July 11, 2025 • 35 mins
Focus on the 2nd Half – As we enter the second half of 2025 with the stock market at record high
levels, Senior Portfolio Manager Brian Regan joins Chris Boyd and Jeff Perry for a detailed
review of the first half of the year and an outlook for the remainder of 2025. With a focus on
valuation metrics, Brian offers general commentary on the stock market as well as specific
sectors, including utilities and semiconductors. Brian also provides thoughts on the importance
of “AI” relative to the growth in corporate earnings. Chris inquires with Brian whether
international stocks are worthy of consideration. #financialplanning #geo-political #stockmarket
#utilitystocks #semiconductors #corporateearnings #stocks #internationalstocks
Click the link below to register for our upcoming webinar, “Don’t leave a digital mess.”
https://register.gotowebinar.com/register/6040334700710880088
For more information or to reach TEAM AMR, click the following link:
https://www.wealthenhancement.com/s/advisor-teams/amr
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to Something More with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president and financial advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome to Something More with Chris Boyd.
I'm here with Jeff Perry and Brian Regan.
All of us are with the AMR team
at Wealth Enhancement, and glad to have you
(00:43):
joining us for a segment.
So glad to have you back.
You each were on vacation last week.
Not together.
Fair enough.
But I missed you both.
Would it be that bad, Jeff?
I don't know, based upon- You don't
have the time of your life.
Maybe for the first two days.
After that, it would probably be downhill.
I think we both feel that way, as
(01:04):
previously discussed.
It's that time of year, a great time
of year to take a vacation.
So you guys picked the perfect week, I
think.
I billed this previously, Brian, that we were
going to talk to you about, hey, where
are we at at the half, and how
are things going?
And then I forgot you were on vacation.
So I billed it again last week for
this week.
So here we are.
(01:25):
Lots to think about.
So much going on in the world in
terms of foreign policy issues.
We've had issues with Iran that came up
a month ago, maybe.
We've had the looming question of what's happening
with tariffs that's evolving and developing.
(01:46):
We had this big legislation, which we'll talk
about in another episode shortly.
So there's so much going on.
I think investors look at things and say,
well, it seems like things are going well.
How should I be thinking about the second
half of the year?
(02:07):
And so I just wanted to have an
opportunity for you to talk a little bit
about some of this, and maybe offer some
insight and guidance for our listeners as to
how do we think about all that's going
on in the world, and how does that
play into some of the thinking people might
want to give consideration to with their portfolio
(02:28):
as we look into the latter part of
the year?
So if you fell asleep on January 1st
and you woke up on June 30th, you'd
probably be pretty thrilled with your investment returns,
or at least happy, would be my guess.
Maybe not thrilled when you compare it to
2024 and 2023.
The reality is, for better or for worse,
(02:49):
we don't go into a coma for six
months at a time.
I'll say that's better.
But year to date through July 9th, the
S&P 500 was up 7.16%
total returns, so that includes dividends.
The aggregate bond index was up 3.64%.
(03:10):
So objectively, that's pretty nice.
You're getting something from your fixed income.
You're tracking at over 7% on your
fixed income, which is much higher than the
stated yields that you're going to get on
investment grade fixed income right now.
And you're tracking for close to 14%
on the S&P 500, which is around
(03:31):
the 10-year average.
We've had a very good decade for stocks.
So if you just fell asleep and woke
up, that'd be nice.
Of course, we all lived through the end
of the first quarter though, and a quote
unquote liberation day where we had some wild
tariff policy that came into effect.
(03:52):
And I have this interesting chart from JP
Morgan.
If you bear with me a second, I
can just take a comment.
So on April 8th, the effective tax rate
on imports was going to be 30%, which
(04:14):
is basically the highest it had ever been
going back to the year 1900.
I'm happy to say that as of June
30th, it's down to 15%.
So we've dialed back the tariff dramatically and
we've started kicking the can down the road
(04:35):
on tariffs.
The reciprocal tariffs, the deadline was July 4th.
I think we all know that was a
soft deadline.
Now it's going to be August 1st.
We'll see what happens.
There's been a lot of rhetoric and a
lot of threats about copper and pharmaceutical tariffs
as of late, but the general trend has
been a softening of the tariffs from the
(04:57):
peak issue that we were seeing.
So there was a lot of investment considerations
based on that.
So we had a dramatic sell-off when
the effective tariff rate was at 30%.
And as we've ratcheted down to 15%, we've
seen a recovery in the market.
(05:17):
And last quarter, I said, if we have
a continued tariff war with these outrageous rates,
we're probably going to have a global recession.
And the S&P 500 could be looking
at 4,000.
At the time, the S&P 500 was
around 5,000.
And as we've come down, we're back at
all-time highs.
It begs the question, what would have happened
(05:39):
if we didn't have this friction in the
economy and these additional tariffs?
Would we be having even a better year?
The other consequence of this is the dollar
has fallen dramatically to the tune of around
10%.
This has been a direct tailwind for international
stocks.
(05:59):
If you look at international stocks on a
dollar basis, you see that it's done about
18%, 19% year-to-date, much better
than the S&P 500.
If you were to strip out the effects
of the dollar, it's only about 8%, 9%.
A little bit better than the S&P
500, but not dramatically different.
(06:20):
So the tariffs have had a negative effect
on the dollar, where less exporting of dollar
or less imports are devaluing the dollar.
In addition to that, the confidence in the
United States has likely gone down as well
because of this.
So this has been a tailwind to international
stocks.
(06:41):
This is interesting because it's really been an
underperformer.
International stocks have been underperforming against the S
&P 500 for a very long time, as
we've talked about.
So if you maintained some diversification, some allocation
to international stocks, you did very, very well
relative to the S&P 500.
(07:04):
So that's the good news, right?
We've had a good year.
International stocks have done well.
If you've been diversified, you've done well.
But the tough thing is there is some
friction in the economy, and we can all
hope that the progress we're seeing on the
tariff front continues.
Now, if the progress on the tariff front
does continue, I would expect some strengthening in
(07:25):
the dollar since the tariffs were the issue
for the dollar in the first place.
And then you might see some reversal in
leadership in the second half.
So when we think about the second half,
and I've said this to my colleagues at
Wealth Enhancement and our macro meeting, I would
be very careful to chase international stocks because
if we do have a continued reversal of
(07:47):
this tariff policy, we could see some leadership
from domestic stocks going forward.
Now, if we're going to drill into, if
we're going to double click or we're going
to dig into whatever you want to use
for your segue into domestic stocks, where do
you want to be?
(08:08):
We have been focused on a few areas.
We've been focused on utilities and semiconductors.
And why?
Because there's, and mega cap growth themes.
