Kersten Wealth Management Group - Money Sense 6-17-23

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Episode Transcript

(00:00):
Good morning and welcome to Money Cents. You're listening to the advisors of Kursten
Wealth Manager Group, Kevin Kurston andBrad Kursten. Happy to be with you
as we are continuing to have theRoaring twenties here, Brad, No,
nobody would have said that at thebeginning of the year, but twenty twenty
was a good year. That wouldhave been a good prediction at the beginning
of the year if somebody would havesaid we're about to start the Roaring twenties.

(00:21):
Well, I mean we had twentytwenty one, twenty two, and
twenty three. Three out of thosefour are really good years. Even the
COVID year ended up being a prettydecent year. And that's what's going on
here in twenty twenty three, muchto the chagrin of many of the market
pundits, SMP five hundred up fourteenpercent year to date, now through through

(00:41):
the middle part of June here andJune being probably the best month of the
year. Next I had to goback and look at January. January is
a very good month as well,but in terms of the broad based nature
of it and how many different areasof the market are moving higher The whole
story for March, April, andMay was this is narrow, it's only
a couple of stocks. It's justthe big bang names. Five stocks makeup

(01:06):
you know, half the return blahblah, But that those five stocks made
up most of the downturn as well. Right now June, you go into
June and everyone's saying, oh,it is still going to be really bad.
Wait for the recession, and nowthat's starting to peter out a little
bit with the Fed talk. Ifwe ended June here would be one of
the best Junes of all time,a couple percent away from the best June

(01:27):
of all time. Small caps areleading large caps this month, and that
certainly was a complete change from thefirst part of the year. Small Caps
are up over eight percent this monthand large caps are up six So we're
seeing that broad based nature this month, even though everyone said that that was

(01:47):
a problem. Interest rates have moveda little bit higher this month, so
the performance on fixed income is moderatinga bit as well, with the aggregate
bond indecks now only up one pointeight five percent on the year. So
the book said that bonds were ano brainer at the beginning of the year
and I don't want to say theywere a no brainer as part of a
diversified portfolio. If you had sixtyforty, you're certainly a lot happier about

(02:10):
your forty starting in twenty twenty threethan you were in twenty twenty two.
But to say it was a nobrainer to beat stocks, yeah, that's
kind of a silly argument based onhistory. Think about what people were saying.
Why wouldn't I buy the two yeartreasury getting four in a quarter.
Why wouldn't I buy the one yeartreasury getting four three quarters at the start
of the year. Why because inthis month you got that. Okay,

(02:32):
in this first half of the year, it would be hard not to have
doubled that return in the stock market. So why now look at the annualized
numbers? Right, we wrote itdown at the beginning of the year.
The obvious trade is never is usuallythe wrong trade. And one of the
obvious trades that everyone was talking aboutat the beginning the year was a two
year treasury. So we're not quitehalfway through the year. But once you

(02:54):
get to halfway through the year,the two year treasury that you bought at
the beginning of the year would beup two point one two percent, the
SMPS up fourteen, right, sowhy not because you're up fourteen now six
months through. They only take youseven, seven or six month periods like
that to get back to even onthe fourteen that you missed out on in

(03:15):
the first six months, with anyonesaying, you know what, the two
year of treasury might be. Okay, but let's wait six months and if
you're up fourteen, go ahead andstep aside. No, of course not.
Now they're all changing their tune.Now that the FED is done and
the market is up this much,you're having a lot of people say,
okay, maybe not a recession yet, but maybe a recession later. But
still wait, wait, wait,wait to get invested until we see this

(03:37):
recession. And that's everybody on TVafter the FED meeting. It's everyone and
also contradicting themselves. I sat writingdown all of the contradictions post FED meeting
that I heard and for those whoare not following it that closely, this
was a week with a lot ofnews. Tuesday we had the CPI number
come out. It was four percent. Okay, eleventh straight down month,

(04:00):
four percent. Eleven months ago wewere at nine. Now we're at four
the monthly was point one the threemonth average is two percent, the six
month average is three point four percent. So inflation is a story that is
going away, and so is theFed. On Wednesday, they meet and
say they're not going to raise thismonth, but they still want to talk
tough, so they project out acouple more rate hikes at the end of

(04:23):
the year, and they're leaving itup in the air for July. Well,
that spooks everyone and says, well, geez, they think inflation is
not done. No, they justdon't want everything to go crazy. They're
not going to say we're done.Don't listen to us anymore. They're just
talking a tough game. And whetherthey raise or not at the end of
the year, that's seven months downthe road. They might need to they

(04:43):
also might not. But everybody comeson TV and says, you can invest
when the Fed raising rates, Andhere they just said they're going to raise
rates a couple more times, sowe'll just wait don't invest. And they
were saying don't invest at the startof the year. They were saying we
were going to have a negative return. And we have listeners that watch TV
and call us and say, hey, I'm hearing a lot of talk about
a recession. I think we shouldbe worried about that. You know what

(05:03):
I heard, Yeah, you knowwhat I heard. I heard get everything
out of the market. Well,then the last month, you know that
that was only up six and ahalf percent year to date. In the
last month it's up six and ahalf percent. Small caps are up about
the same and in the last monththey're up that full amount. Half of
the return for the NASDAC this yearis in the last two months. Half

(05:24):
of the return for the SMP isin the last month. So had you
listened to them that are saying wait, wait, wait, you would have
missed out on these great returns.And missing out on the best month of
the year in and up year canbe pretty detrimental to short, medium,
and long term performance. Is whatwe need to avoid. If we're going
to be taking profits, we're goingto do it and reinvest into something that's

