what they say on their their earnings call the
company has on their earnings call of what they're projecting
(05:27):
for the future or what they might be concerned with.
There has to be everything that's going right. It's like
a Goldilock situation because the market and some of these
individual names have run up so high with all this Oh,
you know, open ai is doing an investment with in Video,
or open ai is doing an investment with and chat
Rept's doing an investment with Oracle. Oracle went up like
twenty two to twenty three percent once that news came out.
(05:49):
Now it's like, okay, the stock went up twenty two
to twenty three percent. Now in the week's coming, does
it merit that twenty two to twenty three percent jump?
And then when they do earning, you know, do the
earnings represent like we can count on this jump of
twenty three from that initial news that it looks like
it's going to project, you know, to to come to
(06:11):
fruition or not the.
Speaker 2 (06:13):
Real sixty four million dollar question is you know, do
you buy the dips of companies that report at least
in line with expectations and then sell off and and
and my kind of philosophy is is you don't add,
you know, more exposure to something that's already over exposed.
Speaker 3 (06:36):
Yeah, I think, I think, I think what could you know?
What could be a strategy. And obviously this is not
a recommendation because we don't know every individual person who's listening,
your scenario, your risk tolerance, and so on and so forth.
But it's the companies that get dragged down because if
a company within its industry that reported and for some reason,
(07:00):
that dragged that industry down, and so then you have
some other stocks within that say, very same industry that
their fundamentals could be absolutely solid and have great forward guidance,
but they ticked down because of a big behemoth within
that industry. So let's say like in video right let's
say in video reports, and right now you had like Microsoft, Meta, Amazon, Goo,
(07:24):
Google was up after the report, right, but Meta was
down pretty heavy. Microsoft was down a little bit. Google
was the one that was up green the day after
all the reporting. Apple was a little bit down, but
then you look at okay in that space because there
was some big behemoths that came lackluster and maybe drag
(07:45):
some other that could be an opportunity to say, O,
I'm going to add a little bit more to that name,
right because they're fundamentally We saw that with banking, right
in two thousand and eight, Bank of America went down
to three dollars a share, right, WELLS Fargo was pretty
fundamentally sound. JP Morgan was definitely fundamental, but their stock
prices had got decimated in two thousand and eight because
there's a contagion effect and it was a recession. So
(08:05):
there's two big components there. But that was a time
where you say, Okay, you know JP Morgan's fundamentally sound.
Their stock price went down so much because of some
of these other banks that are defaulting or about to
cease to exist. So that could be an opportunity where.
Speaker 2 (08:22):
You add, yeah, I continued to think that the the
not so much the contrarian, but the end around is
really kind of what you're talking about, the end around opportunities,
meaning you know, you still have the big names catching
all the headlines, you know, driving a lot of For example,
(08:43):
you mentioned JP Morgan. If you look at JP Morgan
and a few others, they drove you know, whether I
think it was on Wednesday or Thursday, you know, the
Dow going up quite a bit. It was just a
few companies that did that. And when you're looking on okay,
where where do I put my my cash if I'm
(09:06):
worried that I'm not going to be participating in this
market or participating in the potential projected growth of the
market next year. To me uh and and going back
to and videos of the world, well, I certainly wouldn't
be comfortable, say, buying an Nvidia right here. But then
(09:27):
you look at companies like Core Scientific or core Weave
for example, and I'm not saying by those now, but
the ones that you know, uh uh are run the
data centers, have the data management you know, create the
the stacks of of of equipment, and then the other
(09:48):
company and these two specifically that build the center. And
so so it's really about knowing, you know, how to
find things that still have upside in them, and that
takes a lot of time, effort, research, reading, listening, you know,
(10:09):
over and over again. So the obvious mistake that I
think people will make here is they'll just pile in
to so on and so forth when they're already stretched
way out there. Could they go higher? Yeah, but I
wouldn't really call them a momentum stock or or something
(10:30):
that they are because they did.
Speaker 3 (10:33):
That's what I'm saying. They swing so much. But to
your point, you know, I had a conversation with one
of our clients to Do in a review meeting earlier
this week, and he he was saying he's got an
ex brother in law and he always pings him once
in a while because he's got a video and meta
and some of these big names, right, and he says,
(10:53):
you should have you should have done what I told you.