Why?
Because there's been an enormous investment in the
AI trend.
That means for power generation, queue up utilities.
(08:28):
That also means for semiconductors because you need
computers to generate all this new content.
You need GPUs, you need CPUs, you need
inference chips, you need everybody's working on custom
chips for inferencing, for example.
So we keep seeing that spend grow.
And even at faster rates from the quote
(08:50):
unquote hyperscalers than we expected just six months
ago, it keeps growing at a great, great
clip.
So, you know, I think that is going
to lead to a competitive advantage for the
mega cap growth names.
It's going to be a competitive advantage for
the semiconductor equipment and semiconductor design companies, most
notably Nvidia and the design capabilities.
(09:12):
And I think you've seen that.
Now, what do you, what do I think
is going to suffer or where you need
to be less focused on?
I think discretionary and cyclicals you need to
be careful with.
So why do I say that?
Well, Ed Bastian, the CEO of Delta was
on CNBC this morning after discussing his first
(09:38):
quarter results.
And what we're seeing is the front of
the cabin is up 5% in revenue
and the back of the cabin is down
5% in revenue.
So we do have this dichotomy of who's
doing well in America and who's not doing
well.
And that's one interesting data point that's top
of mind, but you could find this data
basically anywhere, right?
Credit card spend is higher, delinquencies on autos
(10:02):
are higher, things of that nature.
You're seeing the lower part of the consumer
not doing as well as the upper end.
So, you know, for me, that means that
you kind of want to be careful around
discretionary goods.
We've generally seen a decline in discretionary spend.
(10:24):
So, you know, let's just be careful.
Let's not over-allocate there.
When it comes to staples, well, to me,
they're pretty expensive and you're not getting the
growth.
So they might be consistent, but they're not
necessarily growing.
You know, where am I, am I going
to get any bang for my buck there?
People have really liked industrials and that's basically
(10:45):
because of the onshoring theme.
That can be great, right?
But there's different kinds of industrials, right?
We can have industrials that tend to be
cyclical and we can have industrials that are
more consistent.
And, you know, I'd be careful in ETF
and mutual fund portfolio, for example, allocating to
the whole sector, because I think as a
(11:05):
sector as a whole, it can act more
cyclically.
But I think you could definitely find individual
stocks that could be consistent and growing and
take advantage of that trend.
I just think you need to be more
discerning.
When it comes to interest rates, we just
had the quote unquote big, beautiful bill passed.
(11:26):
This is extending the previous Trump tax cuts
and making them permanent, you know, permanent until
we have a different government likely, but, you
know, permanent for the foreseeable future.
This is deficit spending, you know, it's adding
to the debt.
Typically that is stimulative and inflationary.
(11:48):
So when you have stimulative and inflationary, likely
you're going to have higher rates for longer.
That might be frustrating to people, including the
president of the United States.
But typically that is what we're going to
see.
One caveat to that is I think it's
the debatable, it's not debatable, you know, that
this is going to add four or five
(12:09):
trillion dollars in debt over 10 years, or,
you know, maybe it is in some circles,
but I think generally there's some agreement on
that.
But what I think is interesting is how
stimulative and how inflationary the bill is going
to be going forward.
And the reason I say that is it's
really building off of the tax rates that
already existed in 2024, right?
It just kind of extended them with certain
(12:32):
caveats, right?
And we can discuss that if you want.
But if you're looking at the bulk of
it and you're just comparing what's going to
change between 2024, 2025 and 2026 based on
the changes in the big beautiful bill, you're
probably not going to see that big of
a change.
I mean, personally, my tax return might not
change that much and Jeff and Chris, I
(12:52):
imagine your tax returns might not change that
much.
But for certain folks, you know, it will.
But in aggregate, you know, I think we're
going to see some stimulus and some inflationary
effects, but nothing hugely concerning, you know, that
that I think would be a huge driver
(13:12):
of of inflation.
So, you know, all things equal, if we
are a little tight right now on interest
rates, maybe the big beautiful bill makes us
more in equilibrium than where we previously were,
and it makes it easier for the Fed
to sit tight at the position they're in
(13:33):
right now, which I think is going to
be the case.
At the very least, you know, there's a
lot going on right now between tariffs and
the new tax bill where they're likely going
to want to continue to see some more
data.
Finally, we had another initial claims and another
continuing claims data point this week, and they
(13:54):
were very benign.
So, you know, that's a good thing.
Nobody wants a recession.
But what we are seeing is slowly the
continuing claims tick up, while initial claims basically
kind of stay around the same area.
So, you know, this is basically means that
people aren't quitting, people aren't getting laid off.
(14:15):
But it does seem like the people who
do lose their jobs are having a lot
of trouble finding a new one.
A great analogy from Neil Dutta from Ren
Mac Research, he's the macroeconomist there, he says
it's like a bathtub that's dripping water.
It's not a heavy flow, but it's dripping
and the bathtub's filling up.
(14:36):
So I think we do want to keep
an eye on, you know, how heavy that
flow is into the bathtub, which is initial
claims and the water level in the bathtub,
which is continuing claims.
But so far, so good.
So if you put all this together, you
know, interest rate related sectors, I think, are
(14:57):
going to struggle, I think, because I think
we're going to be higher for longer, at
least on the short end.
I think discretionary names might struggle a little
bit, but we don't have a crazy unemployment
problem.
So we might just get, you know, a
muddling along in those types of areas.
And I think we're going to have continued
strength in the B2B onshoring and AI type
(15:22):
themes in the second half of the year.
So I gave you guys a lot of
information there.
Love to hear your thoughts or questions.
And, you know, let's have an interesting conversation
about this.
So Brian, one area that you didn't talk
about, it's implicit in all your comments, though,
is earnings, corporate earnings.
There was, you know, a lot of commentary
(15:44):
about tariffs slowing down, movement of corporations, investments
in different things, and consumers maybe taking a
step back.
What have you seen with consumer spending and
how it has related to corporate earnings?
Consumer spending, it's been very hard to tell,
right?
So Q1, earnings were very good.
(16:06):
The some companies withdrew guidance, some gave guidance
with tariffs, some gave without tariffs, but generally
speaking, it was viewed as very good.
The problem with that is it's very hard
to tell how much was pulled forward.
So, for example, if you're a company and
you wanted to get inventory in before the
tariffs hit, you might have overbought, which might
(16:28):
have been stimulative to your vendors.
If you're a consumer, you might want to
get ahead of price increases or shortages, so
you might have gone out and bought where
you might not have otherwise, and that might
have been stimulative for earnings there.
So I think, you know, in the second
and third quarters, people are going to be
(16:48):
looking for drop-offs or possible drop-offs.
