September 30, 2024 • 44 mins
What does the data say? We use the data to analyses the past markets and forecast the future markets. Host John and Giuseppe share how they work the numbers. Plus, Government refinancing, the Importance of Planning, and our Retirement Workshop this week in Rocklin. Tune in for details. 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 or call nine
one six nine six seven thirty five hundred.
Speaker 2 (00:17):
Welcome to the Wise Money Guys Radio Show. I'm your
co host John Scambra. I'm here with my partner Giuseppe Fisconti.
We are certified portfolio managers out of Granite Bay, California
that specialize in helping people who are retired or about
to retire manage their money. If you like our show
and want to get a hold of us for a question,
or get on our calendar our register for our next
(00:39):
week workshop, call us at nine one six nine six
seven thirty five hundred. I guess I should mention that
first our workshop after talking about it for about a month,
probably our last one of the year because most of
the ones in November December we can't count on the
on the weather. So it's at the Old Spaghetti Factory
(01:02):
from six to seven thirty pm next Wednesday, or I
should say this Wednesday from six to seven thirty pm
at the Old Spaghetti Factory in Roseville. You definitely need
to register. I think we have. We definitely have more
registrations than we have seats, but we haven't confirmed you know,
(01:25):
so there's still a few seats left basically, right because
if we can't you know, get a hold of you
to confirm your registration, then we don't put you on
the list. But called nine one six nine six seven
thirty five hundred, why would you want to attend? Well,
if you're concerned at all about everything that's been going
(01:45):
on the last few years, really since probably going back
to twenty nineteen was which was the last kind of yeah,
I would Yeah, I'm gonna.
Speaker 3 (01:57):
Say that before we entered the twilights, right.
Speaker 2 (01:59):
Before the highlight zone hitting twenty twenty and twenty twenty one,
and then okay, now, all the government spending from the
twilight Zone of twenty twenty and twenty twenty one put
us into hyper inflation, which caused a market crash, a
stock market crash, a bond market crash. Then slowly, you know,
(02:20):
people who aren't working with us probably started recovering. If
you're working with us, you didn't crash to begin with.
But you know, there's still so many things out there
potentially that could be the next crash, and that next
crash could be a number of things. It could be
geopolitical tension, it could be inflation coming back even more
(02:45):
so than it was before, which is my prediction because
even though we've seen the rate of increases in prices
slowing down, we've seen no reduction in prices, and more importantly,
we've seen no changes to fiscal policy whatsoever. Fiscal policy
being the the purse that Congress controls and deficit spending, borrowing, printing,
(03:15):
devaluation of the dollar continues without change. And so because
of that, I think we're getting a temporary slow down
in the increase in prices c P, I p P
I PCE. You know all those data measurements that you know,
strategists like US, economists, investment experts like us look at. However,
(03:41):
we take it all with a grain of salt, don't we.
Speaker 3 (03:43):
Yeah, And data just came in recently. GDP is at
three percent for last quarter. Core durables came in, So
nothing screaming panic or we need stimulus i e. Rate cuts,
And it'll be interesting to see what the rest of
this year turns out. Because the Feds are you know,
(04:05):
they've indicated maybe another quarter point cut, but then there's
other analysts and talking heads and pundits are saying we're
gonna get another fifty basis point cuts.
Speaker 2 (04:14):
So it's more on Can you say more on Philip More?
On Philip More? I mean, if you're just looking, you know,
going okay, you know we're still doing good right. Our
house is paid for, our cars are paid for, We
don't have credit card debt. We saved up a good
amount of money, you know, while we worked in our
investments and things. But you're concerned it might not stretch,
(04:39):
you know the rest of your life and still allow
you to leave a legacy. That's where we come in
and that's what we're going to show you at the workshop.
You know what we're doing to really stay as much
as possible without having a crystal ball, stay ahead of
the curve, you know. So as an example, when the
(05:00):
FED in twenty twenty one was saying, listen, and this
is towards the end of twenty one, beginning of twenty two,
inflation is temporary. Transitory was the word that they kept using.
We were going, that is absolutely ludicrous. Not only is
inflation not transitory, it may be at the highest levels
(05:23):
we've ever seen. So we were not in bonds, and
we were reducing our exposure to stocks and increasing hour
and I say our clients and our own accounts, increasing
the cash or cash equivalents, all in anticipation of a
(05:45):
stock market that did go down, of a bond market
that did go down because inflation was anything but transitory,
and in fact, it hit records that hadn't been seen
since the seventies. And I believe that is going to
happen again, and sooner than we think. So you think
they're going to.
Speaker 3 (06:04):
Come out and say the the transitory word again, except
for it's gonna be flip flopped.
Speaker 2 (06:10):
Yeah, yeah. And initially, you know, the the the residents
will duck and hide and and you know try to
manipulate you know, data and and use dot dot plots
and all kinds of things to you know, really give
you this illusion that they really know what they're talking about.
(06:31):
But if they really knew what they were talking about,
they would be saying but they won't because of political
you know, reasons that the Federal Reserve has zero ability
to control inflation, you know, through monetary policy, through the
(06:51):
FED funds and or or maybe some of the bond
buying and or bond selling because it's being far outpaced
by borrowing from the federal government. And the deficit cost
(07:12):
now not the deficit cost, the debt cost now as
far as a single you know, ledger item on the
balance sheet on the budget sheets for each year has
now surpassed individually the cost of running the entire military complex,
the cost of Social security, and or the cost of medicare.
Speaker 3 (07:36):
That's amazing.
Speaker 2 (07:37):
And so the only reason why they're they're they're trying
to manipulate interest rates lower when they know they shouldn't
is to try to refinance some of that just unwarranted,
absolutely disastrous spending that has been over the last decade
(08:02):
or so. And there's no other way around it. I mean,
you've got to be able to refinance that debt. Five
trillion is needing to be refinanced immediately, and then another
five trillion, and then I don't know how much you know,
the the bulk of it has after that, but there's
basically two tranches of five trillion dollars that the Fed
(08:27):
has to deal with, you know, in the next few months,
and then next year ten trillion dollars of the thirty
you know, five thirty six trillion dollars, and again call
it what you will. That's going to make everything more
expensive because it's either going to be more expensive through
(08:50):
taxes being increased, or it's going to be more expensive
because the value of the dollar is going down and
it takes more dollars to buy the same thing. Couple.
Speaker 3 (09:01):
And on top of that, interest rates are still high
on borrowing, credit cards are at real high interest rates,
credit card debt limits are at all time high. Delinquencies
you're starting to pick up. So yeah, so if inflation
comes back, I mean it's already putting pressure on the
consumer and stress.
Speaker 2 (09:20):
Oh pressure is an understatement, and think about it. Come back, Well,
it's not come down. So if we look at prices
from twenty twenty until now, you know, most things that
people need are up in that short amount of time
to several years more than one hundred percent, some as
(09:42):
high as five hundred percent. It just depends on the
item you're looking at. But here's the funny thing. The
worst categories are the things that you can't get around spending,
which is you know, food, gasoline, insurance, so on and
so forth. Medical costs, those things have all doubled and trimpled,
(10:04):
and so we're going to show you and talk a
little bit more about what we're going to show you
at our workshop or if you come in and meet
with us, on what we're doing to help you know,
combat and really build inflation beating portfolios that will consistently
help you stay ahead of the game. And yes, we
(10:27):
are going to show you actual you know models or
a model that most of our retirees have, and then
the way we actively manage and rebalance it and what
that could do for you, and why we do things
the way we do them, which we believe are drastically
better than competitors in the marketplace, and the proof is
(10:51):
in the putting. So that's the main thing come see
for yourself. But also, if you haven't done planning in
a while, we were talking about this at another I
forget when, but if you look at the inflation assumption
that was built into most people's plans. So let's say
(11:14):
you've done everything right. You're sixty five years old, you're
now on a passive income, you just started taking Social Security,
you saved five hundred thousand or a million, you paid
off your house, you have no car payments. You've done
everything that you're supposed to do, and you even did
(11:35):
a plan to help you get there. But that plan,
you're now thinking, Okay, I did my plan. I did
everything I was supposed to do. But keep in mind
that just about a year, no two years ago, inflation
assumptions built into planning where that average inflation over a
(11:57):
ten year period was about one and a half percent.