Look at how how much in video has gone up
and so on and so forth. I was like, yeah,
but did he call you in like March, April and
May when it was down over forty percent? Yeah. He's like,
he's like, yeah, no. And I said, well, there's and
there's other names out there, right, because you've told me
this a couple of different times. I said, but if
we look in your portfolio from some of the models
(11:16):
that we have and we implement with our clients, you know,
one of them was Western Digital WDC and literally from
from the model, right, it triggered to be a candidate
to buy in August. It's from August, and I saw
I showed him. I was like from August this year
until now, right, Well, whenever I met with him this week,
(11:36):
which was Wednesday, actually it was up eighty four percent.
Speaker 2 (11:40):
Yeah, and that's and Western Digital is a great example
of the end around, right, And I think, you know,
we need to explore that a little bit more. So
let's back up. I mean, because you know, economically at
a macro level, I mean there's some big things going on.
I mean, like the government shut down. Now I think
(12:01):
it it will maybe have an effect on on some
GDP and and maybe might have some effect on some
of the consumption.
Speaker 3 (12:11):
November November first is a big day, right because from
from my understanding, like EBT cards and that's today today
today it is I'm like, this week has gone by
so fat. I mean, I was telling my kids the
middle of this week, I said, oh my gosh, it's
gonna be Halloween on Friday.
Speaker 2 (12:33):
It's just it November or was it November sixth? I mean,
obviously we're not looking at things on the weekend, but
where the snap program runs out well.
Speaker 3 (12:44):
And just government employees aren't you know that are furlough
they're not getting They got paid in October, right, but
they're not getting so now hopefully they have. That's kind
of why it's important, you know, and you see it
and just reading articles in the past. I haven't seen
an article late, but just a savings rate that people have.
They don't have much in savings, they don't have much
(13:05):
in sidelines. We just actually talked to a prospect which
is potentially going to be a new client. She's going
to retire in April. Most of her money is tied
up in a pension. I think this is going to
be a good topic to talk about in this in
this radio show as well too. She has a healthy
monthly benefit that she can get from her pension from Kaiser,
(13:27):
but when asking what her other assets are, it's not
a whole lot. She's got a four to one K
that wasn't so much built up for it because she
put a lot of dedication in just you know, working
for Kaiser for so many years and raising her family.
She was a single mom, so good for her, but
most of it and so the discussion we had was
(13:48):
do I take the monthly benefit when I retire, but
then the draw the downside to that is that's what
you get. You can't call hey, mister pension, I need
twenty five thousand dollars because something came up with my house,
my car or whatever. You can't do that. So then
we were discussing, well, another strategy because you have the
option to do a lump some rollover and put it
(14:08):
in s anira and then you have full control over it.
So we can generate the income for you, but then
you have full control that should something come up. Or
the other thing is you pass away, what happens to
your pension? Does it go to your beneficiaries?
Speaker 2 (14:22):
Does it not in the case of where you're a
single person and you don't have somebody of same age
because a lot of people don't know that. And now
we're into a little bit more technical side of a
defined benefit plan versus a defined contribution plan. Define contribution
plan being like your four oh one K define benefit
(14:44):
plan just being based on you know, compensation age and
years of service and that then that defines your benefit.
Speaker 3 (14:53):
You know.
Speaker 2 (14:53):
The reality is is that it's very expensive to pass
on your income to an air even if it's your
your spouse, your partner, whatever the case may be, because
now they're guaranteeing some level of income for more than
one life exactly. And so when you look at a
(15:17):
modified benefit, then it just really comes down to the math.
And what we were showing this client is that, Okay,
you know, if fifty four hundred is your unmodified benefit,
that's the income you will receive from your pension. But
(15:38):
if you die the next day after receiving one check,
the money's gone the lump side.
Speaker 3 (15:43):
Nobody benefits from their history from that point on, and.
Speaker 2 (15:46):
Then people will think, oh, well, I'll leave it to
my kids. Well, what happens is your kids are much
younger than you, so their life expectancy from a mortality
table is much longer than yours. So then they go, okay, great,
your un modified is going to be fifty four hundred.
