November 11, 2024 • 36 mins
Chuck Zodda and Mike Armstrong discuss Warren Buffett's recent trading activity and why he seems to be selling off long term holdings. Mortgage rates fell, then rose. What comes next? The fees burdening home owners after they buy. How seniors can do smart Roth IRA conversions. A new streaming customer emerges: the subscription pauser.
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Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
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(00:20):
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(00:43):
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(01:04):
Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong.
Speaker 2 (01:12):
Kicking off hour two of the Financial Exchange at the moment,
and we got some movement in equity markets to the upside.
Speaker 1 (01:20):
Here.
Speaker 2 (01:20):
The DOWS up three hundred and ninety one points almost
one percent, the S and P up about a quarter percent,
sixteen points, and the NASDAC pretty much flat up eight points.
So a little bit of a divergence here, and you're
seeing again you take a look at the areas of
the market that are performing strongest today. You got financials,
energy industrials, that whole cyclical story continuing to rally today.
(01:46):
The Nasdaq actually just turned negative here. Tenuere US Treasury
not trading today. Bond markets closed because it's a bank
holiday in observance of Veterans Day, and so the US
ten year Treasury is not moving. But it's just because, well,
the bond market is closed today. To those wondering why
(02:08):
the bond market closes on bank holidays but stocks don't,
the reason is if you think about what banks do,
they lend and they borrow, that's exactly what the bond
market does. So you don't want to have banks closed
while the value of their underlying loans is trading on
an open market, because it doesn't allow them to set
their books up how they want, and so that is
(02:29):
why the bond market is closed today. The more you know,
there you go. Oil. We've got West Texas Intermediate down
two dollars and twenty one cents a barrel to sixty
eight seventeen, triple a national average for gas prices sliding
another two tenths of a cent down to three h
eight and three tenths. And we've got gold today down
seventy four dollars and forty cents an ounce to twenty
(02:52):
six twenty and forty cents. Mike, there is a piece
in the Wall Street Journal today. It's titled does Warren
Buffett know something that we don't?
Speaker 3 (03:07):
Undoubtedly yes is yes, because he's almost eight years old,
has made billions of dollars in his life, and drinks
a ton of diet coke every day, so he certainly
knows something that we don't, probably a whole lot.
Speaker 2 (03:22):
Of something, quite honestly. But what this piece is specifically
asking is hey, Berkshire Hathaway, and you know which is
Warren Buffett's company. He says that, you know, he's kind
of starting to not be as active, and he's got
some lieutenants that are taking over a more active role.
But still his company, Berkshire Hathaway is really growing its
cash pile right now. It's got three hundred and twenty
(03:44):
five billion dollars sitting in cash and cash equivalents at
the moment.
Speaker 3 (03:48):
And selling off some applestock been selling off some uh
it was a Bank of America. They are backed at
it for a while now. And here is the point
that I will make. It is always impossible to tell
whether this is because of some big overarching concern that
Warren Buffett has about the state of the markets, if
it is entirely based on something else. For let's talk
(04:12):
about just you know, Berkshire Hathaway for a moment. Here
they own and operate dozens, if not hundreds of businesses
across the country, and so they wholly own some of
them like Dairy Queen. I think, is Geico a holy
owned subsidiary of Berkshire Hathaway is?
Speaker 2 (04:30):
Well, can we go through just the wide range of
things they own, So just on the insurance side, they've
got Geico General Reinsurance, National Idemity Company, Netherlands Reinsurance Group
I translated that from the original Dutch and Berkshire Hathaway Assurance.
Then they've got a whole utilities group that owns you know,
(04:50):
five or six other companies. They own Forest River Incorporated,
the world's largest seller of r v's. Like again, these
businesses are just all over the place. They Let's see,
they own through of the Loom, garrand Russell Corporation for
building products. They don't acme building brands. I'm just going
(05:10):
through some of these here. Let's see what else they have.
They got Jordan's Furniture if you live in New England,
have ever bought anything at Jordan's. Berkshire Hathaway owns them.
They also want Nebraska Furniture Mark, just because you know,
they got to geographically diversify. I guess sees Candy Dairy Queen.
As you mentioned, they own a bunch of different car dealerships.
(05:33):
At this point. They have Berkshire Hathaway Realty that they own.
I mean, it's all kinds of stuff in different industries.
Speaker 3 (05:40):
I guess one point that I would have would be
I bet that somebody over at Berkshire Hathway has a
pretty good model for Hey, based on how these businesses
are behaving and performing at any one point in time,
we've got this read or that read on the state
of the economy. But just because Warren Buffet is selling
applestock and bag of America stock does not in and
of itself mean that he is concerned about a big
(06:02):
sell off, or that he is reading anything, or that
Berkshire Hathaway is reading anything into this market long term.
Speaker 2 (06:09):
Yeah, I think Look, here's the thing with Berkshire Hathaway.
It's not worth trying to figure out why they're doing
something because they they have their own businesses they're running internally.
It's not just about hey, do we want to invest
in this company or invest in that they might need
the capital for something else.
Speaker 3 (06:30):
Yeah, are you selling Apple because you're worried about their
business model? If you're are you concerned about their valuations
or are you just considering a big acquisition and need
to free up some cash for it?
Speaker 2 (06:38):
And beyond that, the other thing, you have no idea
what their time horizon is. You can almost guarantee it's
longer than you. It's it's probably longer than yours. Yeah,
I'm guessing their time horizon is somewhere in the vicinity
of fifty to one hundred years. Yes, And that works
for them because they don't need the money. They've got
plenty of it. And so if they to go out
(07:01):
and buy I don't know a company that makes I beams,
you'd be like, oh, does that mean they think that
like construction is gonna pick up next year, when in
reality they might be like, no, we think that this
is you know, hedging for you know, commercial space stations
that are gonna be built in the twenty fifties, and
we want to, you know, get in on the technology
now because we're gonna be launching I beams into space. Right,
(07:23):
I'm not it could be anything. It's it's just you
don't know why they're doing it. And the other thing
they're not gonna tell you when they change their mind.
All that will happen. Each quarter you'll read what they
bought and sold and you'd be like, oh, they sold that.
Should I have done? I have no idea. It's a
(07:44):
horrible way to try to go about it. Right, So
we get these pieces that come out because look, it
is interesting, you know, worries.
Speaker 3 (07:53):
The You cannot make a successful case for any investor
having been better at it than Warren Buffett.
Speaker 2 (08:01):
But this is equivalent to Tom Brady showing up to
training camp and being like, oh I did X, Y
and Z this off season. And if you're, you know,
an aspiring quarterback, you're like, well should I be doing? No,
You're not Tom.
Speaker 3 (08:16):
Brady, You're Mike Armstrong right through like a seven year
old girl. You got to stand stop, You got to
stand on your tiptoes just to be able to see
the butt of the offensive lineman, let alone over them.
Speaker 2 (08:29):
Yeah. Yeah, So I just think, hey, it's it's interesting
to see what investing greats or greats in any industry
or any you know, any enterprise do, But that doesn't
mean that you should be doing the same thing. Important distinction,
and I think that that's important. So, you know, think
(08:51):
about it in terms of you ever see what you
know some people wear for fashion and you're like, hey,
could I pull that off?
Speaker 1 (09:00):
No?
Speaker 2 (09:00):
You can't, don't try to.
Speaker 3 (09:03):
You're more likely to be able to pull off the
fashion statement than Warren Buffett's investments.
Speaker 2 (09:07):
Correct, But even there, you know, it's it's questionable. Proceed
with caution. Yeah, it's you can't wear the Lady Gaga
meat dress. It's just not gonna work for you.
Speaker 3 (09:19):
I've been mean to have a conversation about your fedora, Chuck.
I actually do own a couple of doors, not surprised.
