Kersten Wealth Management Group - Money Sense 6-03-23

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Episode Transcript

(00:00):
Good morning, and welcome to money. Since you're listening to the advisors of
Kirsten Wealth Man if your group,Kevin Kurston and Brad Kurston. Happy to
be with you this morning, Brad. As we work through the month of
May and close out the month ofMay, pretty boring out there for stocks.
So we're going through a period oftime where we've closed up or down
within two percent. There's obviously thegrowth area the market doing quite a bit

(00:22):
better, but that's been offset byvalue and bonds going down overall this month.
If you had a growth tilt andyou were one hundred percent equity this
month, you probably saw a prettydecent month. But if you're balanced or
you're sixty forty, probably a prettyflat month overall because interest rates went up
again this month and that is aheadwind for long dated bonds especially. Certainly,

(00:47):
there are certain types of fixed incomethat held up a little bit better,
in particular on the short end.But you know, I think it's
interesting you see the SMP five hundredup year to date, what is it
over eight scent. I just sawa statistic when the SMP we're through the
first hundred days of the year,when the sp five hundred is up over
eight percent. We've never finished theyear down ever. Um, well,

(01:08):
it's a year where large megacap isoutperforming, and that's uh, you know
that the market cap weighted indexes aregoing to outperform. In the weighted index
is actually down on the year.Yeah, and so the equal weight to
SMP which has point two percent andfive hundred stocks instead of what we have,
which is about twenty five percent ofthe total in the top ten.

(01:29):
And even the Dow, you know, not so market cap weighted. And
so the Dow barely up on theyear, but the NASDAC, which is
market cap weighted to the to theheaviest of the of the technology area doing
you know, having a rebound yearabout thirty percent. What's interesting this month
on fixed income is much as beingmade about tightening conditions in fixed income,

(01:52):
tightening conditions for lending, tightening conditionsfor bonds. And although every category of
fixed income was down this month,it was the most economically sensitive or credit
sensitive areas that did the best.So that's a sort of a strange phenomenon.
When people are telling us that therecession is coming and the world's coming,
you an end yet best performers inthe last month were high yield,

(02:15):
emerging market debt, and bank loans, so the areas that would be more
of a stock proxy than a bondproxy. Many people will say the bond
market smart than the stock market.Well, if that's the case, then
the bond market is saying that theeconomy's okay. So you know, it's
tough. I think in any environment. People like to think. We're going

(02:37):
to talk later in the show aboutmore about the long term nature of investing,
and that's the way it should be. But even when you look at
a chart, a long term chartof the SP five of the Dow Jones,
and you think, well, that'spretty good. You know, the
average and your return is nine percentor ten percent, depending on if you're
looking from the Great Depression or nineteenfifty or seventy eighty ninety year period.

(02:58):
That's the average and your return.But that's really not what the market gives
you. The market gives you bigperiods of growth followed by consolidation periods,
and sometimes those consolidation periods when youstep back, are long. Okay,
nineteen seventies for example, into theearly eighties, ten years of consolidation you

(03:21):
had a downturn and then you hada rally, but you kind of went
flat for a while. So andif you start to get a while to
get back to all time high andthen you kind of didn't you look back,
you didn't go anywhere. You know, if you were thirty years old
starting to invest in nineteen sixty nine, you said, say to yourself,
now you're forty two stock marketing everyonewas talking about, not so great.
I've averaged two. Yeah, andthen the eighties and nineties kickoff age eighteen,

(03:46):
and that's that's the typical for themarket. Then you're then another person
is thirty years old in the twothousands and they're forty two years old in
two thousand and twelve. Same thing. I've made very little in twelve years
and a huge period of expansion afterthat. And then we have these mini
sideways digestive periods. Okay, sojust look at the last ten or twelve

(04:08):
years. The market did a sidewaysdigestive period from April of two and eleven,
ironically enough, around another debt ceilingdebate, okay, and that lasted
until the early part of twenty twelve. Okay, so a little less than
a year and then in early partof twenty twelve through the middle part of
fourteen the market took off. Okay, then you went May fifteenth of fourteen

(04:31):
all the way to the Monday beforethe election in sixteen two years where you
were only up a couple percent inover two years, and then seventeen until
the end of eighteen takes off.Then you have eighteen very short, shorter
period of consolidation about six months nineteentwenty nineteen takes off. And then I'm

(04:54):
not even going to use the COVIDperiod as an example, straight down,
straight back up. But then herewe are today with the market peak roughly
January first, twenty one, andwe're still we'll start consolidating through that two
year period, but there's no questionthat the next liftoff point will happen.
Whether it happens whether it started lastOctober or whether it starts next October.