(05:46):
underperformed it's long term average, orwe're gonna step aside because we've overextended it
in the last nine months. We'vegotten a little bit more aggressive and we're
just going to pull it back towhere we started last year, or where
we were maybe at some point intwenty twenty, but not an all in
and all out so on FED Day, these are the sorts of things that
you're hearing if you're watching TV.One expert was saying, there's just not

(06:10):
a lot of precedent for a softlanding. Well, there actually is.
There's as many soft landings as hardlandings, and most of the recent FED
interventions where they're raising rates most aresoft landings, including the last one at
the end of twenty and eighteen.They stopped raising rates and we didn't have
a recession in nineteen. In fact, twenty nineteen was one of our best
years in the last decade, sothe very last time they raised rates,

(06:32):
we had a soft landing. Andyet experts on TV will tell you there's
just almost no precedent for a softlanding, even though most of them are,
and no one calls them on it. So if you're listening, you're
saying, cheez, I guess Ibetter. It would be worried that the
Fed's going to keep raising rates untilthey break something. Now they're not.
They did break something and it wentaway already. They broke the banking system.
We had three of the biggest bankfailures of all time happen, and

(06:56):
yet here we are up a lotthis year. We got past that was
March twenty third of that was happening, and here we are three months later,
up a lot. What else werepeople saying. They're saying, now
everyone agrees that the Fed's gonna skipis only skipping and will raise later,
okay, But they also all agreethat we're going to have a recession.
So now everyone on TV post FEDrate hike is saying, yes, I

(07:19):
think they're gonna raise at the endof the year, but I also think
before the end of the year,we're gonna have a recession. Now,
those two things don't go hand inhand. Either we're not going to have
a recession and therefore they can raisebecause inflation is going to stay hot,
or we get a recession and they'renot going to raise rates. But now
everyone is in agreement that these twoopposites are going to happen. That the

(07:40):
FED six months from now is goingto raise rais. I don't know where
this. The FED raises rates alwayscause there's never a soft landing. You
mentioned twenty okay, let's let's lookat them. You mentioned twenty eighteen,
Okay, there was a soft landing. People say, oh, what about
the COVID recession that was two yearslater. Yeah, there was a soft
landing. Okay, So you hadtwo thousand and eight, you got okay,

(08:05):
you could call that a hard landing. Of course. Then you have
twenty eighteen that you mentioned, Brad. Okay, so now we're one to
one. Yeah, okay. Innineteen ninety four, that was the most
mild recession of all time. Theycalled it a recession, but it was
about a three month recession, andit kicked off the largest returns for a
five year period of all times.FED doubled rates, more than doubled rates

(08:28):
from two and a half to sixpercent in nineteen ninety four, and it
kicked off one of the best periodsever for stocks. Then in the late
two thousands, okay, they raisedrates and there was a recession. All
right, what's the score? Twoto two? Right? Two to two?
How about in raising rates in thelate nineteen nineties, went into the

(08:48):
nineteen ninety recession. Okay, Nowwe have three hard landings too, soft
okay, Well did they mention thatin from nineteen eighty two? Brad from
Choose Me from nineteen eighty read innineteen eighty five, the FED raised rates
consistently for that three year period oftime, and the market double Nope,
nobody mentions that. So now threeto three is the score nineteen eighties when

(09:11):
they were trying to stamp out inflation. That was a hard landing. And
there's and you looked at that oneas saying that. So there's no rhyme
or reason to the Fed raising ratesand it causing a hard landing or soft
landing in the economy. There justis. That's the that's the new consensus.
And will they have to raise ratesif we bounce a little bit higher.
But right now, the next monthis projected to be three point one

(09:33):
percent on inflation because we're dropping offa big number from a year ago,
and we're going to bounce around inthe threes for a while. Unless we
get a three month trend where ourannual number is going into the fours and
beyond, they're not raising rates again. Now. I actually think that we
will get slightly above four and theymay raise one more time. But why
because I think that it'll be inconjunction with pretty solid employment numbers, and

(09:58):
because the employment base is changing.People are are not quitting jobs to go
make a ton more money anymore.That's starting to go away, and so
productivity is going up, earnings aregoing to start to pick up. And
if that happens and the stock marketfollows them, the FED can actually go
a little bit further without hurting anything. And I think they will, but
it's not going to come until NovemberDecember, So you got a long time

(10:22):
to be out of the market andmiss out on big days and weeks like
we saw this week. Here's acouple other things they were talking about.
I turned it over to Fox Businessjust to hear what somebody else is saying.
And Charles Payne has this woman onfrom the conference. Conference Board surveys
key findings from May. Now,this came out at the end of May,
right before a period of time wherethe stock markets up six percent in

(10:43):
a three week period, and everythingthat they came up with was negative.
That there were gonna be all thesenegative things. Basically, the economy is
going to have further headwinds because ofinflation, the consumer is going to start
to dry up because of X,Y Z, all of these negative things.
He caller on it to say,hey, kind of miss that one.
No he says, Wow, youguys have been dead on. I

(11:05):
guess we should all be worried.Well, this came out in May,
and if everyone had followed along,they would have missed out on the rally
that we've gotten. Now. Theydidn't say not yet, stay invested and
later down the road you can getout. And that's not what the recession
people are talking about. They're nottalking about, hey, recession in a
year, staying fully invested until then. No, they're saying the market's gonna

(11:28):
go down. The recession's coming rightaround the corner. And it's all these
doomsdays. Last one. Turn itback to CNBC and two of the experts
on say, the Fed dot plotnow says three percent inflation for the next
decade, not two. And theexpert says, geez, three percent inflation,
that'll mean that prices are going todouble over the next ten years.

