Kersten Wealth Management Group - Money Sense 6-24-23

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Episode Transcript

(00:00):
Good morning, and welcome to money. Since you're listening to the advisors of
Kursten Wealth Manager Group, Kevin Kurstonand Brad Kurston. Happened to be with
you this morning, Brad. Asthe market continues to hit a few milestones
here we mentioned last week getting overto the twenty percent threshold and having a
little bit of a pause and consolidationhere this week. But the longer you
go, and certainly we're big proponentsof looking at history, the longer you

(00:24):
go where not only this rally continueswithout going on to make new lows,
but even the levels from the lowof the market at its peak about a
week ago. Here it was atwenty four percent gain from the lows,
and a lot was talked about interms of time but also percentages off those

(00:45):
lows. In the number of timesthat happened in the market is twelve out
of thirteen when it goes up morethan twenty percent from a bear market low,
okay, in in a more thanthree month period of time. The
only time it didn't work, Imentioned was after nine to eleven, and
we've now even gone past that.After nine to eleven, the market went

(01:07):
up just over twenty percent, andnow we're at twenty four percent at our
peak, So more milestones hit andmore things in the rear view mirror.
The bear crowd still there, butit's it's really getting harder and harder to
see it in terms of how thiscompares to history and seeing the market going
back to make new lows. Yeah, so we're the bear crowd is dumbfounded

(01:32):
that we can keep moving up.Right, the bear crowd even right after
the initial rally, probably starting atSMP well to call it ten fifteen percent
ago, saying that's it, youhave to sell this market. They just
had a few on TV this week. But even this last week, as
the markets move just basically sideways areslightly down, you have things that are

(01:52):
doing a little bit of catch upand you're getting a little bit more broad
based rally. Healthcare and industrials upin the last week, utilities up in
the last week. Those are twothat that we're negative just just a month
ago on the year, and utilitiesare still negative on the year. So
things playing a little catchup. Butif we look at the three month return,
it we're almost at exactly the threemonths from when the bank failures happen

(02:16):
tomorrow will be the three month onthat. But growth since then up fourteen,
value only up four and a half. But the NASDAC qqs the NASTAC
one hundred not a recommendation or buyor sell that that's up over twenty percent
since those bank failures, and ourlisteners would know that we were getting rid

(02:37):
of some value and going to growth, and what we were using were the
nastacques the NASTAC one hundred for thatpositioning. That's the most beaten up area
of the market over the last yearand a half and so that still has
a long way to go to getback to the all time high, but
it has come further off the bottom. So I think the market is pretty
rational here and I think there's anot a lot of surprises if if you

(03:00):
do know history of the market.Now. The real news this week that
I think will continue to be themarket mover for the last few days here
we're taping this on midday on Thursday, is that the Bank of England still
fighting more inflation than they thought theywere going to have, raising another half
a percent overnight, and so Ithink we're going to continue to have this

(03:22):
push and pull of our, our, our what the dollar is going to
be doing, because we're going tobe backing off of rate increases and inflation
is already calming down and they're stillfighting it and happened to increase rates,
and there's a there's there's some economiesaround the world that are having to do
that. There are some that arethat are already that are still cutting,

(03:43):
like China because they had such alate reopening, so they're still in the
cutting phase for uh interest rates UH. And so that's going to affect how
the dollar is strengthening or weakening versusother currencies. And of course you're going
to have the doomstayers out there.I just saw a I think it's a
clip from about three or four monthsago from Glenn Beck that everyone is posting

(04:04):
again, and it's a it's aclip where he's he's saying, you know,
some people are calling for a recession, and this is always in his
somber voice. Smart people are callingfor a depression. Really smart people are
calling for a total collapse. Andthen he goes on to talk about the
dollar and it's collapse and it won'tbe the reserve currency and look at VENs

(04:25):
that goes back to the William O'Neillquote from a couple of weeks ago.
I've never met a wealthy pessimist.Yeah, well that the only the only
one maybe maybe is Glenn Beck.But he's profiting off of this doomsday or
mentality for the last two decades becausehe's selling ads for the solution to all
this uh what will be a collapse? And he's talking about Venezuela in this