(05:17):
It doesn't matter when. But ifyou get caught up in the market averages
X per year, and I mustbe doing something wrong if there's a year
where I didn't do that, ora two year period where I'm flat,
And if it takes all the waytill January first of next year, for
the market to get back there.We'll have had a good return from now

(05:38):
until then, we'll have had amarket where the nastic is up thirteen and
the overall market is up eleven fromnow until then. That's great for a
seven month period. However, itwill have met. You went two years
of really not going anywhere. Ifyou did some rebalance and you probably made
good money, But if you justwere a buy and hold investor, you
went two years of nowhere. Nowthat's typical that you go nowhere for a

(06:00):
couple of years, and then yououtperform for a few years, and then
maybe you get a little overheated fora few years, and then you correct,
and that's the cycle of the market. Every six point seven years,
that's the duration of a bull market. One point two years is the duration
of a bear market. You knowbear market if it's marked by a twenty
percent downturn. We've had three inthe last six years, so that's pretty

(06:23):
unusual too. So a lot ofpeople are looking for a reason to be
out of the market, and thedebt ceiling was the most recent, and
I think the Fed and it's verydifficult to know what's them just talking because
they don't want the market to takeoff based on them being too positive.
But you've had a couple of kidsthat I've had a couple of kids that

(06:44):
have gotten driver's license in the lastfive years, and one of the things
you often tell them is the anticipationof things. Right, let's not you
see the break lights ahead, startbreaking. That's probably the biggest one.
Yeah, you can't look right overthe hood. You got to look down
the road. Right, I seelights a half mile ahead, right,

(07:05):
that means I need to start breaking. Well, why do I need And
what do the kids say? WhyI need to start breaking? There's all
this room? Yeah, well,because you know what's going to happen.
Yeah, okay, Well, tome, the FED is constantly doing this
right, whether they're being too easywith money and not seeing the dangers down

(07:25):
the road of inflation. But nowhere we are, they're not seeing the
break lights. Okay. Does thatmean they're not seeing the break lights?
What do you mean? Are youguys worried? No, I'm saying what
they're doing is working. Let itwork. Okay. If if some of
something is good, more of itis not necessarily better. Oh, it's
working. So we just need tokeep going, okay, And so to

(07:48):
me, you have a situation wherethe Fed Funds rate is above inflation,
which is and it's going to bedramatically so in the next couple of months,
And could inflation rebound a little littlebit fine even in some of the
worst testaments are four to five percentby the end of the year. That
would put the current Fed Funds ratestill a bill above. Okay. But

(08:09):
if you look, you know,you're seeing what they want. You're seeing
the slowdowns underneath the hood. Doesn'tmean when we say slow down, just
like you said last week, you'reseeing things returned to where they were pre
COVID, not melting down, right, Things are returning to where they were

(08:30):
pre COVID. So, for example, if you look at the Wall Street
Journal today, whereas the US Economyheading follow the money is the headline,
lending conditions for companies, consumers,and real estate developers have tightened this spring
two levels, not seeing since whenright right before COVID. That's okay,
So the flow of cash on WallStreet has been slowing. Lending standards have

(08:52):
been increasing as well. Yes,they're increasing to where they were before COVID.
The slowdown is a consequence of thefederal reserves interest rate hiking against inflation,
there's now less money available for USbusinesses and households to hire new workers,
bill plans, and pay the bills. Less money on a relative scale.
Right, if you're gonna if you'regonna shut down the economy, you

(09:13):
need to inject money to do allthe things that were mentioned there. But
it's if it's getting us back towhere it was a pre recessionary period before
COVID for all of these things,that was a very healthy period in the
market and a market that could sustainitself with that, I guess tight of
lending, but they should be carefulbecause there are areas of the market that

(09:37):
you know, it's just like twothousand and eight where even if you did
all the right things and you didn'thave any exposure to subprime lending, well,
eventually that affected everything. And sowe do have things to look out
for. For example, I thinkthe Fed should be watching commercial real estate
and the stay at home factor,and do they need to be so tight

(09:58):
in an environment where there's a statemicrom might need help, not has to
have a huge adjustment, maybe agenerational adjustment to commercial real estate in terms
of how much space they need,how the space is going to be utilized
with work from home taking hold,not as much as it was at the
height of COVID, but it's stillgoing to be more than before. I

(10:20):
mean, you think about what wework was, they were probably just a
little early on what they were doing. Because now if it were if it
were a post COVID environment where employerswere more than willing to reevaluate how much
space they want and to also incorporateresidential living in their office space, I
mean way work would have been theexact thing to kind of take hold at

(10:43):
that time. But you know,they overbought, they overinflated their books,
and the IPO never happened. Butyou you rewatch that either documentary or the
docuseries that's on Apple TV. Imean, in this environment, they're just
they were just five years too early. Now. One thing is mentioned in
this Wall Street Journal article too,Brad, is compared to previous recessions,

(11:05):
there is more private money available topeople who want to borrow than almost ever
before. You know, in thelast fifty years, it's changed. It
used to be when you wanted todo something, you had to go to
a bank, Like, who elsewould you go to it's a bank.
Where else do you go? Doyou go to the big downtown bank and
you and you ask to borrow money? So banks are having to compete with
private investments almost more than ever.So that certainly could be something that could

(11:28):
fill the gap from tighter lending standards. But I do think that the Fed
should be careful in particular about thatcommercial real estate area. So you know,
there's some other things here. We'reseeing credit squeeze. We're seeing a
little bit of an uptick, notnot anything that it wasn't pre COVID in

(11:48):
things like auto loans. No uptickand delinquency of mortgages at all. It'll
come. It's gonna come. Imean when you when you start to have
the the US will rate mortgages probablythere's just so few of them. Yeah,
yeah, it will be a blip. But you're coming off of historic
lows for that, because with creditcard that last week credit cards had a

(12:09):
blip up. But yeah, you'recoming off of a historic low. You
can't stay at the bottom forever,um, you know, Kevin, this
last two weeks, I've had morecalls in in a five year period about
the debt ceiling, and we've hadthe debt ceiling debate so many times.
I was never worried about it,and I will never be worried. I