(11:50):
No, it doesn't even with compounding. Three percent for ten years is just
shy of thirty five percent. Twopercent for ten years is just over twenty
two percent cumulative. So that wouldmean your five dollars big mac is going
to cost six seventy five and tenyears instead of six and eleven cents,
so not a double. So theseare the experts that we're having to defend

(12:13):
against a lot of times when I'mtalking to man on the street, when
I'm talking to clients, when I'mtalking to prospects, they don't know what
they're talking about, and the trackrecord is horrible. But because they're on
TV, they are the air quoteexpert, and I think we need to
be aware of how bad the trackrecord is. Well. Morgan Houser from
the Psychology of Money Brad said,most of the pundits on TV who scream

(12:37):
about unprecedented times forget that there isactually a precedent for what they're talking about,
and that couldn't be more true thanthe environment we're in right now.
Unprecedented, this unprecedented, that we'venever had so much political turmoil, We've
never had this much inflation, We'venever printed this much money. Sure in
absolute terms, but for example,if you as a pretender to GDP,

(13:01):
we printed way more money during WorldWar Two, how did that work out?
Well? The nineteen fifties are stillthe greatest decade ever for the for
the for investment returns for the SMPfive hundred, pacing even the nineteen nineties.
So it doesn't feel good. Theword debt and all this money we're
printing doesn't feel good. But Istill have yet to see an example in

(13:24):
the United States of America where someoneshould have buried a hole in the backyard
and put all their possessions there becauseof the money we're printing. We printed
money in the nineties, printed moneyin the eighties. I mean, you're
gonna wait for a budget surplus.We've had two, yeah, and I
think they lasted one twelve months andone eighteen And by the way, each

(13:46):
budget surplus we had, one wasthe late sixties, one was nineteen ninety
nine. They were the end ofa rally. Was that a good time
to invest? Right? So let'stake a look at the context, the
precedent for which we're seeing for theSMP five hundred right now. If we
are more than eight months eight monthsor more, which is what we are

(14:07):
from the bear market low and uptwenty percent or more, one year later,
the stock market has been up twelveout of thirteen times by an average
of eighteen percent. Okay, soone year from the point that we're basically
at early this week. Only timeit didn't work was after nine to eleven.
Okay, this goes all the wayback to nineteen fifty. Excuse me,
this goes back to the world WorldWar two. Excuse me. The

(14:28):
only time it didn't work was afternine eleven there was a twenty percent rally
and the market went on to makenew lows. I would argue that a
terrorist attack that hit the Twin Towers, which for a brief one week period
of time, sent the market lower, and then it had a twenty percent
rally. It's not really something thatyou can game out for future returns on

(14:50):
the that's sort of a unique event. And I know the market, the
economy, and the market is fullof unique events throughout history. A little
bit of a unique event there everyother one besides nine eleven, twelve months
later. The best return this isafter going up twenty percent. After many
people are out there right now Brakingsaid, oh, we went up twenty
percent, that's the top. Yeah. Tops don't happen underneath all time highs.

(15:13):
Tops happen at all time hies.You just don't know when they are.
But if you look after going uptwenty percent, okay, after going
up twenty percent from a bear marketlow, there's only one that was lower
in a year, and that wasnine after nine to eleven. The worst
was two point two percent after nineteensixty seven. The best is forty nine
percent, forty nine percent after COVID. Okay, if you want to call

(15:37):
that one unique, look at afterMarch of two thousand and nine, one
year later, up forty two pointseven percent. The average return twelve months
out is eighteen point nine percent.I mentioned that earlier. So many people
are that I've been seeing are saying, well, we're up twenty percent from
the lows. That's the end.That's it. That's what I've been calling
for, even though that same personhas been calling for a recession and a

(15:58):
downturn and a and a return tothe to the bottom. And the returns
one year later, Brad are evenbetter when there was no recession, When
there was no recession that accompanied thatbear market, the returns one year are
even better. How about the durationwhen you look at the amount of return

(16:18):
that you get once you hit abull market, So there, like it
or not, they say a bullmarket's twenty percent up. Okay, bear
markets down. It's very arbitrary,but at least gives you something to look
at. Data on Okay, ifyou look at the average bull market,
that is, after going up twentypercent, on average, the market went
up another forty months, So justshy a three and a half years and

(16:41):
on average it went up another hundredand thirty percent until the eventual top.
So folks saying that this is thetop, we could have a correction,
market go down ten percent next month. It could. You could have a
correction. But if you're looking forthe ultimate, this is the end.
Going up twenty percent first and thenhaving some sort of correction is not a

(17:03):
signal of the top. Anybody's sayingthat is wrong. When we get back
from the break, Brad, Iwant to look at all these Wall Street
strategists. They're on TV, they'rein the Wall Street Journal all the time.
All the ones I'm talking about arechanging their tune now that the Fed's
done. And yet they get tocome out and say one thing on January
first, and then chase the marketfor their clientele throughout the year even though

(17:26):
they were wrong. Maybe they getto the end of the year and they're
eventually right because they just kept moving, kept moving the needle. So we're
gonna talk about that when we getback from the break. You're listening to
money Sense, Kevin and Brad Kurstonwill be right back and welcome back to
the show. You're listening to theadvisors of Kursten Wealth Manager Group. Kevin
Kursten and Brad Kurston happy to bewith you this morning. As a reminder,
we are professional financial advisors and ouroffices are in Perrysburg. If you

(17:48):
want to give us a call throughoutthe week to review your own financial plan,
whether you're just getting started or you'rein retirement or preparing for retirement,
give us a call for one nineeight seven two zero zero success or check
us out online at Kirsten Wealth dotcom. Brad. The headline here from
Ben Carlson. I read a littlebit of him last week. He writes
a blog called a Wealth of commonSense. Says, this is why you

(18:11):
stay the course. What's going onthis week? This is why you stay
the course. UM call it recencyor loss aversion or some other bias.
Our brains are hardwired to assume biglosses will be followed by more big losses.
Yep, and big gains will befollowed by big losses. Right star
markets going up, It's gonna godown. Star room is going down.

