2025 Outlook with Gene Goldman CIO Cetera Financial Group

January 5th, 2025

Episode Transcript

Speaker 1 (00:00):
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(00:22):
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(00:45):
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(01:06):
Four five to one, Who's six Street, Troy, New York
one two one eight zero.

Speaker 2 (01:29):
Welcome back, everybody to your Money Matters. I'm your host,
Drew Prescott, Chartered retirement Planning counselor, Accredited Wealth management Advisor,
and President of Prescott Private Wealth, located at four fifty
one Who's Ex Street in Troy, New York. The phone
number here is five one eight two zero three one
nine eight three. Hope everybody had a great Christmas and

(01:52):
New Year's. Hopefully you had some good celebrations and everybody
was safe. So for those of you who have New
Year's resolutions, I wish you well. I hope that you
will make it through the year disciplined, and I hope
that this twenty twenty five year becomes even better than

(02:16):
anything that you could have dreamed up for yourself. And
I just want to encourage you to stick with those plans.
I know it's early on, and believe it or not,
fatigue sets in quick with new goals, as we well know,
so just keep going.

Speaker 3 (02:36):
I'm in your corner, Okay.

Speaker 2 (02:38):
Now, I'm really excited about today's show, and I have
a special guest for us here, and this is going
to be just a great show, very high level guests
here that you'll see on CNBC Fox Business. And he's

(03:02):
very sought after to have him speak on his outlook
for investments. So we're really blessed to have this guest
today and I'm gonna turn the show over to my
interview with Jene Goldman. You're in for a real treat today.
If you have any questions whatsoever, feel free to qualifive

(03:23):
one eight two zero three one nine eight three. Welcome
back to your money matters. I'm your host, Drew Prescott,
chartered retirement planning counselor and accredited wealth management advisor here
at Prescott Private Wealth, located in Troy, New York. Phone
omer here's five one eight two zero three one nine
eight to three, and excited to have you listen today.
We're diving into what lies ahead for the markets in

(03:46):
twenty and twenty five. We put our toe in the
water a couple of weeks ago here. But uh, I
have a special guest that I want to introduce you to,
and who better to help us make sense of all
of this than Jene Goldman. Jan is the chief investment
officer of Satera Financial Group and Gene. Welcome to the show.

Speaker 3 (04:05):
Hey, Thanks Drew, Thank you so much. Happy New Year.
Hope you have your resolution set up for this year already?

Speaker 2 (04:10):
Yes, absolutely, looking forward to a new year. A lot
of excitement here and Gene, you always do such a
great job of putting together a look ahead for us
as financial advisors that are in the SATA Financial network here,
and you know, I was hoping that maybe you could
just touch a little bit on different topics here and

(04:32):
just well, maybe we could start off with the big picture,
which you know, I think a lot of people have
questions about the economy, interest rates, and really with the
Federal Reserve with them lowering interest rates, maybe you could
share your take on how all of this will impact
the broader economy for twenty twenty five.

Speaker 3 (04:52):
Sure, that's a that's a big question and I'll give
you a big answer. I'm just kidding, So just taking
and step back. So you know, my team and I
were a team of CFAs and be away with designations.
We have tons of designations. Our responsibilities help support you
and your clients in terms of giving market advice, giving
portfolio advice, giving investment advice. So you know, we're behind

(05:13):
the scenes people. So you know, as we always say,
we have a face for radio, right, That's why I'm
on your radio. So with that said, you know, twenty
twenty five, you know, it's an interesting year. So every
year we lay out our three key investment themes which
kind of summarize everything we're thinking. So if you look
at twenty twenty four, our three themes were simply this

(05:33):
number one. The FED goes from being a foe to
a friend. They go from raising interest rates to cutting
interest rates. Our second theme is that we would not
see a recession. We felt that twenty twenty four would
not be a recession, and we still feel that way,
so let's keep taking it out to the table right away.
Our third theme was that market volatility would surge dramatically
in twenty twenty four. We really didn't see that until

(05:55):
the end of last year. So those were our three
twenty twenty four themes. Let's turn the clock to this one.
There are three key themes, and similarly our first theme,
we call it the Great Moderation. Everything is moderating. The
economy is slowing down a bit, the labor market is
slowing down a bit, inflation is slowing down a bit,

(06:15):
market returns are likely going to slow down a bit,
and bond yields are likely going to slow down a bit.
So you take all that together, everything is moderating, and
we'll go into each of these when you want to.
Our second theme is simply this. Yes, the FED is
your friend, but they're not as good of a friend
as you thought they were. So the FED is going
to cut rates, but not as much as the market's
had anticipated last year or even this year. There's lots

(06:38):
of reasons why the Fed's not and there's lots of
dissension going on amongst the FED. And we'll talk about
what the FED does, because I always like your viewers,
and so your listeners don't understand what the FED does,
and the Fed dual man dates. We can touch on
that too. And our third theme is it's a boring one,
but it takes everything together. Diversification is back now everyone.
My mom has called me and saying gotta buy the

(06:59):
mag seven. That's not really what you want to do.
You want to be more diversified. You want exposure to
different parts of the markets. And really we think this
is because everything is moderating part of it. The FED
doesn't cut rats as much. We do expect some other
issues to face the markets near a term, creating a
lot of near term market volatility. But the good news
is that with volatility picking up and surging, we could

(07:23):
see a pullback. We may see a correction, and a
correction is when stocks fall from peak to trough ten
percent or more. But keep in mind of correction is
a normal part of investing, happens about once a year.
And take that together, we do think that any type
of pullback is a buying opportunity. Lots of cash on
the sideline, good prospects for corporate earnings going forward. So
a lot of things I said, but those are our

(07:43):
three themes. The great moderation, the FED is not as
good of our friend as you thought they were, and
diversification is back nice.