So if you modeled out your spending needs over the
next So you're again, you're sixty five now, and you're
projecting that you're gonna live to age ninety or ninety five.
You know, if you're married and you're both over sixty five,
(12:18):
chances are one of you is gonna live to be
ninety or ninety five. Well, that means that if you
adjust that inflation average number during your projected twenty five
to thirty years of retirement just by a half or
(12:38):
even you know, maybe a little bit to be more
conservative one percent. So and we know of inflation, like
I just said earlier in the previous it's one hundred
percent or more for most things that we give. So
if you just adjust it to say two and a
half percent, assumption or three percent assumption.
Speaker 3 (12:57):
And three used to be the norm you know, prior
to two thousand and eight when you're planning, is okay,
If we're gonna do a retirement plan and we figure out,
you know, your assets, how much you're gonna need for
retirement spending on an annual basis last for twenty or
thirty years in retirement, what do we get a factor
in for inflation? It used to be three percent. After
two thousand and eight, it decimated it, yeah, because it
(13:19):
was you know, one percent.
Speaker 2 (13:21):
There was some years it was to get it ro right,
recession years.
Speaker 3 (13:25):
I mean twenty twenty, just give twenty twenty, we were
at one point two percent average inflation rate. And then
after that we went into the mid and then see
and then single high digit inflation. And how we're you
know in the three so the average rate of inflation
depending on how you know, the rate of decline of
the growth of inflation. If you get back to some
(13:47):
more normal right, but if we see it this higher elevated.
If the Feds did make another mistake, right because they figure, oh,
we're forecasting that the target rate, we're going to get there.
You know, things are decreasing, we're going to get to
our two percent, so we can go ahead and start
cutting rates right now. If they miss the mark again
like they missed the mark battling.
Speaker 2 (14:07):
Inflation previous times. Yeah, battling inflation.
Speaker 3 (14:10):
Then this inflation, we're going to be in a higher
inflationary environment for a long period of time, which is
going to increase the overall average. So just you know,
prior to twenty twenty two, most software plans were in
the two percent two point two. Now that's sicked up
to two point five two point seven percent, and so
that can we can go back to the old inflation, and.
Speaker 2 (14:29):
You really should in my opinion, because what that really means.
So okay, we're throwing out a lot of things here.
It's simple. If if you want to continue being able
to go out to dinners, travel, you know, live comfortably
in retirement, it used to be that. Okay again, when
(14:53):
I don't have debts and I have you know, a
capital and excess of my knee where you know, I
can spend based on what those assets produce or kick off.
It used to be it could be something better than
three percent or around three percent, you were good, especially
(15:15):
if inflation was one or two percent. As long as
my investments or my pension, my cola and my soul security,
so on and so forth was increasing enough to keep
up with inflation. I was good.
Speaker 3 (15:30):
And here's an important thing, and you touched on it earlier,
is let's say we go and we say, okay, well,
we used three percent in planning for quite a while
previous to two thousand and eight, So if we end
up getting back to that, then all right, no problem,
because that was normal for us before. The difference is,
as he's passed two three years, things on accumulative basis, right,
(15:52):
Because when we're talking about inflation and a plan two
and a half or three percent, that's on an annualized basis.
That's the rate of growth one year to the next year.
It's like getting a pay raise. Hey, what's my projected
pay raises every year? Oh, you're gonna get three to
five percent every year. Okay, But if you're not. And
a lot of things went up more than just an
average rate of three percent a year, five percent a year,
(16:14):
or nine percent a year. And when we hit the
top of nine point one percent CPI, we got to
boost to a lot of things out there insurance has
gone up double digits. I mean a lot of things
have gone up double digits or triple an accumulative basis.
So now we're starting at a higher water level. That's
not the right term, well, high water mark, high water mark,
(16:38):
and then you have to tick the you have to
increase that annualized rate of inflation growth moving forward into
the future. We were just talking about the other day
going out to dinner, right, you just went this last weekend.
Oh my god, I went last night. I remember the days,
which wasn't too too far back, when I spent one
hundred bucks around a little over one hundred bucks for
(16:59):
a meal for t with wife.
Speaker 2 (17:00):
You get any meal at any restaurant was no more
than one hundred bucks.
Speaker 3 (17:06):
Well, there are some of those high.
Speaker 2 (17:08):
I don't mean, like the hoity toity little French pause
where you get you know, a peanut pump from there,
and they called that an on trade pumfrey. Yeah, you
don't like them on tree.
Speaker 3 (17:22):
It is a seventy nine ninety five for.
Speaker 2 (17:24):
The peah exactly.
Speaker 3 (17:26):
But yeah, I mean, if I'm paying one hundred hundred
twenty dollars for dinner for me and my wife, that's
a nice restaurant in general terms.
Speaker 2 (17:33):
Yeah, now it's oh, it's a run in the milk.
We get a sandwich, you and I most days, and
it's it's it's anywhere from thirty to fifty bucks for
two sandwiches, two drinks, and a couple of bags of
chip or whatever, depending on where you go. I mean,
it's insane. A sandwich is twenty dollars. It should be five.
(17:55):
It's not going to go back to five. That's the thing.
Prices never, They might reach act a little bit, but
they never revert back to what they were ten years
ago or five years ago. So the key solution to
this is you so if your plan and we rewrite
your plan or do a plan for you. By the way,
(18:17):
our work includes planning. That's a living, breathing roadmap that
we update regularly to bench how how we're doing and
to measure success. And if we know that three percent
is even low from a projected price increase annually, then
you really need to be netting double that. And that's
(18:39):
where I was going where all this stuff we're talking about.
The solution is I can't be comfortable at a three
to five percent. I can't put my money in a
bank or a CD and go, wow, I'm getting three
four five percent.
Speaker 3 (18:54):
I'm good a ton of capital, and that's.
Speaker 2 (18:57):
Now they're eagerly now there are exactly right. And there
are the people that have so much excess investment capital
that obviously rate they don't need a high rate of return.
But if again, you're like most people who did everything
right again, you paid off the house, you don't have
car payments, you don't have credit card payments, but you
(19:19):
want to maintain an active lifestyle where you can afford
the cost of things going out to dinner, traveling, you know,
so on and so forth, and cover still all your
basic needs that have you know, probably doubled. Then you're
going to have to earn more than three four or
five percent. It's that simple. And there's nothing, you know,
(19:39):
one hundred percent fixed and guaranteed that pays more than
three four five percent. So we're going to show you
how we get more than three four five percent as
consistently as possible, with the least amount of risk possible.
And that is what we're going to show you. And
it can be done, and it can be done comfortably
(20:00):
without having to watch the TV every day and worry
that you know, oh my god, the market's down today. Well,
guess what. Your money shouldn't be all in anything, And
when you're working with us, we never put one hundred
percent of people's money in anything. We don't even put
fifty percent of their money in anything, meaning categorically, and
(20:23):
then we usually under each category of investments use a
five percent rule of thumb to mitigate risk as much
as possible. Because let's say you have a balanced portfolio
now of stocks and bonds, fifty percent in stocks, fifty
percent in bonds, and you have a half a million dollars,
(20:44):
A five percent position, whether it's a stock or a bond,
should be no more than twenty five thousand dollars roughly. Now.
It could be a little bit more in bonds, especially
individual bonds where they are fixed and guaranteed, but in stocks,
it's really important to have somebody who uses basic, you know,
(21:06):
high quality, long term tested, you know, fundamental principles of
managing money, which is, don't over bet on anyone position,
be in a position to be a buyer versus a seller.
Use dollar cost averaging, don't use emotion, don't panic when
things go down, you know, don't buy when things have gone,
(21:28):
you know, up really high because you think, hey, everything's
great now, look.
Speaker 3 (21:32):
And don't marry yourselves to one name or position at
or company.