(18:33):
It's gonna keep going. I thinkthere's I think there's a crowd out there,
Brad that that think when it's goingup, it'll just keep going up
forever too. Well, it depends. Yeah, you know what it depends
is are you in or are youout? Right? If you're out,
you think the up is going tobe followed by down and all get right.
If you're in, you never thinkit's going down, right, which
your positioning in the market has zeroeffect on what it's going to do.

(18:55):
Yeah, it changes everyone's opinion.The thing about big losses in the stock
market is sometimes they are followed bybig losses. It can be then the
market goes down fifteen percent, goesdown another fifteen percent. Sometimes, in
fact, often they're followed by biggains. Every double digit down year for
the SMP back to nineteen twenty eight, along with the ensuing returns the following
year, here's what we had.Here's what we looked at. Okay,

(19:15):
if we had a double digit loss, we had one, two, three
times where it went down the nextyear. That was O one. I
mentioned that earlier nineteen forty and nineteenthirty. So since nineteen forty, Brad,
there's only been one time, onetime since yep, excuse me,

(19:36):
seventy three as well seventy three twotimes seventy three and seventy four one or
two since nineteen forty. Now tostart the year, was anyone saying that's
eighty years. There's very little precedentfor back to back negative years. No,
what most people were predicting is backto back negative years, even though
there's only two times since before WorldWar Two that it had even happened.

(19:56):
Let's look at the bounce back yearsand what they were after a double digit
down yere in the stock market twentynine point three, nineteen point two,
forty three point seven, thirty seven, twenty eight point four, twenty five
point nine. There's just not thatmany. There's not that many double digit
down years. So it's not afoe gone conclusion that stocks would rally this
year as much as they have withthe SMP up almost fourteen percent. It

(20:18):
could have gotten worse if inflation stayedhigh, or the FED broke something,
or we went into a recession.Regardless of the outcome, there's a good
lesson in the power of staying thecourse as an investor in the last two
years, staying the course was theright move. Is the right move,
whether stocks created even more or tookoff like a rocket ship, staying the
course was still the right idea evenif we went down even further. Okay,

(20:41):
why because what's the alternative? Tellme what happens next? Well,
good luck with that. Even thepros, the smartest guys in the room,
as the title of the Enron show, right, smartest guys in the
room have no idea what's going tohappen next. And this year is a
perfect example of that. The sixteen biggest Wall Street firms at the beginning

(21:02):
of the year, Okay, where'sthe SMP almost at forty I'm talking about
Morgan, Stanley, UBS, CityGroup, Bank of America, Goldman,
Sachs, HSBC, Credit, Suezwhich is now defunct, JP, Morgan,
BMO, Wells Fargo, Deutsche Bank. Only one of the sixteen even
had a level close to forty fivehundred, which the SMP is getting close

(21:25):
to today. Okay, and herewe are, we're not even halfway through
the year, and the most bullishon there, we're already there. We're
within a percent and a half ofthe most bullish prediction five and a half
months into the year. So allof these and one of them is a
is a bankrupt bank. Okay,So these are the experts that we're following

(21:47):
that that somebody is going to say, you know what I heard, I
heard, you know, Credit Squeezesay that the market's going to go down.
Oh well, their bank went down, So can we stop following them?
So these these Wall Street forecasters,Brad, they're not waiting around to
see if those original forecasts Pana.That's the other thing too. Six months
go by and you're gonna now you'regonna change. Yeah, at least everybody's

(22:10):
raising their their their projections for theend of the year. Hey, just
at the right time. Huh whatif we go up do then we come
back down? How does that helpyour clientele? By the way, yeah,
how does that help your clientele?Uh? Just recently, Goldman Sachs
went from four thousand and forty fivehundred, Royal Royal Bank of Canada forty
one forty two fifty, and Bankof America four thousand to four thousand,

(22:33):
three hundred. So so these areall below the level that we're at today.
Okay, So how is that helpfulto your client. When it was
at thirty six hundred, you weresaying, no, it's gonna go further,
there's a recession coming. At thestart of the year, you were
saying four thousand, Okay, Ithink the market will be flat for the
whole year. Now that it's upseventeen, you're predicting that it'll go down

(22:53):
by three. I just don't understandthe point of all this. Could one
investment come out and say, wedon't know and we're not making predictions anymore.
Okay, stay for the long term. Okay, that'd be great.
Why don't we talk about history.Okay, we just had Why don't they
come out and say, we justhad a negative year. The likelihood of
a negative year is not zero butpretty but much closer to zero than it

(23:18):
is one hundred percent, And noone talks like that. What they do
is just follow near term. Whateverdid well the year before is going to
keep doing well this year. It'sjust going to be you know, energy
stocks did well. We like energystocks. Tech stocks are doing well.
I bet everybody likes tech stocks now. So it's a follow the herd mentality
with every single one of them.There isn't a single investment firm out there