But now that you want to pass on your income
to somebody who's thirty years younger than you, now your
(16:08):
modified benefit is going to be two thousand dollars a month,
so that they can get two thousand dollars a month
for the rest of their lives. And these are all
kinds of things that we look at and examine and
run calculations on to determine are you better off, you know,
taking the unmodified benefit, a modified benefit which is just
(16:30):
a different insurance choice, or rolling over the lump sum.
And we'll be brutally honest. I mean, if you're in
a position where the income that you're going they're gonna
pay you.
Speaker 3 (16:42):
Yeah. And let me let me just chime in real
quick about the honesty part is Initially, when we were
going through the numbers on our pension, because we kind
of dove into that first and we were doing the
math on that, we initially said, that's actually pretty good
outcome and the raaid to return was actually pretty good
based off of them out that you have in the
pension of a lump sum if you rolled it over.
(17:03):
But then when we dug further and had more discovery
and found out her situation, the things that she wants
to be able to do with her money, you know,
new cars, her car's really old, she's gonna have to
buy a new car. She wants to help out some
of her kids.
Speaker 2 (17:17):
And then and then she doesn't have much beneficiary or
her same age, don't.
Speaker 3 (17:22):
For you that as well? And then she doesn't have
much in savings outside of the other accounts. It changed it.
It changed that scenario where we said, okay, we have
to take some of the things into consideration, and that's
that's important. It's important to build towards your retirement, but
not just one hundred percent focus on that you have
(17:42):
to have because there are these scenarios like this government
shut down that you can't you can never predict the future,
but at least have a few months worth of expenses
set aside in something.
Speaker 2 (17:52):
Yeah, I really think it should be longer, right, the
rule of thumbs three to six months, three to six months,
But I really think probably nowadays, with volatility of the market,
volatility of employment, volatility of the economy, volatility of geopolitical thing,
on and on, you really need to have six to
twelve months.
Speaker 3 (18:11):
I guess it really be six months. Really, you know,
I I battle this. I'm probably more conservative than I
than I need to be for my age because I have,
you know, more than the three six months set aside.
But if I think back, what was the worst time
in my life that I lost a job and I
needed to go find another job? Right, Because that's what
(18:32):
it really comes down to. Is what if, for whatever reason,
you have a situation where your income stops. Right, And
for some people now that are in government jobs, their
income is stopping because because politicians are finding back and
forth and can't agree, and you know, they're not getting
a paycheck in November. But you know, for me it
(18:53):
was two thousand and eight, I lost a job. I
was a brand new financial advisor. They're paying I was
on this new training program, so I was part salary
on that, and they just were cutting expenses and Bank
of America bought Merrilynch or you know, kind of forced
to buy Merrill Lynch and then let go all of
us new guys. Right. But when I think, I think
(19:13):
back on that, and as crazy as a market was
at that point in time, in high unemployment, it took
me four months before I got a job.
Speaker 2 (19:20):
Yeah, you know, so I would say I think jobs
are I mean, if you've got a good job, especially
if you're you know, a younger person in your in
your twenties or thirties or even forties, well you don't
want to quit in this environment because you know, many
a lot of the hiring is some sort of government
(19:41):
you know, or or entity that gets its revenue from
the government. It might be a good or services that
sold or contracted with the government. And so boy, I
wouldn't I wouldn't put myself in the in the job
searching category right now if I have a job and
you're just maybe again you're younger and you don't like it.
(20:02):
But that's that's a small, you know, uh segment, and
certainly not the segment that we specialize in helping, which
is people who you know, are on passive Yeah, finding
people that are on passive income versus versus earn income,
because that's all really retirement is is do you have
the ability to go to passive income from what you
(20:25):
w two income or self employment income, whatever the case
may be, right, And and so does the government shut
down have an effect on that? Maybe? I mean if
it really did on you know, the majority of the
of the country's economy, I don't think we would see
you know, companies going up in spite of of you know,
(20:51):
what's going on with the shutdown, And we certainly wouldn't
see you know, luxury real estate just hit, you know,
some amazing growth.
Speaker 3 (21:01):
You think government government employees are buying luxury.
Speaker 2 (21:04):
There not, That's my point so the government shut down
because it's it's more, it is white collar and a
lot of aspects.