Speaker 2 (21:36):
So so, if you're nowhere near retirement and you haven't
you know, any concerns about you know, the markets or
your investments, or your dollars stretching out for the rest
of your life, you know, so on and so forth,
it's probably not the right event for you. If you
are retired or about to retire and you've you've saved
(22:00):
and as I've said earlier, you've done everything right. You
paid off your debts. You know, you saved beyond what
your company was going to do for you. You got
Social Security coming in, and now you're just worried about
your dollars lasting for the next twenty five years at
the same level that they can that they buy goods
(22:22):
and services. Now, that's who should attend, and it's at
the old Spaghetti Factory from six to thirty from six
to seven thirty PM on October second, called nine one
six nine six seven thirty five hundred. Again that number
is nine one six nine six seven thirty five hundred.
I should also mention that we are fiduciaries. This isn't
(22:44):
a you know, about selling you some sort of product
for a commission.
Speaker 3 (22:49):
It's a flip where should pay for your dinner?
Speaker 2 (22:53):
Yes? No? Yeah? And on top of it, you know,
dinner is included, and the dinner's good. I've never had anybody.
Sure would somebody want, you know, a fancy steak dinner
somewhere else? Probably, you know, maybe, But nobody complains about
the meal at Spaghetti Factory. Everybody loves the spaghetti Factory,
(23:14):
at least that I know. And we've had thousands of
people sign up for these workshops over the years, and
hundreds and hundreds attend, and not one complaint about the venue. Actually,
I take that back. A couple of times we had
a big party, you know, next to us, but that's
(23:35):
very and it was a little bit harder to hear.
But other than that, it's a great venue. The food
is good, the service is good. The information is even better,
I promise you.
Speaker 3 (23:47):
That's all. That's basically what it is. It's just equipping
you with a lot more information, not just peeling, you know,
peeling the layers back or pulling the curtains back, however
you want to put it. As far as what's inside
what we do for our clients as loten as.
Speaker 2 (24:01):
It's not peeling your pants down, We're good if you're
opening up the curtains or pulling the covers back on
information and transparency, that's good.
Speaker 3 (24:11):
But it's also talking about the current financial markets, where
we're at in the economy, where you know, what our
thoughts are, where we see things you know, going in
the near term future, where there might be some concerns,
and then also touching on planning, as we had talked
about a little earlier.
Speaker 2 (24:28):
And you might think, well, why would I want to
come listen to these guys, Well, let me tell you why.
For over thirty years for me, for working on twenty
years almost for Giuseppi, we've been helping people who are
primarily retired manage their money through all kinds of very
good conditions and very very bad conditions. And so we're
(24:52):
battle tested. You know, most of what we have seen,
you know, over the last several years, we've seen before
and we'll see it again, and we know where your
money should be, you know, based on periods that are
very similar to now, to give you the best you know,
(25:13):
opportunity and chance for success. We're risk adverse. We focus
on total return, which is finding you ways to generate
the income or distributing the money from you know, the
investments and things that you have as a goal first,
along with capital preservation that's very important, and risk mitigation
(25:35):
and then growth. Third. It doesn't mean that we don't
want your money to grow beyond you know, the the
returns that it that it kicks off, the cash flow
that it kicks off. But if you just focus on growth,
like you probably did before you retired or you're about
to retire, there's too much risk usually in that area
(25:56):
where anyone bad year and then it sets you back.
Speaker 3 (26:01):
So you know what happened with the SMCI Nvidia not
too long ago, I mean double digit drops, you know,
in a matter of day or a few days or
even a week.
Speaker 2 (26:16):
So we actually sometimes have to help people realize that
it's a lesser evil to sell a position and wish
that you had held onto it a little bit longer,
versus that you didn't sell the position and you wished
you sold it sooner. Now, I don't know if that
(26:36):
if you can follow that, it just simply meanings that
most people end up regretting not selling a position and
rebalancing it into other things as as as you know,
times like this present the opportunity to do so. Meaning
where let's face it, so many of the big name
(26:58):
companies have gone up, you know, as JOZEFI said, double digits,
some triple digits, like in Video or SMCI and now
you know, you even know that in Video is doing okay.
Others are are selling off for various reasons, and people
hold on to things too long. We don't. The point
of that is is we don't have emotional you know,
(27:21):
ties to the money. We do it based on what
your goals and objectives are and how do we have
a portfolio that consistently gets you to those with the
least amount of risk possible. And again that's where we're
going to show you at the workshop. That's what we'd
show you if you came in and sit down with us.
If you can't make the workshop date called nine one
(27:45):
six nine six seven thirty five hundred. Again that number
is nine one six nine six seven thirty five hundred.
I did mention that I think that we're fiduciaries, but
everything we do is about transparency. Nothing we do is
about our interests. First it's about your interests first, not ours.
(28:05):
That's basically the definition of being a fiduciary is that
we don't look for something that we have to sell
you that then pays us so that we make a living.
Speaker 3 (28:16):
And that's a good point too, because the other part
of that is, you know, we're not looking for something
that we have to sell you because we don't have
to sell you anything. We don't have to put anything
into your portfolio. And we have a couple of large
custodial firms that we are aligned with that gives us
a ton of choices to choose from that's out there
(28:37):
within the investment world. A lot of the plain vanilla
things that you might be familiar with, and a lot
of other things that you've probably never heard of. And
then the ability to partner with some other institutional investment
firms to custom build some types of investments and strategies
to get the most bank for you buck, especially if
you're retiring or if you're looking for a little bit
(28:57):
more growth or more income, And how can you do
that without taking any unnecessary risk.
Speaker 2 (29:03):
Yeah, I was explaining this to you know, a fairly
new client the other day, and this this these the
access to investments that that we can put together that
we can, you know, use a another money manager that
(29:24):
really acts as a deal captain and creates an investment
banking relationship, you know, through the custodian that we use
so that we can place investments that you can't find
on the shelf for our VIP clients. And one of them,
you know, was literally what nine point eight percent a
(29:48):
return for three years with a hedge that that as
long as one of three indices and the details don't matter.
We'll explain you know, some of these things further if
you decide to join us. But as long as the
market let's say the stock market and the major indices
(30:08):
of the stock market in any given month, and it
resets every month war down thirty percent, you're going to
make that nine point eight percent per year. So that's
that's that's unique in the marketplace. Most people just have
mutual funds or exchange traded funds or some individual stocks
(30:31):
or bond funds. We can put together custom investments that
are usually only available to people with millions and millions
of dollars a private client status type. Right, But what
we do is we we go, hey, all right, we
got about two million dollars that of clients money that
(30:52):
we're looking for an investment aggregate that pays a high
monthly income better than you could get you know, your
yourself or off the street. And then we partner up
with another big money management type firm and then they
act as the captain to find other firms like us,
and then they go to a big bank and go, okay,
(31:15):
we got ten firms that are going to do fifty
million dollars and we want a custom investment that you're
going to guarantee to pay at nine or ten percent
you know, interest per year, and you're going to hedge it,
you know, use a hedging strategy with some options so
that you get this return. And it's, like I said,
(31:38):
it's something you can't do anywhere else. And you're thinking, well,
what is that? And and quite frankly, it's like having
an index fund for an example. So many people know
about SPY or QQQ or DIA, and and that's a
passive approach to investing in the market. But there's no
(32:01):
there's not much of any dividend to speak of, especially
from QQQ. You know a little bit more from DIA
and a little bit less from s or vice versa.
