Kersten Wealth Management Group - Monday Sense 4-26-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to the show. You're listening to the
advisors of Kirsten Wealth Management Group, Kevin Kirsten and Brad Kurston.
Happy to be with you today, Brad. As the market
continues to try to find its footing, it's amazing to
me in the last couple of weeks the things that
markets participants and market pundits are talking about, which I

(00:21):
think even fifteen, twenty, twenty five, thirty years ago, we
didn't talk about at all, and all of a sudden,
it's like the daily thing. Okay, So we've talked before
on the show about constant talk about who who the
FED chair is, what they're doing now. We even know
all the individual voting members of the Fed. We know
all they speaking tour once a month. And really, I mean,

(00:44):
Alan Greenspan was probably the first FED chair that anyone
even knew their name. But then we're also getting in
the weeds with the ten year treasury, We're getting in
the weeds with dollar yen and talking about that carry trade,
and you know, it made me want to go out
and look at some of these things they're talking about.
And I'll even hear it as it pertains to the economy.

(01:08):
It's like telling part of the story. Then you really
look at it and you're saying, that's not really what
that chart shows. Yeah, I heard one this morning about
credit card delinquencies. Credit card delinquencies up whatever percent, they're up,
And if you look at it on like a six
month chart, only it looks like a big spike. And
then if you look at a ten year chart, you

(01:29):
are you are barely off the turf when it comes
to the increase in the credit card delinquencies because historically
they were at historic lows. Well. So the other one
that I keep hearing is the dollar. This is a disaster, Brad.
This is a absolute I mean you've heard it too, right,

(01:51):
I mean you've heard that for the dollar. This is
an absolute meltdown, disaster, all the all the adjectives. And
you can look at a one year chart and we're
not even at the peak. You look at a five
year chart, it looks like it's something that's irrelevant. And
yet the narrative is that it's it's clear that the
world thinks that the dollar's not the reserve currency anymore.

(02:12):
So everybody can take a look at the symbol uup. Okay,
that's umbrella umbrella Paul uup. That is the dollar against
a basket of all currencies in the whole world. Okay,
So and maybe Brad take a look if you will,
at the same time and humor me here, let's look
at some different periods of time and how the market responded.

(02:32):
So uup is pretty much if you look at going back,
the ETF started in two thousand and seven, okay, and
in two thousand and seven, So we're talking about this
dollar meltdown, right, the dollar's melting down. Bread, the dollar
is melting down in two thousand and seven. It started

(02:53):
at a twenty five dollars a share, okay, in two
thousand and seven. So this meltdown they're talking about is
the weaker, the weaker the dollar, the lower this number,
the weaker the dollar is against other fantasy, So our
buying power goes down so bad. It's just so bad
for the economy. It's so bad for every it's terrible.
If this happens, it's terrible. So let's start with the
fact that in two thousand and seven it was at

(03:14):
twenty five a share and it's at twenty seven a share. So,
first of all, if you look at it over a
long period of time, shockingly stable, which is what you
want in a currency, and up a little bit over
the last seventeen or eighteen years. Okay, Then if you
look at recent history, and just like I said with
the credit card delinquencies, if you look at the chart,

(03:35):
if you did a six month chart, oh my gosh,
you should be scared. It's gone from thirty dollars and
fifty cents a share to twenty seven. That is terrifying, Brad.
The problem is this ETF was at twenty seven a
share on December twenty fourth, twenty twenty three. It was
at twenty seven a share on January twenty ninth, twenty twenty.

(04:00):
It was at twenty seven a share on June first,
twenty twenty two. And if you go all the way
back to the last peak in the market, okay, which
was most of twenty twenty one, it was at twenty
four dollars a share over almost fifteen percent lower than here.

(04:20):
So the last time we had a peak in the market,
it was ten percent to fifteen percent lower than here. Yeah,
but I would also go further to say there's almost
no there's almost no correlation at these peaks when when
the dollar is strong, you could have periods of time
where it was a buying opportunity. Oh bad, No, they
have decided that the week dollars. That's what they tell me.

(04:41):
That's what they tell us, so they tell me. But
let me. Let's look you the last three peaks that
you had. A peak in October of twenty two. Great,
that's a buying opportunity. The market has sold off, the
dollar is strong, you should buy, hold on, hold on.
Strongest dollar we've had in the last eighteen years. Coincided
with the low of the overall market. That's right. Yeah,
that's right. Yeah, that's that's the October, the October of

(05:04):
twenty two. Now you go more recent history. December, the
end of December, just four months ago was also another
relative peak. Right after the election, the dollar spiked. Now
that was a that was a peak in the market.
That's a selling opportunity. So here we have the two
most recent peaks. One's a buy, one's a sell. So
what are we to make of it? It doesn't it

(05:26):
doesn't correlate to anything. Yeah, and look, let's look at
a little bit like let's look at a longer trend
in terms of periods of time where the dollar was
increasing or decreasing. We had a significant period of time
where the dollar, the value of the dollar was increasing
from October of twenty to July of twenty two. Okay, now,

(05:50):
great period of time for equities. If you're starting in
October of twenty even though July of you kind of
have to take COVID out, don't, don't you. It's just
of all the money that was spent, all the money
that was spent, we don't have. There's no environment we're
ever going to have. That's similar to that where we
shut the economy down and threw a bunch of money
at everything. It's just I feel like, you look at unemployment,
you look at this, you look at a lot of
things in our economy. You gotta take COVID out. All right,