(12:31):
will never be worried about it.And I want to talk about what's in
the debt ceiling bill, but thenI want to talk when we come back
from the break, just about allthe things that seem new to people who
are especially I think what we haveis you have people who are busy working
and they're not paying attention to thesedaily news stories that could affect the market.
And then then you're retired, oryou're working less and you have more

(12:54):
time in your hands, or we'rejust in this this twenty four hour news
cycle. Everyone's more aware and it'sat your fingertips on your phone that you're
more aware. And now people thinkthat this new story is something new and
something I should be worried about,because it seems like the markets worried about
it, and the debt ceiling isjust the flavor of the week, and
now it's over and we don't haveto worry about that again. But let's

(13:16):
talk about what's in it, becauseI think there's some good things that came
out of a little bit of thedebate and the hold out by the Republicans
for what's in the bill to cutspending a little bit and get things under
control. You mean you mean itwasn't all bad because some some right wingers
are currently saying it was all bad, and some left wingers are saying it
was all bad, then the oppositeof the middle of the road must be

(13:41):
true. Right. People probably alwaystalking about the nineteen eighties and compromise and
Tip O'Neill and Ronald Reagan and howthey compromise, but yet when it actually
happens right in front of their phases, yeah, everybody's mad. Everybody's mad,
then you might you know, itmust be a good deal, right
mean, if you were buying ahouse and both the buyer and the seller
were mad about the price, youknow it's probably pretty fair. It's the
right price. That's what we justgot. Everybody's matt right, so it

(14:05):
must be okay, it must beas good as you can get. I
was only going to be happy,Brad if we completely balanced the budget and
we were in budget surplus that wecan start paying down the debt. Well,
that is a recession then, becausethe government is your biggest spender in
this economy, so you'd be askingfor a stock market to sell off,
and it's not what we got.So let's talk about that. We come
back from the break. You're listeningto Money Sense the advisors A kursedon Wealth

(14:26):
Management Group. We'll be right backand welcome back. You're listening to the
advisors A cursing Wealth Management Group.Brad and Kevin here this morning. Kevin.
The dead ceiling, Oh, thedead ceiling. Worry get out of
the market until the dead ceiling isover. Well, we would have missed
about, especially on the NASTAC,about five percent rally from the time that
we were supposed to start worrying aboutCabby, get the dead ceiling. And

(14:48):
maybe I'm crazy. Was it calledthe fiscal cliff at one point? I
don't know what from I don't knowwhat made the fiscal cliff. I think
there was two or three things comingtogether all questration. There was another one.
I think there's two or three thingscoming together all at once with the
debt, and that made the physicalcliff. But this one, I just
printed out the one. The thingsthat I thought were important in this there's

(15:11):
a lot of just you know,garbage in a bill like this, But
some of the things, it's shockingthat one we even had to debate a
couple of these, and two thatthese are part of the debt ceiling bill.
So one of those I'm just surprisedis even part of it is there
is permitting from energy projects and someand some some more stringent UH regulatory things

(15:33):
in here for getting things permitted quicker. So it says that the bill imposes
a two year timeline for complicated environmentalreviews for large scale energy and infrastructure products
or projects. Doesn't that seem long? Two years? Well, it was.
There was no limit and it wasaveraging four and a half. So
now if it's if it's going togo longer than two years, UH,

(15:54):
companies can sue the government. Soif it's going to take longer than two
years for the yes or no tocome down and waste time and waste money,
then you can sue. So,I mean, of course, two
years, geez, that seems longin my opinion. One that is surprising
to me that we had to reallydebate about, but we did, is
there's twenty nine billion of unspent COVIDmoney. Twenty nine billion, I mean,

(16:18):
COVID's over, and we are adto debate whether to not spend the
twenty seven billion. I mean,what were they going to blow twenty seven
billion with a b on at thispoint and have it fall under the COVID
COVID nineteen aid package. I mean, if you didn't spend it, you
didn't need it. Great, wethrew this big number at it. If
you needed it was there, butyou didn't need it. So now there's

(16:41):
all these people like, yeah,but I could spend it in my community
for X, Y and Z.No, it was meant for COVID.
You didn't spend it. I meantventilators, right, maybe maybe we need
now Ventilator disposal is what we'll spendthe twenty We stop paying the rent on
whatever ventilator warehouse we have, whichyou know is out there. Yeah,
just just but what do you dowith all of them? Dig a hole
and put them all in it?I have no idea. You know,

(17:03):
there is a ventilator warehouse, ventilatorthere's going to be a documentary about venorare
warehouses, or about how we putthem all on a barge and now there
flat out. Yeah. So COVIDnineteen twenty said, oh, we saved,
we saved. This is how wesaved twenty seven billion that we didn't
spend it, and now we're notgoing to spend it. That's saving twenty
seven billion. We were about readyto blow twenty seven billion and now we're

(17:27):
not. Okan, that was that'ssaving Okay. So the uh, the
main part of the bill was thoughabout how much we're gonna spend and how
much we're gonna increase spending. Sowe set the cap at one percent for
the next year and I think it'sactually one percent for the next few years.