It doesn't matter, but the income is very little from
those while you own it and just riding the roller coaster,
and there's no guarantee on what you're gonna make and
(32:23):
there's no protection on the downside. So this is just
like buying spy or an index, but knowing what you're
gonna make and knowing that you've got downside protection. As
long as spy, for example, does not go down twenty
nine point ninety nine percent or more, you get the
guaranteed you know ready to return. And so why would
(32:46):
you buy spy or an indextnuity or anything passively tied
to an index without guarantees wrapped around it. So if
you want to learn more about that, and if you're
retired or about to retire and want to meet for
a no obligation consultation, call us at nine one six
(33:08):
ninety six seven thirty five hundred. If you're retired or
about to retire and want to see us live and
see what we do live, register for our workshop next
week on Wednesday, Occober second, from six to seven thirty
pm at the Old Spaghetti Factory called nine one six
ninety six seven thirty five hundred. Well, this is my
favorite part of the show because I love talking specific
(33:31):
investment ideas or specific investment strategies, and we're going to
talk about a specific investment strategy that we do for many, many, many, many,
many clients, because many, many, many, many retired clients. Should
I have done one more many? Maybe I should have
(33:52):
done one more many, But anyway, many of our retired
clients worked for publicly traded companies and they asked, you know,
anywhere from hundreds to thousands to actually tens of thousands
of shares in at least one clients of ours, you know,
(34:12):
we're in the from their stock option plan, and they've
amassed these shares over the years and decades sometimes that
are very low cost base and they don't want to
sell the shares because if they sell the shares, they're
going to pay a good chunk in tax. And also
(34:33):
they like the company. They worked for it for you know,
years or decades, as I said, and they just don't
want it, they don't need to sell it. And in fact,
maybe it's an asset that's part of your legacy to
go on to the next generation.
Speaker 3 (34:47):
Or maybe it's stocks, you know, the company, and the
stock is good and it looks like a scott good
growth potential.
Speaker 2 (34:53):
You know. Again, whatever the reason is that you don't
want to sell the shares, what we do is look
at the shares from again what we were talking about
earlier and income perspective. Will it help you in your
hopefully long long term retirement years, you know, keep pace
(35:14):
or more importantly, outpace inflation. And one of the strategies
that does outpace inflation typically is the use of writing
or selling options call options against the stock position, covering
it with the stock position that you have in the
(35:35):
company that you worked for. For example, it could be
many many you know, some of the ones that we
have of former employees or Google, or maybe you're even
current employee. Google Ups, Tesla into It, Amazon into It, Visa.
(35:59):
You know, those are just some. This works on many,
many companies that are big companies that have lots of volume,
you know, daily. So let's take let's take Google for example.
Google is definitely off of its all time highs. Google
(36:22):
doesn't pay a good dividend. It certainly doesn't pay an
income that's going to keep up with inflation. As far
as the you know, what you get from cash flow
wise from owning Google stock, it's basically almost zero, and
I think it's wet around less than one percent.
Speaker 3 (36:40):
Yeah, I meant most of the text. Apple I think
pays the most, and that's seven tenths of a percent.
So a year, let's say you have so I've you
have to you have to be dependent upon the growth
of the stock. Yeah, the price of the stock going
up period yep. So let's say you have five thousand
shares of Google. Again, it could be any publicly traded
(37:01):
company that you work for that you've a mass that
you don't want to sell the stock and you're going, Wow,
five thousand shares of Google is like, well what is
that right now? It's a couple of million bucks or more,
and you're going, that's a lot of money to not
be earning, you know, something that's going to help me
(37:22):
pay my bills. But again, if I sell it, you
know I'm going to pay hundreds of thousands of dollars
in taxes because I either got the shares for free
or paid very little for the shares. So now we
look into the options market, and I've been doing this
for a very long time, and see what we could
sell options to buy your stock off of you and
(37:47):
for a premium, meaning for money that you receive, and
we want it at a price that's above, you know,
considerably above the current price and will give you the
to generate some money of giving somebody the option to
buy your stock off of you with the intention that
it's at a price that the stock's probably not going
(38:10):
to go to. And this is where we do calculations
and things to figure out a price that gives a
good return, but it's also a price that you're not
going to end up having to sell your stock. You're
just going to end up retaining you know, as much
of and hopefully ninety percent of more of that premium
(38:31):
you receive. So think of it like a house. So
I have a house.
Speaker 2 (38:36):
It was maybe our first house, and now we're in
our second house and I'm renting it. You know, the
rent is the cash flow that the stock price, the
house price you know, could still go up in value,
but you don't want to sell it. You want the
cash flow of the rent. In this case, you have
a stock that is like not renting your your investment property.
(39:01):
So you have to figure out a way to get
cash flow. So in this case, you give somebody the
option to buy your stock off of you for a
period of time, and if it doesn't go through the
price that the person who has the option period is
willing to pay, you keep the premium they receive. And
the types of premiums you can receive on a percentage
(39:23):
basis are gigantic.
Speaker 3 (39:25):
And that's a good analogy and a break it down
in simpler terms. You buy an investment property. You can
need to buy an investment property purely for the capital appreciation.
You bought it, you're going to renovate it and at
a later time you're going to sell it for a
higher price and may just a capital appreciation. Or you're
buying the investment property and you're going to rent it
(39:47):
out and it's going to be income producing all the while.
As you hold on to it, it is going to
appreciate and price and have some appreciation, but you're getting
paid while you wait for that price appreciation to take place.
And that's the same thing as you have a growth
stock that doesn't pay a dividend or hardly you know
any dividend, and you're just looking for a capital appreciation.
(40:11):
But when you're doing the option strategies, overlaid. On top
of it, you're actually getting paid for your time while
you're waiting for that to go.
Speaker 2 (40:19):
Up and to just put it into real numbers. Google
is actually trading, you know, somewhere in the low to
mid one sixties. Of course, the market's not open, and
depending on how it opens next week, you know, don't
we don't know, could be up or down. But again
it's in the low one sixties to mid one sixties.
(40:41):
And right now, you know, just looking at what the
options market was pain last week, if you sold Google
options on your Google covered by your Google shares at
one seventy, you would get about forty cents per share.
Now you're thinking, well, forty cents, that's not that great. Well,
(41:05):
when you times at times five thousand, that's two thousand
dollars for one week. Now, if Google stays below the
one hundred and seventy dollars per share that expires next Friday,
you keep the two thousand dollars, or a portion of
(41:26):
the two thousand dollars, you know, depending on when we
get you out, because we can get you out early
if we think, you know, Google, you know, it's Wednesday,
say next week, and Google's hovering around one, you know,
sixty seven, one sixty eight, and say, we can you know,
keep like fifty percent of the two thousand dollars that week,
(41:49):
but we're worried that it might go above one seventy.
We get it out and lock in some profit early,
and then we look next week to sell an option
on your Google stocks again next week, and so on
and so forth.
Speaker 3 (42:05):
And just example where you said if you own five
thousand shares, that's a little under a million buck. I
think it's eight hundred and forty thousand dollars on like
one sixty eight. Yeah, I did use a calculator. You're like,
how did you? You look at me, like, wait a minute,
are you data from star.
Speaker 2 (42:22):
Trek h exactly? But just see the couch ltter.
Speaker 3 (42:26):
Just quick calculations on that. And if you're doing two
thousand dollars a week, not that that's going to stay consistent,
but just simple math, and.
Speaker 2 (42:35):
You might you might not be. There might be some
weeks where it's a loser. You don't have to win.
We don't have to win every week to make this
a winner for you, because this is not guaranteed, you know,
but definitely, but owning Google stock is not guaranteed Google. Look,
Google was you know, way higher and you've lost value,
(42:57):
So why not offset it with some sort of income
you know strategy on Google to begin with when it's
already not guaranteed.
Speaker 3 (43:06):
But eight thousand a month ninety six thousand dollars a
year on eight hundred and forty thousand dollars investment over
eleven percent, So you just created an eleven percent dividend.
Now that's one hundred percent winners and seeing if you
had two thousand dollars a month, Now, that's not going
to happen. There's nothing that's one hundred percent. But we
have a pretty you know, pretty good track record. So
let's say seven out of ten times, you you you're
(43:27):
able to do this. Even if you do that at
seventy percent, that's still overall about an eight percent you know,
return on the original investment. That's that's a healthy dividend
that basically pays nothing, you know, so that you're not
going to sell that is not creating cash flow for you.
Speaker 2 (43:46):
Again, covered calls is the simplest option strategy that that
that we've been doing a very long time. So I
hope you enjoyed some of the things we talked about.
Please give us a call by calling nine one six
nine six seven thirty five hundred. You've been listening to
(44:08):
the wise money guys and have a great weekend.