(06:12):
let's go pre COVID. Let's go pre covid, Brad. The
beginning of twenty eighteen, through the caause, yeah, sorry about that,
through the end of twenty nineteen. Beginning of twenty eighteen,
the value of the dollar increase is increasing. Was it
increased from twenty three to twenty seven, so almost eighteen percent? Yeah,

(06:37):
in that period too. And your point being, they want
you to think we need a dollar that is low
going high in order to buy this market. The problem
with that is the end of that period, you had
a full three months at the end of two thousand,
kind of the middle to end of that period, you
had the market go down by twenty percent, And so
if they if you were buying because of that, you
were buying right at the wrong time to experience a

(06:59):
twenty percent on selloff. Yeah. I mean, I keep staring
at this dollar chart because everybody seems to have it
figured out, and I'm being sarcastic here, and yet if
you look at the periods of time when the dollar
is weak or the dollar is strong, you get nothing
out of this y. Sometimes it's good, sometimes it's bad,
But you need a better batting average to use that
as a gauge. Yeah. I mean, the dollar consistently got

(07:21):
weaker during COVID BRAD from March of twenty and the
market went straight up. Yeah, went straight up. The dollar
consistently got stronger in twenty eighteen and twenty nineteen, and
the market was up over that period of time. The
dollar got consistently weaker for most of twenty seventeen twenty seventeen.
You have your chart. There is one of the best
years in the market ever. And the dollar got weaker

(07:44):
the entire year. Okay, the dollar got stronger from May
of sixteen through December of sixteen. That was a strong dollar.
That was a weak market. Okay, the dollar got significantly
stronger from twenty fourteen through March of twenty fifteen. Week market.

(08:07):
There's nothing you can gain from this, If anything, it
tells you. By the way, when I say stronger or weaker,
we're talking about moves on the ETF from twenty four
to twenty seven. Yeah, you're the all time on the chart.
It only moved with the dollar getting nine percent stronger
over that period. The five year is a flat. It's point.
It's one tenth of a point difference in five years.

(08:29):
So all of this movement, this dramatic move we've seen
in the last five days, and all the movement over
the last five years, accounts to nothing. It's a zero. Well,
you could get some weakness or strength from what the
FED is doing. If the FED is stimulating and printing
money and not just raising or lowering interest rates, actually

(08:49):
doing quantitative easing and all the other things that they
did that was that coincided with weeker dollar or stronger dollar.
So the week dollar that we seen in the last
couple of weeks. If the Fed is not gonna come
in with some magical Q program, even if they just
cut rates, you're not gonna see continued weeks. This is
only so far it goes, right, Yeah, it's always so

(09:10):
far it goes. This entire trading range in last eighteen
years is twenty five to thirty high to low. Yeah, yeah,
and the other of that ETI yeah, there's so much
talk of you know, this week we had the fire
Powell route on Monday and all because over the weekend
Trump is kind of on Twitter talking about firing Pole.
He's allowed to fire Pole. I don't know why everyone's

(09:32):
up in arms. And I come in on Monday, you
have this sell off that they say is just because
of that. Look, if he's gonna fire Pole to put
somebody in that's gonna cut rates, why is that bad
for the market. I you got to tell me why
that's bad for the market. And then I hear people
saying on Monday and Tuesday, if he fires Pile, interest
rates are gonna shoot up. Why would that happen? Okay,

(09:53):
they're gonna bring in somebody that's more favorable to cutting rates,
and you're gonna tell me that firing Pile is gonna
have the opposite of fact that that would be back
up the truck on on rates going down in the
future if if they spike up because they fire Pole.
The problem too is I and this is why it
would be a waste of time other than the cause

(10:13):
market turmoil though, Brad, Yeah, uh, they vote, there's it's
not just Powell that makes the decision, so he'd have
to literally fire all of them. Yeah, all that. You're right. Yeah,
So it's it's just wait it out, get your guy
in there. It's fine. Pole is still gonna cut this year. Okay,
it's he doesn't need to do an emergency cut. Of course,

(10:34):
you if he here's the thing with the emergency cut.
If he came in today and did an emergency cut,
the market would spike for an hour, and then the
next day he goes straight down because the narrative would be,
why did he need to do it? What does he
know that we don't know? Yes, so we don't need
any of that. Yeah, okay, you got two sides of it.
It's inflation and unemployment. Employment is low. Unemployment is low,
employment numbers are good. Therefore, he doesn't think we're going

(10:56):
into a session. I don't need to do anything. They're
worried about tariff. Sure, that might be a reason they
do it, but the current unemployment numbers don't show that.
But then inflation is low, and they're hanging their hat
on the potential for higher inflation because of tariffs, but
current inflation is low. So if you have these two
things that are looking at one is a reason to cut,

(11:16):
one is not a reason to cut, and in the
future the same thing, one would be a reason to
cut and one's not a reason to cut. So they're
probably just on hold. I don't know how low inflation
could go that he would cut in May, and the
market doesn't think they're cutting in May now, even though
inflation is low and going lower. It's all this weight
and see if by May the tariff deals were all done,

(11:39):
they'd probably cut. But that's not happening. And some of
the inflation numbers that are dropping oil gas prices, that's
in anticipation of an economic slowdown. So some of that
you're gonna see oil prices go back up. If we
don't get an economic slowdown, which is what you're talking about,
So some of that won't be long lasting, and oil

(12:01):
will probably you know, settle somewhere a little bit higher
than here. So you know, we're having a rally on
the day we're taping the show. This is Tuesday. And
there's part of me that doesn't like what happened today.
I mean, of course you like it when the market
rallies back. But here's why I don't like what happened today.
The market was rallying on its own. Okay, it was up.