(04:47):
basically, which is a talking ad. Could you get to the end of
this and it's like, okay,now we're going to go to a commercial
go by, go buy a bunkeror doomsday insurance. Well, and the
ultimate irony was somebody like him ishe's not a pessimist. He clearly believes
in capitalism. Otherwise he doesn't wantanything. If all that stuff that pans
out that he thinks is going tohappen, his whole business fails, right,

(05:09):
right, So the only people thatare the pessimists are the ones that
listen to him, not him himself, right right, There's just the ones
who listen to him. So we'regonna that'll be the increased talk for the
next I think three months. Asas we're pausing and other countries are still
raising, and probably before we raiseagain. You know, you and I
both think that the economy is goingto pick up. I mean, earnings

(05:31):
are are projected now for the fourthquarter to really spike, and so we
think that the federal raised towards theend of the year again. And so
until then, you're gonna have thistalk of wow, look at the weakening
of the dollar. Well, it'sit's just the inflationary cycles that are hitting
different economies at different times. Andif they're raising and we're done raising,

(05:55):
the dollar will get stronger. Yeah. Well, I mean you're we're weak
now. I mean, the theeuro to dollar was parody a back in
September and now we're at one ohnine on the on the euro. Uh,
the pound is is one twenty seven. I think the low point was
one ten, one oh five maybe, and that again was uh, that

(06:15):
was the end of the summer lastyear. I think September was the ultimate
low point for dollar versus UH,dollar versus the pounds. So no,
certainly, I mean the dollars,the dollars off of its you know,
off of its highs. Okay,But if we're in if we're in a
state we're not raising interest rates andthe rest of the world is is still

(06:40):
raising Yeah, still raising rates.I mean, I think the writing would
be on the wall for uh forthe dollar, and you know it a
lot of times because the market isso predictive into the future. And this
is what what all the Glenn Beckcrowd gets wrong. Because the market is
such a forward looking mechanism. What'sgoing on right now doesn't necessar sarely mean

(07:00):
that that's where the direction of thedollar will go. The technology and technology
related sectors point prove that point right. Earnings move the market. The last
two quarters were negative. The currentquarter that we're just coming out of here
was even more negative than the fourthquarter of last year. And so what

(07:21):
is the earnings expectations going forward?Slightly positive for the third quarter and the
fourth quarter this big spike the SMPfive hundred estimates now for the fourth quarter,
after all, the guidance from thesecompanies is eight point two percent.
What is the contributors to that.Communication services are thirty six percent increase,
consumer discretionarya is twenty one percent increase, and technology is twelve percent increase.

(07:44):
So everyone that's saying I can't believetechnologies up this much, they still have
problems. Look at the earnings multiple, Well, the market is looking ahead
at where third and fourth quarter earningsare and moving accordingly. And so what's
the worst energy negative twenty four forthe fourth quarter, materials negative one for
the fourth quarters all the only twothat have guided down and are negative for

(08:07):
the fourth quarter of this year.So not surprising that the market is looking
ahead at where earnings are going tobe and moving ahead of that. So
yes, by the time that itis news, it's old news, especially
when the market is is not justwith interest rates like we were talking about
before, but also with stock marketmovements. Is so forward looking. Brad

(08:30):
I like a lot of his informationhe puts out there. He used to
be worked for LPL and Ryan Dietrichhas a lot of good information out there.
He gets He gets the moniker ofperma bear, as if it's some
sort of negative thing. Excuse me, perma bull, permanent bull positive on
the market, as if that's somesort of negative connotation. Right, if
someone's a perma bear, that,oh that's that's a smart guy. Yeah,

(08:50):
Well, market goes up seventy twopercent of the time, So I'd
rather be accused of being a permabull than a perma bear. I just
want to go through some of hisstats. I know a lot of people
give us some pretty good feedback onstats that we put out on the market,
and his stats are all where weare currently compared to history. So,
first of all, strong first halfof the year. We're a couple