Speaker 3 (21:13):
Yeah, I think I think the biggest is just depending
on the percentage and I don't know off the top
of my head the percentage of government employees, and right,
it's gonna it's going to hurt their spending. Right, So,
and we're in the holiday season now, So how long
does this drag on for? And now that they're actually
starting to miss paychecks, that's they're not going to be
spending that money. So does it impact that next quarter
(21:34):
of consumer spending by how much?
Speaker 2 (21:37):
At this at this number of days, it'll have no effect.
But to your point, if it continues, it might have
some minor effect.
Speaker 3 (21:45):
It's December's income.
Speaker 2 (21:47):
And yeah, here's my prediction. My prediction is that this
shut down ends with a continuing resolution, which is what
all these worthless politicians always do. The can down the road.
They'll go, okay, we'll get back to the budget, trying
to pass a budget, which they haven't done in years
(22:07):
and years and years. The big problem we've been operating
on borrowed and printed money and crs continuing resolutions where
they just go, okay, we're gonna We're gonna fund the
government for a number of months and then we'll battle
it again in a number of months. So health wise,
(22:28):
we should not and the shutdown to just do it
another continuing. But my prediction is because both sides will
start going, oh, is this going to affect the midterms?
Are we going to lose our seat in Congress or
or or.
Speaker 3 (22:44):
Or there's leverage to be had and it's not really
in the best interest of the citizens.
Speaker 2 (22:49):
So and that's what the mainstream media will start focusing
on as, Oh, you're not gonna win your you're you know,
if you're up for real.
Speaker 3 (22:56):
Said, you know, that's sad, that's that's bs really.
Speaker 2 (22:58):
Instead of doing your job, which is let's finally balance
the budget, because that's what this is all about. That's
why there's a shutdown. Focus all these sound bites, all
these subsidies. So, you know, Republicans want to get rid
of the subsidies that should have been gotten rid of,
you know years ago. Democrats not only want to keep
(23:19):
the subody subsidies, they want to increase even more free
stuff to people who don't actually pay in to our society.
But at the end of the day, we're going to
end up with a continuing resolution and kicking the can
down the road. That's my prediction. The market won't really
care either way and has not. And let's touch upon
(23:41):
the interest rates or in freshion the I mean, yeah,
he's really starting to get beat up, you know, more
so now as he gets closer Drone pal the chairman,
as he gets closer to not being reinstituted coming up
(24:03):
in May.
Speaker 3 (24:04):
I mean, if you or him, would you want to
be reinstitution But God does he need to?
Speaker 2 (24:11):
These worthless FED presidents, Fed board members, I mean, they
think growth is a bad thing, right, Oh God, if
you get growth, you'll have inflation. And that's just not
the case.
Speaker 3 (24:25):
You know.
Speaker 2 (24:26):
They don't understand the you know, supply side economics, and
they should not have the mandate that they have. They
definitely shouldn't have the power, uh that they have, you know,
you know, because again they they their their job has
become one that they have way too much. It's like
(24:49):
the power of school masters of the universe. But but really,
at the end of the day, what the FED has done,
you know, through its errors, is they've they've really destroyed
the dollar and and and that's where we we keep
getting inflation mistakes because at the end of the day,
(25:12):
if you stabilize your currency, you won't have inflation, and
then you can have growth without inflation. And so I
think the FED needs to be completely revamped. But Congress
can't even pass a budget like what.
Speaker 3 (25:28):
You mean, like a new ballroom and a pain.
Speaker 2 (25:31):
Which now comes out. You know who one of the
big anonymous donors was, or is UH and video what? Yeah,
three hundred million it uh is being paid for by Nvidia. Wow,
So you know they're dropping the bucket there, buddy, buddy,
But but it's just laughable. And now you got me
(25:54):
on a tangent that oh or you know, there's Democrats
out there going god when Trump's gone gonna tear it down.
But yet they don't look at the money that that
Biden spent, and more importantly Obama spent on renovating the
White House and what they did to it. Fdr put
(26:14):
an indoor swimming pool that was purely for his benefit,
spending the equivalent of tens of millions of dollars. No
back then, people don't know that. So, you know, presidents
all have put money into the White House. But President
Trump is the only one doing something for the White
(26:35):
House that doesn't benefit him exclusively. The money that Biden spent,
that Obama spent, going back to FDR spent was to
their benefit and paid for by taxpayers.