But don't worry about it. Let's take a quick break here.
Speaker 2 (09:28):
And I'm a little worry about it. I just be worried.
It's just a nice hat about it. Look, what are
your fred astare? Occasionally you need something that's a little
bit more demure than just a baseball hat, you know,
and the other thing. Quite honestly, as a proud bald man,
(09:50):
the little brim at the back helps to keep the
you know, the back of the neck a little bit
cooler too. So indeed, there's there's a lot of considerations here.
Speaker 1 (09:58):
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(10:19):
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Speaker 2 (10:23):
Piece of the New York Times. I love the headline
mortgage rates fell, then rose? What comes next? Probably gonna fallen,
rise a little bit more. What do we do the
hokey poke and turn ourselves around? I mean, come on,
what are we doing here? No one knows what's going
to come next for mortgage rates? Shure, we do predictions?
What kind of predictions? Where are we right now in
(10:45):
the thirty year? Okay? Hold on, I see where you're
going with this. Mortgage News daily right now, this is
as of the close of Friday, has us at six
point nine to two.
Speaker 3 (10:55):
Tucker, how long of a payoff do you want? Thirty
years months, twelve months from now? Rate the blue whale,
now forget it. Three months from now rates lower higher, Chuck,
three months three months lower lower to twelve months higher?
Speaker 2 (11:11):
Hang on, I'm going lower?
Speaker 1 (11:13):
Right?
Speaker 2 (11:14):
That was fun? What do we do next? So higher
than lower? What did I just agree to? Yeah?
Speaker 3 (11:22):
Nobody knows. Nobody knows where rates are going to go.
The Federal Reserve has been cutting rates. They've cut We're
talking about seventy five basis points since Septembertember nineteenth, and
since that point in time, the average thirty year mortgage
rate has gone up seventy five basis points.
Speaker 2 (11:39):
So I don't know where rates are going to go.
Speaker 3 (11:41):
It's going to depend on everything else going on in
the economy.
Speaker 2 (11:44):
I think, look, it comes next what what?
Speaker 3 (11:49):
I just Yeah, it's just a silly thing to to
guess at.
Speaker 2 (11:53):
Ultimately, it's going to be dependent on two things, inflation
and growth. Short term, my expectation is both inflation and
growth probably stick around here. Well, I think inflation might
pick up a little bit, the reason being companies and
individuals front loading purchases the next couple of years, the
next couple of months rather. But I'm also kind of
(12:17):
the opinion that, hey, we just went through this little
rebound in growth, and usually those again they kind of
roll over every couple of months, and so maybe we're
heading into one of those. So maybe they balance out
into Tucker, I'm going to change. I'm going to change
my next three months. It's gonna be the exact same
push in twelve months, three months, three months, I'm going push.
(12:38):
So I'm lower lower, Chucks, push higher.
Speaker 4 (12:41):
You said higher lower, No, And now I got to
get a new post.
Speaker 3 (12:44):
You just didn't listen, Tucker, No, you said lower than
hould the tape Mike had lower for both I did, Tucker, Tucker,
you're not being a very good listener.
Speaker 2 (12:53):
I understand the desire to only listen to what I say.
Speaker 4 (12:55):
Mic is higher higher.
Speaker 2 (13:02):
Can we get your wife in here to tell you
that you're a bad lesson?
Speaker 4 (13:06):
Let's get her up on the hotline here. Yeah, she'd
be the first one in line.
Speaker 2 (13:10):
Anyways. I think, Look, it's ultimately going to be about
growth and inflation, and I think that it's likely that
in the next three months, one or both of those
might roll over lower. In the next twelve months, one
or both of those might roll higher. That's kind That's
all I'm saying.
Speaker 3 (13:30):
Yeah, and I think moreover, there's really no compelling argument
that I can see whatsoever her rates substantially lower.
Speaker 2 (13:39):
Recession, Yeah, that's the only one. Recession tough to understand.
How you get there? Response?
Speaker 3 (13:46):
There's a path to recession out there, yep, But does
it materialize?
Speaker 2 (13:51):
Who the heck knows. This thing has been resilient for
the last two years when everyone and their grandmother has
been calling for recession.
Speaker 3 (13:58):
So it'll just be one of the those additional headwinds
for new homeowners at least and existing ones who want
to refinance the higher than I think anyone anticipated mortgage
rates at this point in time. I just don't think
a lot of people thought we would still be hanging
out at seven percent by November of twenty twenty four.
The other pieces burdening homeowners pretty substantially these days is
(14:21):
a piece from the Journal on hoas and condo fees,
and this one I find interesting, But I'm going to
make the argument that it's not really any different whether
or not you're in a condo fee or HOA, because
you're facing the same increased costs. And don't be surprised
when your HOA has to bump up their monthly amounts
(14:41):
or their one time things by substantial amounts for inflation.
Speaker 2 (14:45):
Yeah, the subeditor here is rising costs for insurance, repair
and maintenance, or pushing hoadues higher. And yes, it's pushing it,
pushing hoadues higher. But if you just own a home
that's not in an HOA, they're still moving higher. It's
just you don't pay them as any HOA fee on
a monthly basis.
Speaker 3 (15:01):
Yeah, as a owner of a pool, I can tell
you that the costs for everything associated with keeping my
pool that nice crystal blue are quite a bit higher
than they were four years ago, And whether you pay
that as part of your HOA dues or as an
individual homeowner, it's not going to make a big difference.
(15:22):
I think the one lesson here is the only real
way to control home ownership costs is by doing the
work yourself, And if you plan to do so, then
buying into an HOA is probably a bad idea.
Speaker 2 (15:32):
Right, That's not really it's not why that works. Its
ways aren't really a great thing.
Speaker 3 (15:36):
For do it yourselfers, Right, Like I'm going to mow
my own lawn and repair all my shutters.
Speaker 2 (15:42):
Well, no you're not. Yeah, your name is gonna have
something to do say about it. So I think that
on this the part that's going to continue to be
problematic more than others is the insurance piece. Yeah. I
can't figure out what the answer is here, other than
(16:02):
home prices maybe having to come down. It's it's just
not affordable in a lot of areas at this point
to have insurance premiums moving the way they are with
incomes where they are. And so that's kind of where
I'm I'm landing on this stuff is the other pieces
(16:22):
are are starting to plateau somewhat like repair and maintenance costs. Ultimately,
what you're paying for there is labor, and those costs
have moderated. Yeah, in the last year or two. The
insurance piece, look no further. What we're seeing in freaking
Massachusetts right now. We got freaking wildfires here, like we're
(16:43):
in California.
Speaker 3 (16:44):
Yeah, not expected, you know, like, this is not great.
I think it's forty eight states right now are in drought.
Speaker 2 (16:52):
Yeah, it's it's insane. Forty eight states are in drought
and the other ones had twenty eight inches of rain
dropped by two hurricanes on them. Yeah.
Speaker 3 (17:00):
I'm hoping to take the optimistic view on the insurance
market because prior to the two hurricanes ripping through the
southeastern United States, there were insurers actually stepping back into
Florida and buying back policies from the state insurer there,
and so you did start to see some healthy behavior
in some of these markets. And I do think that
(17:21):
at some point you wash through all of these giant
premium increases that insurers have had to implement. I genuinely
don't think it's that insurers don't know how to price
the risk in.
Speaker 2 (17:33):
A lot of these markets. I think in most of
the markets they do know how to price the risks.
They would get screwed like they couldn't attract anyone of
those prices.
Speaker 3 (17:40):
And I think again, for better or worse, people are
now getting okay with those prices. Legislators are realizing that
they have to accept these prices, and we might have
more pain to go here, but I think you're getting
close to the point where insurers starts stepping back into
some of these markets.