(23:41):
that's one of the big ones thatis doing anything other than having their compliance
department write their prediction. I wantto I want to cover my butt and
make a basically a non prediction prediction, and if it doesn't go my way,
I'll change it. Nobody will callme on it. No, no,
And I mean some of these areso bad that they're they're wrong every

(24:03):
single year. When the market goesway up, they think it's gonna go
up even higher. When the marketgoes down, agin it's gonna go down
even lower. And so this isnot We don't sue off. We don't
share this to poke fun at WallStreet. The point is it's impossible to
predict on a one year basis.They should all stop doing it. Of
where the market's going to go.When stocks fall, our emotions make us
think that they're going to fall further, and the smartest guys and girls in

(24:26):
the room are no different. Whenstocks rise, our emotions believe they're going
to rise even further. This iswhy you have to have a plan and
you have to stick through it nomatter what the conditions of the market is.
Okay, we put this plan togetherfor a client, Brad. Right,
it's designed to weather any storm,and it's designed to do pretty good.
When the market's doing well. Okay, then you get the storm,

(24:51):
you say, abandon everything, right, No, we we already. It's
also designed for when the storm comes, we have a little dry or to
add to the most beaten up areasin the market. And when things look
frothy and everyone's uphoric, we're pullingback. So we're getting more conservative.
That is the plan. And everyonenods their head, yes. But in
the moment when everything's going up andwe're pulling back on the riskiest parts of

(25:15):
the market, the ones that areup the most, and I'm having a
conversation with someone about it, mosttimes they're not saying that's good. I
was thinking the same thing. Mosttimes, what I'm hearing is, Okay,
I know you pulled a little bitout of the stock market, but
what about this individual stock that's wayup? What about cryptocurrencies? What about
x ys? What about spacks?What about IPOs? No, I'm telling

(25:36):
you there's froth in the market.That's we're avoiding all of that, right,
And Ben Carlso goes on to say, talk about what staying the course
actually means because people, you know, it's kind of a buzz phrase among
financial advisors, But what does itWhat does it actually mean? Okay,
staying the course means going against yourown emotions. Staying the course means thinking
and acting for the long term,even when it doesn't feel right in the

(25:57):
short term. Staying the course meanspreparing yourself and not predicting anything. Staying
the course means doing nothing if that'swhat your plan calls for. Doing nothing
is hard work. Denny always saysit. Don't just do something. Stand
there. When it comes to investing, markets are constantly tempting you to make
changes just for the sake of makingchanges. And he goes on to say,

(26:19):
there's a parable about a locksmith whohad a tough time picking locks when
he was just a lowly apprentice learningon the job. He would have to
use all sorts of tools, andit took him a long time to open
doors when people locked themselves out ofcars and homes. But people saw him
sweating it out, and the effortwas so evident that they tipped him well.
As he slowly but surely learned thetricks of the trade, he was
able to pick locks quicker with muchless effort. The problem is his tips

(26:42):
went down because he got people intotheir vehicles and houses much faster. He
made it look too easy. Goodinvesting is harder than you think, and
it can be easy if you cancontrol your emotions. So intelligent investors realize
the effort is awfully inversely related tothe results. Just because you do more
or try harder, the market's goingdown, I gotta do something. No,

(27:07):
we prepared for this. It's partof your plan. And especially on
the downside. You know, Iequated to someone putting up storm doors after
the hurricane or has already gone through. Okay, we prepared for that.
You already went through it. Nowwhat's next? Okay? And it's not
about what's next? Tell me wherethe Dow is going to be in a
year. Clearly, no one cando that. When we look at all

(27:27):
these strategists, for we had alot of people ask at the end of
the year, what are we goingto do about this recession they're talking about?
And I guess it's a good thingthat they didn't think that they were
in the in the middle of adownturn, because they weren't down that much.
And I had to tell them thatwe just had the fifth worst calendar
year of all time, and it'sit could be over with and you didn't

(27:48):
even know it even started yet.So it came with a handful of adjustments
last year and now one more insome cases two more already this year.
But all of those are against thegrain. It's to buy things nobody wanted,
starting June of last year and continuingon until March of this year,
the most beaten up berries in themarket, getting rid of the things that

(28:11):
had held up the best. Andso I think all of it is perspective,
whether you're following a lot, oryou're in or you're out. But
let's take our next pause, andI want to talk about two different sides
of the market. And I don'tknow which one we're in, but one
side it thinks we're in a winterof despair and the other side thinks we're
in a spring of hope. AndI think if you're in or you're out,

(28:32):
it changes your perspective. So well, I'm gonna read a little bit
of what the winter of despair peoplethink and what the spring of hope people
think, and I think both allof our listeners can neither your head that
you don't know because all of thesethings could be true or are true,
but we just don't know. Soyou stay invested, stay diversified, and
if anything gets a little too heatedin your portfolio, you don't just ride

(28:55):
it into zero all the way upall the way down. You trim back
some of the gains that a littleexcessive. I have to I have to
maybe add one thing here. Ifyou're in a diversified portfolio or an index,
Okay, there's no writing it deserno, okay, no, people
think that might happen. That ison individual stocks only. Yeah, yeah,
right right, which we don't ownany of the portfolio I'm talking.