(12:21):
We had some good earnings, you had, like it was
about one out of five earnings were good. Lackie Martin
had a good number, Northolk Drummond had a bad number.
So the Netflix had a great number. And the market's
nervous about Tesla. It was back and forth without any
help from any you know, headline out of Trump's office.
The market was doing just fine today and then we
get some headline out of the office Scott Bessen, the

(12:43):
Treasury Secretary, saying something about how it's not sustainable to
have these tariffs with China or whatever it is, and
the market did go even higher. But my issue with
it is now when this day closes out, and it
is only one day, so who cares, But we're here
to talk about it now. When this day closes out,
they're gonna the message is gonna be. The only reason

(13:04):
the market was up today was And so we're still
in this, mam. We're hanging on you telling me more. Yes, Okay, tomorrow,
I need you to say another thing about tariff deals,
and if not, we're gonna go down. I'm gonna throw
a tampertantrum. Yes. And if by the end of the
day you give me a little hint but it's not
a full deal, then I need a little more tomorrow,
and I need a little more to They need to
realize that and just start making their first deals. I

(13:27):
think even the first deal will have the market not
hanging on deal news because we'll see what what one
deal likes, what the deals are. You're not gonna get
a full it's gonna be like, here's our outline. Even Bessett,
in the speech he gave today, which someone reported on,
said we got to come to an agreement with China
so that we can get a deal in two or

(13:49):
three years. That's was his quote. So the point is
we got to get to a point where were all
gonna agree to get rid of the tariffs and things
that we put on the board so that we can
have a deal in two to three years, because that's
how long it's going to take. Yeah, okay, And yes,
we can't stick with the current policy for two to
three years, as long as we all agree that we're
going to come to the table get rid of everything. So,

(14:11):
you know, I don't like that we had to hang
on We're back in this mode where we have to
hang on every word now if we take all the
discussion out of it in terms of what is going
to come out of Trump's office, okay, and just look
at the market itself, there is something good things happening.
You look at the volatility index, which was over sixty
is now under thirty. Historically, when you when you have

(14:33):
a close over sixty and a close under thirty, that's
extremely bullish for the overall market, Brad. And then the
other thing we need to look at is whether or
not we can clear the hurdle of that first ten
percent days high, And certainly I think it would be
very bullish if this is the you know, we were
down almost exactly twenty. We had this huge day ninety

(14:55):
day pause Tariff's Day where we went up over ten percent,
or went up exactly to percent. You're saying a close
above that level would be would be some confirmation that
the bottom is in. That's correct. So if you look
at right now, we're at five thousand, two hundred and
sixty one on the S and P. That level was
five thousand, four four hundred and fifty seven, So give

(15:18):
it a little wiggle room. Round it off so you
can remember it. I think it's fifty five hundred. We
get a close above fifty five hundred, especially on a
big up day, I think that we can breathe a
little bit of a sigh of relief getting that close
above fifty fifty five hundred. I mean, that's a long
way from here. That's still two hundred and fifty SMP points,
so about four percent, But that'd be the number I
would be looking for to sort of confirm that we

(15:43):
maybe hit a little bit of a short term bottom.
I heard we got to take our first break, but
I heard warm pies on the Josh Brown podcast and
one of the metrics that they were all using, and
it's fine, you can use all different kinds of metrics
to find market bottoms. But they were saying that how
much you erase. So right now, we've roughly erased a
little over two hundred days of performance about one year, okay,

(16:08):
And that's fine. I mean you look at other selloffs
and you erased a little bit more. And the more
that you erase, the more you can say, Okay, we've
hit a bottom. But I think it's strange because we
closed one percent, less than one percent above the twenty
twenty one highs okay, And so right now you could

(16:28):
say we've only erased a year. But what's ridiculous about
that argument is, and this kind of goes to where
the market is right now and the support level, if
we had closed a little more than one percent lower,
we would have went from erasing one year and we
would have jumped to four years on one day. So

(16:51):
that whole argument, so we go from like this huge
fort So my point is if we do settle with
that low being right around four thy nine hundred, the
S and P also keep in mind that that also
means that the market has gone nowhere for four years.
And so I think that that high of twenty twenty

(17:12):
one will more than likely hold even if we start
trickling back down. There. You're looking at a market where
you have, you know, a reasonable amount of downside, nothing
to panic over, and a whole lot more upside. Okay,
let's take our next pause. I want to continue on
that discussion, but just shift gears a little bit with
the market doesn't spend that much time down and spends

(17:32):
a lot of time either at or very close to
an all time high. And I want to want to
talk about that a little bit because I think what's
happening now When the market is down, people think, well,
it's always down. It's not, and and weel like it
if it does feel like it. But let's talk about
that a little bit more. You're listening to the advisors
of Christ and Wealth Manager Group, Brad and Kevin. We'll