If there's not drop-offs, then I think
we're going to be in very good shape.
If there is drop-offs, I think we
could definitely see some additional volatility.
On a personal note, if anecdotes mean too
much to you, I certainly spent forward.
(17:09):
I bought a car, a refrigerator, a washing
machine.
I went on a spending spree because I
didn't want to be caught with a broken
down car that I can't fix because I
can't get the parts or because they're too
expensive.
So I remedied a situation with an old
car, for example.
I had an old refrigerator.
I have two young kids.
(17:29):
I need to have a working refrigerator, so
I just got ahead of replacing my 20
-year-old refrigerator.
So that type of activity is what I
mean by pull forward.
So it'll be interesting to see what happens
going forward.
Now, on the biggest stocks in the market,
right, if we're talking about the S&P
500, the biggest stocks in the market, they
don't necessarily have to worry about pull forward
too much.
(17:50):
Microsoft, Amazon, Amazon a little bit, but a
lot of their revenue comes from Amazon Web
Services just as much as retailing.
They're not part of this inventory good cycle,
right?
A lot of it is subscription-based.
A lot of it is considered, Windows, for
(18:12):
example, I think would be considered a staple,
right?
It's a business-to-business type product, but
it's a staple.
We need it.
And they're continuing to grow at a very,
very rapid pace in a secular manner.
So when we're talking about the overall market
and we talk about concentration in the market,
the concentration in the market might actually be
(18:32):
helping us with this situation right now because
those companies are less exposed to the potential
effects of tariffs.
Brian, you're probably tired of me asking about
this because it's something I bring up routinely.
I can ask him if you want.
I know your question.
(18:53):
I could just answer it.
Maybe for the listeners, you should ask, Chris.
Okay.
Just to put it out there, why not
be worried about valuation, the market valuation?
The forward PE is near 22 times at
the half.
That's relatively high in historical terms.
(19:16):
Why shouldn't we be concerned about that?
I think you should be concerned about valuation.
I think you should always be concerned about
valuation.
I want to buy good companies at good
prices.
I just think the PE ratio is a
terrible way to measure valuation.
The PE ratio on a trailing basis, if
you look at a trailing PE, only takes
into account companies' earnings versus the price today
(19:39):
over the last 12 months.
The forward PE ratio is arguably even worse.
It only takes into account expected earnings in
the next 12 months.
There is a lot wrong with this.
We don't think about stocks within a one
year time period.
We talk about how stocks are long-term
assets.
(20:00):
The fact that that doesn't take into growth
at all is a problem for me.
The Mag 7 names are expected to grow
at 30%, and the total S&P 500
is expected to grow at 9%.
We have had historic growth for years now,
and we're in a productivity boom.
(20:21):
If you add on growth to the historical
market just there, you should expect that you
would pay a higher PE ratio for better
expected growth in the future.
Now it's true that if that better expected
growth in the future does not pan out,
then the valuation is definitely a big concern
(20:42):
because the PE ratio is too high.
Right now, that's the reason why it's pricing
that in.
Another reason why I think it's pricing in
a high PE ratio is interest rates.
We have interest rates at four and a
quarter on the 10-year, which is historically
very low.
If we're going to look at historic PE
ratios, we have to think about PE ratios
in historic terms.
(21:03):
The 10-year interest rate in the late
90s was above 6%.
So when we're comparing today's PE ratio to
the PE ratio of the late 90s and
you're saying, hey, look, we're in a similar
ballpark of the dot-com bust, I would
argue we're nowhere close.
Those interest rates were 50% higher than
(21:24):
they are today.
I get comfort there as well.
Finally, the economy is much different.
Historically, if let's say we were around a
14, 15, 16 PE ratio going back to
the 50s, capital expenditures were enormous back then
(21:46):
because we were a bits and bytes economy.
The stock market was also, I would argue,
less understood.
People were very concentrated on dividend yields, for
example, rather than things that we have today
like buybacks.
They weren't necessarily concerned about growth.
Free cash flow yields were arguably lower or
in future free cash flow yields were definitely
(22:07):
lower.
So this is what I call a difference
between the bricks and mortar economy versus the
bytes and bits economy.
We have transitioned to a bytes and bits
economy where we have everything is as a
service.
And as a service just means that it's
a subscription.
It's a lower cost that you can more
predictably pay for.
So your cash flows are more consistent, they're
(22:30):
more predictable, and your margins are much higher
because you can deliver software that's already been
written without the use of another human being,
without the use of another truck, without the
reuse of a lot of other things.
I've learned about this in college, CDs don't
(22:50):
exist anymore, but it costs almost nothing to
stamp out another CD.
But it costs a lot more to make
another movie, for example, or make another widget.
So what we've seen is margins just continue
to increase.
And the bigger the company, the more the
margins are increasing.
So we have companies that are more profitable,
(23:12):
we have companies that are more consistent, and
we have companies that are growing at a
much faster rate.
And we have lower interest rates.
You combine all those things together, and I
think it's rational that we have a higher
PE ratio.
And if we did have a significant dip,
it's likely a buying opportunity.
So that's where I come out on that.
It's not that I don't worry about valuation,
(23:34):
I absolutely do.
PE is not a very good indicator of
it.
Brian, how much does AI play into those
previous comments about future expansions, future growth, accelerated
growth, however you want to frame it?
Significantly.
I mean, the biggest names in the market
are the biggest names in the market because
they're AI names.
(23:54):
And why are they growing at 30%
a year?
It's because they're the AI players.
I mean, that's going to be the productivity
boom of the future.
There's consensus around that.
I believe it to be true.
I think we all use it and we're
all getting better at it regularly.
I don't think there's really any doubt in
my mind.
I do think there's overhype.
(24:15):
I've talked about Tesla, for example, many times.
I don't understand why it has a trillion
dollar valuation.
The reason why it has a trillion dollar
valuation is because people think they're going to
be able to build humanoid robots and have
driverless taxis.
And basically, they just believe that Elon Musk
is going to be able to do it
better and faster than anybody else.
(24:37):
I think there's reason to believe that's wrong.
And that's one of the biggest things in
the market.
So there's certainly risks, right?
We jump from being able to write our
emails better to having humanoid robots like the
Jetsons.
That idea- Rosie.
(24:57):
Yeah.
Rosie jumped in our head real quick inside
of a year, I feel like, where I
don't think people were giving Rosie too much
credit.
So I think there's going to be a
hype cycle.
But at the same time, these companies, they're
not relatively inexpensive.
(25:18):
They're not relatively expensive, right?
So if you look at the dot-com
as a comparison, we're companies that had zero
revenue.
These are the biggest companies in the world
by revenue, by profit, by margins, by every
statistical financial measurement you can think of.