(29:18):
Yeah, I'm talking about somebody who'skind of winging it on their own and
they they caught X y Z stockat the bottom last year and now it's
up two percent, and they're like, great, if I just compound this
for the next ten years, youknow, I'll have millions. Well that
that is not investing. That's gambling. So let's take our next pause.
I want to talk about kind ofthe two sides of the market right now.

(29:41):
If you're listening to money Sense,they advised a curse and wealth Management
Group. We'll be right back andwelcome back. You're listening to the advises
a cursed to Wealth Manager Group.Braddon Kevin here with you. If you're
out of town ever and want tokeep listening to our shows, make sure
you tune in on our podcast.The new ones usually sometime during the weekend
we'll post and any of the oldones Jimiss. You can just google our

(30:02):
name, Kurston Wealth on wherever youlisten to your podcast and find any of
our shows. Kevin talking about thepsychology of investing here and how people are
feeling about the market. I thinkthere's a lot of confirmation biased out there
with what people are searching or keeptuning into TV stations that are agreeing with
them. And if you're somebody thatis negative on the market because you got

(30:23):
out, or you're negative on themarket because you've never been in, you
might be the people that are lookingfor someone to say we're in a winter
of despair. High interest rates,debt, overhang, money supply. A
lot of talk about money supply.I don't think anybody even knows what any
of it and how it affects themarket, but a lot of money supply
talk, commercial real estate time bomb. That's the headline I'm seeing pending corporate

(30:47):
earnings blow ups, even though earningsare starting to go up. Feel we
could add in Ukraine and Taiwan worries. If you're a Trump voter, you're
worried about Biden. If you're aBiden voter, you're worth about Trump.
It doesn't matter. There's all thesethings to be worried about. And these
are all the people that are justwaiting for any of these time bombs to

(31:07):
hit the market, because one ofthese is going to be really detrimental to
the market. Or you're somebody thatrealizes that inflation and rate increases look like
they're probably over with and or atleast near the end, a lot nearer
the end than the beginning. TheUS is probably a safe haven compared to
the rest of the world. Whitecollar layoffs and blue collar labor shortages are

(31:32):
starting to end. Banks have stabilized. We had failures, but now it
looks like that there's a little stabilizationthere and interest rates to come down,
so it should help them. Arestructuring of the workforce might happen, and
ai might be open the door forproductivity revolution, and that could also help

(31:52):
some of the labor shortages. Thosepeople would be in the spring of hope
category and ones that think, well, I don't I don't see this coming
to an end anytime soon. Bothcould be right, both could be wrong.
But you're searching for anyone that agreeswith you, especially if you're out
of the market, because now you'researching for somebody who says, yeah,

(32:13):
no big recessions coming. You're sosmart to be out, and if you're
in, you're the spring of hopepeople, and you can't find anything wrong
with the market. Now you thinkit's just gonna keep going forever. Okay,
a little bit of both somewhere inthe middle, just like our politics,
right somewhere in the middle is probablythe truth and a lot of these
things. I think there's more stillworry in the market than there is hope

(32:34):
in the market. But as itstarts to change and you find no one
worrying about the market, you shoulddefinitely be worried. Okay, when we
have too much euphoria and no oneis saying anything bad about the market,
you know, think end of twentytwenty one, that's the time to really
be worried. What do we haveright now a little bit of a sea
change where people are starting to say, oh, maybe the market's gonna go
out for a little while, mayberecessions not gonna come around the corner.

(32:55):
We're starting to see a little bitof that, but it's not the consensus.
There's still more negative out there thanpositive. And the next one we're
going to start to hear about isall the presidential election worries. We need
to be worried about Biden, weneed to be worried about Trump, we
need to be worried about Republicans whothey put it in aus Democrats. It
doesn't matter. You're gonna turn onthe TV and everyone's going to tell you

(33:16):
should be worried. Even this year, we were supposed to be worried about
the presidential election cycle, and mostpeople don't even know what that means for
the stock market. Every year,if we go all the way back to
World War Two, every year inthe presidential cycle is positive. Now the
worst one is the midterm election year, the one we just came out of.
Market's only barely positive. If welook at the batting average fifty two

(33:37):
percent of the time, it's positiveforty eight percent of the time, it's
negative. The average return is fourpoint six percent. That was our negative
year. We just got it.Now. The third year, the year
we're in right now, is thebest for the presidential cycle. The average
is sixteen point eight percent, andthe market is positive eighty nine percent of
those years. However, for comingoff of an get a year, every

(34:00):
third year in the presidential election cyclegoing back to World War Two, every
single one coming off of a negativeyear is positive one hundred percent of the
time, and the average return inthat third year is twenty four point six
percent. So if you were worriedabout the presidential election cycle, you should
have been fully invested for this yearand you should probably stay that way now.

(34:21):
Next year, the batting average iseighty three percent in that election year,
and the average seven point three percent. So anyone telling you you should
be worried doesn't understand that the marketis mostly positive, you know, seventy
two percent of all years, andthis presidential election cycle shouldn't matter at all,
and it also shouldn't matter who getselected. Now, where the market

(34:42):
is before the election tells me ifI want to be bullish or bearish,
if we're up twenty more percent thisyear, and twenty percent before the election.
I don't care who gets elected.I'm gonna be a little bit negative
on the market if we're not upat all from now until election day.
I don't care who gets elected.I'm gonna be pretty positive that the marke
it's gonna see it as a positivethat we have the election out of the

(35:04):
way and it has held off onmoving and now now we should have the
wind at our back a little bit. So I think there's always a lot
of talk about presidential election cycles.There has been a lot of talk about
the FED, and I think it'sgonna start to go away, but there's
always something somebody's worried about. We'renot talking about death ceiling anymore, and
we're probably not going to talk aboutthe FED too much the rest of this