Speaker 3 (26:47):
That's the big part. So that's a big part. I mean,
come on, the big part. The big part is using
taxpayer money for stuff like that, which doesn't matter what
the guy does.
Speaker 2 (26:56):
You know, he stops wars, No, no Nobel Peace Prize,
he gets you know, uh, companies, entities to spend money
on our country and invest in our country. Nope, still
hate him, Still Trump demarrangement syndrome. You know, it doesn't matter.
Speaker 3 (27:16):
But back back to the back to the back, back
to the back to the ground level, back to the
so so, some of the takeaways I had from from
the f MC meeting. Uh one, and this has been
plastered all over the place too, is the December rate cut.
And so there was question questioning around, you know, the
next cut, and he said that's not a foregone issue,
(27:38):
far from it. So market reacted negatively to that because
it was pretty much baked in that he was going
to do quarter point cut, which they did this week,
and that they were going to be you know, high
probability a quarter point rate cut in December, but that
probability dropped from his you know, rhetoric from a speech
(27:59):
on Wednesday. That's one. The other is you had to
centers on both sides of the spectrum of you know,
rate cuts or no rate cuts. And and primarily because
you're battling because the inflation you know that they look
at is at three percent and it's kind of staying
steady at three percent. And then they're looking at the
labor force and the you know, employment environment, and that
(28:24):
is still showing some softness, although we are currently at
a really good rate of employment because at four point
unemployment right, four point three percent. So I think he
just did it as okay, I'm gonna throw another rate
cut in there. I don't know if it's baked in.
I mean I didn't. I didn't think he was gonna
(28:44):
actually cut this this you know, this most recent meeting,
and and he did. We'll see what happens in December.
But the market has been bake baking that in, and
we have a little bit of a pullback and some
volatility that spiked up a little bit in the market,
and I think that's warranted, and I think it's needed
just because it's gotten stretched too far. I mean it's
like thirteen percent from its moving averages, so it just
(29:08):
gets a little bit too stretch, stretcher individual names and
the market itself. You know, he did make a comment
about dot Com because you know, there was some questioning around,
like do do we think we're two valuations too high?
We're to He says, you know, I don't. I don't
think that AI is the same as dot Com, you know,
(29:32):
with a spending and the profits of the haven.
Speaker 2 (29:34):
If you look at the dot com industrial revolution, dot
com was very different because most of those companies, the
only revenue they had was from their I P O
and and and or any sort of capital rays and
their burn rate and and their ability to survive because
(29:59):
they did and actually have a profitable product or company.
I mean that's why so many of those and and
the valuations that they received were just worse than just
pie in the sky. It was just nonsense. I mean,
these companies were getting you know, a billion dollars in
(30:20):
there in their initial public offering and they made nothing,
generated no profit, hired hundreds to that ample and in
the hopes you know that maybe it was a unicorn
for you know, it would would be the next whatever apple,
so on and so forth, And that's very different. The
(30:42):
AI spend is primarily coming from companies that have billions
in assets, billions in reserves, you know, billions in profits
yea and so forth.
Speaker 3 (30:55):
So far different it is. But I think it's okay
for them out that they're spending and the amount of
infrastructure it's going to take, right and the and the
capital expenditures that's needed and that that they've been doing,
how much of that is actually going to turn into profits?
And is it the right amount? Is it too much? Right? So,
(31:16):
part of why Meta went down based off of its
earnings was one thing that was looked at was the
amount of spend.
Speaker 2 (31:22):
Spending right not in line with so.
Speaker 3 (31:26):
So has the stock price got a little bit ahead
of itself with all these you know, future projections of
what it could be and do and so on and
so forth, But then you come back to reality and say, like, oh,
we're spending a ton of money. Okay, what's your actual profit?
You know from from all of this so far? The
other thing is open to eye, and we talked about
(31:46):
that before they're making a lot of investing deals, but
they're not showing much of a profit. For as much
as they're promising to invest in these companies over the
next three to five years.
Speaker 2 (31:58):
Their revenue has own. They have ways to uh remunerate
it's offering into you know, a meaningful level of of
of money. However, their spend is way out of whack compared.