Speaker 2 (07:50):
I've been reading your comments on that and it's been
I agree, and I learn from individuals like you, As
you know, I've got my own sense and about how
things have worked over periods of time. And I feel
confident and good about this coming year. And I think

(08:12):
that you touched on something that I perceive is very important,
which is the potential for correction. I think that this
could be a wonderful opportunity. Maybe you could talk a
little bit about you had mentioned the cash on the sidelines,
and that's that's really to me, is really kind of
a canary in the coal mine, if you would for

(08:33):
what could potentially happen if we do see a bit
of a pullback with the amount of cash that's on
the sidelines historically, do you think that we're at a
pretty high level of cash on the sidelines that could
potentially mean an impact in the market if this were
to happen.

Speaker 3 (08:51):
Yeah, yeah, yeah, definitely. And I think I want to
come back on the one topic I mentioned earlier. Although
we're cautious in terms of near term for the year,
we're still pretty optimistic. We're positive for equities. I mean,
whenever you have an environment where you have strong economic growth.
So if you look at the Atlanta FED, GDP looks
like for fourth corey will be three point one. Let's
say that under Trump two point zero, less regulations, more

(09:12):
business spending, will probably have pretty good economic growth. We
have moderating inflation, and the FED easy. Take those three
together usually provides a good market return. So long, you know,
for the year, we feel good about the markets. We
just feel about the near term challenges. So a correction, again,
a crection is when stocks fall from peak the troth
ten percent or more. We have our last correction was

(09:33):
October twenty seventh of twenty twenty three, so we've gone
a long time. July, we almost had a correction. Stocks
fell nine point eight percent from Pete the troth. But
what happened in October of twenty twenty two, of twenty
twenty three, excuse me, and July of last year. As
soon as we got close to that ten percent correction level,
cash came in from the from the sidelines into the market.

(09:54):
So there's a lot of cash on the sideline looking
for better valuations because you know, stocks have really you know,
since the October correction of twenty twenty three, stocks are
up about forty three percent. It's a huge surge, and
we all know stocks goes straight up. So a lot
of investors are saying, I'm seeing the stock market rise.
I want to get in, but valuations are pretty high.

(10:15):
So to your question, so I apologize long long answer.
For sure, I like it. So if you look at
cash on the sidelines, we call cash being money market
assets and cash and sav these accounts, it's about twenty
four trillion dollars lots of cash on a side. It's
a huge surge, and when we do have a pullback,
we do expect some of the money to move back

(10:36):
into the market. So there's the opportunity there, so again,
lots of cash on the sideline.

Speaker 2 (10:40):
Good, that's great, and I look forward to Yeah, a
lot of people get scared when there's a pullback, but
as as an investor, I get excited about it because
I feel like it's, like you said, it's a new opportunity.
So it can be really a blessing if you're the
patient one and playing guards.

Speaker 3 (11:00):
And that's why I learned and we all learned in schooling.
You know, there's three fundaments, three components of investment. There's fundamentals,
is it a good company, is it making good earnings.
There's also technicals, you know, how's momentum within the stock
for example. But lastly it's valuation. How valuable, I mean,
how expensive are stocks? And I think right now the
markets are looking at the fact that the PE ratio,

(11:22):
so it's a price earnings ratio, that's the price of
the stock market to buy by earnings of the stock market.
Right now, it's about twenty two times forward earnings. Is
that high? Yeah, it's pretty high. In the last fifteen years,
the average is about eighteen. In the last twenty years,
it's twenty five years. It's about I think fourteen or
fifteen stocks are expensive and you can't have high valuations.

(11:43):
But keep in mind that you need low in gist
rates and low inflation. We have neither right now. They're
in the right direction, but we have neither right now.

Speaker 2 (11:50):
I have this question lined up for later on, but
it's perfect timing to throw it out there. You're talking
about valuations, and there's always a lot of talk with
seasoned investors about small cap values, right because they can
present themselves and do very well in the market at

(12:12):
different times in different cycles. How difficult is it right
now to find a value stock with these valuations being
as high as they are.

Speaker 3 (12:26):
That's a great question, great, great, great question. So first
of all, let's let's define growth versus value. So growth
our companies are expected to grow earnings or revenue or
something in a very high manner. So I'm being very
big because there's different high manner. Value companies are those
companies are a little bit more seasoned in theory that

(12:46):
are already generating dividends, have consistency, but they won't grow
as much. Hence there's between growth and value. Growth companies
are your classic technology companies, maybe communications services, and then
value companies would be sort of your financials or maybe
your basic materials, your industrials. So if you look from
a valuation standpoint, if you look at the PE ratio

(13:07):
on the S and P and I'm just gonna use
the last twelve months twenty seven, if you look at
small cap so these are small companies, the PE ratio
is about sixteen, So there are some value opportunities there.
I think what's happened is that the market has moved
higher throughout the market, whether it's tech or financials or
whatever you want to look at, but small cap companies,

(13:28):
these small companies have now appreciated with the rest of
the market. Here's a great example. So last year the
S and P five hundred was up let's just say
twenty percent, okay, And as a sign, here's some stats
the market last year of over twenty percent. That's the
second year in a row we've been up twenty percent
or more. We haven't seen that since nineteen ninety eight.

(13:48):
Another fact, we're in a bull market. The bull market
has been has been moving higher. We've been in the
bullmarket since October fourteenth of twenty twenty two. Just to
put some numbers in perspective. So again, second year of
twenty percent gains, we haven't seen that since nineteen ninety eight.
If you look at the equal weight SMP five hundred,

(14:08):
that's if you look at the SMP five hundred, you
know it's very market cap weighted. As you know, the
larger companies are a bigger component of the index. Smaller
companies are less of a component. So if you look
at the equal weight index, where every stock gets the
exact the same weight, stock market overall last year was up,
say twenty three percent, the equal weight was up just
eleven percent, and seven just those seven names up sixty

(14:32):
three percent. So you just see the narrowness of the market.
So interesting, interesting dynamic. And so I'm talking about market dynamic.
I thought this is interesting. Last year we had fifty
seven record closing highs. So we take that in consideration.
In terms of the number of trading days we had
last year, that means twenty two percent of the time
the stock market was creating a new record. This is crazy.