(17:48):
Uh. Military is capped at threepercent. So in rough terms,
is one percent on all spending,three on all non military spending, three
percent on all military spending per year. I mean, that's not really a
cut. They're calling it a cut, but increasing spending by one when you're
going to increase it by three,it's still increasing spending. But that's called

(18:08):
a two percent cut. So that'sthat's part of it. Though, I
mean, all of these things aregood, you're still increasing spends. There's
something that was a big hang up, and did it go through regarding a
work requirement on like welfare stuff.Yeah, that is part of it,
and that's still a state to statething, so it's it's it's too long
to even get into, but thereare They did adjust some of the work

(18:29):
requirement things. The other one thatI thought was interesting because you know me,
I'm all for the IRS going aftertax sheets, and here on this
show, I was talking about thefact that if they don't do things a
little differently to find people who aregetting paid in cash, paid on Venmo,
paid under the table, because we'rein such we're in this economy where
so many different jobs can be underthe IRS's radar. They'll never catch these

(18:53):
people. And the only way tocatch them is see how they're living and
see that they're spending two hundred thousanda year, but they're claim that they're
making fifty thousand a year, Sowhere does the money come from? Okay,
that's the way you have to catchthat person. Well, you aren't
living like a person that X fiftythousand. Much much is made about in
tax policy, the concept of fairness, right, and I don't I don't

(19:17):
know how you come up with apercentage of taxes that is fair. You
know, Hillary Clinton talked about thatand everyone went crazy. All the right
wing went crazy on it. Buthere's what I know is fair. Okay,
A school teacher making forty five thousanddollars a year who has to pay

(19:38):
taxes because there's no way to avoidit. There's no way to avoid it.
And a contractor yep, making fortyfive thousand dollars a year and paying
zero, I know that's not fairright now. Now I don't have that
contract. You're gonna make a onehundred bill O'Reilly did this years ago with
somebody tried to pin them down.What do you want? You want eighty
percent, you want ninety percent?You'll never get to an answer on that,

(20:00):
But it is very easy for meto get to an answer on someone
who makes whatever they make, fiftyseventy five one hundred thousand and pay zero
compared to the W two employee whocan't no way to avoid it, right
and they might fudge some of theirexpenses and throw three hundred dollars worth of
extra expenses in and get audited andthat. But I'm that person, That's

(20:22):
what everyone would say. I'm thatperson, And now I feel like the
government's attacking me. The government's notattacking you. Yeah, the government is
saying that you have to be likeeveryone else. Yeah, you're just because
you've gotten away with it for afew years doesn't make it right. Eighty
percent of people out there can't avoidit. If you just happen to be
at a job where you can avoidit. If you go to the if
you go to Cedar Point and youcut to the front of the line all

(20:45):
day and no one stops you,and then on the last ride of the
day, you cut to the frontof the line and they catch you.
Are you gonna say, why areyou attacking me? Yeah? I've been
doing this all day. You've beencutting all day, and now they just
call you and they escort you outof the park, and you say to
yourself, I feel like I'm underattack. Yeah. No, everyone else

(21:06):
got to ride three rides. Yeah, my kids just went recently the road
three. I'm like, three rides. You're there all day. You rode
three rides, three rides, Yeah, and you rode twenty Yeah. So
real quick here on the irs.This is what's changed me a little bit
on all of that, because Idon't know where they're coming up these estimates.
The elimination of the funding that theywere going to do, they cut
the funding by twenty one billion.And the estimate is that the twenty one

(21:30):
billion that they're cutting out of theIRS budget will reduce tax revenue by two
point three billion over a decade.Over a decade, so we were going
to spend twenty one billion and it'sonly going to cost US two point three
billion over a decade. That meansit would cost it would take one hundred
years to get enough tax revenue tomake up for the cut that we just

(21:51):
did. Okay, I'm fine withthe cut then, I mean before I
read that, I kind of wanteda little more IRS spending. Now,
if you're gonna spend twenty one billionand you're only gonna get what is this
two hundred million a year out ofit, that's ridiculous spending. So well,
and this goes to the thing thateveryone was worried about and talking about
with bank accounts because they're trying tofigure out Okay, that's fine, people

(22:12):
should pay taxes, but how dowe figure it out? Yeah, Hey,
if you get a letter and yousay, yes, I inherited a
million dollars and I'm spending it,They're not going to pursue you. You're
allowed to inherit money. No,So you know, I think that that
i RS thing was way overblown.They were talking about the people who Oh,

(22:34):
well you're going after people who makebetween fifty and one hundred thousand.
Well, that's where all the cheatingis. Because cheats don't claim a million
because they made a million five.They make a million five, they claim
one hundred and fifty. Yeah.Yeah, so it and it's the volume
of people that are in that area. It's I'm not saying that those people

(22:55):
are rich, but there's a lotof people who make that same income who
pay to pay and that it's notabout fair share, it's about fairness.
Yes, you make the same asthe teacher, you should pay the same
as the teacher. I think ifyou're a person who follows all the rules
and pay your taxes, it's justlike immigration. If you followed all the
rules and came into this country legally, you should be the person that is

(23:18):
most offended by illegal immigration. Yes, okay, if you follow the rules
and pay your taxes, you shouldbe the person who is most offended.
Now, I hate paying taxes asmuch as anybody, but people who pay
nothing, yeah, because they're cheating. That I have a problem with Brad,
switching not really switching gears. We'retalking about the debt ceiling. That
doesn't matter to the market, eventhough it did move the market a little

(23:40):
bit up and down and then up. It's something that we're gonna have to
talk about again in three or fouryears, just like other headlines that to
some people feel like a market moverand feel like the first time the markets
ever experienced such a drastic, earthshakingpolitical and but Brad, it's different this
time. This time it's different.Well, just like this upcoming election will