Given what you've said about the US economy
and its valuations, and this year we've seen
(25:39):
outperformance from international companies, some of that you
talked about with reference to the dollar, but
what's that tell us?
What's your take then?
How does that play into the consideration about
foreign exposure and whether it should be cheaper
(26:01):
valuations, but should it be an increasing part
of the portfolio for people?
Of course, you don't know what everyone's individual
exposure is, but thematically speaking, what's your take
as it relates to different kinds of economic
drivers in terms of other economies?
(26:24):
How does that play into the thoughts around
foreign?
So every investor has a home country bias.
It's pretty interesting, right?
So if you are an American, you're likely
going to hold more American stocks.
If you are German, you're going to have
more German or whatever, yeah.
But reality is when you look at the
(26:46):
global stock market, the United States is more
than 60% of the market and Nvidia
is like the size of the UK alone.
So the investable universe in the United States
is bigger than it is internationally.
So we just start there.
You're probably going to have more US stock
under most circumstances with any advisor.
(27:09):
We've made the active decision that we always
would like to have some international exposure in
our portfolio.
And I think there's good reason for that.
I think it's helped diversify our clients this
year.
And I think it will in future years
as well.
So why have we done that?
(27:30):
There's different types of companies in different parts
of the world, right?
So France, for example, is very good at
luxury, much better than the United States is.
LVMH has been around for hundreds of years.
Hermes has been around for hundreds of years.
They're not as good at technology.
(27:53):
They have never generated a meta.
They have never generated an Nvidia where the
United States tends to do this fairly regularly,
it seems like.
Now that doesn't mean that there's not good
companies in Europe that specialize in technology.
There is.
There's ASML, there's SAP.
They historically have had some good car manufacturers.
(28:16):
So Volvo is one of the biggest car
manufacturers in the world by revenue.
Ferrari has been a very good stock historically.
So there are good stocks internationally.
As an index, it hasn't done as well
for what I think is cultural, structural, and
(28:38):
structural reasons.
The United States has one benefit where, it
might not seem this way, but the 50
states are much more united than the countries
in the European Union.
The European Union struggles to keep everybody in
line with their rules, for example, which is
(29:00):
part of the reason why we had a
Greek tech crisis 12 years ago, for example.
China is a huge economy.
It's growing at a rapid rate, but there's
good reason to be concerned about capital controls.
Technically, in a lot of ways, it's illegal
for foreigners to hold domestic stocks.
(29:22):
There could be an adversary in some ways
of thinking, which could bifurcate their economy and
what are the impacts of that.
Generally, I think we've made a decision that
we'd like to avoid that area as much
as possible.
But that can be painful if China spikes
as it has in the last six months.
(29:44):
But over time, I don't think we've given
anything back by not being allocated in China
in any significant way.
Chris, I'm not sure the answer- This
relates to what you're describing there relates particularly
to the AMR team strategies as differentiated from
some of the other wealth enhancement strategies, just
to be clear, our own discretionary accounts for
(30:07):
our clientele.
In any case, yeah, I think that answers
my question, that notion that as much as
there can be opportunities in economies around the
world, you still lean toward a domestic bias
because of the quality of the companies and
(30:28):
the kind of profitability that they are generating,
which doesn't mean we don't want some international
exposure, but it still justifies perhaps our view
of why we're benefited by having an overweight
U.S. relative to perhaps a benchmark or
some comparative perspective.
(30:51):
I think it's a great way to sum
it up, Chris.
Thank you.
All right.
You summed up nicely.
Well, you're the content.
Well, terrific.
That's great.
So gives us a view of sort of
where we're at, lots of possibilities.
Seems I'd say fair to characterize your overall
view as generally optimistic or maybe cautiously optimistic
(31:15):
as we go into the second half of
the year.
Yeah, I'd say I'm neutral.
I'm not pessimistic.
I'm not optimistic and neutral is good, right?
When I say neutral, I mean, I think
we're going to have average returns in the
next 12 months.
And why do I say that?
Well, if you want to strap some numbers
to it, that chart you showed of the
(31:36):
PE ratio, if you were invert that and
get the earnings yield, you're going to get
something around 5%.
I think we're going to have 2.5
% inflation.
We're probably going to have some growth of
2%.
We're going to have margins expand by 1%.
And just there, you get the 10%.
And if we have growth in the S
&P 500 beyond what I just described that
(31:58):
we're probably going to see in the overall
economy, then you could get beyond that 10%.
You maybe track for the 14% that
we're tracking for now.
Certainly, we could get some curveballs.
I mean, April 2nd was certainly a curveball.
And that's why you need to be diversified
into a portfolio that is reflective of the
(32:19):
amount of volatility that you personally are willing
to take and withstand.
And that's personal to most people.
One thing that we have a particular client
that likes to ask a lot is, what
do you think is going to happen in
the next six months?
And I'm always reluctant to answer the question
(32:40):
because I just don't know.
It's like asking me about Einstein's theory of
relativity.
I'm no expert on what's going to happen
in the next six months.
But I can survey the landscape and say,
is this way off sides, on sides?
Are we going to score a goal?
Are we going to stay neutral and play
the puck well?
(33:01):
That's the kind of general thinking.
And if you try to pinpoint it and
you try to push your portfolio really far
one way or another based on putting your
finger in the air and feeling where the
wind is blowing, I think you're going to
get yourself in trouble.
So reminders for listeners to one, be sure
you have some liquidity reserves or a mechanism
(33:23):
for the unexpected where you can get access
to capital quickly.
Generally, we like to see a reserve account
as opposed to a loan, a home equity
line of credit or something like that.
We talk about buckets, have a strategy that
has graduated levels of risk.
So some portions are more long-term than
others.
(33:44):
And then make sure this is all put
together in the context of a financial plan
that's designed around your goals, your objectives, your
cashflow demands, your resources.
And get some help in that process to
make sure you're thinking it through deliberately across
a variety of integrated considerations.
(34:07):
It's not just about the portfolio, though that's
certainly an essential part of it, but it's
also about tax planning.
It's also about the cashflow design.
It's also about the things that will bring
you peace of mind when you put it
all together.
Thanks, Brian, for your take today.
Until next time, everybody keeps striving for something
(34:28):
more.
Thank you for listening to Something More with
Chris Boyd.
Call us for help, whether it's for financial
planning or portfolio management, insurance concerns, or those
quality of life issues that make the money
matters matter.
Whatever's on your mind, visit us at somethingmorewithchrisboyd
.com or call us toll free at 866
(34:49):
-771-8901 or send us your questions to
amr-info at wealthenhancement.com.
You're listening to Something More with Chris Boyd
Financial Talk Show.