(14:54):
And then that's just a seven seventh year since nineteen
fifty three, we've had fifty or more record eyes in
the year is important because that's the year we started,
the stock market started treating on five days first.

Speaker 2 (15:07):
Yeah, yeah, that's incredible. I remember in the first term
of Trump presidency we had a year where we saw
that it was continuously breaking records. But nowhere's near the
level that we just saw, right, Yeah, that's that's incredible.
So let me jump into something a little bit outside

(15:28):
of the market, but still nonetheless important. I would love
to talk a little bit about housing and maybe some
banking and defense. But with the potential for lower mortgage rates,
this should be a tailwind, you would think for real estate,
but affordability is really still a big issue. Do you

(15:51):
think that we're going to see some type of a
rebound in housing demand? Are you? Do you get any
type of a pulse on that market?

Speaker 3 (15:59):
Sure? Sure? And I think your question what you said
is it's interesting you said the possibility of mortgage rates
going lower. That's a key phrase, possibility, because everyone is
talking about the Fed cutting interest rates. And let me
take a step back. I'm going to go off in
a little tangent because so the FED, the FED is
a fal reserve and they're in charge of monetary policy.
They have a dual mandate, and the dual mandate is this.

(16:22):
And first of all, the Fed does tons of things,
but they have a dual mandate. They want to make sure,
first of all, that we all have jobs, and second
of all, they want to make sure that inflation is
kept in check. If all of a sudden we start
everyone starts losing jobs, the FED gets worried. They lower
interest rates. They lower it's called the Fed funds rate.
When they do this, other interest rates tend to fall
with them, and they do this. When they do this,

(16:43):
this theory makes borrowing cheaper, car loan mortgage rates home eically,
loans come down. In theory, consumers, you and I have
more money, we can go and buy stuff. This theory
stimulates the economy and then more people get hired. On
the other hand, if inflation is too high, what happened
is that the FED comes in and they raised the
Fed funds rate. This makes it more expensive to borrow money,

(17:05):
more expensive to buy a car, more expensive to use
credit cards. Slows the economy down, and this, in theory,
slows down demand, which slows down inflation. So everything in
the FED does you know all your you know your listeners.
Their neighbors are going to be like, oh, the Fed
the FED. The FED. The FED has dual mandate make
sure we all have jobs and keep inflation to check.
So what we've seen over the last you know, let's
just say four years ago, inflation surged dramatically, the Fed

(17:27):
raise rates. Three years ago, the raise rates. Now it's
reversing and inflation is coming down. We were at one point, say,
seven percent year of year inflation. Now we're headed towards
the Fed's two percent target. And right now we're like
two point five percent year of a year. So with
this in mind, the Fed, beginning on September eighteenth of
last year, lowered interest rates. I did think that's a mistake,
and I'll come back to that later if you want

(17:48):
to talk more about that. But they lowered interest rates.
By lowering interest rates, they felt that the labor market
was starting to slow down, which it showed. It slowed
for like two months. Now it's back up. But anyways,
the labor market slowed down, so it Fed lowered interest rates,
and then by doing this, other rates started to go lower.
But something happened. As soon as the Fed cut rates,

(18:10):
the financial market said, well, you know, we've got a
strong economy. We have an e commedy that does not
need to be that's pretty resilient, that does not need
lower interest rates. We also have an improving labor picture
because in the summer June and July, the labor market
looked terrible. But that's because we had hurricanes, we had

(18:30):
strikes with other issues going on were very temporary. And
then the job the revisions, the job search took place
and came in strong. Right afterwards, the data got better
and better and better and better. All of a sudden,
the Fed's cutting rates. But the ten year treasury yield,
which is like a proxy for bond yields, surged, went
from about three point six to right now, it's about

(18:52):
let's just say it's about four and a half percent,
and it searched. So that's the bond market saying, well,
you're cutting rates. The economy is okay, we stew up
some concerns about inflation, the e commy. You know, we
got the manufacturing number today looks better than expected. The
data is better than expected. Why are you cutting rates?
So what's going on? Is the Fed cut rates a
few times last year. The ten year treasure yield is

(19:15):
moving higher to reflect higher potential inflation and most importantly,
and this is to your question. To your point, mortgage
rates are based on the tenure treasure yield. So now
so now the treasure yield is rising, mortgage rates are rising,
and the FED is cutting rates. So you see the
mix up right there going on. It's crazy. And that's

(19:35):
why I think in December, I think I saw mortgage
applications were down like twenty two percent. I mean, that's
a big drop. So going back, let's go back to housing. Housing.
Housing we think is in a recession. Okay, we've said
that for a while. If you look at our overall commy,
our overall comomy is great, but there are two areas
in recession, manufacturing and housing. Housing is in recession because
rates surged. You know, my mortgage rate now is two

(19:57):
point nine to nine, and now if I get into it,
it's like say seven percent, and there's a lack of inventory.
So I live here in California, I mean it's very
little inventory. Take those two together, you have a very
difficult housing market. And housing was in recession. But here's
the good news. To your question, we think it's stabilizing.
It's not improving because some of the forward looking indicators
that we're seeing right now, including building permits are starting

(20:21):
to pick up, and building permits are when builders go
in and start to file a permit to dig to
build a house or to build a multi family. I
think there's a difference between single family and multi family.
There's a lot of multi family being created given the
whole the shortage of rental properties just a few years ago.
But overall, net net, we do think building the housing
market is starting to stabilize, So we don't think we

(20:42):
think we think we're at the worst point right now, which.

Speaker 2 (20:44):
Is stabilization is a positive thing. I think that there's
a lot of emotion involved in the real estate market
because one is supports a lot of families. It also
is heavily embedded into us personally. So I think that
you know, there's a there's a lot of emotion that

(21:06):
goes into the housing market, even more so, I think
than the stock market at times. So it's good to
see a stabilization because we need to stabilized before we
can grow.

Speaker 3 (21:16):
So that's that's true.