I mean, they they're completely underwater, you know, and but
(32:20):
yet the billions being thrown at company. That's kind of
similar to the dot com bubble. But right now, you know,
most of the spend is from companies who can afford
to spend it. And then the other part of that
which might hurt their stock price just because the the
(32:41):
increase in in earthing profits don't match the spend. But
all that would mean is just a temporary you know, down.
Speaker 3 (32:52):
To their stock price until.
Speaker 2 (32:55):
Or they stop that that same level of spending.
Speaker 3 (32:58):
Right It's kind of like the spending we been doing
in the country. Does that slow down? Do we catch
up at some point?
Speaker 2 (33:04):
It never not at the government level, not at the
federal government.
Speaker 3 (33:08):
I mean, the difference is is a corporation we'll start
realizing it and then they start turning things around.
Speaker 2 (33:12):
Right, That's the thing. I mean, a corporation is how
the federal government needs to be run. It needs to
be about, or at least run like you know, a
personal household that if you don't have money to spend.
Speaker 3 (33:26):
They can't keep borrowing it. You can't.
Speaker 2 (33:28):
I mean eventually they go, you're you're a bad bet, right.
Speaker 3 (33:31):
Yeah. And so your credit score, your credit score, Yeah,
your credit score is no longer seven forty oh the
US six twenty.
Speaker 2 (33:40):
It's not even six twenty, it's like four ninety five.
Speaker 3 (33:44):
No. No, because if if you look at it and
figure all the assets, right, I mean that that's but yeah.
Speaker 2 (33:50):
Well and the fact that how much that's actually a
good idea.
Speaker 3 (33:53):
We should give a like political credit score to all
these politicians, right, and they start off with great credit score, right, right,
like an eight hundred or eight fifty whatever. Right, they
start off when they get an office. But then through
all of the things that they from their efforts, whether
it's some bill that they pass or some act or
something that they you know, had some heavy participation in
(34:16):
of like oh we need to do this and raise
taxes on that, Oh we need to do this and
have a bill and spending on this blah blah. We
have successful for this and just have just metrics, right,
no rhetoric, but just metrics and data to say like,
how well did that pan out? What did you tell
the people it was going to do, and what actually
happened and if and if it had a you know,
(34:36):
if it didn't work out, if it fell on its head,
like your credit score is impacted.
Speaker 2 (34:41):
We're probably giving somebody a great idea and for an
app or a website whatever can think about it. It
could have a neat acronym like fycop for example, or
fair eyes.
Speaker 3 (34:51):
Hiko hiko political interests exactly.
Speaker 2 (34:56):
So, but no that but that's that's the reality. Government
needs to run more like a for profit entity. We
order we have for profit Well yeah, I mean so
the GDP is yeah, well, but it's not translating into
any common sense with you know, balancing the budget and
(35:19):
spending more than we're taking than the US government is
taking in.
Speaker 3 (35:23):
Right.
Speaker 2 (35:23):
I mean again, you can't fund the world's you know,
lack of prosperity. We have to focus on our prosperity
and our citizens and our well you to grow and thrive.
Speaker 3 (35:39):
Just a frivolous wasteful spending, right.
Speaker 2 (35:43):
Yeah, it's out of control. Well all right, So at
the end of the day, again, what's most important is
is how you react to these things and and and
not panic or over react. And you know, my big
concern about all of this is that people make the
(36:05):
wrong decision when it comes to you know, timing investments,
and a.
Speaker 3 (36:11):
Lot of times it's emotional.
Speaker 2 (36:12):
It's emotional and it's the exact opposite of timing that
you should be utilizing, which is you know, most people
they get in now to things because right they're just
like we're getting calls and going, you know, oh I
(36:33):
made XYZ maybe it's eight, nine, ten percent, but I
your example, earlier, I see an Nvidia or whatever is
up forty percent year to date, and then they buy
into those things that have already run up, and then
when something negative comes out and then they go down,
then they panic and sell out. So they actually buy
(36:55):
high and sell low. Here and at the end of
the day, there's always going to be good years, there's
always going to be bad years, and it matters what
you average through all of them, and to not overreact,
but more have.
Speaker 3 (37:11):
A goal and not focus on one quarter or one
year and build your strategy around that or more or
change your strategy around that, because you know, a quarter
is like, oh there's some names out there that just
ran up in this last quarter, and now we're going
to change our strategy around that. When your strategy needs
to last you twenty years.