(09:13):
about a week away from the endof the first half of the year.
Strong first half of the year usuallymeans strong second half. It's not always
true, but when the SMP isup greater than ten percent at the end
of June one year later, theaverage is twelve percent, with a seventy
seven point three percent positive rate,meaning better than average. On average,

(09:37):
the market is up seventy two percentof all twelve month periods. That jumps
to seventy seven when you're up thatmuch halfway through the year. For the
If it's more or less, thenit's something to talk about. If it's
exactly the same, it's meaningless.But here you have a slightly better chance
the rest of the year. Justthe final six months has only been negative
four times. That was nineteen seventyfive, eighteen eighty three, nineteen eighty

(10:03):
six, and nineteen eighty seven.Since nineteen eighty seven, we have never
had a second six months negative whenthe first six months is up more than
ten. So and you're not talkingabout giving up the ten. You're talking
about just being negative for the finaltwo quarters at all, yet not necessarily
giving up giving up the ten.Here's another one that he put out there,
fifty two week high that would bea one year high when the SMP

(10:26):
five hundred makes a one year highafter making a one year low, which
of course did in October of lastyear. It has been higher fourteen out
of fourteen times, with an averagereturn of sixteen percent. We just triggered
that last week with the SMP makinga new fifty fifty two week high.
Average return in those periods of timewhen when the market makes a new fifty

(10:48):
two week high twelve months later orfifty two weeks later, sixteen point one
percent and fourteen for fourteen positive.Another thing that he put out there was
building permits. I found this interesting. CNBC this morning had should I forget
what his name was, but he'sa real estate guy, and of course
he's all negative. Well, ofcourse you're negative. You need low rates,

(11:09):
right, Okay, But One ofthe positives that's going to come from
higher rates is new home construction andbuilding across the board. Right, Okay,
building permits were up five point twomonth on month last month. This
is also from Ryan Dietrich. Betterthan expected, highest pace since last October
could be an early cycle indicator,and it did trend down from last October.

(11:33):
But since last October? What happened? Interest rates stayed high. What
did everybody say, Oh, don'tworry about interest rates, They're going to
go back down. Mortgages will comeback down, and they're not. So
that person that was thinking about buyingis saying, you know, I can
deal with the higher rate. Ijust can't deal with this crazy price this
person's offering, right, Or there'sno house available at all because people are
in a three percent mortgage and don'twant to sell, Yeah, because they'd

(11:56):
have to move to a six percentmortgage. They're finally biting the bullet.
And what are they doing. They'resitting down with a builder and they're building
a house. So that's certainly apositive overall. A couple more things that
he put out there in the lastweek or so. SMP five hundred is
eight percent away from a new alltime high. I mentioned that when the

(12:18):
SMP is up greater than ten percent, the final six months I mentioned since
nineteen eighty seven was never lower.But the final six months also averages more
than ten percent. So where doesthat put us at all the stats that
we've been giving out over the lastyear, Brad, we said, mid
term election year low return through theend of the following year averages thirty two

(12:41):
percent. Never been lower. Okay, what does a thirty two percent return
from that midterm election year low backto the all time highs Oh, no,
way in twenty twenty three. Notpossible. That's an insane percentage.
And here we are, we're alleight percent away from well from the high.
It's now about a couple given upa couple percentage points there. If

(13:01):
the SMP finishes June more than Idid the ten percent stat how about if
it finishes June more than fifteen percent. Let's look at history, and let's
look at the stats. If itfinishes June greater than fifteen percent year to
date, only other years to doit since nineteen eighty twenty, nineteen twenty
thirteen, nineteen ninety eight, ninetyseven, five, ninety one, eighty

(13:22):
nine, eighty six, eighty seven, eighty three, the biggest years in
history, full year was always higher. Average return four that year was twenty
three point eight percent. Worst returnwas twenty six point three percent in nineteen
ninety one. So certainly, whatif we got to that fifteen percent clip