(35:24):
year, so we're gonna have toeveryone's gonna have to find something else to
worry about. And I'm just warningeverybody it's probably gonna be this election that
everyone will dub the most important ofour lifetimes, and the market won't care.
That's right, Brad and I wantto get a little bit more political.
In the last segment, take ournext pause. You're listening to money
sense, Kevin and Brad Kurston.We'll be right back and welcome back to

(35:46):
the show. You're listening to theadvisors of Kurston Wealth Manager Group. Kevin
Kurston and Brad Kursten got our lastsegment here. Brad, I want to
you mentioned the next thing, right, because the inflation talk is subsiding.
The debt ceiling came and wind.Like we said, the bank failures came
and went. The bank failures cameand went because they were very small banks.

(36:08):
The next thing will probably be thepresidential cycle. And you know I've
changed a little bit over the yearson what you're looking for and what you're
not looking for. I was justgonna maybe have a little back and forth
here and ask you in terms ofin terms of policy by itself. Okay,
what types of things are at thetop of the list for you?

(36:31):
Low taxes, less regulation, lessregulation, right, anything that can make
companies make more money so that thestock market goes up. That's I mean,
everyone's biggest asset in retirement should bethe retirement portfolio, if stocks and
bonds or the makeup of that.How should why should you not care about

(36:52):
lower corporate taxes and less regulations sothat companies can make the most amount of
money, so that your portfolio canmake the most growth policies as well keeping
the capitalist system in place. Allof those things can be accomplished with a
lot of different people. It isTrump the only one. In fact,
Trump has a lot of antigrowth policies. I hate to say it, the

(37:14):
whole tariff on China plan. Yeah, that is not a pro capitalist policy.
It isn't Buy America. Everyone's likebuy America, Buy America. Buy
America is great for jobs, butit's not great for profits if a company
is hamstring to buy a more expensiveAmerican good. Or was a Build America,
Buy America Act that was part ofthe one point two trillion dollar infrastructure
signed by Biden. Trump probably likedit, He wouldn't say liked it because

(37:37):
it was Biden's idea. But whenyou look at these buy America programs,
Brad that you talk about a studythat was done that said that these requirements
are equivalent to a twenty five percenttariff or a five to ten percent increase
on the prices to consumers. Okay, So, and in fact, if

(37:57):
you look at the jobs themselves,then that jobs because you might gain some
jobs in one area, but you'regonna lose others because cost of goods go
up so much. Okay. AndPeterson Institute study estimated that over three years,
this current Buy America plan that's inthe in the Biden infrastructure plan is
a three hundred thousand net loss.Now that's not a lot in our economy,

(38:21):
but it's a three hundred thousand netloss overall as a result of Buy
America. So Trump has some ideasthat certainly he would have support the buy
America thing because that was one ofhis big campaign things. But people act
as if Trump's the only person thatcould have some of those ideas that you
have. Now, there's the ideasthat you want, there's the things that
you want, But then there's alsobeing a smart political person, okay,

(38:45):
which I think a lot of thesepeople don't get smart in what you're promising
even though you know you can't doit or be smart. And let's talk
about what you can actually accomplish.Do we need to make a big change
to soul security to make sure it'ssolving Yes? Should the word social security
even come out of your mouth whenyou're when you're running for when you're running
for office. No, never,No, there is no upside to even

(39:07):
saying the word social security. Correct, right, And I would make the
argument that until you get elected toyour second term, um, you shouldn't
talk about it now. Once youget elected your second term, go head
on and make it a plan thatchanges the age. But but don't touch
anybody over Probably forty five is theyounger, the oldest person that should be

(39:30):
affected. But make a bold changeon it so we don't have to talk
about it anymore. That's what theydid in nineteen eighty one. It was
forty five year olds that were affected, and nobody care. You can't utter
the words no, no, youcannot. The other part of the political
season I think is so important thatpeople don't understand is the concept of winning

(39:51):
winning being important, like not winningyour primary, not winning your party's nomination,
but the concept of winning the presidency, Like that's the first goal and
everything should lead you toward that,and then you want to sort out the
policy differences within your party, sortthat out later. Okay, Number one
should be winning, And in thisday and age of alternative intelligence and data

(40:13):
analytics, you should be able tolook at the numbers and say and see,
I'm sorry, Donald Trump can't win. Yeah, he cannot win.
How about Mike Pence, who justannounced this week they should be able to
do the polling and know exactly thatMike Pence can't win because he's not going
to get any swing voters. There'sno Democrat voting for Mike Pence. I'm
sorry the world, you're not gettinga swing voter vote for a guy that

(40:37):
looks like Mike Pence. Sorry,he's a robot. I saw him on
TV yesterday, Mike Pence. Okay. And by the way, the fewer
the candidates, we have the betterchance that the Trump will lose. But
Mike Pence is a complete robot.Okay. I saw him on CNBC,
CNN, and then he was onthe Clay Travis, Clay and Buck Show.
He repeated the same four sentences aboutTrump and up saying, you know

(41:00):
these are serious charges. You knowthese are serious charges, and we have
I think you're saying it with alittle too much, too much inflection.
He's he's not he's not giving eventhat was like he was reading it off
of paper. Okay. He isone of the most unlikable people among the
general pop He's like, Oh,he's a nice guy. He's got a