Speaker 3 (44:11):
Have a great weekend and hope to see you on Wednesday.
Speaker 2 (44:13):
By y'all,
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 or call nine
one six nine six seven thirty five hundred.
Speaker 2 (00:17):
Welcome to the Wise Money Guys Radio Show. I'm your
co host John Scambra. I'm here with my partner Giuseppe Fisconti.
We are certified portfolio managers out of Granite Bay, California
that specialize in helping people who are retired or about
to retire manage their money. If you like our show
and want to get a hold of us for a question,
or get on our calendar our register for our next
(00:39):
week workshop, call us at nine one six nine six
seven thirty five hundred. I guess I should mention that
first our workshop after talking about it for about a month,
probably our last one of the year because most of
the ones in November December we can't count on the
on the weather. So it's at the Old Spaghetti Factory
(01:02):
from six to seven thirty pm next Wednesday, or I
should say this Wednesday from six to seven thirty pm
at the Old Spaghetti Factory in Roseville. You definitely need
to register. I think we have. We definitely have more
registrations than we have seats, but we haven't confirmed you know,
(01:25):
so there's still a few seats left basically, right because
if we can't you know, get a hold of you
to confirm your registration, then we don't put you on
the list. But called nine one six nine six seven
thirty five hundred, why would you want to attend? Well,
if you're concerned at all about everything that's been going
(01:45):
on the last few years, really since probably going back
to twenty nineteen was which was the last kind of yeah,
I would Yeah, I'm gonna.
Speaker 3 (01:57):
Say that before we entered the twilights, right.
Speaker 2 (01:59):
Before the highlight zone hitting twenty twenty and twenty twenty one,
and then okay, now, all the government spending from the
twilight Zone of twenty twenty and twenty twenty one put
us into hyper inflation, which caused a market crash, a
stock market crash, a bond market crash. Then slowly, you know,
(02:20):
people who aren't working with us probably started recovering. If
you're working with us, you didn't crash to begin with.
But you know, there's still so many things out there
potentially that could be the next crash, and that next
crash could be a number of things. It could be
geopolitical tension, it could be inflation coming back even more
(02:45):
so than it was before, which is my prediction because
even though we've seen the rate of increases in prices
slowing down, we've seen no reduction in prices, and more importantly,
we've seen no changes to fiscal policy whatsoever. Fiscal policy
being the the purse that Congress controls and deficit spending, borrowing, printing,
(03:15):
devaluation of the dollar continues without change. And so because
of that, I think we're getting a temporary slow down
in the increase in prices c P, I p P
I PCE. You know all those data measurements that you know,
strategists like US, economists, investment experts like us look at. However,
(03:41):
we take it all with a grain of salt, don't we.
Speaker 3 (03:43):
Yeah, And data just came in recently. GDP is at
three percent for last quarter. Core durables came in, So
nothing screaming panic or we need stimulus i e. Rate cuts,
And it'll be interesting to see what the rest of
this year turns out. Because the Feds are you know,
(04:05):
they've indicated maybe another quarter point cut, but then there's
other analysts and talking heads and pundits are saying we're
gonna get another fifty basis point cuts.
Speaker 2 (04:14):
So it's more on Can you say more on Philip More?
On Philip More? I mean, if you're just looking, you know,
going okay, you know we're still doing good right. Our
house is paid for, our cars are paid for, We
don't have credit card debt. We saved up a good
amount of money, you know, while we worked in our
investments and things. But you're concerned it might not stretch,
(04:39):
you know the rest of your life and still allow
you to leave a legacy. That's where we come in
and that's what we're going to show you at the workshop.
You know what we're doing to really stay as much
as possible without having a crystal ball, stay ahead of
the curve, you know. So as an example, when the
(05:00):
FED in twenty twenty one was saying, listen, and this
is towards the end of twenty one, beginning of twenty two,
inflation is temporary. Transitory was the word that they kept using.
We were going, that is absolutely ludicrous. Not only is
inflation not transitory, it may be at the highest levels
(05:23):
we've ever seen. So we were not in bonds, and
we were reducing our exposure to stocks and increasing hour
and I say our clients and our own accounts, increasing
the cash or cash equivalents, all in anticipation of a
(05:45):
stock market that did go down, of a bond market
that did go down because inflation was anything but transitory,
and in fact, it hit records that hadn't been seen
since the seventies. And I believe that is going to
happen again, and sooner than we think. So you think
they're going to.
Speaker 3 (06:04):
Come out and say the the transitory word again, except
for it's gonna be flip flopped.
Speaker 2 (06:10):
Yeah, yeah. And initially, you know, the the the residents
will duck and hide and and you know try to
manipulate you know, data and and use dot dot plots
and all kinds of things to you know, really give
you this illusion that they really know what they're talking about.
(06:31):
But if they really knew what they were talking about,
they would be saying but they won't because of political
you know, reasons that the Federal Reserve has zero ability
to control inflation, you know, through monetary policy, through the
(06:51):
FED funds and or or maybe some of the bond
buying and or bond selling because it's being far outpaced
by borrowing from the federal government. And the deficit cost
(07:12):
now not the deficit cost, the debt cost now as
far as a single you know, ledger item on the
balance sheet on the budget sheets for each year has
now surpassed individually the cost of running the entire military complex,
the cost of Social security, and or the cost of medicare.
Speaker 3 (07:36):
That's amazing.
Speaker 2 (07:37):
And so the only reason why they're they're they're trying
to manipulate interest rates lower when they know they shouldn't
is to try to refinance some of that just unwarranted,
absolutely disastrous spending that has been over the last decade
(08:02):
or so. And there's no other way around it. I mean,
you've got to be able to refinance that debt. Five
trillion is needing to be refinanced immediately, and then another
five trillion, and then I don't know how much you know,
the the bulk of it has after that, but there's
basically two tranches of five trillion dollars that the Fed
(08:27):
has to deal with, you know, in the next few months,
and then next year ten trillion dollars of the thirty
you know, five thirty six trillion dollars, and again call
it what you will. That's going to make everything more
expensive because it's either going to be more expensive through
(08:50):
taxes being increased, or it's going to be more expensive
because the value of the dollar is going down and
it takes more dollars to buy the same thing. Couple.
Speaker 3 (09:01):
And on top of that, interest rates are still high
on borrowing, credit cards are at real high interest rates,
credit card debt limits are at all time high. Delinquencies
you're starting to pick up. So yeah, so if inflation
comes back, I mean it's already putting pressure on the
consumer and stress.
Speaker 2 (09:20):
Oh pressure is an understatement, and think about it. Come back, Well,
it's not come down. So if we look at prices
from twenty twenty until now, you know, most things that
people need are up in that short amount of time
to several years more than one hundred percent, some as
(09:42):
high as five hundred percent. It just depends on the
item you're looking at. But here's the funny thing. The
worst categories are the things that you can't get around spending,
which is you know, food, gasoline, insurance, so on and
so forth. Medical costs, those things have all doubled and trimpled,
(10:04):
and so we're going to show you and talk a
little bit more about what we're going to show you
at our workshop or if you come in and meet
with us, on what we're doing to help you know,
combat and really build inflation beating portfolios that will consistently
help you stay ahead of the game. And yes, we
(10:27):
are going to show you actual you know models or
a model that most of our retirees have, and then
the way we actively manage and rebalance it and what
that could do for you, and why we do things
the way we do them, which we believe are drastically
better than competitors in the marketplace, and the proof is
(10:51):
in the putting. So that's the main thing come see
for yourself. But also, if you haven't done planning in
a while, we were talking about this at another I
forget when, but if you look at the inflation assumption
that was built into most people's plans. So let's say
(11:14):
you've done everything right. You're sixty five years old, you're
now on a passive income, you just started taking Social Security,
you saved five hundred thousand or a million, you paid
off your house, you have no car payments. You've done
everything that you're supposed to do, and you even did
(11:35):
a plan to help you get there. But that plan,
you're now thinking, Okay, I did my plan. I did
everything I was supposed to do. But keep in mind
that just about a year, no two years ago, inflation
assumptions built into planning where that average inflation over a
(11:57):
ten year period was about one and a half percent.