Speaker 5 (18:11):
Bringing the latest financial news straight to your radio every day,
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Speaker 2 (18:33):
Mike, there's a piece in the Wall Street Journal. It's
titled how Seniors can do smart Wroth IRA Conversions. First question,
what would a dumb Wroth IRA conversion look like?
Speaker 3 (18:43):
Doing the entire thing at once in one taxier and
bring your tax rates up so high that it makes
no financial sense whatsoever. That's a dumb one.
Speaker 2 (18:53):
Yeah. Potentially also taking into account, you know, things like
medicare rates and things like that, where you might you know,
be bumped up into a higher monthly payment on those.
Speaker 3 (19:00):
YEA doing it the same year you're selling a giant
investment property for example. So or generally just doing it
without any sort of math behind it, I think is
the takeaway on anything tax strategy related. Right, if you're
just kind of sticking your finger up and trying to
see which way the wind is blowing, you're probably going
(19:22):
to miss something and something that's fairly important. But yeah,
I mean seniors, even folks who have already started required
minimum distributions, it can occasionally make sense for them to
look at roth ira conversions. And I guess we should
just start with talking about how that all works, Chuck. So, yes,
you can take money. You can still put money into
(19:44):
a roth ira after you are done working. The only
way you're allowed to do so, though, because you don't
have any earned income at that stage. The only way
you're allowed to do so is by taking it out
of a traditional retirement account and placing it into a
wroth one. There's a specific process here. Some four one
k's allow you to do it within the plan, Others
do not. Sometimes you have to have an IRA to
(20:07):
do it. But there's a number of reasons people do this,
and largely it's based on well a couple of different reasons.
One reducing long term taxes for your family and this
sometimes also includes like beneficiaries. And the second piece would
be reducing your required minimum distributions for the future. That
(20:29):
kind of plays into the same factor there. But required
minimum distributions on roth irays don't exist for the original
count holder. They might for the beneficiary. Again, but that's
the baseline here is you take money out of that
pre tax portion to beef up that tax free portion.
Speaker 2 (20:46):
Yeah, and again, the specific amount and the way that
you approach this is going to depend on your specific situation.
There is no one size fits all of Hey, what
age should I start converting to ROTH or how much
did I do? You have to take into account the
thing Mike mentioned there, and it's something where right now,
with the way that the tax code is structured, you
(21:07):
also don't have the ability to get a do over
if you make a mistake. Until when did they change
and get rid of recharacterizations. I think it was during
the Trump Was it seventeen or was it nineteen during
the Secure Act? I can't remember, but either way in
the last five to seven years that they got rid
of the ability to take a mulligan, take a mulligan
on it. And so you need to make sure that
(21:28):
you're actually, you know, looking at this and getting it
right the first time, because if you don't, any potentially, yeah,
in a bit of a pickle with those higher taxes
or maybe higher Medicare premium.
Speaker 3 (21:37):
So the most common timeframes, yeah, it's usually between retirement
and age seventy three or seventy five that most of
these things occur. But as Lauras Andres points out in
this Wall Street Journal piece, it can make sense to
do so later. I've seen examples where maybe you've got
like a five or ten year age gap between husband
and wife or partners, and you know, hey, my required
(21:58):
minimum distribution has already started, but it still might make
sense to do some wroth conversions over the top of
that in order to avoid a bigger tax problem down
the road. This has become a pretty popular strategy. There
is a lot to beware of, especially when you are
retired from search charges that you'll pay on Medicare, from
the net investment tax from heck, even you know people
(22:23):
who might be on a Obamacare health insurance policy and
how your incomes might affect that, including.
Speaker 2 (22:29):
Roth Ira conversions.
Speaker 3 (22:30):
Maybe you're you know, retired pre sixty five and not
on Medicare yet. There's other considerations there, and it can
be tough to evaluate all this stuff on your own
and get it exactly right if you're trying to do so,
or quite frankly, if you're working with somebody professionally already
who's not at least considering it as part of your
(22:51):
financial strategy, then please call the folks at Armstrong Advisory Group.
We can help you evaluate whether or not this will
be a successful strategy for you. And yeah, frequently we
tell people, hey, it's not the right thing for you
to do, but that's at least good information to have.
Please call us to the Armstrong Advisory Group where we
can help you with your tax strategies when it comes
to your investment portfolio by calling eight hundred three nine
(23:14):
three four zero zero one. That's the number for the
Armstrong Advisory Group and we offer free consultations throughout New England.
That number once again is eight hundred three nine three
four zero zero one.
Speaker 1 (23:26):
The proceeding was paid for by Armstrong advisory group a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (23:41):
Mike, I want to just talk about one other thing.
I know that the last segment was talking about not
last segment. Last thing we covered was talking about roth
Ira conversions. There's an interesting topic just to talk about.
I know, wroth Ira conversions are something that typically you
talk about, as you noted, once you start getting a
little bit older, kind of a you're you know, fifties sixties,
where you might have kind of a pre pre retirement
(24:05):
scenario where your income might be dropping, or you know,
just after retiring when your income is lower. There's an
interesting discussion that I think is happening right now just
in general about the idea of traditional IRA versus roth IRA,
even for younger people, and even for younger people that
might be in higher tax brackets. The conventional wisdom and
(24:26):
what you know kind of was always there was, Hey,
if you think your tax bracket in retirement is going
to be higher than it is today, opt for the WROTH.
If you think that your tax bracket in retirement is
going to be lower, use the traditional because you get
the deduction today. That's that's the math, and generally that's
kind of been the accepted wisdom. Anecdotally, I've been hearing
(24:49):
larger numbers of people in their twenties, thirties, forties, regardless
of income, saying, look, I'm pushing to use the WROTH
to begin with, just because because Roth four one ks
are more widely available now and there's more tax code
uncertainly about where tax rates could be in the future. Hey,
let me take that off the table to a certain
(25:11):
you know, in one direction at least. Yeah, thoughts on this,
because I'm seeing it more and more.
Speaker 3 (25:17):
I think you can make an argument, and it certainly
depends on your situation, because I have a really, really
tough time believing that somebody in the twelve percent income
tax bracket, for example, is going to face substantially higher
tax rates at any point in their life. But if
you're in that thirty seven and you can afford to
(25:38):
do so, that's the highest possible income tax bracket, you know,
locking in some certainty around paying taxes at thirty seven percent.
Could you make a compelling argument that over the rest
of your lifetime you could face forty or forty five
percent federal tax rates. I don't think that's that crazy,
But I still see mistakes around this.
Speaker 2 (25:56):
I see a lot of you know, you talk about
that example.
Speaker 3 (25:59):
The most common what I see is, well, I don't
know what to do, so I'm gonna split the difference
and do half and half. Sure the other piece too. Remember,
you know, think about long term what your plans are.
Because let's say you are contributing and living in Massachusetts,
but your plan is to not retire here.
Speaker 2 (26:16):
That changes the formula dramatically.
Speaker 3 (26:19):
Right now, you're saying, hey, I'm going to you know,
pay the state of Massachusetts there five percent or nine
percent if you're making a lot of money, and then
I'm going to retire. Someone that doesn't have an income
tax or has a lower income tax like that, that's
a very different equation. And so yeah, it's yeah to
your point, Maybe you're saying more of it just because
(26:40):
there's more row for one k's available.
Speaker 2 (26:42):
Maybe that's yeah.
Speaker 3 (26:43):
I just see a lot of not hard thinking about
which way people should go.
Speaker 2 (26:48):
To take a quick break here. When we come back,
we've got stack Root.
Speaker 1 (26:53):
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(27:13):
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Speaker 4 (27:18):
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(27:40):
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Speaker 2 (27:59):
Mike, what do you got for stack Roulettes?
Speaker 3 (28:01):
I want to talk a little bit about the continued
streaming wars and the new trends that may or may
not be significant to the business models. These companies have
all been under a fair bit of pressure to show
that they can actually make any money in the space,
and Netflix has been the only one.