Wealth Enhancement Advisory Services and Jay Christopher Boyd
provide investment advice on an individual basis to
clients only.
Proper advice depends on a complete analysis of
(35:09):
all facts and circumstances.
The information given on this program is general
financial comments and cannot be relied upon as
to your specific situation.
Wealth Enhancement Group cannot guarantee that using the
information from this show will generate profits or
ensure freedom from loss.
Listeners should consult their own financial advisors or
conduct their own due diligence before making any
financial decisions.
Welcome to Something More with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president and financial advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome to Something More with Chris Boyd.
I'm here with Jeff Perry and Brian Regan.
All of us are with the AMR team
at Wealth Enhancement, and glad to have you
(00:43):
joining us for a segment.
So glad to have you back.
You each were on vacation last week.
Not together.
Fair enough.
But I missed you both.
Would it be that bad, Jeff?
I don't know, based upon- You don't
have the time of your life.
Maybe for the first two days.
After that, it would probably be downhill.
I think we both feel that way, as
(01:04):
previously discussed.
It's that time of year, a great time
of year to take a vacation.
So you guys picked the perfect week, I
think.
I billed this previously, Brian, that we were
going to talk to you about, hey, where
are we at at the half, and how
are things going?
And then I forgot you were on vacation.
So I billed it again last week for
this week.
So here we are.
(01:25):
Lots to think about.
So much going on in the world in
terms of foreign policy issues.
We've had issues with Iran that came up
a month ago, maybe.
We've had the looming question of what's happening
with tariffs that's evolving and developing.
(01:46):
We had this big legislation, which we'll talk
about in another episode shortly.
So there's so much going on.
I think investors look at things and say,
well, it seems like things are going well.
How should I be thinking about the second
half of the year?
(02:07):
And so I just wanted to have an
opportunity for you to talk a little bit
about some of this, and maybe offer some
insight and guidance for our listeners as to
how do we think about all that's going
on in the world, and how does that
play into some of the thinking people might
want to give consideration to with their portfolio
(02:28):
as we look into the latter part of
the year?
So if you fell asleep on January 1st
and you woke up on June 30th, you'd
probably be pretty thrilled with your investment returns,
or at least happy, would be my guess.
Maybe not thrilled when you compare it to
2024 and 2023.
The reality is, for better or for worse,
(02:49):
we don't go into a coma for six
months at a time.
I'll say that's better.
But year to date through July 9th, the
S&P 500 was up 7.16%
total returns, so that includes dividends.
The aggregate bond index was up 3.64%.
(03:10):
So objectively, that's pretty nice.
You're getting something from your fixed income.
You're tracking at over 7% on your
fixed income, which is much higher than the
stated yields that you're going to get on
investment grade fixed income right now.
And you're tracking for close to 14%
on the S&P 500, which is around
(03:31):
the 10-year average.
We've had a very good decade for stocks.
So if you just fell asleep and woke
up, that'd be nice.
Of course, we all lived through the end
of the first quarter though, and a quote
unquote liberation day where we had some wild
tariff policy that came into effect.
(03:52):
And I have this interesting chart from JP
Morgan.
If you bear with me a second, I
can just take a comment.
So on April 8th, the effective tax rate
on imports was going to be 30%, which
(04:14):
is basically the highest it had ever been
going back to the year 1900.
I'm happy to say that as of June
30th, it's down to 15%.
So we've dialed back the tariff dramatically and
we've started kicking the can down the road
(04:35):
on tariffs.
The reciprocal tariffs, the deadline was July 4th.
I think we all know that was a
soft deadline.
Now it's going to be August 1st.
We'll see what happens.
There's been a lot of rhetoric and a
lot of threats about copper and pharmaceutical tariffs
as of late, but the general trend has
been a softening of the tariffs from the
(04:57):
peak issue that we were seeing.
So there was a lot of investment considerations
based on that.
So we had a dramatic sell-off when
the effective tariff rate was at 30%.
And as we've ratcheted down to 15%, we've
seen a recovery in the market.
(05:17):
And last quarter, I said, if we have
a continued tariff war with these outrageous rates,
we're probably going to have a global recession.
And the S&P 500 could be looking
at 4,000.
At the time, the S&P 500 was
around 5,000.
And as we've come down, we're back at
all-time highs.
It begs the question, what would have happened
(05:39):
if we didn't have this friction in the
economy and these additional tariffs?
Would we be having even a better year?
The other consequence of this is the dollar
has fallen dramatically to the tune of around
10%.
This has been a direct tailwind for international
stocks.
(05:59):
If you look at international stocks on a
dollar basis, you see that it's done about
18%, 19% year-to-date, much better
than the S&P 500.
If you were to strip out the effects
of the dollar, it's only about 8%, 9%.
A little bit better than the S&P
500, but not dramatically different.
(06:20):
So the tariffs have had a negative effect
on the dollar, where less exporting of dollar
or less imports are devaluing the dollar.
In addition to that, the confidence in the
United States has likely gone down as well
because of this.
So this has been a tailwind to international
stocks.
(06:41):
This is interesting because it's really been an
underperformer.
International stocks have been underperforming against the S
&P 500 for a very long time, as
we've talked about.
So if you maintained some diversification, some allocation
to international stocks, you did very, very well
relative to the S&P 500.
(07:04):
So that's the good news, right?
We've had a good year.
International stocks have done well.
If you've been diversified, you've done well.
But the tough thing is there is some
friction in the economy, and we can all
hope that the progress we're seeing on the
tariff front continues.
Now, if the progress on the tariff front
does continue, I would expect some strengthening in
(07:25):
the dollar since the tariffs were the issue
for the dollar in the first place.
And then you might see some reversal in
leadership in the second half.
So when we think about the second half,
and I've said this to my colleagues at
Wealth Enhancement and our macro meeting, I would
be very careful to chase international stocks because
if we do have a continued reversal of
(07:47):
this tariff policy, we could see some leadership
from domestic stocks going forward.
Now, if we're going to drill into, if
we're going to double click or we're going
to dig into whatever you want to use
for your segue into domestic stocks, where do
you want to be?
(08:08):
We have been focused on a few areas.
We've been focused on utilities and semiconductors.
And why?
Because there's, and mega cap growth themes.
Why?
Because there's been an enormous investment in the
AI trend.
That means for power generation, queue up utilities.
(08:28):
That also means for semiconductors because you need
computers to generate all this new content.
You need GPUs, you need CPUs, you need
inference chips, you need everybody's working on custom
chips for inferencing, for example.
So we keep seeing that spend grow.
And even at faster rates from the quote
(08:50):
unquote hyperscalers than we expected just six months
ago, it keeps growing at a great, great
clip.