So if you modeled out your spending needs over the
next So you're again, you're sixty five now, and you're
projecting that you're gonna live to age ninety or ninety five.
You know, if you're married and you're both over sixty five,
(12:18):
chances are one of you is gonna live to be
ninety or ninety five. Well, that means that if you
adjust that inflation average number during your projected twenty five
to thirty years of retirement just by a half or
(12:38):
even you know, maybe a little bit to be more
conservative one percent. So and we know of inflation, like
I just said earlier in the previous it's one hundred
percent or more for most things that we give. So
if you just adjust it to say two and a
half percent, assumption or three percent assumption.
Speaker 3 (12:57):
And three used to be the norm you know, prior
to two thousand and eight when you're planning, is okay,
If we're gonna do a retirement plan and we figure out,
you know, your assets, how much you're gonna need for
retirement spending on an annual basis last for twenty or
thirty years in retirement, what do we get a factor
in for inflation? It used to be three percent. After
two thousand and eight, it decimated it, yeah, because it
(13:19):
was you know, one percent.
Speaker 2 (13:21):
There was some years it was to get it ro right,
recession years.
Speaker 3 (13:25):
I mean twenty twenty, just give twenty twenty, we were
at one point two percent average inflation rate. And then
after that we went into the mid and then see
and then single high digit inflation. And how we're you
know in the three so the average rate of inflation
depending on how you know, the rate of decline of
the growth of inflation. If you get back to some
(13:47):
more normal right, but if we see it this higher elevated.
If the Feds did make another mistake, right because they figure, oh,
we're forecasting that the target rate, we're going to get there.
You know, things are decreasing, we're going to get to
our two percent, so we can go ahead and start
cutting rates right now. If they miss the mark again
like they missed the mark battling.
Speaker 2 (14:07):
Inflation previous times. Yeah, battling inflation.
Speaker 3 (14:10):
Then this inflation, we're going to be in a higher
inflationary environment for a long period of time, which is
going to increase the overall average. So just you know,
prior to twenty twenty two, most software plans were in
the two percent two point two. Now that's sicked up
to two point five two point seven percent, and so
that can we can go back to the old inflation, and.
Speaker 2 (14:29):
You really should in my opinion, because what that really means.
So okay, we're throwing out a lot of things here.
It's simple. If if you want to continue being able
to go out to dinners, travel, you know, live comfortably
in retirement, it used to be that. Okay again, when
(14:53):
I don't have debts and I have you know, a
capital and excess of my knee where you know, I
can spend based on what those assets produce or kick off.
It used to be it could be something better than
three percent or around three percent, you were good, especially
(15:15):
if inflation was one or two percent. As long as
my investments or my pension, my cola and my soul security,
so on and so forth was increasing enough to keep
up with inflation. I was good.
Speaker 3 (15:30):
And here's an important thing, and you touched on it earlier,
is let's say we go and we say, okay, well,
we used three percent in planning for quite a while
previous to two thousand and eight, So if we end
up getting back to that, then all right, no problem,
because that was normal for us before. The difference is,
as he's passed two three years, things on accumulative basis, right,
(15:52):
Because when we're talking about inflation and a plan two
and a half or three percent, that's on an annualized basis.
That's the rate of growth one year to the next year.
It's like getting a pay raise. Hey, what's my projected
pay raises every year? Oh, you're gonna get three to
five percent every year. Okay, But if you're not. And
a lot of things went up more than just an
average rate of three percent a year, five percent a year,
(16:14):
or nine percent a year. And when we hit the
top of nine point one percent CPI, we got to
boost to a lot of things out there insurance has
gone up double digits. I mean a lot of things
have gone up double digits or triple an accumulative basis.
So now we're starting at a higher water level. That's
not the right term, well, high water mark, high water mark,
(16:38):
and then you have to tick the you have to
increase that annualized rate of inflation growth moving forward into
the future. We were just talking about the other day
going out to dinner, right, you just went this last weekend.
Oh my god, I went last night. I remember the days,
which wasn't too too far back, when I spent one
hundred bucks around a little over one hundred bucks for
(16:59):
a meal for t with wife.
Speaker 2 (17:00):
You get any meal at any restaurant was no more
than one hundred bucks.
Speaker 3 (17:06):
Well, there are some of those high.
Speaker 2 (17:08):
I don't mean, like the hoity toity little French pause
where you get you know, a peanut pump from there,
and they called that an on trade pumfrey. Yeah, you
don't like them on tree.
Speaker 3 (17:22):
It is a seventy nine ninety five for.
Speaker 2 (17:24):
The peah exactly.
Speaker 3 (17:26):
But yeah, I mean, if I'm paying one hundred hundred
twenty dollars for dinner for me and my wife, that's
a nice restaurant in general terms.
Speaker 2 (17:33):
Yeah, now it's oh, it's a run in the milk.
We get a sandwich, you and I most days, and
it's it's it's anywhere from thirty to fifty bucks for
two sandwiches, two drinks, and a couple of bags of
chip or whatever, depending on where you go. I mean,
it's insane. A sandwich is twenty dollars. It should be five.
(17:55):
It's not going to go back to five. That's the thing.
Prices never, They might reach act a little bit, but
they never revert back to what they were ten years
ago or five years ago. So the key solution to
this is you so if your plan and we rewrite
your plan or do a plan for you. By the way,
(18:17):
our work includes planning. That's a living, breathing roadmap that
we update regularly to bench how how we're doing and
to measure success. And if we know that three percent
is even low from a projected price increase annually, then
you really need to be netting double that. And that's
(18:39):
where I was going where all this stuff we're talking about.
The solution is I can't be comfortable at a three
to five percent. I can't put my money in a
bank or a CD and go, wow, I'm getting three
four five percent.
Speaker 3 (18:54):
I'm good a ton of capital, and that's.
Speaker 2 (18:57):
Now they're eagerly now there are exactly right. And there
are the people that have so much excess investment capital
that obviously rate they don't need a high rate of return.
But if again, you're like most people who did everything
right again, you paid off the house, you don't have
car payments, you don't have credit card payments, but you
(19:19):
want to maintain an active lifestyle where you can afford
the cost of things going out to dinner, traveling, you know,
so on and so forth, and cover still all your
basic needs that have you know, probably doubled. Then you're
going to have to earn more than three four or
five percent. It's that simple. And there's nothing, you know,
(19:39):
one hundred percent fixed and guaranteed that pays more than
three four five percent. So we're going to show you
how we get more than three four five percent as
consistently as possible, with the least amount of risk possible.
And that is what we're going to show you. And
it can be done, and it can be done comfortably
(20:00):
without having to watch the TV every day and worry
that you know, oh my god, the market's down today. Well,
guess what. Your money shouldn't be all in anything, And
when you're working with us, we never put one hundred
percent of people's money in anything. We don't even put
fifty percent of their money in anything, meaning categorically, and
(20:23):
then we usually under each category of investments use a
five percent rule of thumb to mitigate risk as much
as possible. Because let's say you have a balanced portfolio
now of stocks and bonds, fifty percent in stocks, fifty
percent in bonds, and you have a half a million dollars,
(20:44):
A five percent position, whether it's a stock or a bond,
should be no more than twenty five thousand dollars roughly. Now.
It could be a little bit more in bonds, especially
individual bonds where they are fixed and guaranteed, but in stocks,
it's really important to have somebody who uses basic, you know,
(21:06):
high quality, long term tested, you know, fundamental principles of
managing money, which is, don't over bet on anyone position,
be in a position to be a buyer versus a seller.
Use dollar cost averaging, don't use emotion, don't panic when
things go down, you know, don't buy when things have gone,
(21:28):
you know, up really high because you think, hey, everything's
great now, look.
Speaker 3 (21:32):
And don't marry yourselves to one name or position at
or company.