Speaker 2 (28:18):
That's reliably capable of doing so.
Speaker 3 (28:21):
But an interesting statistic the monthly median percentage of premium
premium streaming video subscribers. I don't know how they describe premium, but.
Speaker 4 (28:31):
You know, not paying for ads.
Speaker 3 (28:33):
Not paying for ads, and you know, presumably that's going
for ten plus bucks a month on average. The percentage
of them who rejoined the same service they had previously
canceled within a twelve month period was about a third.
So about a third of streaming customers are saying, I
watched my show, I don't need to continue to pay
(28:54):
for you over the next nine months. I'll resubscribe labor later.
And I wonder how big a problem that is for
the stream platforms and whether they go the route that
I've thought they would go for quite some time, which
is incentivizing year long contracts.
Speaker 2 (29:09):
Most of them already do that, do they? Disney does,
Disney does, Disney Plus has an annual option that I
think is like ten or twenty percent cheaper. Okay, I
believe Peacock does, but I could be wrong on that.
I don't know, But I mean, I've done this with Netflix.
Speaker 3 (29:25):
Doesn't need to. Netflix has no need to. I've done
this with Max. I hate that name, HBO. Max canceled
and then resubscribed as the dumbest name and Netflix to me,
Netflix and Amazon and maybe Disney are the only ones
to me that are not going to face this behavior.
And it is kind of problematic, right. It is pretty
(29:48):
tough if you're a streamer to say, oh, yeah, you know,
once this next hit show goes out, I know that
ten percent of my subscribers, for example, are going to
cancel and I'm going to see a massive deficit in
monthly incomes.
Speaker 4 (29:58):
I mean, I just paused polu subscription for a third
time and gives you the option to pause it for
at most is twelve weeks.
Speaker 1 (30:06):
You can pause your subscription.
Speaker 2 (30:08):
So I did that. You know what model of these
places shouldn't adopt? What's that is what the New York
Times are doing with the Athletic. I'm not familiar. It's wild.
Speaker 4 (30:19):
I didn't see this.
Speaker 2 (30:20):
So the Athletic if you're not familiar with it. It
is basically like sports only Like originally it developed with
like different verticals for each city, and each city its
own dedicated correspondence. But it's remind me, did they buy this?
New York Times didn't start it. They bought it maybe
two or three years ago, and now it's just kind
of general, you know, national sports news with some local
(30:42):
coverage as well. Got it and each year for the
past three years, I have like when my thing comes up,
it tells you, like, hey, it's gonna be if forget
what the cost is. It's like sixty or ninety bucks
for the year in order to like to continue your subscription.
And I make a note the week before, like cancel
my subscription, and I go through and I'll have to
pull up exactly what it is that I end up paying.
(31:05):
They give you like eighty or ninety percent off the price.
I think I'm paying ten dollars for the full year.
I love when companies do this. It is so dumb,
Like all I had to do was click one button.
That's what Hulu did for me. How much do they discount?
Speaker 4 (31:19):
It was like whatever Hulu cost at that time, it
was like seven ninety nine, eight ninety nine, and they're like, hey,
we're sorry to se you go, but before you do go,
how about two ninety nine a month.
Speaker 3 (31:29):
I finally stopped doing this for six months with my
high speed internet. But I know right now if I
wanted to, I could call FiOS, cancel my WiFi and
then come back as a new customer, or put it
under my wife's name more likely, and I know that
they would offer me fifteen dollars cheaper than what I'm
paying right now. It became too much of a hassle
to go return the box every time. But when you're
(31:50):
talking about something as simple as an online subscription or
streaming over the internet, people are going.
Speaker 2 (31:56):
To do exactly that.
Speaker 3 (31:57):
You cannot make these offers so compelling and treat these
people like a new customer. Else they're going to do
exactly what Chuck's doing and just rake you over the coals.
Speaker 2 (32:06):
No, I'm looking at it now, just because I was
curious what it actually was. So I got an email
from them, and this was on June twenty ninth. Hey,
your subscription set to renew on July twenty eighth. It's
going to be seventy one dollars and ninety nine cents
and lets you cancel immediately. I go in and say, okay,
let me cancel. I'm now paying nineteen ninety two for
(32:27):
the next twelve months. It's less than two dollars a month.
That is such a bad business model. I like, what
are we even doing here? Like, no, wonder print media
can't make money if they're doing that. If streamers start
discounting it, the economics are even worse. Yeah, because of
all the licensing costs. That is very much some silliness.
And now we have to go to just a fantastic story. No,
(32:49):
this one out of Mattel. So the Wicked movie is
going to be launching in theaters on the twenty second
of November. Wicked, if you're not familiar with it, it
is basically the story of the two major witches from
the Wizard of Oz and kind of how they became,
their perspective, who they are and everything. Yeah, it's their
(33:11):
life story. It's a documentary and it's documentary. Is that wrong?
It's like Best in Show? Yes, it's like the Blair
Witch Project. You know, it's basically the same thing. I
think they're very different movies. Actually, Anyways, as part of
this listen, you have all kinds of different toys and
(33:32):
merch that you want to make because it's not enough
to just own the box office. You need to own
the retail market as well. And so apparently there was
a Barbie edition or a Wicked Edition Barbie that is
being put out by Mattella's part of this, and somehow
on the box to the Wicked Edition Barbie, rather than
(33:56):
directing people to the url the website were the Wicked movie,
they accidentally put the name put the web address for
an adult film studio instead. Now it's kind of a
big oversight. Now, Fortunately, as I think Mike or Tucker
(34:18):
brought up during one of our breaks, they didn't do
this in an email where the link was clickable or
anything like that, so it wasn't like that would have
been a lot worse.
Speaker 1 (34:26):
Yeah, it's on the back of the box.
Speaker 2 (34:27):
But in any case, if you are a kid who
has a phone because your parents have given you one,
and you're like, as much as I wish this weren't
the case, I do know like nine to ten year
olds who have phones and they're like, oh, like let
me go, and oh no, that's not what I thought
it was at all kind of a problem. So Mattel
is now issued in a statement we deeply regret this
(34:49):
unfortunate error and or taking immediate action to remedy this.
Parents are advised that the misprinted, incorrect website is not
appropriate for children. It's also unclear how many of these
toys actually have been distributed to stores already and how
much how many of them are just in warehouses somewhere.
Speaker 3 (35:05):
But you have a tough time getting your wicked Barbie doll?
I think is the takeaway here?
Speaker 2 (35:10):
It sounds like, according to the Hollywood Reporter, they're they're
pulling these from Walmart, Best Buy in Amazon right now
in order to try to prey up too many of
them from getting out.
Speaker 3 (35:19):
Is this going to be the hot must have item
of Christmas twenty twenty four? Now might be a secondary
market for this day the originals that have the misprint
this is valuable. My goodness, you know a mint condition
one of these?
Speaker 2 (35:35):
Boy, This might be corporate blunder of twenty twenty four.
I gotta go through my list. This is definitely gonna
make it into the into festivsts this year, but definitely yea,
it's it. I have to go through my list because
we often forget how long a year is. It's three
hundred and sixty five days.
Speaker 3 (35:54):
If you weren't you know, if you didn't know, some
years one hundred and fifty two that would do shows.
Speaker 2 (35:58):
For some years like this year, there's three hundred sixty six.
It was a leap heer too, so it's extra content. Yeah,
it's an extra point three percent for Festivus this year.
We're gonna take a quick break back at tomorrow. We'll
see you then.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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(00:43):
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(01:04):
Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong.
Speaker 2 (01:12):
Kicking off hour two of the Financial Exchange at the moment,
and we got some movement in equity markets to the upside.
Speaker 1 (01:20):
Here.