Speaker 2 (21:18):
That's a good thing.

Speaker 3 (21:19):
But here's here's a good point. Though. I think I
don't have the exact numbers in front of me, but
I think if you look at the owner's equity within homes,
you know it's around sixty I think its around sixty
eight percent or so. It's good news. Remember during the
during the Great Financial Crisis, when owner's equity was much lower,
so all of a sudden values came down, people were
forced to sell their homes or selling into a bad market. Now,

(21:41):
because you have high owners equity within a home on average,
good news. Even if how housing prices pulled back a
little bit, you're still fine because you still have a
built in value within your home.

Speaker 2 (21:51):
Yeah, that makes sense. Now on that vein, I'd like
to share with you one of my thoughts and uh
tell me if you think that this is good thinking
or am I all wet on this philosophy here? But
if we're going to have a little less in regulation,

(22:12):
the lending restrictions, I could potentially loosen up a little
bit here. And when you look at these big banks,
they're kind of setting their ways. And when regulation starts
to loosen up a little bit, if it does under
the Trump administration, it's my belief that potentially these regional
banks stand to be in a good position as far

(22:36):
as lending and being a little bit more lenient on
lending practices. Do you agree with that? Is that something
that you think has wheels? Or am I all wet here?

Speaker 3 (22:48):
I think you think. I think you are well ahead
of the game. Actually, seriously, though, I do think this
is already happening. So if you look at what's called
the Senior Loan Officer Survey, so this is a quarterly
survey from the FED, they reach out to senior loan
officers at banks and they're asked a bunch of, you know,
qualitative questions like are you tightening lending standards? Are you

(23:09):
tightening lending standards to small businesses, large business whatever? You are? Okay,
So if you look at some stats, and these are approximates,
but if you look back in the first quarter of
this year, a first quarter of twenty twenty four asked
this question, I think it was like fifty five percent
of banks said, we are tightening standards, We're making it
more difficult. Then you move ahead to the second quarter,

(23:30):
it's about thirty percent thirty thirty five percent. Now if
you look right now, and this is through September thirtieth,
because we you know, the government is you know, takes
a while to get data, so they're always slow, but
on September thirtieth, it's about twelve percent. So you see
that banks are already loosening lending standards. This is even
before under Trump two point zero. Let's just say business

(23:50):
regulations are reduced, which probably is going to be the case.
But these banks are already providing liquidity and already lending
money at a faster clip than they were before.

Speaker 2 (24:00):
News fantastic news, especially for small businesses as well. So
that's that's a good thing. And I think that that
too will We've seen a lot of growth in the
tech sector, and as I mean, you'd have to be
living under a rock to not know that, right, But
I think that with these smaller companies and in the
tech sector, potentially that gives some more opportunity for additional

(24:23):
options for them for lending to reinvest more heavily into
their businesses too.

Speaker 3 (24:30):
I would think, yeah, I definitely, I definitely think I
do you know, tech, tech is one of our we
I like tech. I don't love it. I like it.
I just think, remember back to the story, fundamentals and valuations.
Fundamentals look great. AI is the future. AI is like
electricity back in the eighteen nineties. It's going to be
so huge. We just don't know to what extent. I
worry that there's too much spending on tech upfront. AI

(24:53):
spending and may weigh on new term tech earnings. And
in a case of why some companies late last year
were in some of their earnings are or it said
that customers were slowing down spending a bit. The AI
spend was increasing more than they anticipated. They weren't seeing
the benefits of it as much as they thought. So,
you know, to me, this reminds me. I've been in
this industry since nineteen ninety two. It reminds me of

(25:14):
the tech bubble. Everyone wanted coming in and buying companies.
You know, we didn't care about fundamentals. We didn't care
about revenues. All we cared was clicks per revenue per click.
That's all met and a lot of companies during that
whole shakeout, the survivors survived, and we use the internet today.
You know it works. I think the same thing. We
will use AI significantly in our practice and our businesses

(25:35):
going forward. I just think that not everyone will survive,
every company will, So.

Speaker 2 (25:39):
Yeah, I agree with you're talking about AI and we
had talked about that offline a little bit, and there's
always what goes hand in hand is like when you
think about the Internet and then you think about Google, right,
and you think about AI, and naturally people have heard
of Nvidia. But when I build out a portfolio, I

(26:02):
think that the sector expansion is more important than having
to try to hit a home run with an individual holding,
and so I'm always trying to figure out So I
agree with AI. I think it's really in its infancy
at this point and has just a tremendous runway ahead
of it. But what are kind of the arms that

(26:25):
grow off of this into what sectors and potentially could
really benefit from just holding onto the shirttails of AI
if you would, or be helping to insulate it if
you would.

Speaker 3 (26:41):
Yeah, look, that's a great question. I think AI has
so many different tentacles where it could go. But let
me use a personal example. So for me, I went
on TV. If a few like I go on TV
every couple of weeks, so this is like a couple
weeks ago I was going. I think it was Fox Business.
And also in my mind of thinking, okay, which which
banks raised interest rates in twenty twenty four. I don't

(27:02):
know why I should know this, but you know which
which bank? Because most were cutting, but I know there
are some banks raising rates, and obviously I know that's
Japan and Russia. So but I wanted to make sure clear.
So olden days, I would just go to Google and
you know central banks raising rates in twenty twenty four,
And Google give you an article. Now here's the article.
You read it. But now if you go to say
Chatt GBT or whatever tool you use, if you ask,

(27:25):
ask acted, ask it like an assistant. You know, I'm
a financial professional and I'm a CIO about to go
in Fox Business. List me all the central banks that
have raised and cut interest rates in twenty twenty four
to what degree, to what number, and all the other
stuff and all this information. Boom. It came out within
ten seconds. So it gave me information as opposed to
going to an article or a lot of times how

(27:47):
I used to say, let's say that I get this
one hundred page document that you know that you know
it's a lot of information, reading and reading it. I
read it, and then you know that's going to take
You know, I'm a slow reader, so it's going to
take a few hours. AI just drop it in, summarize
the ten key points and be very detailed on the
key and then that will help summarize our documents. And
my wife, my wife is she's getting her Masters of