(17:53):
be right back and welcome back. You're listening to the advisor
is a Christ and Wealth Manager Group, Rad and Kevin
here with you. We're talking about a lot of things
with the market, but some perspective here on the number
of days that you spend in correction territory, in recession territory,
in bear market territory, bear market kind of being defined

(18:14):
by twenty percent down. And I saw a chard here
that goes back to two thousand and nine, and just
as a reminder to people, from two thousand and nine
all the way till COVID, we spent zero days, zero
days where we closed below a high point to low
point of twenty percent. Okay, we had one intra day

(18:35):
in twenty eighteen where we went down below twenty percent
and then finished a little bit above being down twenty percent,
But from two thousand and nine to COVID, we didn't
have a single trading day where the market was off
twenty percent. Okay, start with that. In that period of time,
we only had about five trading days where the market

(18:55):
was more than fifteen percent down. So if you're down
more than fifteen percent, you only had five days in
over a decade that you could have bought the market
down fifteen percent. So if you're going to say I'm
going to buy the market when it's down twenty or
I'm gonna buy the market was down fifteen, well you
would have waited over a decade and you wouldn't have
been able to buy at all. And if if you

(19:17):
were smart enough on those turmoil days, when the market
was down fifteen, you had about five trading days that
you could have done it in that in that decade.
And then if we look at the chart for being
down ten to fifteen, it's a little bit more, maybe
about one percent of all days the market was down
in that period of time negative ten to negative fifteen.

(19:38):
The rest of the days, the other ninety nine percent
of ninety eight point five percent of all days has
the market either at an all time high or within
ten percent of it. Now, we've had a little bit
more volatility recently. We've had a couple unusual events like
COVID that had the market down and in that period
down more than twenty for a few trading days, but

(20:00):
not long you had to buy that. You had only
had about a week to buy the market down twenty percent,
and about another two weeks before it was not even
down fifteen percent, So you had about a three week
period to could have bought the market down between fifteen
and something more than that percent, dip down all the
way to thirty five, and came right back. In twenty twenty,

(20:22):
you had the market down in June about twenty percent,
shot right back up, and then in October it was
down about a little bit more than twenty percent, but
only spent about eight to ten trading days down below
twenty percent during that period. The rest of the days
it was in correction territory between ten and twenty, but
not very much at all. And here we are with

(20:42):
the current sell off. You have one day where we'd
dip down below twenty but didn't finish there nineteen point
two percent most of these days here, and it's really
only been since, you know, the middle of February two
months call it where we've been off of the all
time high, but only about three weeks of this has

(21:03):
the market been down below ten percent or more. So
it's crazy to me that here we were two months
ago and everything was great, most people got the majority
of people got the president they wanted, when nuw tax
cuts were coming, Unemployment was low, we weren't worried about recessions.
And then two months goes by and nobody can figure

(21:23):
out anything good to say about the market, even though
earnings are good and unemployment is low and inflation is low,
and most of the time the market spends its time
within five percent of an all time high or at
an all time high, and we are so far from
that that from anybody thinking that that could ever happen.

(21:45):
And it reminds me of COVID, where people said, well,
this time it's different. We didn't we didn't have the
market shut down, we didn't have all these things going on,
and people have that this time it's different with the tariffs,
and before the end of the year, we are not
going to be talking about tariffs. We aren't. Just like
I mean, we were still talking about COVID two years later.
This one's gonna come and go, and you're gonna and

(22:05):
everyone's gonna say, what was that little blip in twenty
twenty five, Oh that was, Oh I remember that tariff.
We did talk about that for a little bit. Well,
let's look at the Let's look at the three most
recent twenty percent So I was gonna call them twenty percent.
Not every one of these got to twenty percent, but
let's look at the three most recent brand In twenty twenty,
the market sold off over thirty five percent in three weeks.

(22:27):
And when did he get to its new all time
high August of that year. Okay, August of that year,
So let me give you either the days that the
market was ten percent or worse that in that in
that year in twenty twenty, we spent sixty six days
with the market down ten percent or more, right, and
recovered all of its losses in a little over six

(22:48):
months in twenty eighteen. In twenty eighteen, the market got
down almost twenty percent. It took approximately from high to low.
So I mentioned COVID took three weeks. This took two
months and two weeks. Two months and two weeks. Excuse me,
I always say three down and four up to get
back back there as what Yeah, it was two months
and two weeks. Right now, our current sell off is

(23:10):
at two months. Well, if you go from the low,
it's almost exactly two months, okay, because it started on
February nineteenth. So probably more similarities with the twenty eighteen timeframe,
especially given that Trump was in office back then than
right now, and that market when it hit its low point,
recovered all of its losses in four months and a
number of days that were spent in correction between ten

(23:32):
and something more than ten. So this is I'm saying
this because this is your opportunity to buy. How long
did you have to buy the dip in twenty eighteen
fifteen days, fifteen trading days the market spent below ten
percent off of its all time high. And after those
fifteen trading days were over, you did not get an
opportunity again to they didn't retest and you had one

(23:54):
more opportunity. That was it. You had essentially three trading
weeks where the market was at a at a low
point lower than ten percent. Twenty and eleven, the selloff
for the overall market started on July first ended on
October third, okay, So you had July August September three months,

(24:18):
so a little bit longer than the current two months
sell off, okay, and the market went on to make
a new all time high after the October third low.
The market made a new all time high in at
the end of February. Okay. So it took three five months,
so COVID was six months. Twenty eighteen was four months.