Speaker 2 (01:20):
The DOWS up three hundred and ninety one points almost
one percent, the S and P up about a quarter percent,
sixteen points, and the NASDAC pretty much flat up eight points.
So a little bit of a divergence here, and you're
seeing again you take a look at the areas of
the market that are performing strongest today. You got financials,
energy industrials, that whole cyclical story continuing to rally today.
(01:46):
The Nasdaq actually just turned negative here. Tenuere US Treasury
not trading today. Bond markets closed because it's a bank
holiday in observance of Veterans Day, and so the US
ten year Treasury is not moving. But it's just because, well,
the bond market is closed today. To those wondering why
(02:08):
the bond market closes on bank holidays but stocks don't,
the reason is if you think about what banks do,
they lend and they borrow, that's exactly what the bond
market does. So you don't want to have banks closed
while the value of their underlying loans is trading on
an open market, because it doesn't allow them to set
their books up how they want, and so that is
(02:29):
why the bond market is closed today. The more you know,
there you go. Oil. We've got West Texas Intermediate down
two dollars and twenty one cents a barrel to sixty
eight seventeen, triple a national average for gas prices sliding
another two tenths of a cent down to three h
eight and three tenths. And we've got gold today down
seventy four dollars and forty cents an ounce to twenty
(02:52):
six twenty and forty cents. Mike, there is a piece
in the Wall Street Journal today. It's titled does Warren
Buffett know something that we don't?
Speaker 3 (03:07):
Undoubtedly yes is yes, because he's almost eight years old,
has made billions of dollars in his life, and drinks
a ton of diet coke every day, so he certainly
knows something that we don't, probably a whole lot.
Speaker 2 (03:22):
Of something, quite honestly. But what this piece is specifically
asking is hey, Berkshire Hathaway, and you know which is
Warren Buffett's company. He says that, you know, he's kind
of starting to not be as active, and he's got
some lieutenants that are taking over a more active role.
But still his company, Berkshire Hathaway is really growing its
cash pile right now. It's got three hundred and twenty
(03:44):
five billion dollars sitting in cash and cash equivalents at
the moment.
Speaker 3 (03:48):
And selling off some applestock been selling off some uh
it was a Bank of America. They are backed at
it for a while now. And here is the point
that I will make. It is always impossible to tell
whether this is because of some big overarching concern that
Warren Buffett has about the state of the markets, if
it is entirely based on something else. For let's talk
(04:12):
about just you know, Berkshire Hathaway for a moment. Here
they own and operate dozens, if not hundreds of businesses
across the country, and so they wholly own some of
them like Dairy Queen. I think, is Geico a holy
owned subsidiary of Berkshire Hathaway is?
Speaker 2 (04:30):
Well, can we go through just the wide range of
things they own, So just on the insurance side, they've
got Geico General Reinsurance, National Idemity Company, Netherlands Reinsurance Group
I translated that from the original Dutch and Berkshire Hathaway Assurance.
Then they've got a whole utilities group that owns you know,
(04:50):
five or six other companies. They own Forest River Incorporated,
the world's largest seller of r v's. Like again, these
businesses are just all over the place. They Let's see,
they own through of the Loom, garrand Russell Corporation for
building products. They don't acme building brands. I'm just going
(05:10):
through some of these here. Let's see what else they have.
They got Jordan's Furniture if you live in New England,
have ever bought anything at Jordan's. Berkshire Hathaway owns them.
They also want Nebraska Furniture Mark, just because you know,
they got to geographically diversify. I guess sees Candy Dairy Queen.
As you mentioned, they own a bunch of different car dealerships.
(05:33):
At this point. They have Berkshire Hathaway Realty that they own.
I mean, it's all kinds of stuff in different industries.
Speaker 3 (05:40):
I guess one point that I would have would be
I bet that somebody over at Berkshire Hathway has a
pretty good model for Hey, based on how these businesses
are behaving and performing at any one point in time,
we've got this read or that read on the state
of the economy. But just because Warren Buffet is selling
applestock and bag of America stock does not in and
of itself mean that he is concerned about a big
(06:02):
sell off, or that he is reading anything, or that
Berkshire Hathaway is reading anything into this market long term.
Speaker 2 (06:09):
Yeah, I think Look, here's the thing with Berkshire Hathaway.
It's not worth trying to figure out why they're doing
something because they they have their own businesses they're running internally.
It's not just about hey, do we want to invest
in this company or invest in that they might need
the capital for something else.
Speaker 3 (06:30):
Yeah, are you selling Apple because you're worried about their
business model? If you're are you concerned about their valuations
or are you just considering a big acquisition and need
to free up some cash for it?
Speaker 2 (06:38):
And beyond that, the other thing, you have no idea
what their time horizon is. You can almost guarantee it's
longer than you. It's it's probably longer than yours. Yeah,
I'm guessing their time horizon is somewhere in the vicinity
of fifty to one hundred years. Yes, And that works
for them because they don't need the money. They've got
plenty of it. And so if they to go out
(07:01):
and buy I don't know a company that makes I beams,
you'd be like, oh, does that mean they think that
like construction is gonna pick up next year, when in
reality they might be like, no, we think that this
is you know, hedging for you know, commercial space stations
that are gonna be built in the twenty fifties, and
we want to, you know, get in on the technology
now because we're gonna be launching I beams into space. Right,
(07:23):
I'm not it could be anything. It's it's just you
don't know why they're doing it. And the other thing
they're not gonna tell you when they change their mind.
All that will happen. Each quarter you'll read what they
bought and sold and you'd be like, oh, they sold that.
Should I have done? I have no idea. It's a
(07:44):
horrible way to try to go about it. Right, So
we get these pieces that come out because look, it
is interesting, you know, worries.
Speaker 3 (07:53):
The You cannot make a successful case for any investor
having been better at it than Warren Buffett.
Speaker 2 (08:01):
But this is equivalent to Tom Brady showing up to
training camp and being like, oh I did X, Y
and Z this off season. And if you're, you know,
an aspiring quarterback, you're like, well should I be doing? No,
You're not Tom.
Speaker 3 (08:16):
Brady, You're Mike Armstrong right through like a seven year
old girl. You got to stand stop, You got to
stand on your tiptoes just to be able to see
the butt of the offensive lineman, let alone over them.
Speaker 2 (08:29):
Yeah. Yeah, So I just think, hey, it's it's interesting
to see what investing greats or greats in any industry
or any you know, any enterprise do, But that doesn't
mean that you should be doing the same thing. Important distinction,
and I think that that's important. So, you know, think
(08:51):
about it in terms of you ever see what you
know some people wear for fashion and you're like, hey,
could I pull that off?
Speaker 1 (09:00):
No?
Speaker 2 (09:00):
You can't, don't try to.
Speaker 3 (09:03):
You're more likely to be able to pull off the
fashion statement than Warren Buffett's investments.
Speaker 2 (09:07):
Correct, But even there, you know, it's it's questionable. Proceed
with caution. Yeah, it's you can't wear the Lady Gaga
meat dress. It's just not gonna work for you.
Speaker 3 (09:19):
I've been mean to have a conversation about your fedora, Chuck.
I actually do own a couple of doors, not surprised.
But don't worry about it. Let's take a quick break here.
Speaker 2 (09:28):
And I'm a little worry about it. I just be worried.
It's just a nice hat about it. Look, what are
your fred astare? Occasionally you need something that's a little
bit more demure than just a baseball hat, you know,
and the other thing. Quite honestly, as a proud bald man,
(09:50):
the little brim at the back helps to keep the
you know, the back of the neck a little bit
cooler too. So indeed, there's there's a lot of considerations here.