(28:08):
Nursing and she's seeing AI being used already in her
in her rotations, you know, just patient information being uploaded,
then analyzed and the doctor has given information here is
the key traits. And then even like cops now I'm
hearing police for example, they are able to get there's
technology where they have cameras on their uniforms. Everything is
being recorded. Then they take the camera out, they download

(28:31):
into a system. AI will go through, synthesize it, review it,
summarize it all for them a lot easier. Again, think
about the times, so AI is huge, it's huge, But
I think so with that said, I think where the
opportunities are near term are really around sort of automation.
You know. I do think with Trump two point zero,
so I think Trump start, you know, starts in about

(28:51):
seventeen days now I'm not counting, but the seventeen days,
and you do have obviously we will see reduced immigration.
I think Trump has indicated that most immediately he will
put come in and put like you know, you know,
some executive executive orders in terms of reducing immigration maybe x,
you know, you know, unfortunately kicking out immigrants, illegal immigrants,

(29:14):
all sorts of things. What the ravocations are going to
be is that you know, there's going to be a
need for more efficiencies, especially in the labor intensive industries
like healthcare, like finance. So I do think sort of
that playthrough of AI looking at companies that sort of
address those areas. So I would look at industries like semiconductors, AI,

(29:36):
software providers, robotics firms, and then you can also just
buy thematic ETFs are really focused on those areas. So
I will look at that time. Another area that's gonna
be pretty related, I think what healthcare innovation. I think,
first of all, healthcare the sector is extremely attractive, very
high quality growth. Second, highest expected earnings growth in twenty
twenty five. You also have advances in biotech, personalizement, telehealth solutions.

(30:02):
They're really revolutionizing, revolutionizing patient care. So I think industries
that we look attracted are like biotech, med tech, healthcare IT.
And then the third area I'm really optimistic about broadly
is I think merging markets, and merging markets are going
to recover. I think they will benefit from rising middle
class consumption, infrastructure investing, and then really focus in those

(30:23):
countries where you see favorable demographic trends like Indonesia. You
think about Indonesia, the media and the age is what'
thirty years old here in the United States is thirty
nine or forty? Philippines is twenty five? Here United States
is it's like thirty nine or forty. So look at
em industries like technology, infrastructure, consumer discussion. So I think

(30:43):
AI is important, but I think there's other parts of
the market, like we talked about before, growth and value.
Those other parts of the market are going to look
attractive in the diversified portfolio. Now.

Speaker 2 (30:53):
So two things. One, because I was going to touch
on this was one of my questions was do you
see or what's your outlook I should say, on international
and emerging markets and which one you think may present
more opportunity than the other potentially. But you touched on
that and you talked about emerging markets. And now I

(31:16):
would say that we have some pretty savvy listeners on
the show, we also have some people that are still
trying to learn the difference. Can you just touch give
a good illustration on the difference between international versus emerging
market Sure?

Speaker 3 (31:31):
Sure, So both are non US investments, okay, non US companies.
International is much more international and really it's short for
international developed. So these are more developed countries that are
more established. So like you maybe Germany, the UK, you
think about Japan, those are much more developed nations, just

(31:51):
larger companies with you know, slowing economic not slower slowing
economic growth, but not in the you know, the huge surges.
Emerging market countries tend to be much more of those
peripheral countries that are growing at a faster clip. They
tend to have better demographic trends. You know, we are aging. Facts,
look at China, we are China's aging, Japan is aging.

(32:12):
We are aging. But emerging market nations tend to have
better demographic trends, better, you know, better, more, more of
a manufacturing type of infrastructure as opposed to a country
like ours, which is much more consumer based. So our
seventy percent of our GDP is consumer spending. So those
are the broad perspectives. From an evaluation standpoint, both tend

(32:37):
to be lower valued compared to the US because a
in the US. You know, we're you know, a big country,
you know, growing consumer spending, you know, the strongest country
in the world, howper you want to say it on
the development on the other on the other front, these
other countries have lower valuations just because there's less optimism

(32:59):
about these company about these countries. You know, it could
be more regulations, slower economic growth, it could be just
poor demographic trends. I mean, you can look at Japan,
for example, Japan as interest rates around you know, less
than one percent because there's no inflation, is very slow
economic growth. You can look at that. So what with
all of said, though, the one thing to watch about,
whether it's international or emerging markets is watch the strength

(33:22):
of the dollar. And the dollar is a huge, huge
detractor towards foreign investing because, first of all, a strong
dollar hurts us in the United States because when the
dollar is strong, our goods become more expensive to sell
outside the United States. Second of all, if a dollar
is strong, let's say you're investing here here, based in

(33:42):
the US, and you invest outside the US, when when
you bring your foreign cash back into dollars, a stronger
dollar weekends your weekends in a currency translation, so that's
always a concern. The third thing about a stronger dollar
is that a lot of countries, especially emerging market countries,
they tend to borrow in dollars and they tend to

(34:03):
take in revenues in their local currency. So all of
a sudden you have a surge of dollars, their cost rise,
their borrowing costs rise, their debt rises, but their revenues
are rising with it. And the classic example was back
in nineteen ninety eight we have the whole emerging market
and debt crisis. That's because the dollars surged dramatically and
a lot of countries were borrowing dollars and they were

(34:26):
using revenues in local currency. So there are lots of risks,
but there's also higher expected growth returns, especially in emerging markets.
So from an optimism stample, I do think both areas
have low valuations. I think merging markets. I think China
is obviously the one everyone talks about the most. China
is trying to transition to economy from being a manufacturer

(34:47):
to a consumer economy. You know, they want to look
more like the United States, where they're buying their own
buying stuff than driving their consumers spending that way. The
problem with China is that they've made a very big
mistake back from nineteen seventy nine to twenty fourteen, the
whole one child policy, exactly one child policy was bad
because it crush them because their demographic trends have really

(35:10):
worse and they're aging. But you know, the phrases are
they're like, they're in the race becomes the world the
world's largest nursing home because they are growing. I mean,
because you have fewer children, fewer paying and our retirement
system is not great. Theirs is a lot worse. And
so they're facing that issue. So if you look at China,
what China's doing, they're trying to stimulate their economy by
lowering interest rates, but it's not helping the consumer to

(35:33):
spend their way out.