So, you know, I think that is going
to lead to a competitive advantage for the
mega cap growth names.
It's going to be a competitive advantage for
the semiconductor equipment and semiconductor design companies, most
notably Nvidia and the design capabilities.
(09:12):
And I think you've seen that.
Now, what do you, what do I think
is going to suffer or where you need
to be less focused on?
I think discretionary and cyclicals you need to
be careful with.
So why do I say that?
Well, Ed Bastian, the CEO of Delta was
on CNBC this morning after discussing his first
(09:38):
quarter results.
And what we're seeing is the front of
the cabin is up 5% in revenue
and the back of the cabin is down
5% in revenue.
So we do have this dichotomy of who's
doing well in America and who's not doing
well.
And that's one interesting data point that's top
of mind, but you could find this data
basically anywhere, right?
Credit card spend is higher, delinquencies on autos
(10:02):
are higher, things of that nature.
You're seeing the lower part of the consumer
not doing as well as the upper end.
So, you know, for me, that means that
you kind of want to be careful around
discretionary goods.
We've generally seen a decline in discretionary spend.
(10:24):
So, you know, let's just be careful.
Let's not over-allocate there.
When it comes to staples, well, to me,
they're pretty expensive and you're not getting the
growth.
So they might be consistent, but they're not
necessarily growing.
You know, where am I, am I going
to get any bang for my buck there?
People have really liked industrials and that's basically
(10:45):
because of the onshoring theme.
That can be great, right?
But there's different kinds of industrials, right?
We can have industrials that tend to be
cyclical and we can have industrials that are
more consistent.
And, you know, I'd be careful in ETF
and mutual fund portfolio, for example, allocating to
the whole sector, because I think as a
(11:05):
sector as a whole, it can act more
cyclically.
But I think you could definitely find individual
stocks that could be consistent and growing and
take advantage of that trend.
I just think you need to be more
discerning.
When it comes to interest rates, we just
had the quote unquote big, beautiful bill passed.
(11:26):
This is extending the previous Trump tax cuts
and making them permanent, you know, permanent until
we have a different government likely, but, you
know, permanent for the foreseeable future.
This is deficit spending, you know, it's adding
to the debt.
Typically that is stimulative and inflationary.
(11:48):
So when you have stimulative and inflationary, likely
you're going to have higher rates for longer.
That might be frustrating to people, including the
president of the United States.
But typically that is what we're going to
see.
One caveat to that is I think it's
the debatable, it's not debatable, you know, that
this is going to add four or five
(12:09):
trillion dollars in debt over 10 years, or,
you know, maybe it is in some circles,
but I think generally there's some agreement on
that.
But what I think is interesting is how
stimulative and how inflationary the bill is going
to be going forward.
And the reason I say that is it's
really building off of the tax rates that
already existed in 2024, right?
It just kind of extended them with certain
(12:32):
caveats, right?
And we can discuss that if you want.
But if you're looking at the bulk of
it and you're just comparing what's going to
change between 2024, 2025 and 2026 based on
the changes in the big beautiful bill, you're
probably not going to see that big of
a change.
I mean, personally, my tax return might not
change that much and Jeff and Chris, I
(12:52):
imagine your tax returns might not change that
much.
But for certain folks, you know, it will.
But in aggregate, you know, I think we're
going to see some stimulus and some inflationary
effects, but nothing hugely concerning, you know, that
that I think would be a huge driver
(13:12):
of of inflation.
So, you know, all things equal, if we
are a little tight right now on interest
rates, maybe the big beautiful bill makes us
more in equilibrium than where we previously were,
and it makes it easier for the Fed
to sit tight at the position they're in
(13:33):
right now, which I think is going to
be the case.
At the very least, you know, there's a
lot going on right now between tariffs and
the new tax bill where they're likely going
to want to continue to see some more
data.
Finally, we had another initial claims and another
continuing claims data point this week, and they
(13:54):
were very benign.
So, you know, that's a good thing.
Nobody wants a recession.
But what we are seeing is slowly the
continuing claims tick up, while initial claims basically
kind of stay around the same area.
So, you know, this is basically means that
people aren't quitting, people aren't getting laid off.
(14:15):
But it does seem like the people who
do lose their jobs are having a lot
of trouble finding a new one.
A great analogy from Neil Dutta from Ren
Mac Research, he's the macroeconomist there, he says
it's like a bathtub that's dripping water.
It's not a heavy flow, but it's dripping
and the bathtub's filling up.
(14:36):
So I think we do want to keep
an eye on, you know, how heavy that
flow is into the bathtub, which is initial
claims and the water level in the bathtub,
which is continuing claims.
But so far, so good.
So if you put all this together, you
know, interest rate related sectors, I think, are
(14:57):
going to struggle, I think, because I think
we're going to be higher for longer, at
least on the short end.
I think discretionary names might struggle a little
bit, but we don't have a crazy unemployment
problem.
So we might just get, you know, a
muddling along in those types of areas.
And I think we're going to have continued
strength in the B2B onshoring and AI type
(15:22):
themes in the second half of the year.
So I gave you guys a lot of
information there.
Love to hear your thoughts or questions.
And, you know, let's have an interesting conversation
about this.
So Brian, one area that you didn't talk
about, it's implicit in all your comments, though,
is earnings, corporate earnings.
There was, you know, a lot of commentary
(15:44):
about tariffs slowing down, movement of corporations, investments
in different things, and consumers maybe taking a
step back.
What have you seen with consumer spending and
how it has related to corporate earnings?
Consumer spending, it's been very hard to tell,
right?
So Q1, earnings were very good.
(16:06):
The some companies withdrew guidance, some gave guidance
with tariffs, some gave without tariffs, but generally
speaking, it was viewed as very good.
The problem with that is it's very hard
to tell how much was pulled forward.
So, for example, if you're a company and
you wanted to get inventory in before the
tariffs hit, you might have overbought, which might
(16:28):
have been stimulative to your vendors.
If you're a consumer, you might want to
get ahead of price increases or shortages, so
you might have gone out and bought where
you might not have otherwise, and that might
have been stimulative for earnings there.
So I think, you know, in the second
and third quarters, people are going to be
(16:48):
looking for drop-offs or possible drop-offs.
If there's not drop-offs, then I think
we're going to be in very good shape.
If there is drop-offs, I think we
could definitely see some additional volatility.
On a personal note, if anecdotes mean too
much to you, I certainly spent forward.
(17:09):
I bought a car, a refrigerator, a washing
machine.
I went on a spending spree because I
didn't want to be caught with a broken
down car that I can't fix because I
can't get the parts or because they're too
expensive.
So I remedied a situation with an old
car, for example.
I had an old refrigerator.