Speaker 1 (09:58):
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(10:19):
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Speaker 2 (10:23):
Piece of the New York Times. I love the headline
mortgage rates fell, then rose? What comes next? Probably gonna fallen,
rise a little bit more. What do we do the
hokey poke and turn ourselves around? I mean, come on,
what are we doing here? No one knows what's going
to come next for mortgage rates? Shure, we do predictions?
What kind of predictions? Where are we right now in
(10:45):
the thirty year? Okay? Hold on, I see where you're
going with this. Mortgage News daily right now, this is
as of the close of Friday, has us at six
point nine to two.
Speaker 3 (10:55):
Tucker, how long of a payoff do you want? Thirty
years months, twelve months from now? Rate the blue whale,
now forget it. Three months from now rates lower higher, Chuck,
three months three months lower lower to twelve months higher?
Speaker 2 (11:11):
Hang on, I'm going lower?
Speaker 1 (11:13):
Right?
Speaker 2 (11:14):
That was fun? What do we do next? So higher
than lower? What did I just agree to? Yeah?
Speaker 3 (11:22):
Nobody knows. Nobody knows where rates are going to go.
The Federal Reserve has been cutting rates. They've cut We're
talking about seventy five basis points since Septembertember nineteenth, and
since that point in time, the average thirty year mortgage
rate has gone up seventy five basis points.
Speaker 2 (11:39):
So I don't know where rates are going to go.
Speaker 3 (11:41):
It's going to depend on everything else going on in
the economy.
Speaker 2 (11:44):
I think, look, it comes next what what?
Speaker 3 (11:49):
I just Yeah, it's just a silly thing to to
guess at.
Speaker 2 (11:53):
Ultimately, it's going to be dependent on two things, inflation
and growth. Short term, my expectation is both inflation and
growth probably stick around here. Well, I think inflation might
pick up a little bit, the reason being companies and
individuals front loading purchases the next couple of years, the
next couple of months rather. But I'm also kind of
(12:17):
the opinion that, hey, we just went through this little
rebound in growth, and usually those again they kind of
roll over every couple of months, and so maybe we're
heading into one of those. So maybe they balance out
into Tucker, I'm going to change. I'm going to change
my next three months. It's gonna be the exact same
push in twelve months, three months, three months, I'm going push.
(12:38):
So I'm lower lower, Chucks, push higher.
Speaker 4 (12:41):
You said higher lower, No, And now I got to
get a new post.
Speaker 3 (12:44):
You just didn't listen, Tucker, No, you said lower than
hould the tape Mike had lower for both I did, Tucker, Tucker,
you're not being a very good listener.
Speaker 2 (12:53):
I understand the desire to only listen to what I say.
Speaker 4 (12:55):
Mic is higher higher.
Speaker 2 (13:02):
Can we get your wife in here to tell you
that you're a bad lesson?
Speaker 4 (13:06):
Let's get her up on the hotline here. Yeah, she'd
be the first one in line.
Speaker 2 (13:10):
Anyways. I think, Look, it's ultimately going to be about
growth and inflation, and I think that it's likely that
in the next three months, one or both of those
might roll over lower. In the next twelve months, one
or both of those might roll higher. That's kind That's
all I'm saying.
Speaker 3 (13:30):
Yeah, and I think moreover, there's really no compelling argument
that I can see whatsoever her rates substantially lower.
Speaker 2 (13:39):
Recession, Yeah, that's the only one. Recession tough to understand.
How you get there? Response?
Speaker 3 (13:46):
There's a path to recession out there, yep, But does
it materialize?
Speaker 2 (13:51):
Who the heck knows. This thing has been resilient for
the last two years when everyone and their grandmother has
been calling for recession.
Speaker 3 (13:58):
So it'll just be one of the those additional headwinds
for new homeowners at least and existing ones who want
to refinance the higher than I think anyone anticipated mortgage
rates at this point in time. I just don't think
a lot of people thought we would still be hanging
out at seven percent by November of twenty twenty four.
The other pieces burdening homeowners pretty substantially these days is
(14:21):
a piece from the Journal on hoas and condo fees,
and this one I find interesting, But I'm going to
make the argument that it's not really any different whether
or not you're in a condo fee or HOA, because
you're facing the same increased costs. And don't be surprised
when your HOA has to bump up their monthly amounts
(14:41):
or their one time things by substantial amounts for inflation.
Speaker 2 (14:45):
Yeah, the subeditor here is rising costs for insurance, repair
and maintenance, or pushing hoadues higher. And yes, it's pushing it,
pushing hoadues higher. But if you just own a home
that's not in an HOA, they're still moving higher. It's
just you don't pay them as any HOA fee on
a monthly basis.
Speaker 3 (15:01):
Yeah, as a owner of a pool, I can tell
you that the costs for everything associated with keeping my
pool that nice crystal blue are quite a bit higher
than they were four years ago, And whether you pay
that as part of your HOA dues or as an
individual homeowner, it's not going to make a big difference.
(15:22):
I think the one lesson here is the only real
way to control home ownership costs is by doing the
work yourself, And if you plan to do so, then
buying into an HOA is probably a bad idea.
Speaker 2 (15:32):
Right, That's not really it's not why that works. Its
ways aren't really a great thing.
Speaker 3 (15:36):
For do it yourselfers, Right, Like I'm going to mow
my own lawn and repair all my shutters.
Speaker 2 (15:42):
Well, no you're not. Yeah, your name is gonna have
something to do say about it. So I think that
on this the part that's going to continue to be
problematic more than others is the insurance piece. Yeah. I
can't figure out what the answer is here, other than
(16:02):
home prices maybe having to come down. It's it's just
not affordable in a lot of areas at this point
to have insurance premiums moving the way they are with
incomes where they are. And so that's kind of where
I'm I'm landing on this stuff is the other pieces
(16:22):
are are starting to plateau somewhat like repair and maintenance costs. Ultimately,
what you're paying for there is labor, and those costs
have moderated. Yeah, in the last year or two. The
insurance piece, look no further. What we're seeing in freaking
Massachusetts right now. We got freaking wildfires here, like we're
(16:43):
in California.
Speaker 3 (16:44):
Yeah, not expected, you know, like, this is not great.
I think it's forty eight states right now are in drought.
Speaker 2 (16:52):
Yeah, it's it's insane. Forty eight states are in drought
and the other ones had twenty eight inches of rain
dropped by two hurricanes on them. Yeah.
Speaker 3 (17:00):
I'm hoping to take the optimistic view on the insurance
market because prior to the two hurricanes ripping through the
southeastern United States, there were insurers actually stepping back into
Florida and buying back policies from the state insurer there,
and so you did start to see some healthy behavior
in some of these markets. And I do think that
(17:21):
at some point you wash through all of these giant
premium increases that insurers have had to implement. I genuinely
don't think it's that insurers don't know how to price
the risk in.
Speaker 2 (17:33):
A lot of these markets. I think in most of
the markets they do know how to price the risks.
They would get screwed like they couldn't attract anyone of
those prices.
Speaker 3 (17:40):
And I think again, for better or worse, people are
now getting okay with those prices. Legislators are realizing that
they have to accept these prices, and we might have
more pain to go here, but I think you're getting
close to the point where insurers starts stepping back into
some of these markets.
Speaker 5 (18:11):
Bringing the latest financial news straight to your radio every day,
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Speaker 2 (18:33):
Mike, there's a piece in the Wall Street Journal. It's
titled how Seniors can do smart Wroth IRA Conversions. First question,
what would a dumb Wroth IRA conversion look like?
Speaker 3 (18:43):
Doing the entire thing at once in one taxier and
bring your tax rates up so high that it makes
no financial sense whatsoever. That's a dumb one.
Speaker 2 (18:53):
Yeah. Potentially also taking into account, you know, things like
medicare rates and things like that, where you might you know,
be bumped up into a higher monthly payment on those.