Speaker 2 (35:34):
So right, yeah, and that makes that makes sense. With
the graying population, how do you transition into a consumer
situation versus the manufacturing is awfully difficult.

Speaker 3 (35:49):
Maybe they're going to.

Speaker 2 (35:50):
Start to completely outside of the market, but maybe they'll
start to adopt something like Russia where they pay you
to have children.

Speaker 3 (35:56):
You know, they're going to have to do something right.
And there's one more thing facing Europe, and this is
obviously there's there's the Russia Ukraine war, and we heard
news over the Pass a week that Russia is shutting
down oil how natural gas going through Ukraine. So it
hasn't been a big of a deal the last couple
of years in terms of natural gas prices because it's

(36:17):
been a warmer winter the last couple of years in Europe.
But but we had we've had a very cold winter
now in Europe. Also you see natural gas prices before
the Russia is shut off up already fifty twenty twenty four.
It's a big surgeon crisis. So take all that together,
you know, it's it's concerns for Europe for cold weather

(36:37):
and so on. But there's one good news out there
that you can look at with the price of oil. Oil.
I think oil up last year was pretty flat. Oil
it's one of my it's one of my least favorite
investments right now or related companies because oil it has
no place to go but down. I mean, the global
economy is slowing a bit, you know, China is slowing.

(36:59):
China is a huge consumer of oil. Oil is sewing.
Then you have President Trump coming in and President Trump
wants to reduce regulations, especially on energy companies. It's great news.
It's good news, you know, more m and a activity,
more drilling. But we are already at record levels of
oil production, record levels of oil explorer exports worse. Oil
going to go more supply equals we reduce prices. And

(37:21):
then the UAE and Sally Arabia recently have come out
and said, if oil prices rise, we will come in
and supply more oil to the markets. So I would
be wary of oil as an investment. You know, you
can have some diversification because of course we can always
be wrong, but you know.

Speaker 2 (37:36):
Right right, No, I that makes a lot of sense.
I actually didn't think of it from that perspective because
I think sometimes, you know, all the fanfare out there
of drill baby, drill right gets you excited and makes
you think that, you know, with the boosting our own
reserves again and so on, that there could be opportunity.

(37:57):
But you know, along your thought there, I agree, I think, yeah, certainly,
I mean, where do you go from here?

Speaker 3 (38:05):
Right? So exactly? And I think oil And I always
tell you our other advisor in our clients, listen, the
two most important indicators to look at are oil and copper. Okay,
there's lots of indicators out there, but the data tends
to be a little bit late. You know, you look
at the payroll report. Everyone's like payroll report that comes
out it comes out next Friday. So it comes out
next Friday, and it's the first look at December's economy.

(38:28):
But the problem is is that that's December's economy through
mid December. It's old data. GDP comes out. That lag
of GDP comes out a month later. Lots of economic
data comes out later and later and later. So if
I look at the price of oil, the price of oil,
it gives a real time indicator of the of of
geopolitical risks. If geopolitical risks are increasing, it gives you

(38:50):
a real time indicator what the markets impact will be
on the geobolical risk. And then copper. Copper is a
real time indicator of the global economy. And I know
you and I talked to about this before, and I
know you said copper, who used it? Who cares about copper?
Copper is only used for pennies and moscow mules the drink,
But in reality, copper, the average American car has about

(39:12):
four hundred pounds up fifty pounds of copper in the
average American car. Average American home was four hundred pounds
of copper. Copper is a real time indicator of the
global economy. To watch copper watch oil together almost a
real time effect of what's markets interesting.

Speaker 2 (39:26):
Yeah, that's a good that's a good point.

Speaker 3 (39:28):
I like that. Now.

Speaker 2 (39:31):
You had talked at the beginning of the show a
little bit about bonds, and I was curious about you know,
the bond market has been a little bit more challenging
than when I first got into the industry back in
the early two thousands, where bonds were pretty pretty predictable.
I would say, you know, I mean, I remember, gosh,

(39:51):
I remember New York State had a tax free municipal
thirty year tax free municipal bond at like five and
a half percent.

Speaker 3 (40:00):
Could you imagine having that now? Pretty nice?

Speaker 2 (40:03):
Right, But with the bonds and alternative investments, you know,
I think a lot of people get a little shy
on these, and that's certainly still something that's very relevant
for building your portfolio.

Speaker 3 (40:19):
Would you agree, definitely? Definitely. So the big fear everyone
has about bonds right now is that yields are going
to move higher. So just taking a step back, if
you go back to bond investing one on one, bond
yields moveing versely the price. So let's say if a
treasury bond price moves higher, yields go lower. If a
treasury bond price falls, yields move higher. So let's say

(40:41):
that the big fear right now is the government comes in.
We're you know, we're running a deficit. You know, you
can look at the amount of debt we have, So
the finance is debt. We have to issue more bonds.
When you issue more bonds, supply increases in a lot
of supply and demand. The supply of bonds comes up,
bond yields, supply goes up, prices come down, prices go down,

(41:03):
yields go up. So more supply equals more higher bond yields.
And if you're the holder of a bond and yields
are rising, your price comes down. So it's a lot
of it's it's a lot. I know, it's a lot
of fixed income mumbo jump. But basically, more debt issues
by the government creates a surge and bond yields and
search and bond yields pressures bond prices, So that's why

(41:25):
people have been fearful. This is why when Trump won
the election and the red sweep the market, you saw
bond yield search because therefore more economic stimulus can go
in economy, less regulations, more business sentiment. All that taken
together suggests more spending, more inflation. That's why bond yields searched.