Speaker 2 (21:36):
So so, if you're nowhere near retirement and you haven't
you know, any concerns about you know, the markets or
your investments, or your dollars stretching out for the rest
of your life, you know, so on and so forth,
it's probably not the right event for you. If you
are retired or about to retire and you've you've saved
(22:00):
and as I've said earlier, you've done everything right. You
paid off your debts. You know, you saved beyond what
your company was going to do for you. You got
Social Security coming in, and now you're just worried about
your dollars lasting for the next twenty five years at
the same level that they can that they buy goods
(22:22):
and services. Now, that's who should attend, and it's at
the old Spaghetti Factory from six to thirty from six
to seven thirty PM on October second, called nine one
six nine six seven thirty five hundred. Again that number
is nine one six nine six seven thirty five hundred.
I should also mention that we are fiduciaries. This isn't
(22:44):
a you know, about selling you some sort of product
for a commission.
Speaker 3 (22:49):
It's a flip where should pay for your dinner?
Speaker 2 (22:53):
Yes? No? Yeah? And on top of it, you know,
dinner is included, and the dinner's good. I've never had anybody.
Sure would somebody want, you know, a fancy steak dinner
somewhere else? Probably, you know, maybe, But nobody complains about
the meal at Spaghetti Factory. Everybody loves the spaghetti Factory,
(23:14):
at least that I know. And we've had thousands of
people sign up for these workshops over the years, and
hundreds and hundreds attend, and not one complaint about the venue. Actually,
I take that back. A couple of times we had
a big party, you know, next to us, but that's
(23:35):
very and it was a little bit harder to hear.
But other than that, it's a great venue. The food
is good, the service is good. The information is even better,
I promise you.
Speaker 3 (23:47):
That's all. That's basically what it is. It's just equipping
you with a lot more information, not just peeling, you know,
peeling the layers back or pulling the curtains back, however
you want to put it. As far as what's inside
what we do for our clients as loten as.
Speaker 2 (24:01):
It's not peeling your pants down, We're good if you're
opening up the curtains or pulling the covers back on
information and transparency, that's good.
Speaker 3 (24:11):
But it's also talking about the current financial markets, where
we're at in the economy, where you know, what our
thoughts are, where we see things you know, going in
the near term future, where there might be some concerns,
and then also touching on planning, as we had talked
about a little earlier.
Speaker 2 (24:28):
And you might think, well, why would I want to
come listen to these guys, Well, let me tell you why.
For over thirty years for me, for working on twenty
years almost for Giuseppi, we've been helping people who are
primarily retired manage their money through all kinds of very
good conditions and very very bad conditions. And so we're
(24:52):
battle tested. You know, most of what we have seen,
you know, over the last several years, we've seen before
and we'll see it again, and we know where your
money should be, you know, based on periods that are
very similar to now, to give you the best you know,
(25:13):
opportunity and chance for success. We're risk adverse. We focus
on total return, which is finding you ways to generate
the income or distributing the money from you know, the
investments and things that you have as a goal first,
along with capital preservation that's very important, and risk mitigation
(25:35):
and then growth. Third. It doesn't mean that we don't
want your money to grow beyond you know, the the
returns that it that it kicks off, the cash flow
that it kicks off. But if you just focus on growth,
like you probably did before you retired or you're about
to retire, there's too much risk usually in that area
(25:56):
where anyone bad year and then it sets you back.
Speaker 3 (26:01):
So you know what happened with the SMCI Nvidia not
too long ago, I mean double digit drops, you know,
in a matter of day or a few days or
even a week.
Speaker 2 (26:16):
So we actually sometimes have to help people realize that
it's a lesser evil to sell a position and wish
that you had held onto it a little bit longer,
versus that you didn't sell the position and you wished
you sold it sooner. Now, I don't know if that
(26:36):
if you can follow that, it just simply meanings that
most people end up regretting not selling a position and
rebalancing it into other things as as as you know,
times like this present the opportunity to do so. Meaning
where let's face it, so many of the big name
(26:58):
companies have gone up, you know, as JOZEFI said, double digits,
some triple digits, like in Video or SMCI and now
you know, you even know that in Video is doing okay.
Others are are selling off for various reasons, and people
hold on to things too long. We don't. The point
of that is is we don't have emotional you know,
(27:21):
ties to the money. We do it based on what
your goals and objectives are and how do we have
a portfolio that consistently gets you to those with the
least amount of risk possible. And again that's where we're
going to show you at the workshop. That's what we'd
show you if you came in and sit down with us.
If you can't make the workshop date called nine one
(27:45):
six nine six seven thirty five hundred. Again that number
is nine one six nine six seven thirty five hundred.
I did mention that I think that we're fiduciaries, but
everything we do is about transparency. Nothing we do is
about our interests. First it's about your interests first, not ours.
(28:05):
That's basically the definition of being a fiduciary is that
we don't look for something that we have to sell
you that then pays us so that we make a living.
Speaker 3 (28:16):
And that's a good point too, because the other part
of that is, you know, we're not looking for something
that we have to sell you because we don't have
to sell you anything. We don't have to put anything
into your portfolio. And we have a couple of large
custodial firms that we are aligned with that gives us
a ton of choices to choose from that's out there
(28:37):
within the investment world. A lot of the plain vanilla
things that you might be familiar with, and a lot
of other things that you've probably never heard of. And
then the ability to partner with some other institutional investment
firms to custom build some types of investments and strategies
to get the most bank for you buck, especially if
you're retiring or if you're looking for a little bit
(28:57):
more growth or more income, And how can you do
that without taking any unnecessary risk.
Speaker 2 (29:03):
Yeah, I was explaining this to you know, a fairly
new client the other day, and this this these the
access to investments that that we can put together that
we can, you know, use a another money manager that
(29:24):
really acts as a deal captain and creates an investment
banking relationship, you know, through the custodian that we use
so that we can place investments that you can't find
on the shelf for our VIP clients. And one of them,
you know, was literally what nine point eight percent a
(29:48):
return for three years with a hedge that that as
long as one of three indices and the details don't matter.
We'll explain you know, some of these things further if
you decide to join us. But as long as the
market let's say the stock market and the major indices
(30:08):
of the stock market in any given month, and it
resets every month war down thirty percent, you're going to
make that nine point eight percent per year. So that's
that's that's unique in the marketplace. Most people just have
mutual funds or exchange traded funds or some individual stocks
(30:31):
or bond funds. We can put together custom investments that
are usually only available to people with millions and millions
of dollars a private client status type. Right, But what
we do is we we go, hey, all right, we
got about two million dollars that of clients money that
(30:52):
we're looking for an investment aggregate that pays a high
monthly income better than you could get you know, your
yourself or off the street. And then we partner up
with another big money management type firm and then they
act as the captain to find other firms like us,
and then they go to a big bank and go, okay,
(31:15):
we got ten firms that are going to do fifty
million dollars and we want a custom investment that you're
going to guarantee to pay at nine or ten percent
you know, interest per year, and you're going to hedge it,
you know, use a hedging strategy with some options so
that you get this return. And it's, like I said,
(31:38):
it's something you can't do anywhere else. And you're thinking, well,
what is that? And and quite frankly, it's like having
an index fund for an example. So many people know
about SPY or QQQ or DIA, and and that's a
passive approach to investing in the market. But there's no
(32:01):
there's not much of any dividend to speak of, especially
from QQQ. You know a little bit more from DIA
and a little bit less from s or vice versa.