(24:41):
That was a similar sell off to today. In twenty
eleven was five months. So it's I'm it's interesting to me.
And even LPL Financial Research just put out, you know,
their their prediction for the for the end of the year.
The last three times we had a sell off of
nineteen and nineteen, the worst one recovered in six months,

(25:03):
the fastest one recovered in four months, all of its
losses and LPL and everybody's reducing their SMP targets for
the year. Well, we have seven months left in the year.
So based on the last three times, and there's others too,
the nineteen ninety sell off recovered very quickly. The nineteen
ninety eight sell off, which was twenty percent, recovered very quickly.

(25:25):
There's a lot more that go down fifteen to twenty
and recover quickly than there are eights. Absolutely, okay most
of them are. And so when we look at that
and we see all these predictions for the SMP now
at the end of the year fifty five fifty six hundred,
which is only five to ten percent from here, you
look at it and you say to yourself, you did

(25:45):
you not look at history? Right? Right? Because if history
is your guide, we make a new all time high
before the end of the year, right, Okay, I'm not
guaranteeing it. No, we could have another eight. No, I
have a vast majority of selloffs which would show a
new all time high before the end of the year. Yes,
And if no progress on trade deals and no progress

(26:10):
on a tax deal and the FED refusing to cut
If that's in the cards, fine, Where it's a little different,
we're going to drag on a little bit longer, and
maybe we just muddle around here in this trading range
where we are right now for a couple more months
and it takes a little longer maybe. But if those
if those things go away. I didn't mention the twenty
twenty two sell off, but the twenty twenty two sell

(26:32):
off was more than twenty percent. It was ten and
a half months down. Yeah, okay, but it was it
was thirteen months to a full recovery. Right now, we're
not looking like that particular sell happen. So you had
two quarters of back to back negative GDP, then you
had a slowdown. We don't currently have that. There's all
this projection of what tariffs are going to do. We

(26:52):
don't currently have that. But even even if I use
that as an example, Brad, you're making a new all
time high some point in twenty twenty six. Yeah that
if we use the twenty twenty two example, well, and
that's that's important to point out because that's the longest
one of all these that we're talking about that's the
longest one of recent history. And yet I will still
have people say to me, while I'd be alive to
see a new all time high, I mean, if you're

(27:13):
gonna be alive in twenty twenty six, Yes, that's what
history tells you. That's right. A lot of these things
are going to go away quicker than as quick as
they came. And I'm it's shocking to me that nobody
is talking about how quickly the narrative changes. It could
It could change before we we this show airs. It's
could be changed before this Yeah, before the show airs

(27:34):
on Saturday, we have three more trading days. So uh
and and I don't like that because that's not healthy
for the market to be whipsawed like that. So we
do need to get a narrative about the negotiations that
are going on with tariffs. Come with come with some
sort of settlement to say, if every country does a
deal like this that we're doing with India or Japan,

(27:58):
then we will come to a quick agreeing with all
of you. Correct, That's what we need there. You need
a framework. It's got to be a framework because the
ninety day pause is not enough to get the full
deal negotiated. We're gonna take our next pause. You're listening
to money Sense. Kevin and Brad Kurston will be right
back and welcome back to the show. You're listening to
the advisors of Kirsten Wealth Manager Group. Kevin Kirsten and
Brad Kirsten happy to be with you today. As a reminder,

(28:20):
we are professional financial advisors and our offices are in Perrysburg.
Give us a call throughout the week if you want
to set up a consultation to review your plan. Whether
you're just getting started, well on your way to retirement,
or already in retirement, be happy to sit down and
go over things with you four one nine eight seven
to two zero zero sixty seven, or check us out
online at Kirstenwealth dot com. Brad I saw a personal

(28:42):
finance section of the Wall Street Journal. Retirees who move
to lower tech states may not save as much as
they think as other costs rise. Retirees need to think
about total spending. I think that when someone moves, and
I've had a lot of people, I've had a lot
of clients back out go to Florida for two years
and then come back, go to South Carolina for two

(29:02):
years and then come back because it wasn't what they thought.
It wasn't what it was cracked up to be. And
I think you need to do your research and your
research and your decision making process. I don't think it
should be all about dollars and cents, because you really
don't know what you're going to spend once you make
that move. It shouldn't be all about dollars and cents.
That should be part of it. But I also think

(29:24):
when you're trying to justify something in your own head,
you'll put more of a weight on where you think
you're going to save money, and you'll discount the things
that are going to cost you a lot more. Okay,
And the studies bear this out. Retire He's moved to
New States for all sorts of reasons for Summit's weather,
being closer to family, but for those moving in search

(29:46):
of lower income taxes, and that's a lot of people,
it might pay to get out the calculator. There was
one example here where someone left the Indianapolis, Indiana area
in twenty twenty four to be closer to their adult
children who live in I ain't Pete. They thought moving
to the come tax state of Florida would be a
big financial benefit. A couple was in their mid sixties

(30:08):
discovered at buying a new home and paying for the
insurance offset any tax sacings. So let's just start with that. Well,
start with that, but also think about a lot of
people do it when they're done working. And you're thinking
about what you would save when you were working in
your peak earning years and now you're retired and you're
making half as much. So automatically in your brain you're
thinking the dollar amount you'll save, but that you were