(41:45):
So the question is do you buy bonds and the
answer is yes, we think bond of course, align it
to your long term investent objective, but we do think
bond yields are pretty attractive. I mean, my best guests
best case scenario is that the tenure treasurey you'll do
that proxy for bond yields, it's going to be about
four and a half to five percent for some time.

(42:05):
That's a peak, be four and a half to five percent,
because yeah, you know, first of all, you know there's
concerns about inflation to get that debt issues. On the
other side, though, our strong dollar is causing FOIGN investors
to buy our debts. Of twenty seven percent of our
debt is being bought by four investors. That's good news there.
You need dollars to buy that, and this pushes the
price of dollar high, but it also push create the

(42:26):
demand for bonds. Also, twenty twenty four, we only had
one week of bond fund outflows. So this demand from you,
me and my mother to buy bond funds, there's lots
of retail demand. I think. The other thing is that
the ten year treasury yield, let's just say it four
four fifty seven right now, that's about maybe two point
one percent over inflation. You're getting a real yield after

(42:48):
inflation of over two percent. That's a pretty attractive number.
That's why you would think that everyone's so fearful about
the impact of Trump, you know, regulation or decrease regulation,
more spending to drive economic growth, pushing up inflation. That's
why bonyos have not searched significantly. Yes, they're up, but
not as much as you would think, because there's still

(43:09):
demand of people buying treasures.

Speaker 2 (43:11):
Yeah, exactly, And I I love I love adding treasuries.
There's a couple of things I like to do with
all of my portfolios as a rule of thumb, and
one of them is treasuries.

Speaker 3 (43:23):
The other is.

Speaker 2 (43:26):
I only do a small percentage of gold in my portfolio.
Only for a hedge. Now we're we're on a conservative
radio station, but by large here and you know this
is this station here will have like a Hanity on
there and all these other guys and they all have
an advertisement for gold, which always blows me away, right,

(43:47):
because of the cost of owning physical gold and everything
is storage.

Speaker 1 (43:51):
I mean, it's just.

Speaker 2 (43:54):
It's amazing to me that people actually go headlong into
buying that much much gold. So what is your what
is your take on gold outside? You know, if someone's
trying to go a little bit more than just use
it for a hedge, I'm not a fan of it
at all. I just think that that's just not prudent.

(44:14):
I think a well balanced portfolio or diversified I should
say not balanced, but a well diversified portfolio where you're
hitting across different sectors and markets is a good thing.
But uh, you know, what are what are some thoughts
about having too much gold and a portfolio?

Speaker 3 (44:31):
Well, let me go in my safe and pull out
my gold, my golden bar, right, I feel like I'm
a baller exactly. Gold gold is interesting. So you know
gold gold tends to do well in an inflationary environment
because what happens is that the dollar weekends, or you
have gold, because we'll come back to that second. So

(44:53):
the dollar weekends, or there's concerns about inflation, so people
want to realize they want to hold something. They want
to say I own this, that this will grow in
value when inflation values, but keep them. And also people
consider gold is a way Okay, if the stock market crashes,
I have gold here, I can protect my assets. Keep
in mind, though, if the stock market crashes, what happens

(45:14):
there's a flight to quality. People. Yeah, they'll buy some gold,
but they'll also buy the dollar. And the dollar is
and gold is priced in dollars. So all of a sudden,
a big sell off in the market, dollar rallies, and
the dollar is not worth as much because a dollar,
the gold is priced in dollars. Sorry, let me say again,
stock market crashes, you have you have people buying safe,

(45:37):
have investments like the dollar, maybe gold, but again gold
won't be worth as much because basically gold is priced
in dollars, so makes that mine too. I think Also
gold exposure. A lot of companies that you buy in
the S and B five hundred have some injurrect gold exposure.
You know minors, that's there's exposure there. I also think

(45:59):
the I think there's other types of investment. Gold tends
to be very backward looking. I know it looks at
you know, it tends to do well based on how
the markets have done in the past. So I'm a
big fan of gold right now. I just I think
that you're trying to play a weaker dollar, and the
stock market does better in a weaker dollar environment than
gold would, so I would. And the other thing the
thing about to look at, look at watch the price

(46:21):
of gold versus silver. Gold and silver gold. They're both
precious metals, but silver tends to do better in terms
of it of a stronger kind because silver is using
everything from seatbelts, from other things.

Speaker 2 (46:32):
Solar panels and everything else. Yeah, exactly, Yeah, nice, perfect well, Gene.
I think that that it would give a really nice
overview and anything that you want to we want to
put a bow on anything here before we part ways.

Speaker 3 (46:47):
Sure you know one thing, you know, and I wasn't
seeing if you see a couple of days ago and
I said this, and I think this is I think
this is a good quote. I'm not trying to have
my something back. Please only it's not that way. You know,
one thing I said that I think this rings true.
You know, it's New Year's okay, we just past New Years,
and I do think twenty twenty five will be like
a New Year's resolution, full of promise, but with a

(47:08):
few challenges to work through. And again the promise is
this twenty twenty five are base case is positive? You know,
as I said before, stronger growth, moderating inflation, the FED easing.
To take those three things together usually does well for
stock market returns. But we have a lot of near
term challenges which is going to create a lot of
market volatility. You know. You look, for example at Thursday
this week, we saw stocks up strong in the morning

(47:31):
and the boom, they came back down. What are these challenges?
As I allude to before Fed uncertainty. You know, there's
lots of disagreement where the FED should go. Within the
FED itself, you've had dissension concerns. Here's a great example.
There's something called the neutral rate and basically is where
the FEDS or the terminal rates, where the feds final
interest rate should be. When everything's all said and done.