(24:03):
be the most important election of ourlifetimes, because just like the last,
this time it's different. So there'sa piece out and you can find all
different variations of this. We've dustthis off from time to time. It's
probably it's a little bit dated andsome of the updated pieces have changed.
It references Time magazine. Now,a lot of our listeners probably know what
Time magazine is. If you're undera certain age, you probably don't know

(24:26):
what Time magazine is. It's Timemagazine is still around. I have no
idea, I don't I don't knowthat it is. But Time magazine used
to be the pulse of the country, right it was you looked at Time
magazine to see what was going on. There's the Time man of the year,
It's Time, and of course whateverit's gotten woke. I'm sure gonne
ultra left wing. But the olderpiece is actually just as appropriate, if

(24:49):
not more, because take us backto say the seventies, right, and
let's look at a couple of headlinesand just the headline itself and see could
this have been from the last fiveyears or is this from nineteen seventy two?
Correct? So in January nineteen seventytwo, and this literally looks like
a cover sheet that that could befrom today. The headline is January nineteen

(25:15):
seventy two, is the US goingbroke? Can a nation with a trillion
dollar economy? We now have aWe now have like six I think there's
three stocks that are worth more thana trillion. Well that yeah, well
gd gd However you measure the economyGDP or whatever you measure it with,
or do you measure it with therevenue that comes into the government, whatever

(25:37):
it might be, But it says, can a nation with a trillion dollar
economy be running out of money?If you're doing GDP, we're well over
twenty trillion. But that's the headline. Yeah, nineteen seventy, nineteen seventy
two, Okay, nineteen seventy Septembernineteen seventy four. The stock market has
rarely scarcely been this shaky. Justabout everyone who buys, sells, borrows,

(26:02):
or invests has a current feeling ofunease. Seventy four, nineteen seventy
four, July nineteen seventy five.Can capitalism survive? Can capitalism survive?
Um? So small? I shouldhave printed out bigger on some of these.
Nineteen seventy two US budget deficit hitsnew all time high YEP, stalled

(26:26):
growth, surging inflation collide with newspending priorities. Wow, we just how
that's that? Piggyback's right on yourdebt ceiling. Yeah, well here's one
from seventy three that could have beena couple of years ago. Well,
prices skyrocketing four percent. Well,I mean that's nineteen seventy three. It
could have been a couple of yearsago. US banking crisis nineteen eighty four.

(26:49):
I mean, we just had abanking crisis, right if we had
four banks fail in a matter ofmonths because of what the FED was doing
and what their balance sheet looked like. Right, right, you do the
small print one, I don't Idon't have glasses, and you can see
you have reading glasses. Let mego. So we're in nineteen seventy four,
brand, let's go. My nextone is nineteen eighty two. So
you do do a couple more fromthe late seventies. Here Dal closes,

(27:14):
what is uh, yeahs lowest levelin a decade? That's seventy four nineteen
eighty two. We got two unemploymentin nineteen eighty two, double digit unemployment.
We haven't had double digit unemployment ina while, ye, so,
but worried about unemployment, Time Magazine, January nineteen eighty two. Unemployment our
biggest worry. Yeah, Okay,people are talking about that the Fed's gonna

(27:37):
raise rate and cause unemployment. Itis doubly trouble some that the ranks of
the jobless may be growing at atime when many of the cushions softening the
pain of unemployment have been deflated.Okay, how about we fast forward to
nineteen eighty seven the crash Right,the crash of nineteen eighty seven Crash on
Wall Street spotlights America's leadership crisis.What were some of the other ones twenty

(28:02):
two percent one day. Yeah,I mean that could be very similar to
something like COVID where we go downthirty five percent in five weeks. You
could you could have easily said,we never have faced anything like this before.
That's why the stock market is sellingoff. Where will the bottom be?
And the same thing with the eightyseven crash. It's all computer,
computer generated and kind of changed therules for the stock market, But shutting

(28:25):
down the economy kind of changes therules for the economy as well. So
that's typically what it takes to havea big sell off is something new to
happen, and that's what happened duringCOVID. In in the early nineteen nineties,
excuse you, we had a recession, persistent job woes test the economy,
and home prices implode amid recession.By the way, in that period

(28:47):
of time, the TAO is inthe early nineteen nineties, right around three
thousand, just to kind of givesome context there. In that same period
of time, we had banking issues. During that particular recession, banks and
insurance firm This is the headline fromTime magazine. Banks and insurance firms are
tottering beneath huge portfolios of bad realestate mortgages. And how did year is

(29:07):
that? January nineteen nine? Excuseme? October nineteen ninety How do we
ever get through that? Brand?Yeah? How did? But this time
it's different? So did they justdo the same headline in the year two
thousand or two thousand and eight,So twenty twenty eight years later they just
do the same headline because you know, it's it's really the same thing.
It's a real estate uh worry andand a selloff because of bad loans,

(29:30):
and it's the same thing over andover again. How about a headline about
the job market changing? Brad nineteenninety four. Whatever happened to the Great
American job The rules of the gamehas changed forever. All sorts of people
who never thought they would be joblessare looking for jobs and not finding Now
we don't so much of that now, but people are are concerned that we
will have a changing job market asa result of either work from home or

(29:55):
ai AI. That's right, Marchnineteen ninety five, the social secure time
bomb, and that's that's from whennine twentieth, nineteen ninety five. Wow,
we're never going to see this onecoming. So then, of course
you have two thousand and two thousandand one, the tech bubble burst.
Of course, nine to eleven Timemagazine headline nine to eleven royals the US