It doesn't matter, but the income is very little from
those while you own it and just riding the roller coaster,
and there's no guarantee on what you're gonna make and
(32:23):
there's no protection on the downside. So this is just
like buying spy or an index, but knowing what you're
gonna make and knowing that you've got downside protection. As
long as spy, for example, does not go down twenty
nine point ninety nine percent or more, you get the
guaranteed you know ready to return. And so why would
(32:46):
you buy spy or an indextnuity or anything passively tied
to an index without guarantees wrapped around it. So if
you want to learn more about that, and if you're
retired or about to retire and want to meet for
a no obligation consultation, call us at nine one six
(33:08):
ninety six seven thirty five hundred. If you're retired or
about to retire and want to see us live and
see what we do live, register for our workshop next
week on Wednesday, Occober second, from six to seven thirty
pm at the Old Spaghetti Factory called nine one six
ninety six seven thirty five hundred. Well, this is my
favorite part of the show because I love talking specific
(33:31):
investment ideas or specific investment strategies, and we're going to
talk about a specific investment strategy that we do for many, many, many, many,
many clients, because many, many, many, many retired clients. Should
I have done one more many? Maybe I should have
(33:52):
done one more many, But anyway, many of our retired
clients worked for publicly traded companies and they asked, you know,
anywhere from hundreds to thousands to actually tens of thousands
of shares in at least one clients of ours, you know,
(34:12):
we're in the from their stock option plan, and they've
amassed these shares over the years and decades sometimes that
are very low cost base and they don't want to
sell the shares because if they sell the shares, they're
going to pay a good chunk in tax. And also
(34:33):
they like the company. They worked for it for you know,
years or decades, as I said, and they just don't
want it, they don't need to sell it. And in fact,
maybe it's an asset that's part of your legacy to
go on to the next generation.
Speaker 3 (34:47):
Or maybe it's stocks, you know, the company, and the
stock is good and it looks like a scott good
growth potential.
Speaker 2 (34:53):
You know. Again, whatever the reason is that you don't
want to sell the shares, what we do is look
at the shares from again what we were talking about
earlier and income perspective. Will it help you in your
hopefully long long term retirement years, you know, keep pace
(35:14):
or more importantly, outpace inflation. And one of the strategies
that does outpace inflation typically is the use of writing
or selling options call options against the stock position, covering
it with the stock position that you have in the
(35:35):
company that you worked for. For example, it could be
many many you know, some of the ones that we
have of former employees or Google, or maybe you're even
current employee. Google Ups, Tesla into It, Amazon into It, Visa.
(35:59):
You know, those are just some. This works on many,
many companies that are big companies that have lots of volume,
you know, daily. So let's take let's take Google for example.
Google is definitely off of its all time highs. Google
(36:22):
doesn't pay a good dividend. It certainly doesn't pay an
income that's going to keep up with inflation. As far
as the you know, what you get from cash flow
wise from owning Google stock, it's basically almost zero, and
I think it's wet around less than one percent.
Speaker 3 (36:40):
Yeah, I meant most of the text. Apple I think
pays the most, and that's seven tenths of a percent.
So a year, let's say you have so I've you
have to you have to be dependent upon the growth
of the stock. Yeah, the price of the stock going
up period yep. So let's say you have five thousand
shares of Google. Again, it could be any publicly traded
(37:01):
company that you work for that you've a mass that
you don't want to sell the stock and you're going, Wow,
five thousand shares of Google is like, well what is
that right now? It's a couple of million bucks or more,
and you're going, that's a lot of money to not
be earning, you know, something that's going to help me
(37:22):
pay my bills. But again, if I sell it, you
know I'm going to pay hundreds of thousands of dollars
in taxes because I either got the shares for free
or paid very little for the shares. So now we
look into the options market, and I've been doing this
for a very long time, and see what we could
sell options to buy your stock off of you and
(37:47):
for a premium, meaning for money that you receive, and
we want it at a price that's above, you know,
considerably above the current price and will give you the
to generate some money of giving somebody the option to
buy your stock off of you with the intention that
it's at a price that the stock's probably not going
(38:10):
to go to. And this is where we do calculations
and things to figure out a price that gives a
good return, but it's also a price that you're not
going to end up having to sell your stock. You're
just going to end up retaining you know, as much
of and hopefully ninety percent of more of that premium
(38:31):
you receive. So think of it like a house. So
I have a house.
Speaker 2 (38:36):
It was maybe our first house, and now we're in
our second house and I'm renting it. You know, the
rent is the cash flow that the stock price, the
house price you know, could still go up in value,
but you don't want to sell it. You want the
cash flow of the rent. In this case, you have
a stock that is like not renting your your investment property.
(39:01):
So you have to figure out a way to get
cash flow. So in this case, you give somebody the
option to buy your stock off of you for a
period of time, and if it doesn't go through the
price that the person who has the option period is
willing to pay, you keep the premium they receive. And
the types of premiums you can receive on a percentage
(39:23):
basis are gigantic.
Speaker 3 (39:25):
And that's a good analogy and a break it down
in simpler terms. You buy an investment property. You can
need to buy an investment property purely for the capital appreciation.
You bought it, you're going to renovate it and at
a later time you're going to sell it for a
higher price and may just a capital appreciation. Or you're
buying the investment property and you're going to rent it
(39:47):
out and it's going to be income producing all the while.
As you hold on to it, it is going to
appreciate and price and have some appreciation, but you're getting
paid while you wait for that price appreciation to take place.
And that's the same thing as you have a growth
stock that doesn't pay a dividend or hardly you know
any dividend, and you're just looking for a capital appreciation.
(40:11):
But when you're doing the option strategies, overlaid. On top
of it, you're actually getting paid for your time while
you're waiting for that to go.
Speaker 2 (40:19):
Up and to just put it into real numbers. Google
is actually trading, you know, somewhere in the low to
mid one sixties. Of course, the market's not open, and
depending on how it opens next week, you know, don't
we don't know, could be up or down. But again
it's in the low one sixties to mid one sixties.
(40:41):
And right now, you know, just looking at what the
options market was pain last week, if you sold Google
options on your Google covered by your Google shares at
one seventy, you would get about forty cents per share.
Now you're thinking, well, forty cents, that's not that great. Well,
(41:05):
when you times at times five thousand, that's two thousand
dollars for one week. Now, if Google stays below the
one hundred and seventy dollars per share that expires next Friday,
you keep the two thousand dollars, or a portion of
(41:26):
the two thousand dollars, you know, depending on when we
get you out, because we can get you out early
if we think, you know, Google, you know, it's Wednesday,
say next week, and Google's hovering around one, you know,
sixty seven, one sixty eight, and say, we can you know,
keep like fifty percent of the two thousand dollars that week,
(41:49):
but we're worried that it might go above one seventy.
We get it out and lock in some profit early,
and then we look next week to sell an option
on your Google stocks again next week, and so on
and so forth.
Speaker 3 (42:05):
And just example where you said if you own five
thousand shares, that's a little under a million buck. I
think it's eight hundred and forty thousand dollars on like
one sixty eight. Yeah, I did use a calculator. You're like,
how did you? You look at me, like, wait a minute,
are you data from star.
Speaker 2 (42:22):
Trek h exactly? But just see the couch ltter.
Speaker 3 (42:26):
Just quick calculations on that. And if you're doing two
thousand dollars a week, not that that's going to stay consistent,
but just simple math, and.
Speaker 2 (42:35):
You might you might not be. There might be some
weeks where it's a loser. You don't have to win.
We don't have to win every week to make this
a winner for you, because this is not guaranteed, you know,
but definitely, but owning Google stock is not guaranteed Google. Look,
Google was you know, way higher and you've lost value,
(42:57):
So why not offset it with some sort of income
you know strategy on Google to begin with when it's
already not guaranteed.
Speaker 3 (43:06):
But eight thousand a month ninety six thousand dollars a
year on eight hundred and forty thousand dollars investment over
eleven percent, So you just created an eleven percent dividend.
Now that's one hundred percent winners and seeing if you
had two thousand dollars a month, Now, that's not going
to happen. There's nothing that's one hundred percent. But we
have a pretty you know, pretty good track record. So
let's say seven out of ten times, you you you're
(43:27):
able to do this. Even if you do that at
seventy percent, that's still overall about an eight percent you know,
return on the original investment. That's that's a healthy dividend
that basically pays nothing, you know, so that you're not
going to sell that is not creating cash flow for you.
Speaker 2 (43:46):
Again, covered calls is the simplest option strategy that that
that we've been doing a very long time. So I
hope you enjoyed some of the things we talked about.
Please give us a call by calling nine one six
nine six seven thirty five hundred. You've been listening to
(44:08):
the wise money guys and have a great weekend.
Speaker 3 (44:11):
Have a great weekend and hope to see you on Wednesday.
Speaker 2 (44:13):
By y'all,
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