(47:54):
If you look at the dot plot, the recent report
they just issued that comes out once a quarter where
each FED member and nonviously decats where they see interest rates.
You know, this is why the range is very wide,
anywhere from three point nine percent to two point four
that's a big range. That's huge. So there's lots of
uncertainty on the FED. Next week we get the FED

(48:14):
meeting minutes, so we'll see what they said behind closed doors.
But all in all, you know, the FED maybe cuts
rates twice this year. Maybe again, things can change and
not cutting raised till June. The second challenge are just
higher bond yields. You and I talked about this a lot.
Bond yields aren't moving higher, becomes more expensive to borrow money.
This what could drag in the economy because the mortgage

(48:35):
rates are based and higher bond yields. And the third
thing that I'm looking at just market dynamics are not
that great. You know. I do worry that we saw
a lot of profit taking being pushed off until this year.
A lot of MAGS seven companies, for example, stock holders
wanted to hang on to those games to avoid paying
taxes at the end of last year. You may see
some selling beinning of this year you also have high valuations.

(48:58):
We touched on before. We have what's called weak market breath,
so the percentage of stocks that are doing well in
the rally. It went from ninety five percent back on
early December to like just nineteen percent. Very few stocks
are rallying. It's a terrible market breath. The market has
bad breath basically right right, And of course the stronger
doll and the stronger doll and then new ones the

(49:19):
doc We have a potential strike this month. We have
debt ceiling issues, we have geopolitical risks. So I do
think the month of January, maybe February will be some
volatiles and weakness, maybe a correction again, correction has happened
once a year, but you think it's gonna be a
bike opportunity.

Speaker 2 (49:34):
Very good, that's great. Thanks so much for committing your
time to thank you our program here, and you know,
I know you've got better, bigger platforms that you can
certainly attend to, but I certainly appreciate you slowing down
to speak to our listeners is very impactful and appreciate it.

Speaker 3 (49:50):
So thanks Gene, and thank you.

Speaker 2 (49:52):
Happy happy New year to you, and we wish you
the best of success and blessings on you and your
family and this new year here.

Speaker 3 (49:59):
Thank you so much, Thank you to YouTube, thank you
so much. Happy New Year, Thanks, Happy New Year.

Speaker 2 (50:03):
What great insight that was by Gene. I'm so thankful
to have the opportunity to have him on the show
here for you guys, And if you have not taken
the time to address your portfolio for the things to
come of twenty twenty five and to align with the

(50:24):
Trump two point zero, then I would encourage you to
call in set up an appointment with me five point
eight two zero three one nine eight three Email me
Drew at PRESCOTTPW dot com and take a peek at
our website PRESCOTTPW dot com. And if you want to
get started with the process, go to the top and

(50:46):
under resources you'll see new clients and we've got three
simple steps to get you started. And hope to have
you look into our services here see if we may
be a good fit for what you're looking to do.
And uh, you know, it's always nice to have new
relationships to work with. And if you have any specific

(51:08):
questions whatsoever and you want me to address them on
the air, feel free to reach out email me at
Drew at PRESCOTTPW dot com or call five one eight
two zero three one nine eight three, and we have
a dedicated voicemail line just for your questions. And I
just again want to thank you for listening and if

(51:32):
you are looking to have a financial plan put together
something that my avid listeners know that I'm very passionate about.
And we have just such an incredible UH technology platform
for those of you who like to keep an eye
on your accounts all the time, even the accounts that

(51:53):
you don't have here, we can tie those in so
you get your life insurance, we can get all of
your banking, your outside investments, everything in one page for you.
And when we run this financial plan, you'll see a
copy of that and it shows you your UH your
grade and the likelihood of your success, and you can

(52:17):
track your rate of returns right on here. And the
goal is really to just have one location for you
to have your entire financial picture laid out right before you.
And it's just something I think that a lot of
people when they finally see it, they're very thankful to

(52:38):
have every place, everything right there in one place. And
we've made some additional upgrades to some of our planning
as well. So whether you're a new client or you're
an existing client, ask about this. I want to. I
want to show you how we can have everything right

(52:59):
there in one picture for you, so you don't have
to jump around between the different websites trying to get
account values and everything. Everything will be right there. It's
just such a great thing. So what else?

Speaker 3 (53:14):
What else do we have? Ooh? I know?

Speaker 2 (53:17):
Next week I'm gonna put together a really nice show
for you, something that I'm working on here. And I'm
gonna go either one or two ways on this, and
maybe I'll do a combination of the two. But there's
some there are some changes coming up to Social Security
and if you're not familiar with them, you know something

(53:40):
I'm going to do that. I'm going to talk about that,
and I'm also going to talk about how to have
a happy retirement. And I have a white paper right
on my website. Now, let me just tell you exactly
what it's called here Prescott pw Com. Let's see, Let's see,

(54:03):
let's see.

Speaker 3 (54:03):
Let's see.

Speaker 2 (54:05):
Yeah, go on there. If you go on right on
the front homepage, it as free Retirement Guide Retire Happy,
A simple guide to your next big adventure, and I
really like that. I think that you're gonna enjoy it yourself,
So feel free to request that free copy and we'll
also put you on our mailing list. We're gonna be

(54:27):
doing a couple of seminars here in the early part
of the year, and one is going to be on
how to utilize a very specific tool to help safeguard
your retirement income and a portion of your investments. So

(54:49):
if that's something that you're interested in, keep an eye
on our website. Okay, and very excited to have this
get started. We're gonna be partnering with Equitable on that,
but that will be coming out soon. You'll start to
see some information roll out on that, and uh, we're

(55:10):
going to offer that in a webinar in addition to
a seminar that we will hold over at a Wolferts Roost.
So I'll mention it as I get closer and I
get all the fine details squared away, and until then,
enjoy the rest of your weekend, and thank you so
much you listening to your money matters. I'm the host,

(55:33):
Drew Prescott, chartered retirement Planning counselor Accredited Wealth Management Advisor,
and President of Prescott Private Wealth, locate at four fifty
one Who's Ex Street in Troy, New York. The phone
number here is five one eight two zero three one
nine eight three. The email addresses Drew at PRESCOTTPW dot
com and we will talk to you soon. Thank you

(55:55):
so much and have a great weekend.

Speaker 3 (55:57):
God bless