(30:30):
already going to save some dollars because you weren't making
as much. Right if you're moving, because you want to
do that by all means, but if you justified in
your head because of no income tax. When you live
in Florida, your insurance with hurricanes is through the roof,
and your car insurance is through the roof, because your
car can be damaged in a hurricane as well, and

(30:51):
it's a lot more expensive than in Indiana or Ohio
or a Michigan. This particular couple had home repairs after
Hurricane Helene hit, and that was an added expense. The husband,
who had retired had to go back to work, and
it's likely the couple have to work many more years
than they initially expected. They were in a pretty pret
good position in Indiana, but now it's not nearly as

(31:11):
good and they will have to continue to work, says
their financial advisor. The lesson for retirees don't let the
income tax tail wag the total spending dog. Okay, beyond
income tax, the impact of state income taxes depends in
part on the bracket. For instance, the state income tax
may be significant factor for wealthier retirees, as you mentioned, Brad,

(31:32):
relying on investment returns, but many middle income retirees income
taxes become less important since they're typically drawing down and
not earning as much when they were working. So exactly
what you mentioned, Brad. For middle income retirees, sales taxes
and property taxes become a bigger and bigger percentage of
their total tax spend throughout the year. So think about this.

(31:53):
A lot of these states have higher property taxes, and
obviously FLOORA is going to have higher insurance. But they
replace the property tax with the income tax, and it's
got to come from somewhere. Well, they replace the income
tax with the property tax. But for you you were
already going to lower your income tax. Now you go

(32:14):
someplace where you're increasing your property tax at just the
time where your income tax were gonna go down anyway.
So you kind of if you're doing it for the
tax savings, you're probably doing it at the wrong time. Tennessee,
for example, has no income tax, but it's combined state
and average local sales tax rate. So the sales tax
rate on average in Tennessee is nine point six percent,

(32:35):
second highest nationally according to the Tax Foundation. On property taxes,
you may have declining income, but if you move to
some of these places, you're gonna spend more money to
buy a similar sized home because those real estate markets
are a lot better. So if you're gonna spend more
money on a price your home, you're gonna have higher
property taxes. Texas is another no income tax state popular

(32:56):
with retirees, has the seventh highest property tax rate in
the country, averages one point six percent. So you know,
if you look at the overall cost and the overall taxes,
taxes are taxes, you're you're gonna be out spending money.
You're gonna be spending money on sales taxes. You're gonna
live in a house, You're gonna have property taxes, so
you have to look at the total cost of that

(33:17):
move and make sure that you know you're factoring the
overall cost and looking at it at as a total picture.
They break down the most popular states Florida, California, California,
that's not a very popular retire estate, I don't think, uh, Texas, Arizona, Tennessee.
And looking at the breakdown here in the Journal. In

(33:38):
terms of homeowners insurance car insurance, of course, Florida is
the highest on homeowners and car so it's absolutely an
issue for some communities. More so in Florida too, because
there's certain communities in Florida that have a higher hurricane
risk than others too. Brad, Yeah, I mean, if you're
on the coast, obviously that's where people want to be,

(33:59):
but there's no where to you'd have to be in
the center of the state to avoid higher hurricane insurance. Now, yeah,
there was an example of someone who was in one
of those hurricane areas here in this Journal article, and
if they added up homeowners, property tax and association fees
just for a condo, it was thirty five thousand dollars
a year, thirty five thousand dollars a year, So you know,

(34:23):
pay attention to the to the overall cost when you're
doing it, not only just daily cost of living, but
all taxes, all in cost of homeowners car insurance. If
you're really going to truly make an apples to apples comparison,
If you're saying I just want to get out of
this weather and I don't really care, that's fine. But

(34:44):
I think, like I said, the justification a lot of
times when we talk to people is this no income tax,
and in a lot of cases when you add in
the full cost, it's not the same. I think the
other thing too, is and you see it, Brad, when
you live somewhere that has really good weather, you spend
more money. Yeah, there's no days inside where you don't

(35:05):
go out and you just cook food and you spent nothing.
You spend more money when you're somewhere with good weather.
And so I think that that is another component that
should go into that overall decision in terms of are
you gonna have a second house or are you gonna
move entirely and retire to another state. And it certainly
should not be the only decision in terms of the

(35:25):
state income tax. Take our next pause. You're listening to
Money since Kevin and Brad Kurston. We'll be right back
and welcome back. You're listening to the advisors of Kristen
Wealth Management Group, Brad and Kevin here today. Kevin, we're
talking about earlier in the show about all the recession
talk and people telling me that things are bad or
I'm hearing people say it's gonna get bad. There are

(35:45):
some leading indicators that will let us know if things
are getting starting to get bad, going to get bad.
There's a lot of lagging indicators, but the leading indicators
are what matters the most. And some of those would
be spending and some of those would be employment. And employment.
The first thing that's going to happen if we're going

(36:06):
to have a recession in this economy is hiring will
slow down. Then the increases to wages will slow down,
and then you'll start to fire some people. So the
hiring numbers have not slowed down. The people employed, if
you want to be employed, is at a record low.
And what's amazing to me on unemployment claims and continuing claims,

(36:29):
and these two numbers are historically low and have been
really since twenty sixteen. You gotta take COVID out because
it's literally off the charts. You can't do a chart
and look at COVID for unemployment because there was never
a time you had a weekly unemployment claim higher than
seven hundred thousand ever except for COVID, and COVID had