Speaker 3 (19:00):
YEA doing it the same year you're selling a giant
investment property for example. So or generally just doing it
without any sort of math behind it, I think is
the takeaway on anything tax strategy related. Right, if you're
just kind of sticking your finger up and trying to
see which way the wind is blowing, you're probably going
(19:22):
to miss something and something that's fairly important. But yeah,
I mean seniors, even folks who have already started required
minimum distributions, it can occasionally make sense for them to
look at roth ira conversions. And I guess we should
just start with talking about how that all works, Chuck. So, yes,
you can take money. You can still put money into
(19:44):
a roth ira after you are done working. The only
way you're allowed to do so, though, because you don't
have any earned income at that stage. The only way
you're allowed to do so is by taking it out
of a traditional retirement account and placing it into a
wroth one. There's a specific process here. Some four one
k's allow you to do it within the plan, Others
do not. Sometimes you have to have an IRA to
(20:07):
do it. But there's a number of reasons people do this,
and largely it's based on well a couple of different reasons.
One reducing long term taxes for your family and this
sometimes also includes like beneficiaries. And the second piece would
be reducing your required minimum distributions for the future. That
(20:29):
kind of plays into the same factor there. But required
minimum distributions on roth irays don't exist for the original
count holder. They might for the beneficiary. Again, but that's
the baseline here is you take money out of that
pre tax portion to beef up that tax free portion.
Speaker 2 (20:46):
Yeah, and again, the specific amount and the way that
you approach this is going to depend on your specific situation.
There is no one size fits all of Hey, what
age should I start converting to ROTH or how much
did I do? You have to take into account the
thing Mike mentioned there, and it's something where right now,
with the way that the tax code is structured, you
(21:07):
also don't have the ability to get a do over
if you make a mistake. Until when did they change
and get rid of recharacterizations. I think it was during
the Trump Was it seventeen or was it nineteen during
the Secure Act? I can't remember, but either way in
the last five to seven years that they got rid
of the ability to take a mulligan, take a mulligan
on it. And so you need to make sure that
(21:28):
you're actually, you know, looking at this and getting it
right the first time, because if you don't, any potentially, yeah,
in a bit of a pickle with those higher taxes
or maybe higher Medicare premium.
Speaker 3 (21:37):
So the most common timeframes, yeah, it's usually between retirement
and age seventy three or seventy five that most of
these things occur. But as Lauras Andres points out in
this Wall Street Journal piece, it can make sense to
do so later. I've seen examples where maybe you've got
like a five or ten year age gap between husband
and wife or partners, and you know, hey, my required
(21:58):
minimum distribution has already started, but it still might make
sense to do some wroth conversions over the top of
that in order to avoid a bigger tax problem down
the road. This has become a pretty popular strategy. There
is a lot to beware of, especially when you are
retired from search charges that you'll pay on Medicare, from
the net investment tax from heck, even you know people
(22:23):
who might be on a Obamacare health insurance policy and
how your incomes might affect that, including.
Speaker 2 (22:29):
Roth Ira conversions.
Speaker 3 (22:30):
Maybe you're you know, retired pre sixty five and not
on Medicare yet. There's other considerations there, and it can
be tough to evaluate all this stuff on your own
and get it exactly right if you're trying to do so,
or quite frankly, if you're working with somebody professionally already
who's not at least considering it as part of your
(22:51):
financial strategy, then please call the folks at Armstrong Advisory Group.
We can help you evaluate whether or not this will
be a successful strategy for you. And yeah, frequently we
tell people, hey, it's not the right thing for you
to do, but that's at least good information to have.
Please call us to the Armstrong Advisory Group where we
can help you with your tax strategies when it comes
to your investment portfolio by calling eight hundred three nine
(23:14):
three four zero zero one. That's the number for the
Armstrong Advisory Group and we offer free consultations throughout New England.
That number once again is eight hundred three nine three
four zero zero one.
Speaker 1 (23:26):
The proceeding was paid for by Armstrong advisory group a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (23:41):
Mike, I want to just talk about one other thing.
I know that the last segment was talking about not
last segment. Last thing we covered was talking about roth
Ira conversions. There's an interesting topic just to talk about.
I know, wroth Ira conversions are something that typically you
talk about, as you noted, once you start getting a
little bit older, kind of a you're you know, fifties sixties,
where you might have kind of a pre pre retirement
(24:05):
scenario where your income might be dropping, or you know,
just after retiring when your income is lower. There's an
interesting discussion that I think is happening right now just
in general about the idea of traditional IRA versus roth IRA,
even for younger people, and even for younger people that
might be in higher tax brackets. The conventional wisdom and
(24:26):
what you know kind of was always there was, Hey,
if you think your tax bracket in retirement is going
to be higher than it is today, opt for the WROTH.
If you think that your tax bracket in retirement is
going to be lower, use the traditional because you get
the deduction today. That's that's the math, and generally that's
kind of been the accepted wisdom. Anecdotally, I've been hearing
(24:49):
larger numbers of people in their twenties, thirties, forties, regardless
of income, saying, look, I'm pushing to use the WROTH
to begin with, just because because Roth four one ks
are more widely available now and there's more tax code
uncertainly about where tax rates could be in the future. Hey,
let me take that off the table to a certain
(25:11):
you know, in one direction at least. Yeah, thoughts on this,
because I'm seeing it more and more.
Speaker 3 (25:17):
I think you can make an argument, and it certainly
depends on your situation, because I have a really, really
tough time believing that somebody in the twelve percent income
tax bracket, for example, is going to face substantially higher
tax rates at any point in their life. But if
you're in that thirty seven and you can afford to
(25:38):
do so, that's the highest possible income tax bracket, you know,
locking in some certainty around paying taxes at thirty seven percent.
Could you make a compelling argument that over the rest
of your lifetime you could face forty or forty five
percent federal tax rates. I don't think that's that crazy,
But I still see mistakes around this.
Speaker 2 (25:56):
I see a lot of you know, you talk about
that example.
Speaker 3 (25:59):
The most common what I see is, well, I don't
know what to do, so I'm gonna split the difference
and do half and half. Sure the other piece too. Remember,
you know, think about long term what your plans are.
Because let's say you are contributing and living in Massachusetts,
but your plan is to not retire here.
Speaker 2 (26:16):
That changes the formula dramatically.
Speaker 3 (26:19):
Right now, you're saying, hey, I'm going to you know,
pay the state of Massachusetts there five percent or nine
percent if you're making a lot of money, and then
I'm going to retire. Someone that doesn't have an income
tax or has a lower income tax like that, that's
a very different equation. And so yeah, it's yeah to
your point, Maybe you're saying more of it just because
(26:40):
there's more row for one k's available.
Speaker 2 (26:42):
Maybe that's yeah.
Speaker 3 (26:43):
I just see a lot of not hard thinking about
which way people should go.
Speaker 2 (26:48):
To take a quick break here. When we come back,
we've got stack Root.
Speaker 1 (26:53):
Lets find daily interviews and full shows of the Financial
Exchange on how Are You Too? Page, Get cut up
on any and everything you might have missed. This is
the Financial Exchange Radio Network. Text uys six one seven
three six y two one three eight five with your
comments and questions about today's show. This is the Financial
(27:13):
Exchange Radio Network.
Speaker 4 (27:18):
The Financial Change wants to thank all of you who
took part in this year's DAV five K. The event
sold out earlier than ever before and was another tremendous success.
If you weren't able to attend, but would still like
to make or excuse me, would still like to support
our great American heroes, visit DAV five k dot Boston
and make your gift today. Every dollar raise will support
(27:40):
a wide variety of initiatives like the DAV Transportation Program,
which takes disabled vets to important medical appointments that supply
both the physical and mental care they need. Thank you
again for your support. The DAV five K Boston is
presented by Veterans Development Corporation.