(30:19):
markets in the economy. That getsthe Dow up to ten thousand from three
thousand and nineteen ninety. Now,after the tech bubble burst, the Twin
Towers fall. Okay, we haveJuly of two thousand and two, three
years of down stock market. Okay, Dow Jones went all the way down

(30:41):
to seven thousand in that period oftime, just just around thirty three thousand
today. Then the Time magazine headlineis Americans are more worried about their financial
future than any other time since innineteen seventies. Okay, well, guess
what Americans can't, will and shouldbe worried about their financial future. It
never stops, that ever stopped.Yeah, I mean, I'm sure there's
some people say I haven't worried aboutthis since since nine to eleven, and

(31:04):
before that, I didn't worry aboutit since nineteen seventy. So we're up
to the tech bubble bursting, andwe started in January nineteen seventy. In
January nineteen seventy, the Dow wasat one thousand. We're up to the
tech bubble bursting where it got overten thousand and dropped down to seven.
We get back from the break.Let's go to the next twenty years and
see what the headlines are and youtell me the listener think about it,

(31:26):
if they've changed at all? Isit different this time? You're listening to
money since Brad and Kevin Kurston willbe right back and welcome back to the
show. You're listening to the advisorsof Kursten Wealth Manager Group. Kevin Kurston
and Brad Kursten happy to be withyou this morning. As a reminder,
we are professional financial advisors and ouroffices are in Perrysburg. If you want
to give us a call throughout theweek to view your own financial plan,

(31:47):
set up an initial consultation whether you'rein retirement, leading up to retirement,
or just getting started four one nineeight seven two zero zero six seven,
or check us out online at KurstenWealth dot com. Brad, we're talking
about the famous phrase it's different time. People think it is because of Biden
or the Liberals, and some peoplethink it is because of Trump, and
some of the conservatives, and we'retalking about how it's never different this time.

(32:09):
Okay, the chess pieces may change, but it's always the same game.
And so we got all the wayup from the early nineteen eighties when
the Dow was at one thousand andall the problems of spending in debt and
unemployment and volatile stock market headlines.We're going through headlines of Time Magazine up
to the two thousands, and thenafter that Time Magazine sort of has faded

(32:32):
away. Unemployment, banking crises.There's three or four banking headlines in these
Time Magazine articles from nineteen seventy totwo thousand. But now we're to the
two thousands, dot com bubble bursts, and we go through that recovery all
the way up till two thousand andeight, and we have stock market meltdown.

(32:57):
Is a headline there, what isthe Dow plunges one hundred and seventy
seven points? And the headline inTime magazine from May twenty six, two
thousand and eight, surviving the leaneconomy. Americans have a new manual economic
woes, real estate crash, creditcrisis, broken healthcare system, and nagging
job insecurity. So you know,I don't think we have anything that parallels

(33:22):
to two thousand and eight financial crisisright now. I mean, we had
banks failed, but you had headlinesfor banks failing back then, and the
headlines from two months ago would haveprobably looked like those headlines. But in
the two thousand and eleven, thirteen, and two thousand and eight, you
know, fiscal cliff, debt ceiling, you had a lot of different headlines
that look similar to what we havenow. In two thousand and eleven,

(33:44):
you know SMP first ever downgrade ofthe of the of US of US debt.
You know that headline would have scaredpeople, but that was a time
to buy, not sell. Intwo thousand and eleven, you had the
market going down by twenty percent rightabout that time lasted for about a week
after that, and then the marketfound its bottom and moved up for a
couple of straight years. Twenty thirteen, the headline is polarizing politics. I

(34:07):
have another one here from Time magazine. Is a solution even possible? There's
there's the Time headline two and fourteen, which, by the way, the
dow at that point in time waseighteen thousand, So we've traveled all the
way from one to ten after thedot com bubble burst down to seven up
to eighteen thousand and two thousand andfourteen. And folks might say today we're

(34:29):
two polarized. It's going to hurtthe economy. This is different this time
eighteen thousand and two thousan fourteen,and we're at thirty three thousand today.
The nation has been carved into echochambers. Increasingly we hear only the sounds
of our own passions and our fears, reverberating I should sell my stocks.
Yeah, and that's from ten yearsago, almost ten years ago. Now,

(34:49):
Yeah, it's hard to believe.Yeah, another one from two and
eighteen. The longest government shut downin US history, thirty five days.
The government was shut down in twothousand and eighteens. Anybody even remember?
Did that affect anyone? In twothousand and eighteen when the government shutdown.
I know, we're supposed to beworried about this government shutdown that was supposed
to have happened with this debt ceiling. Would it have mattered? I mean,

(35:09):
wouldn't the government just have saved moneyto shut down for a little while?
It didn't matter? In two thousandand eighteen, twenty nineteen and all
the way up to COVID, themarket went straight up and it didn't affect
us then and it's not gonna affectus now. And the debt ceiling has
passed us. And in the biggestperiods of time where we had the most

(35:30):
fear, you looked at seventy three, seventy four, the eighty seven bear
market, two thousand and two thousandand two, bear market, seven to
nine. Every single one of thesehad a five year return from its from
its trough. So these are allbear markets. We just came out of
a bear market, Okay, seventythree, seventy four, seventy five percent

(35:52):
in five years, eighty seven onehundred twenty two percent in five years,
dot com bubble one hundred and fivepercent in five years, and the O
eight bear market seventy point six percentin five years. If you start at
the beginning and you went through allof it. The Dow went from one
thousand to thirty three thousand. Yeah. I think that the thing that,

(36:13):
especially if people have too much timeon their hands, that they kind of
miss is that we talk about thelong term average of the market. Depending
on when you start, you know, nine ten or over ten if we
go all the way back to thepost's Great Depression era in order to get
that return. You're in for everyday. You're not out right before the
debt ceiling crisis and back in rightafter the debt ceiling crisis. You're not.