(41:21):
family that you want to talk abouthaving zero chance at winning, it might
be less than zero. Yeah,okay, who else is in the who
else is in the mix? Well, a good one just entered this week.
I don't know if you saw this, but the mayor of Miami,
uh, Francis Suarez Latino Miami bornhis I think his dad was also a
mayor of Miami. Um, goodlooking guy, Latinos. So we can

(41:44):
get some swing votes. Probably hasn'tbeen around long enough. Probably not.
I think he's forty five years old, but the name recognition isn't quite there
yet. It isn't However, Florida'sa swing state. He can definitely take
Florida, and Florida's more red thanit's ever been. I agree with that.
Not only is a popularity contest though, but it is. It is.
There's a lot of people that arevoters who don't know any politics at

(42:07):
all. He is certainly a moremiddle of the road Republican just because of
where he is. I don't thinkthat. I don't know much about his
policies, but I'm sure he's notyou know, far right wing right.
The other thing about winning is nominatesomeone for vice president that can help you
with a with a state, witha state you're not gonna win, or
that is a swing state, SarahPalin Alaska. We were gonna take Alaska,

(42:30):
every right, and it's one whatis that? One or two electoral
votes? Okay, Mike Pence,Indiana always goes red. Who cares?
Who does Mike Pence help you with? Now? They're like, well,
Trump's a philanderer, and and andso Mike Pence with the family man helps
you want to talk about you needto get if you want to be a
candidate like someone who wins convincingly.Reagan one convincingly. Okay, Obama one

(42:58):
convincingly. You want to be acandidate Clinton one convincingly the second time around?
Okay, you want to be acandidate that wins convincingly. You don't
do it by squeezing the turn upof your own party. You don't.
Yeah, you do it by gettingten percent of the other party and the
only one. You know. It'sfunny to me, Brad, because so
many Republicans will go on TV andthey'll long for remember the old days where

(43:20):
there was all this compromise. TipO'Neill and Ronald Reagan. They all got
together and they compromised. And thenwhen it comes time to compromise that you
know what they say, never acompromise. Well, you just told me
that you were longing for the nineteeneighties when there was all this compromise.
You could also run somebody that isthat is you remember the term slightly more
to the center, Remember the termremember the term Reagan Democrats. Right,

(43:45):
but no, everyone talks about it, but they don't do the things that
are required. So when you lookat this list, you have a vec
smart guy, can't win, getout Chris Christie Is he in it now?
Yeah? Yeah, missed his window, that's all. People don't like
you. Yeah. Who else isin the mix? Uh? Well is
Nicky Haley in? I think NickyHaley and Tim Scott, both South Carolina

(44:07):
have till Scott very good, verygood. I mean hard to argue with
the way he handles himself. He'snot robotic like like Pence. Um.
Yeah, Nicky Haley. I don'tknow if there's enough name eric condition there.
I think that she always sounds goodwhen she's when she's out speaking um
and would would handle herself well ina debate um and then to Santis.

(44:29):
You know, you know, Ihope De Santis doesn't miss this window.
Well and if enough people bow outand back to Santis, de santist can
win. DeSantis did not get tosixty five percent of the vote in Florida
by squeezing every last vote out ofRepublican right. He got it because he
changed the minds of Democrats. Okay, Trump cannot do that. Yeah,
Now Democrats who hated him before hatehim even more now, right, Okay.

(44:53):
And the other one to watch outfor is Robert F. Kennedy Jr.
Is a junior. Yeah, Ithink Robert F. Kennedy junior taking
on Biden, which would be shocking. But he is a He has a
medical ailment that causes his voice tokind of sound a little strange. That
could be tough for him, buthe is very smart. He is anti

(45:14):
government. He is one of thefirst ones that pointed out all the issues.
Definitely anti vaccine, so he getsswing voters just because of his stance
on the vaccine at anti government.He's anti establishment, yes, okay,
yes, and certainly a much moremiddle of the road candidate than Biden.
Be interesting to see because you know, I talk about Republicans getting ten percent
of the Democrat vote in order towin convincingly. Robert F. Kennedy Junior

(45:37):
is one that could get some Republicans. He could get ten percent of the
vote versus any of these other candidates. And if it was against Trump,
he could get fifteen percent of theRepublican vote. So that would really be
an interesting one. And whether ornot, who knows. I mean,
we always talk about this. Ina perfect world, one of them would
team up together, like de Santisand Robert F. Kennedy Junior would team
up together. We always talk aboutthat, but it never happens. But

(46:00):
you can, you can drive theTrump train right into the ground. But
it's not going to happen, becausewhose mind is he going to change?
Yeah? Everyone who loved me forstill loves him. Everyone who hated him
still hate You're not changing any mindson Trump, yep. Okay, But
many people like Desantists who don't likeTrump, and many people like Tim Scott
who don't like Trump. There's afew of them in there, Okay,

(46:22):
Some some are some are completely ridiculous. Mike Pence, hopefully he's out soon.
He has no chance whatsoever. Buthopefully you get a decantist run.
He doesn't go and get Suarez asadvice. You get two people from Florida,
you're not doing anything, and we'llget another. What does a Trump
voter want? Are you that obsessedwith Trump? Or did you like the

(46:42):
policies of Trump? Did you likethe stock market and they and the job
market and the economy was humming?Do you like that? Well, that's
there's not a Trump's not the onlyone that can do that. There's plenty
of candidates who will give you allthe same policies without the drama. And
I think many Republican voters gotta haveto look at that and see what they
truly want. Thank listening, everyone, We'll talk to you next week.

(47:05):
You've been listening to Money since broughtto you each week by Kursten Wealth Management
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(47:29):
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