I have two young kids.
(17:29):
I need to have a working refrigerator, so
I just got ahead of replacing my 20
-year-old refrigerator.
So that type of activity is what I
mean by pull forward.
So it'll be interesting to see what happens
going forward.
Now, on the biggest stocks in the market,
right, if we're talking about the S&P
500, the biggest stocks in the market, they
don't necessarily have to worry about pull forward
too much.
(17:50):
Microsoft, Amazon, Amazon a little bit, but a
lot of their revenue comes from Amazon Web
Services just as much as retailing.
They're not part of this inventory good cycle,
right?
A lot of it is subscription-based.
A lot of it is considered, Windows, for
(18:12):
example, I think would be considered a staple,
right?
It's a business-to-business type product, but
it's a staple.
We need it.
And they're continuing to grow at a very,
very rapid pace in a secular manner.
So when we're talking about the overall market
and we talk about concentration in the market,
the concentration in the market might actually be
(18:32):
helping us with this situation right now because
those companies are less exposed to the potential
effects of tariffs.
Brian, you're probably tired of me asking about
this because it's something I bring up routinely.
I can ask him if you want.
I know your question.
(18:53):
I could just answer it.
Maybe for the listeners, you should ask, Chris.
Okay.
Just to put it out there, why not
be worried about valuation, the market valuation?
The forward PE is near 22 times at
the half.
That's relatively high in historical terms.
(19:16):
Why shouldn't we be concerned about that?
I think you should be concerned about valuation.
I think you should always be concerned about
valuation.
I want to buy good companies at good
prices.
I just think the PE ratio is a
terrible way to measure valuation.
The PE ratio on a trailing basis, if
you look at a trailing PE, only takes
into account companies' earnings versus the price today
(19:39):
over the last 12 months.
The forward PE ratio is arguably even worse.
It only takes into account expected earnings in
the next 12 months.
There is a lot wrong with this.
We don't think about stocks within a one
year time period.
We talk about how stocks are long-term
assets.
(20:00):
The fact that that doesn't take into growth
at all is a problem for me.
The Mag 7 names are expected to grow
at 30%, and the total S&P 500
is expected to grow at 9%.
We have had historic growth for years now,
and we're in a productivity boom.
(20:21):
If you add on growth to the historical
market just there, you should expect that you
would pay a higher PE ratio for better
expected growth in the future.
Now it's true that if that better expected
growth in the future does not pan out,
then the valuation is definitely a big concern
(20:42):
because the PE ratio is too high.
Right now, that's the reason why it's pricing
that in.
Another reason why I think it's pricing in
a high PE ratio is interest rates.
We have interest rates at four and a
quarter on the 10-year, which is historically
very low.
If we're going to look at historic PE
ratios, we have to think about PE ratios
in historic terms.
(21:03):
The 10-year interest rate in the late
90s was above 6%.
So when we're comparing today's PE ratio to
the PE ratio of the late 90s and
you're saying, hey, look, we're in a similar
ballpark of the dot-com bust, I would
argue we're nowhere close.
Those interest rates were 50% higher than
(21:24):
they are today.
I get comfort there as well.
Finally, the economy is much different.
Historically, if let's say we were around a
14, 15, 16 PE ratio going back to
the 50s, capital expenditures were enormous back then
(21:46):
because we were a bits and bytes economy.
The stock market was also, I would argue,
less understood.
People were very concentrated on dividend yields, for
example, rather than things that we have today
like buybacks.
They weren't necessarily concerned about growth.
Free cash flow yields were arguably lower or
in future free cash flow yields were definitely
(22:07):
lower.
So this is what I call a difference
between the bricks and mortar economy versus the
bytes and bits economy.
We have transitioned to a bytes and bits
economy where we have everything is as a
service.
And as a service just means that it's
a subscription.
It's a lower cost that you can more
predictably pay for.
So your cash flows are more consistent, they're
(22:30):
more predictable, and your margins are much higher
because you can deliver software that's already been
written without the use of another human being,
without the use of another truck, without the
reuse of a lot of other things.
I've learned about this in college, CDs don't
(22:50):
exist anymore, but it costs almost nothing to
stamp out another CD.
But it costs a lot more to make
another movie, for example, or make another widget.
So what we've seen is margins just continue
to increase.
And the bigger the company, the more the
margins are increasing.
So we have companies that are more profitable,
(23:12):
we have companies that are more consistent, and
we have companies that are growing at a
much faster rate.
And we have lower interest rates.
You combine all those things together, and I
think it's rational that we have a higher
PE ratio.
And if we did have a significant dip,
it's likely a buying opportunity.
So that's where I come out on that.
It's not that I don't worry about valuation,
(23:34):
I absolutely do.
PE is not a very good indicator of
it.
Brian, how much does AI play into those
previous comments about future expansions, future growth, accelerated
growth, however you want to frame it?
Significantly.
I mean, the biggest names in the market
are the biggest names in the market because
they're AI names.
(23:54):
And why are they growing at 30%
a year?
It's because they're the AI players.
I mean, that's going to be the productivity
boom of the future.
There's consensus around that.
I believe it to be true.
I think we all use it and we're
all getting better at it regularly.
I don't think there's really any doubt in
my mind.
I do think there's overhype.
(24:15):
I've talked about Tesla, for example, many times.
I don't understand why it has a trillion
dollar valuation.
The reason why it has a trillion dollar
valuation is because people think they're going to
be able to build humanoid robots and have
driverless taxis.
And basically, they just believe that Elon Musk
is going to be able to do it
better and faster than anybody else.
(24:37):
I think there's reason to believe that's wrong.
And that's one of the biggest things in
the market.
So there's certainly risks, right?
We jump from being able to write our
emails better to having humanoid robots like the
Jetsons.
That idea- Rosie.
(24:57):
Yeah.
Rosie jumped in our head real quick inside
of a year, I feel like, where I
don't think people were giving Rosie too much
credit.
So I think there's going to be a
hype cycle.
But at the same time, these companies, they're
not relatively inexpensive.
(25:18):
They're not relatively expensive, right?
So if you look at the dot-com
as a comparison, we're companies that had zero
revenue.
These are the biggest companies in the world
by revenue, by profit, by margins, by every
statistical financial measurement you can think of.
Given what you've said about the US economy
and its valuations, and this year we've seen
(25:39):
outperformance from international companies, some of that you
talked about with reference to the dollar, but
what's that tell us?
What's your take then?
How does that play into the consideration about
foreign exposure and whether it should be cheaper
(26:01):
valuations, but should it be an increasing part
of the portfolio for people?
Of course, you don't know what everyone's individual
exposure is, but thematically speaking, what's your take
as it relates to different kinds of economic
drivers in terms of other economies?