(36:54):
in the three millions for a handful of weeks during
that So it's just it's literally off the charts. But
if we look at continuing claims first, in nineteen seventy five,
continuing claims, the number of people that were on unemployment
went above two million for the first time ever. And
at that time, the people that were in the workforce

(37:17):
wanted a job was eighty million people. Okay, today that
number is one hundred and seventy million, give or take.
So we had one hundred million less people that were
in the workforce in nineteen seventy five, and we had
the unemployment claims continuing claims above two million. It then

(37:38):
stayed above two million from nineteen seventy five until twenty sixteen,
So from nineteen seventy five to twenty sixteen, it went
somewhere between two million and four million, back and forth,
back and forth for that entire time. Then in twenty
sixteen it did below two million for the first time
again since since we had seventy million people in the
work force instead of one hundred and seventy and it

(38:00):
except for COVID, and COVID was only really about five
months that it was above it. It has been below
it ever since, dipping down to about one point five
million at its low point in twenty twenty three to
where we are right now at about one point eight
million people on continuing claims in the history of looking

(38:21):
at this, in everybody's lifetime, I mean I was born
in seventy three, so in my entire lifetime, the only
time we've had continuing claims below has been since twenty
sixteen to today. And over that period of time, except for COVID,
you've had unemployment between three and a half and four
and a half. And historically that is just a number

(38:41):
that we could have were striving for but couldn't reach.
And now we've been there for almost an entire decade.
And it's the same with the weekly unemployment claims. The
weekly is a very jagged number, but if we look
at the monthly numbers. The monthly number being at two
hundred thousand to two hundred and fifty thousand was really

(39:03):
far fetched. When you look at that same period seventy
five to twenty sixteen, it was above two hundred and
fifty thousand the entire period, and for ninety percent of
the months it was above three hundred thousand on the
monthly claims number for people getting on unemployment and now
here since twenty sixteen it's been below two hundred fifty
thousand the entire time except for COVID. And we have

(39:25):
so many more people in the workforce. It it's kind
of amazing that you have one hundred and seventy thousand
people in the workforce and we have less people getting
on unemployment than when we had a third as many people.
And so they can't really tell me that we have
an unemployment problem. We have you know, we have still
seven and a half million job openings. We need more

(39:46):
people in the workforce. There's hopefully, you know, some legal
immigration that's going to come, because otherwise you're going to
see the number of job openings creep up there because
of less people coming across the border taking some of
the especially lower paying jobs that are out there well,
and this is something Elon Musk has talked a lot about.
In terms of the population, BRAD, twenty twenty five is

(40:08):
the first year in US history during which the percentage
of the US population over the age of fifty four
exceeds the percentage under twenty five. By two thousand and
thirty three, annual deaths will exceed berths, meaning by two
thousand and thirty three, without any immigration, the US population
would start to shrink. So that's not healthy. That's what
Japan had and that's why they went two decades of

(40:31):
basically a recession. Is to have a growing economy, you
need a growing workforce. And so this period of time
I'm talking about, from seventy five to today, we did
have a steadily growing workforce. And so, you know, first
thing with fixing the immigration problem is getting a more
robust legal immigration process that's not so long that people

(40:51):
feel like they don't even want to apply for it.
That's right. The other thing that came out today BRAD
was retail sales. Retail sales in the month of March
increased one point four percent to a new record seven
hundred and thirty five billion. By the way, when these
numbers are coming out, this is another number where they're like,
this is the first one we're gonna see that is
affected by tariffs. Okay, maybe next month. Yeah, and we

(41:14):
were talking about tariffs in the month of March. But okay,
i'll give you that. Let's take a look at what
April did. But if retail sales don't slow down, that
is not a recession. Okay, nobody's talking about it in
the media, nobody's talking about in social media. But if
you look at the retail sales numbers around recessions eight
during COVID, they drop like a rock. So if that
number doesn't drop significantly, then we're not in a mode

(41:37):
where consumers are pulling back. So that's an important thing
to look at. I mentioned earlier in the show the
credit card delinquency rates, which is people saying it's a
red flag credit card delinquency rates. If you go back
and this particular chart goes back to nineteen ninety okay,
highest delinquency rate ever is in the OAIT financial crisis

(41:57):
at six point eight Okay, lowest delinquits this number, this
is the number of credit cards that are delin percentage
percentage percent of total credit cards. Six point eight delinquent
was the was the high water mark. The lowest point
was in the second quarter of twenty twenty one, excuse me,
third quarter of twenty twenty one, and it was one

(42:21):
point five, okay, one point five. Yeah, So that's our range,
six point six point eight to one point five. Now
recently we have moved up to three point two and
actually back down. First quarter of twenty twenty four it
went back down to three. So three or three point two, okay,
That is a lower credit card delinquency rate than any

(42:43):
time in the entire decade of the nineteen nineties and
two thousands. Our current credit card delinquency rate is lower
than that entire twenty year period. Is a lower delinquency
rate than that entire twenty year period. I have heard
this multiple times in the last week about how we

(43:04):
need to be worried about that we went twenty years
and never had Now did we go off a bottom. Yes,
we had the big stimulus. Everyone was getting checks and
you could see it right on the chart. People paid
off their credit card. Yeah, and they got the stimulus.
But you weren't gonna stay at that low level forever.
It was not sustainable what we needed to have a
growing economy and healthy market. We need to go from