(13:43):
in the next week or so.Don't know if we'll get there, but
certainly bodes well for the market forthe final six months. So you know,
And one more thing I'll put outthere about Oh, I already did
this one. Excuse me, I'mgoing through Ryan's things here. I already
did the one about making a newone year high after making a new one
year low in the prior year.So you know some of the numbers that

(14:07):
we put out last year about themidterm election performance and the year after going
from the worst year in the presidentialcycle to the best, well, I
just mentioned it last week. Ithink people brought it up on CNBC and
they were laughed at it that time. Yeah, or they get the stat
wrong. It's in the midterm electionyears going back to nineteen fifty that the
third year of the cycle is positiveeighty nine percent of the time. In

(14:30):
the average is sixteen but when it'sa negative year, before it's positive one
hundred percent of the time. We'venever had a negative year after a negative
third year in the presidential site role, and so that's where we are.
This third year would always give you, always has given you positive returns,
and the average is even greater beforewe get to our first boss, Kevin.

(14:50):
I want to mention something. Ilistened to the Josh Brown podcast and
they always say at the beginning whattheir episode is, and I think they're
at the ninety six or something.So I was talking to Denny last night
and talking to him about when theystarted the show originally nineteen ninety four,
and they went from nineteen ninety fourall the way to to the end of
nineteen ninety nine, and they weretaken off the air in thirteen seventy four,

(15:11):
a little bit more than three thanthree years for the Garden Show,
So they had a six year runwhere they were on the show every single
week, and then in June oftwo thousand and three, all the way
until today, we've never been offthe show. And really starting in June
of two thousand three, U andI started to be on the show a
little bit more in the last fifteenyears has almost exclusively been us. But

(15:35):
thinking about the number of episodes thatI hear a lot of podcaster spragging about,
I thought it was worth occasionally mentioningthe number of shows that we've done.
So that is a twenty six yearplus run of us doing shows every
week and bringing out all of ourlisteners, clients and future clients this content
that we do. And so thattwenty six plus years is one thousand,

(15:56):
four hundred and fifteen shows, andtoday we're show one thousand, four hundred
and sixteen. So we'll continue tomention that. Then people know that we've
been here a long time, we'regoing to continue to be here a long
time, and doing over one thousand, four hundred shows is something that has
always been part of our business tocommunicate two clients. So I think it's

(16:18):
it's worth mentioning. Yeah, Imean, I think a lot of from
time to time will be honest,we'll get phone calls from people who are
interested in doing something similar, andwe've always taken the approach we're just gonna
talk about markets, talk about financialplanning on the show, not gonna we
mentioned our phone number, We mentionedour business and what we do, but
we're not going to have it bean infomercial. We're just gonna talk markets

(16:38):
and talk about what's going on.And you know, that's really worked well.
A lot of times someone will thelocal radio station will have somebody call
us and say what do you think, and they said, well, the
first thing you should do is notsit here and think that, oh,
I'm gonna do this, and allthe phone's going to ring off the hook.
People do call us, but it'sit's about being educational. It's about

(17:00):
providing information on current market conditions andwhat people can do for financial planning as
well. And that's going to beour next couple of weeks of shows because
we're gonna have a couple of weekendsoff, so we're gonna pre tape a
couple of shows, Brad and soin the next couple of weeks. We
had a lot of positive feedback abouta couple of shows that we did where
we took people through the decades oflife and what they should be doing and

(17:22):
the things that should be focusing onin that particular decade of your life.
And so we're going to revisit thatfor the next couple of weeks and the
rest of this show is going tobe a little bit of a taped It's
going to be a taped show froma couple of weeks ago, but with
really good content about how technology ischanged in the world and a couple of
things that people are getting wrong abouthow indexes work, and putting the right

(17:45):
perspective on what the market did lastyear and this year because of how the
indexes are made up. And thenthe future weeks, we're going to get
into financial planning by decades, Sohope everyone enjoys that. And we're gonna
take our first pause. Here you'relistening to Money Sense Kevin and Brad Kirsten.
We'll be right back and welcome back. You're listening to the advisors of
Kirstian Wild Management Group, Brad andKevin Kirsten the advisor. Sorry, I'm