(36:37):
You're not out at the peak ofthe of the real estate boom in
two thousand and seven and back inat the bottom. You're in for every
day. You're in for the good, the bad, and seventy percent of
the years are are up and thirtyyear down. But you're in for the
down as well. You're in forall of them. And we're talking about
making adjustments. Most of them arefive percent adjustments. It's a typical adjustment

(36:58):
for US. Five sometimes just alittle bit more. And it is mostly
never a out. It's from onearea to another, the most recent one
being a value to growth the valuesectors, the dividend paying sectors over to
the tech related sectors, and soit's one stock area to another. So
on the fringes right, it's it'sit's changing the allocation a little bit.

(37:21):
It's not getting out and trying tofind the perfect time to get back in.
That's a loser's game and one thatyou'd be waiting a long time for.
We see plenty of stats on missingthe five best best days or the
one best day every year and howit can drastically change your portfolio performance well,
and even using a very modest periodof time for stocks. I mean,

(37:46):
it's one of the lower twenty yearaverages nineteen December one, nineteen ninety
nine to November twenty nineteen, theSP five average six point two one.
Actually quite impressive given the starting pointis a period of time when the price
to earnings ratio the SMP was overthirty yea. So in that twenty year

(38:06):
period of time, Okay, there'sapproximately how many trading days are there in
a year for the stock market,Brad? Is it roughly two hundred?
Yeah, that'd be my guess.Okay, so there's four thousand trading days
in that period of time. Outof those four thousand, if you miss
the ten best your average junior returnwent from six to two to two three.

(38:27):
Now, most of these that wedo start if it's twenty I looked
at another twenty year. This twentyyear here was two thousand and eleven through
two twenty one, and you cando it the same that brought the twenty
year average all the way up tonine point five. Okay, that's a
little closer to long term average,so I'll use that one. So in

(38:47):
any twenty year period of time,it's four thousand trading days, Okay,
if you miss the ten best days, your average uniord return goes to five
point three just ten days. Okay, No, no, Brad, it's
ten days total, not per year. The no. No. It takes
your average per year, your averageannual town miss twenty days total two point

(39:07):
six out of four thousand days,and just miss thirty days of the best
days, and now you're flat andall the rest are negative. Miss forty
days fifty days. If you missthe hundred best days out of four thousand,
your average an your return is minusten per year. And this is
why I will often say to people, if you are the type of person

(39:27):
that is prone to panic, okay, and this is all part of building
a portfolio for someone that's right forthem. What's the best portfolio for me,
the one that you never panic andsell if that means you're one hundred
percent out of the market, becausethat's what it takes for you to never
panic, so be it. Okay, But if you're someone who's prone to
panic but you love that long termaverage annual return of the stock market of

(39:49):
nine point five, at some pointwe have to break the news you're never
gonna get it, and you haveto come up with the portfolio that matches
that for you. And so thisis not about someone feeling bad because they
did miss those days and they're nevergoing to get back there. This is
about people, over time figuring outand finding their risk tolerance. You know,

(40:10):
people say, what is your risktolerance? You don't know what your
risk tolerance is until you experience somevolatility. Yeah, if you're one that
never looks at it, your risktalence is probably higher because you're a long
term investor that will be in forall those that's right. So sometimes it
takes making a mistake or two overyour investing career so that you don't make
a huge mistake down the road whenyou have a lot more money. Right,

(40:34):
Okay, and that's okay, youcan do that. But that's what
we're here to guide you through isto find whatever portfolio mix is right for
you that you can stick with sothat you don't end up being the person
who misses out of a twenty yearperiod the thirty best days, and you
make no money in that stretch oftime. So take our last pause.
You're listening to money since Kevin andBrad Kursten will be right back and welcome

(40:57):
back. You're listening. Advisors areKurston Wealth Management Group, Kevin here this
morning and Kevin we were talking aboutbeing a long term investor and being in
for all the days. But atthe break we're just talking it out and
saying, I hope investors realize we'retalking about buying the whole market or a
diversified portfold diversified portfolio. And ifwe added it up between all the holdings
of every every manager that we ownand every index that we own, it's

(41:21):
thousands. It's just for the stockholdingsalone. It's probably it's probably five thousand,
because the international markets are are avastly different market than the US,
and the bond holdings are maybe thesame. It's maybe five thousand bonds,
and it's it's two to five thousandstocks. It's not a couple of meme
stocks that we're saying, hey,make sure you don't miss the best days

(41:43):
of bed bath and beyond. Youwant to make sure you always hold that.
Yeah, not a recommendation by yourself. Yeah. Or or you held
on till the bitter end on searsyeah yeah. Or you you you bought
some some crypto coin that no one'sever heard of before, and you had
some thesis that this was going tobe the one because you've read something,
or you happen to listen to somethingat the exact moment and they recommended this,

(42:04):
and you thought, let me putsome money in that, and I
have to hold onto this crypto coinbecause Kirsten said if I missed the ten
best days, Yes, the tenbest days argument does not apply so to
those types of investors. Yeah.So there's an article, actually it's Jason
Zoie article in the Journal, andI think it's from this week. I
mean, with his articles, itcould be from fifteen years ago, who
knows. But it says the titleis E old holdel h O D L.