Speaker 2 (37:33):
Yeah, it's funny. I had a client ask me about Alumina.
I wish we would have stayed in Alumina. Well, when
Alumina was down like seventy five percent in twenty twenty two,
he definitely wanted nothing to do with Alumina. And then
it was down again in April of this year, again
(37:57):
nothing about Illumina. But now all of a sudden, since
Alumina is now back up, it's like, oh, we should
have kept Alumina, and you can't. You can't. You can't
do those things. You know, it just matters overall. And
this is a person that you know is averaging per year,
(38:19):
good good years and bad years, over eight percent cash
flow on his money, and that is phenomenal. That's almost
in line with what stocks average just from a price appreciation.
Speaker 3 (38:33):
For long term average of S and P five and
so you're just not having the roller coaster ride and
I think that's a I think that's a good point.
Is because it's easy, especially in the good times and
when there's euphouri out there and there's a name, and
that's like what happened with dot com, right, people want
to pile in pets dot com or whatever, right, remember, Yeah,
(38:56):
And I've talked about this example before. I had a
client yours go who was working for Cisco, had a
couple million dollars worth of Cisco stock and was you know,
pre dot com or before the crash in two thousand
and his wife told him like, maybe we should sell someone,
maybe we should and he didn't. He's like, no, this
is a Cisco or he can't. Even the stock was
(39:17):
doing great and Cisco's like the it was like the
Apple back then of today, and man, dot com crash
happened and he lost a ton of it and it
took forever for Cisco to climb back out of out
of the hole that it was in. And that's hindsight
twenty twenty, right. So it's you don't want to change
your strategy around because you're trying to chase something because
(39:38):
of fomo, right, fear of missing out, or you just
want to participate in what happened. You can do a
small portion, you know, if you want to take a
small portion of your portfolio, and we've we've advised that
to some clients who get really caught up with this.
We say, hey, look, this is your financial plan. These
are the goals that you're trying to achieve in the
long run, and we're trying to build something that has
longevity around it. Okay, we're not building some trying to
(40:00):
chase like oh, this stock or sector is hot now,
next month it's this, and next year it's that or whatever.
We want something that's going to do good overall, but
it's going to go after achieving your goals and make
you financially successful on average over a long, long term.
Because if not, and you just get caught up in
the moment, right whether it's a month or a year
(40:22):
or whatever, and you change your whole strategy around that,
then there could be very well years or time time
periods where it's down. Then what do you do. Do
you stick to it and say I'm just gonna wait
till it goes back up, especially if it goes down
forty percent or fifty percent or whatever most likely or
not it's going to be very stressful.
Speaker 2 (40:41):
So our humble advice is really based on the importance
of having a game plan, a financial plan, Knowing you
know a number or a need that's most important to you,
achieving you know, whatever your goal or objective is, and
(41:03):
then building something, having something that is designed to accomplish
that at the least amount of risk possible. So just
simply have a plan. If you are ready have a plan,
it's time to review that plan, especially as we go
into the end of the year, for obvious things like
(41:23):
taking out your rmds, how will that impact your taxes?
You know what rebalancing should be done to lock in
some profits, harvest some losses, and really set yourself up
for hopefully kicking off twenty twenty six in a good
first month, good first quarter, because often how you begin
(41:45):
the year really sets the tone for what type of
year you'll have overall. So I highly recommend you know
you come in for a no obligation consultation. Let us
take a look at you know what it is done.
If you have a plan, well will help you update
and do a plan review. If you don't, we'll actually
(42:08):
give you the questionnaire to create your first plan all
with no obligation.
Speaker 3 (42:15):
And how do you do that?
Speaker 2 (42:17):
You say, jis eppy, how do.
Speaker 3 (42:19):
You do that? There you go.
Speaker 2 (42:20):
You called NIX nine six seven thirty five hundred. Again
that number is NIX nine six seven thirty five hundred.
Speaker 3 (42:31):
Kathy will get you set up and then we'll get
we can send you a link with a questionnaire and
then that's how we can get started and set up
the follow up meeting.
Speaker 2 (42:39):
So we're out of time. I hope you enjoyed listening
to the wise money guys. As always, have a wonderful afternoon.
Come back and give us a listen next week.
Speaker 3 (42:47):
Have great weekends.
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