(26:24):
How does that play into the thoughts around
foreign?
So every investor has a home country bias.
It's pretty interesting, right?
So if you are an American, you're likely
going to hold more American stocks.
If you are German, you're going to have
more German or whatever, yeah.
But reality is when you look at the
(26:46):
global stock market, the United States is more
than 60% of the market and Nvidia
is like the size of the UK alone.
So the investable universe in the United States
is bigger than it is internationally.
So we just start there.
You're probably going to have more US stock
under most circumstances with any advisor.
(27:09):
We've made the active decision that we always
would like to have some international exposure in
our portfolio.
And I think there's good reason for that.
I think it's helped diversify our clients this
year.
And I think it will in future years
as well.
So why have we done that?
(27:30):
There's different types of companies in different parts
of the world, right?
So France, for example, is very good at
luxury, much better than the United States is.
LVMH has been around for hundreds of years.
Hermes has been around for hundreds of years.
They're not as good at technology.
(27:53):
They have never generated a meta.
They have never generated an Nvidia where the
United States tends to do this fairly regularly,
it seems like.
Now that doesn't mean that there's not good
companies in Europe that specialize in technology.
There is.
There's ASML, there's SAP.
They historically have had some good car manufacturers.
(28:16):
So Volvo is one of the biggest car
manufacturers in the world by revenue.
Ferrari has been a very good stock historically.
So there are good stocks internationally.
As an index, it hasn't done as well
for what I think is cultural, structural, and
(28:38):
structural reasons.
The United States has one benefit where, it
might not seem this way, but the 50
states are much more united than the countries
in the European Union.
The European Union struggles to keep everybody in
line with their rules, for example, which is
(29:00):
part of the reason why we had a
Greek tech crisis 12 years ago, for example.
China is a huge economy.
It's growing at a rapid rate, but there's
good reason to be concerned about capital controls.
Technically, in a lot of ways, it's illegal
for foreigners to hold domestic stocks.
(29:22):
There could be an adversary in some ways
of thinking, which could bifurcate their economy and
what are the impacts of that.
Generally, I think we've made a decision that
we'd like to avoid that area as much
as possible.
But that can be painful if China spikes
as it has in the last six months.
(29:44):
But over time, I don't think we've given
anything back by not being allocated in China
in any significant way.
Chris, I'm not sure the answer- This
relates to what you're describing there relates particularly
to the AMR team strategies as differentiated from
some of the other wealth enhancement strategies, just
to be clear, our own discretionary accounts for
(30:07):
our clientele.
In any case, yeah, I think that answers
my question, that notion that as much as
there can be opportunities in economies around the
world, you still lean toward a domestic bias
because of the quality of the companies and
(30:28):
the kind of profitability that they are generating,
which doesn't mean we don't want some international
exposure, but it still justifies perhaps our view
of why we're benefited by having an overweight
U.S. relative to perhaps a benchmark or
some comparative perspective.
(30:51):
I think it's a great way to sum
it up, Chris.
Thank you.
All right.
You summed up nicely.
Well, you're the content.
Well, terrific.
That's great.
So gives us a view of sort of
where we're at, lots of possibilities.
Seems I'd say fair to characterize your overall
view as generally optimistic or maybe cautiously optimistic
(31:15):
as we go into the second half of
the year.
Yeah, I'd say I'm neutral.
I'm not pessimistic.
I'm not optimistic and neutral is good, right?
When I say neutral, I mean, I think
we're going to have average returns in the
next 12 months.
And why do I say that?
Well, if you want to strap some numbers
to it, that chart you showed of the
(31:36):
PE ratio, if you were invert that and
get the earnings yield, you're going to get
something around 5%.
I think we're going to have 2.5
% inflation.
We're probably going to have some growth of
2%.
We're going to have margins expand by 1%.
And just there, you get the 10%.
And if we have growth in the S
&P 500 beyond what I just described that
(31:58):
we're probably going to see in the overall
economy, then you could get beyond that 10%.
You maybe track for the 14% that
we're tracking for now.
Certainly, we could get some curveballs.
I mean, April 2nd was certainly a curveball.
And that's why you need to be diversified
into a portfolio that is reflective of the
(32:19):
amount of volatility that you personally are willing
to take and withstand.
And that's personal to most people.
One thing that we have a particular client
that likes to ask a lot is, what
do you think is going to happen in
the next six months?
And I'm always reluctant to answer the question
(32:40):
because I just don't know.
It's like asking me about Einstein's theory of
relativity.
I'm no expert on what's going to happen
in the next six months.
But I can survey the landscape and say,
is this way off sides, on sides?
Are we going to score a goal?
Are we going to stay neutral and play
the puck well?
(33:01):
That's the kind of general thinking.
And if you try to pinpoint it and
you try to push your portfolio really far
one way or another based on putting your
finger in the air and feeling where the
wind is blowing, I think you're going to
get yourself in trouble.
So reminders for listeners to one, be sure
you have some liquidity reserves or a mechanism
(33:23):
for the unexpected where you can get access
to capital quickly.
Generally, we like to see a reserve account
as opposed to a loan, a home equity
line of credit or something like that.
We talk about buckets, have a strategy that
has graduated levels of risk.
So some portions are more long-term than
others.
(33:44):
And then make sure this is all put
together in the context of a financial plan
that's designed around your goals, your objectives, your
cashflow demands, your resources.
And get some help in that process to
make sure you're thinking it through deliberately across
a variety of integrated considerations.
(34:07):
It's not just about the portfolio, though that's
certainly an essential part of it, but it's
also about tax planning.
It's also about the cashflow design.
It's also about the things that will bring
you peace of mind when you put it
all together.
Thanks, Brian, for your take today.
Until next time, everybody keeps striving for something
(34:28):
more.
Thank you for listening to Something More with
Chris Boyd.
Call us for help, whether it's for financial
planning or portfolio management, insurance concerns, or those
quality of life issues that make the money
matters matter.
Whatever's on your mind, visit us at somethingmorewithchrisboyd
.com or call us toll free at 866
(34:49):
-771-8901 or send us your questions to
amr-info at wealthenhancement.com.
You're listening to Something More with Chris Boyd
Financial Talk Show.
Wealth Enhancement Advisory Services and Jay Christopher Boyd
provide investment advice on an individual basis to
clients only.
Proper advice depends on a complete analysis of
(35:09):
all facts and circumstances.
The information given on this program is general
financial comments and cannot be relied upon as
to your specific situation.
Wealth Enhancement Group cannot guarantee that using the
information from this show will generate profits or
ensure freedom from loss.
Listeners should consult their own financial advisors or
conduct their own due diligence before making any
financial decisions.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.