(42:30):
So he's changing the D and theL on the hold to stand for
hold on for Dear life. Sohe's talking about how people instead of being
a buy and hold investor or holdingonto a good portfolio and not missing out
in the best day it's like we'vebeen talking about or holding on for dear
life for for these individual stocks orcryptocurrencies or some sort of speculative investment,

(42:52):
because they're going to write it intoa zero for example, if they sell
that, then they're admitting their wrong. So for example, I'll start with
the whole because we use the tenmissing the ten best days. Example,
Brad, if you buy the SMPfive hundred and you have a ten year
time horizon, and in the middleof that ten year time horizon there's a
twenty five percent bearer market and youdecide not to sell, you are holding,

(43:14):
not holding on for dear life.Yes, so most of these holding
on for dear life are all thebubbles that we're talking about. The Memestop
buggle ball from two thousand encapsulated aboutsix to probably have about six different stocks
that went up twenty thousand percent,and by the time you heard about it,
you're like, well, if Ijust hold on to it for another
twenty thousand percent, I'll where youretired. And so you buy after it's

(43:37):
gone up and now you're holding ontoit. It's worth a tenth of what
you bought it for. But everythingyou read online says, it's coming back,
and that's the same as every bubble, and the meme stock one just
happened to be the most recent whencrypto was after that, actually, and
so you could be holding onto somecrypto that's worth nothing, and you're holding
on for dear life. And inthis article he gives a couple of bullet

(43:58):
points for how you'd know you're oneof these. That's not just holding on
to good investments, but holding onfor dear life onto something that probably you
should have never bought in the firstplace. Here's his couple of guidelines.
Do you get angry when anyone whocast doubt on the company's future, I'm
sorry, Do you get angry ifanyone cast out it? And then he
says, if you've done your homework, you should feel comfortable, not touchy

(44:20):
about talking about the investment or facingcriticism. Do you think that anybody who
disagrees with you must be crazy orcrooked? So you should You should be
trying to learn from other people whodisagree with you, not seeking to discredit
them. And I think those arethe two biggest ones. He's got a
couple of other those are two.Those are two good adages for politics.

(44:42):
I was just going to say,when I'm watching and it is politics,
time to watch, I like tolisten to both sides. I want to
hear it's somewhere in the middle.So give me both sides, And even
if you slant one way or another, it is good to hear the opposition
opinion. And the same thing withall the debt ceiling debate, it's good
to hear both. And if weend up somewhere in the middle, we
probably ended up in a good placefor the debt ceiling. So I think

(45:07):
with all of these you need tothink if you're going to do this type
of investing, which is not reallyinvesting, this is gambling. If you're
doing this type of gambling and everythingfalls apart on you and what you thought
was going to happen didn't happen atsome point with something like this, it's
time to move on. But thisisn't what we're talking about. This is
gambling, and we're talking about longterm investing for your retirement. Yeah.

(45:29):
And I think Brad, on someof these debates and shifting it over to
the politics side, we should havedebates where someone you'll probably never get it,
where somebody sits there and tell mewhy you think that, because so
many times, no matter which sidesomeone's on, I have opposite and they're
evil. They must be evil.You're evil, I'm not. They think

(45:49):
I'm evil, They're not. Well, I think they probably just have a
different experience than you. Your littleexperience is a very tiny percentage of all
the experiences that ever happen. Soif their experience, whether it's Barack Obama's
experience or obviously Donald Trump's experience,who's ever experienced this life, is completely
different forms the way they think certainways. Yes, well, and everything

(46:10):
doesn't have to be if you're onthat side, then I have to be
on the opposite side of that debate. Okay, that makes no sense.
When's the last time we had apresidential debate where there were certain topics with
saying no no, no work.We both agree on that because we're both
Americans, and that makes sense thatwe would actually agree about ten of the
fifteen things we're gonna debate. Butthe way we are now is if there's
fifteen things to debate, you picka side. I picked the opposite.

(46:31):
I'm gonna pick a side, andyou pick the opposite, right, And
that makes no sense, right,And I think someone who would call that
out in a debate setting, ohmy gosh, they would get they would
they would crush it because they'd makethe other person look like a jerk.
Yeah, really would, right.So to cover the end of the show,
you know, if you're following thingsfor the next month, we're gonna
have another FED meeting CPI, whichis the inflation meeting. Actually, Dad

(46:55):
is gonna come in, so we'regonna follow that very closely on this show.
Thanks for listening. Everybody will talkto you next week. You've been
listening to Money since brought to youeach week by Kursten Wealth Management Group.
To contact Dennis Brad or Kevin professionallycalled four one nine eight seven two zero
zero six seven or eight hundred eightseven five seventeen eighty six. Their email

(47:19):
address is Kursten Wealth at LPO dotcom and their website is Kurstenwealth dot com.
Opinions voiced in this show or forgeneral information only, and are not
intended to provide specific advice or recommendationsfor any individual. To determine which investments
may be appropriate for you, consultwith your financial advisor prior to investing securities
are offered through LPL financial member FinraSIPC