Speaker 2 (27:59):
Mike, what do you got for stack Roulettes?
Speaker 3 (28:01):
I want to talk a little bit about the continued
streaming wars and the new trends that may or may
not be significant to the business models. These companies have
all been under a fair bit of pressure to show
that they can actually make any money in the space,
and Netflix has been the only one.
Speaker 2 (28:18):
That's reliably capable of doing so.
Speaker 3 (28:21):
But an interesting statistic the monthly median percentage of premium
premium streaming video subscribers. I don't know how they describe premium, but.
Speaker 4 (28:31):
You know, not paying for ads.
Speaker 3 (28:33):
Not paying for ads, and you know, presumably that's going
for ten plus bucks a month on average. The percentage
of them who rejoined the same service they had previously
canceled within a twelve month period was about a third.
So about a third of streaming customers are saying, I
watched my show, I don't need to continue to pay
(28:54):
for you over the next nine months. I'll resubscribe labor later.
And I wonder how big a problem that is for
the stream platforms and whether they go the route that
I've thought they would go for quite some time, which
is incentivizing year long contracts.
Speaker 2 (29:09):
Most of them already do that, do they? Disney does,
Disney does, Disney Plus has an annual option that I
think is like ten or twenty percent cheaper. Okay, I
believe Peacock does, but I could be wrong on that.
I don't know, But I mean, I've done this with Netflix.
Speaker 3 (29:25):
Doesn't need to. Netflix has no need to. I've done
this with Max. I hate that name, HBO. Max canceled
and then resubscribed as the dumbest name and Netflix to me,
Netflix and Amazon and maybe Disney are the only ones
to me that are not going to face this behavior.
And it is kind of problematic, right. It is pretty
(29:48):
tough if you're a streamer to say, oh, yeah, you know,
once this next hit show goes out, I know that
ten percent of my subscribers, for example, are going to
cancel and I'm going to see a massive deficit in
monthly incomes.
Speaker 4 (29:58):
I mean, I just paused polu subscription for a third
time and gives you the option to pause it for
at most is twelve weeks.
Speaker 1 (30:06):
You can pause your subscription.
Speaker 2 (30:08):
So I did that. You know what model of these
places shouldn't adopt? What's that is what the New York
Times are doing with the Athletic. I'm not familiar. It's wild.
Speaker 4 (30:19):
I didn't see this.
Speaker 2 (30:20):
So the Athletic if you're not familiar with it. It
is basically like sports only Like originally it developed with
like different verticals for each city, and each city its
own dedicated correspondence. But it's remind me, did they buy this?
New York Times didn't start it. They bought it maybe
two or three years ago, and now it's just kind
of general, you know, national sports news with some local
(30:42):
coverage as well. Got it and each year for the
past three years, I have like when my thing comes up,
it tells you, like, hey, it's gonna be if forget
what the cost is. It's like sixty or ninety bucks
for the year in order to like to continue your subscription.
And I make a note the week before, like cancel
my subscription, and I go through and I'll have to
pull up exactly what it is that I end up paying.
(31:05):
They give you like eighty or ninety percent off the price.
I think I'm paying ten dollars for the full year.
I love when companies do this. It is so dumb,
Like all I had to do was click one button.
That's what Hulu did for me. How much do they discount?
Speaker 4 (31:19):
It was like whatever Hulu cost at that time, it
was like seven ninety nine, eight ninety nine, and they're like, hey,
we're sorry to se you go, but before you do go,
how about two ninety nine a month.
Speaker 3 (31:29):
I finally stopped doing this for six months with my
high speed internet. But I know right now if I
wanted to, I could call FiOS, cancel my WiFi and
then come back as a new customer, or put it
under my wife's name more likely, and I know that
they would offer me fifteen dollars cheaper than what I'm
paying right now. It became too much of a hassle
to go return the box every time. But when you're
(31:50):
talking about something as simple as an online subscription or
streaming over the internet, people are going.
Speaker 2 (31:56):
To do exactly that.
Speaker 3 (31:57):
You cannot make these offers so compelling and treat these
people like a new customer. Else they're going to do
exactly what Chuck's doing and just rake you over the coals.
Speaker 2 (32:06):
No, I'm looking at it now, just because I was
curious what it actually was. So I got an email
from them, and this was on June twenty ninth. Hey,
your subscription set to renew on July twenty eighth. It's
going to be seventy one dollars and ninety nine cents
and lets you cancel immediately. I go in and say, okay,
let me cancel. I'm now paying nineteen ninety two for
(32:27):
the next twelve months. It's less than two dollars a month.
That is such a bad business model. I like, what
are we even doing here? Like, no, wonder print media
can't make money if they're doing that. If streamers start
discounting it, the economics are even worse. Yeah, because of
all the licensing costs. That is very much some silliness.
And now we have to go to just a fantastic story. No,
(32:49):
this one out of Mattel. So the Wicked movie is
going to be launching in theaters on the twenty second
of November. Wicked, if you're not familiar with it, it
is basically the story of the two major witches from
the Wizard of Oz and kind of how they became,
their perspective, who they are and everything. Yeah, it's their
(33:11):
life story. It's a documentary and it's documentary. Is that wrong?
It's like Best in Show? Yes, it's like the Blair
Witch Project. You know, it's basically the same thing. I
think they're very different movies. Actually, Anyways, as part of
this listen, you have all kinds of different toys and
(33:32):
merch that you want to make because it's not enough
to just own the box office. You need to own
the retail market as well. And so apparently there was
a Barbie edition or a Wicked Edition Barbie that is
being put out by Mattella's part of this, and somehow
on the box to the Wicked Edition Barbie, rather than
(33:56):
directing people to the url the website were the Wicked movie,
they accidentally put the name put the web address for
an adult film studio instead. Now it's kind of a
big oversight. Now, Fortunately, as I think Mike or Tucker
(34:18):
brought up during one of our breaks, they didn't do
this in an email where the link was clickable or
anything like that, so it wasn't like that would have
been a lot worse.
Speaker 1 (34:26):
Yeah, it's on the back of the box.
Speaker 2 (34:27):
But in any case, if you are a kid who
has a phone because your parents have given you one,
and you're like, as much as I wish this weren't
the case, I do know like nine to ten year
olds who have phones and they're like, oh, like let
me go, and oh no, that's not what I thought
it was at all kind of a problem. So Mattel
is now issued in a statement we deeply regret this
(34:49):
unfortunate error and or taking immediate action to remedy this.
Parents are advised that the misprinted, incorrect website is not
appropriate for children. It's also unclear how many of these
toys actually have been distributed to stores already and how
much how many of them are just in warehouses somewhere.
Speaker 3 (35:05):
But you have a tough time getting your wicked Barbie doll?
I think is the takeaway here?
Speaker 2 (35:10):
It sounds like, according to the Hollywood Reporter, they're they're
pulling these from Walmart, Best Buy in Amazon right now
in order to try to prey up too many of
them from getting out.
Speaker 3 (35:19):
Is this going to be the hot must have item
of Christmas twenty twenty four? Now might be a secondary
market for this day the originals that have the misprint
this is valuable. My goodness, you know a mint condition
one of these?
Speaker 2 (35:35):
Boy, This might be corporate blunder of twenty twenty four.
I gotta go through my list. This is definitely gonna
make it into the into festivsts this year, but definitely yea,
it's it. I have to go through my list because
we often forget how long a year is. It's three
hundred and sixty five days.
Speaker 3 (35:54):
If you weren't you know, if you didn't know, some
years one hundred and fifty two that would do shows.
Speaker 2 (35:58):
For some years like this year, there's three hundred sixty six.
It was a leap heer too, so it's extra content. Yeah,
it's an extra point three percent for Festivus this year.
We're gonna take a quick break back at tomorrow. We'll
see you then.
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