(43:26):
one point eight to one point four to one point five,
or at one point five, or go get the zero. Yeah.
So we have a current credit card delinquency rate that's
lower than any time in the nineteen nineties, at any
time in the two thousands, and I'm supposed to worry
about that. I find that really hard to believe. Hey, brother,
let's close out the show with some that I've had
a conversation with clients about. And it's not really an

(43:48):
actionable item, but it's important for people to know in
terms of you think, maybe take this for granted, when
you look at your tax bracket, Okay, that is a
that is a marginal rate. That's not what you pay.
So if you jump up, there is this fear that
you're gonna have this huge all my anger, I might

(44:08):
as well make you know, say say that my bracket
cut off is one hundred and forty five thousand, I
might as well make one forty four because if one
forty six, I'm gonna net less, right, I mean, the
brackets go from ten to thirty seven percent, And so
people get concerned about this when they start jumping up
to the next level. Somebody who makes seventy five thousand dollars,
for example, has an effective rate of fifteen percent. This

(44:32):
is someone who's single, okay, has an effective rate of
fifteen percent, even though they're in the twenty two percent bracket. Okay,
so it makes one hundred and fifty thousand dollars a
years in the twenty four percent bracket has an effective
rate of nineteen. When you look at your blended total,
and everyone gets the first x dollars at ten, and
the next x dollars at twelve, and the next dollars

(44:54):
at twenty two. When you get to the twenty two bracket,
it's not all at twenty two. And you're right. I
think it's really misunderstood. I have young people and old
people say similar things to me on that. Yeah, even
at two hundred thousand dollars, you're still in the twenty
four percent marginal tax that's your marginal tax rate, but
your effective rate is twenty point two. Now, this is

(45:15):
just someone with that kind of anyway. But you start
adding in dividends and capital gains and interest that changes
the blended rate a little bit. But you know, when
you look historically and you see people paying ten or
fifteen or even twenty percent, it's still pretty favorable. Nobody
wants taxes to go up, but you're still in a
pretty good place when you look at where federal tax rate,

(45:37):
where rates were in this country fifty sixty years ago.
And I think it's very very important that we don't
we don't go any higher than that. Would I love
to simplify it. I mean, the only rate way you
get to a lower blended rate too, by the way,
is a lot of write offs and deductions as well
that brings your lower blended rate down compared to your
gross income. Certainly, when you look at flat tax, I

(46:00):
think the average person in America gets a little bit
scared of the flat tax, or they get excited about
the flat tax, depending on where they are, and they
hear that number and they don't even realize, like, oh,
I'm in the I'm in the thirty two percent bracket,
so flat tax is great for me. Well, you're probably
already not paying thirty two yeah, and so it would

(46:21):
be great. And on the other side of it too,
someone at the lower end, you know, they might they
might look at it a little bit differently. But either way,
if you got rid of a lot of the write
offs in deductions and you did a flat tax, lower
income would still still pay less, higher income would still
pay more. We talked to the last show about trying
to simplify this thing, and I mean that's I think

(46:43):
that's like the simplest form of the complexity of it.
Meaning most people don't even understand that when they go
up a bracket, it's only that extra dollar that you
made that's taxing yaid last week. I think some of
the lower income people are more for it than I
think think even politicians realize, because they think, even if

(47:03):
I pay more, the higher income won't cheat. And there
is some truth to that. Flat tax with no deductions
makes it almost impossible to cheat. So I think that
there definitely is some truth to that. But you know,
keep that in mind. Now on the other side of
the coin, if you're comfortably in one of those brackets,
this is where I think people don't factor in the
savings enough. You might have a blended rate of twenty okay,

(47:26):
but if you're in the twenty four or the thirty
two percent bracket and your blended rate is twenty and
you're comfortably in that bracket. Every thousand dollars you put
in your four to oh one K saves you money
on the top end, on the top ends, not your
blended rates. Yes, right, because now we're coming off the top.
What's your highest bracket that you're in. That's what we're saying,

(47:46):
that's what we're saving. So if you went and looked
at your adjusted gross income and what you owed, and
you thought, oh, I owed about twenty percent. So if
I put a thousand extra in my four oh one K,
I save you know, I save two hundred. Nope, it's
if you're in the two twenty four of the thirty two,
you're saving even more. Yeah. And what if you're only
five thousand into the thirty two, Well, then increasing your
four one K by five thousand means that none of

(48:08):
your dollars are taxed at thirty two. Right, And so
that's an important thing to look at now that you're
going to be getting your returns back. What was my
effective rate, what was my adjusted gross income? And what
are those brackets look like? How many dollars did I
have in those top brackets. That's what makes the four
to one K contribution that much more valuable from a
tax perspective. Thanks for listening, everyone, We'll talk to you
next week. You've been listening to Money since brought to

(48:35):
you each week by Kristen Wealth Management Group. To contact
Dennis Brad or Kevin professionally called four one nine eight
seven two zero zero six seven or eight hundred eight
seven five seventeen eighty six. Their email address is Kristenwealth
at LPL dot com and their website is Kirstenwealth dot com.
Opinions voiced in this show are for general information only

(48:56):
and are not intended to provide specific advice or recommendations
for any To determine which investments may be appropriate for you,
consult with your financial advisor prior to investing. Securities are
offered through LPL Financial member FINRAP SIPC