(18:07):
about to repeat myself. Been awhile since I've done an intro. I
guess so, Kevin one to shiftgears just to touch here, and I
touched on it a little bit inthe in the prior segment. There are
the makeup of these indices and knowingwhat they are it can help your decision
making process. I am starting tohear now and you're starting to hear this

(18:29):
all the time. It was theexact opposite last year. We'd never heard
it, And it is a statementthat's something like, yeah, the market's
up seven percent, but twenty eightpercent of it's just the top ten in
the SMP five hundred. Well,if twenty eight percent of the return is
ten stocks in the SMB five hundred, the story they're not telling is the

(18:51):
top ten in the SMB five hundredis twenty eight percent of the index.
So it would make sense that twentyeight percent of the return is from those
ten stocks. That's the actual makeupof that index. It drives me crazy,
Brad, because it is always truethe SMP five hundred, just so
folks know. So there's two differentways to look at the SMP five hundred.

(19:11):
The one that ninety nine point ninepercent of the people talk about on
TV, the one you see,the one that's on the ticker on CNBC
is the market cap weighted, meaningvery simple, bigger bigger the company,
higher the weighting it gets. Okay, think about the SMP five hundred as
a total as as a single company. Okay, we're gonna take the underlying

(19:33):
components, add up their total marketcap. Okay, using round numbers,
Let's say it's let's see what Apple'sabout, two trillion, Okay, Okay,
let's say it's let's say it's tentrillion. Okay, okay. If
you had a company, this isnot that extreme right now. If you
had a company that was one trillionin an index that's ten trillion, it's

(19:55):
gonna get a ten percent weight.So currently Apple is seven seven point one
four percent weight. Okay, yes, you're not that far off. So
it's market cap weighted. It's thesize of the company divided by the total
Now in the equal weight SNP.Every weighting, every company's the same.
It's point two point two times fivehundred, you get your one hundred percent.
So if it's not Apple, wego back twenty years, it was

(20:18):
Cisco, it was the number oneholding. You go back thirty years.
Who else is to the top?General Electric? General elect which was the
largest company for a time. Nota recommendation to buy your cell AIG might
have been in one of the largerone. Not a recommendation to buy your
sell any of these names. Sowhen you say the market is either up
and it's being driven by the topten, it's just by the way,

(20:40):
when it was down, Yeah,it was also driven by the top ten.
Well, you take a look atthe equal weight. Last year,
the equal weight was only down eleven. The market was down eighteen point one.
So you could have said, well, if it wasn't for the top
ten, this market would only bedown two percent. And I did hear
that. Last year the SMP fourninety is only down two percent. Okay,

(21:00):
Hey, it's just the it's theyinging yang, the back and forth
of the market. It's just whathappens. And no matter whether someone's positive
on the market or negative the market, you can spin it. Yeah,
do your cherry picking anyway you want. You could say, and I'm sure
we hear this. I'm back toback guests on TV. The reason you
should like tech is because, hey, look what's moving the market. And

(21:22):
then the next guy could say,the reason you shouldn't like tech is,
look how much it's moving the market. Time to sell it or last year,
last year, it's dragging the marketdown. You don't want it,
And the next guy could say,it's dragging the market down, it's time
to buy it. It's we don'tknow, but there is a reversion to
the mean constantly. Here's another oneyou hear about about the stateman Brad is

(21:42):
like being the weather man and justwalking outside and saying, what's happening?
Yes, okay, yep up,the sky's blue. Okay. Thanks that
the market is driven by the largestcomponents. So here's another disingenuous statement that
you would hear. So the SMMEfive hundred is the market. So whatever
the sectors are, that's the makeupof the large cap US market. Okay.

(22:03):
So twenty six percent is tech,eight percent is communication services, and
ten percent is consumer discretionary, kindof your growth sectors and what we've been
calling the tech related. So somebodycould say, you know, forty four
percent of the return is coming fromall these these three tech related sectors,
Well it has to. That's becauseit's forty four percent of the index.

(22:23):
So it's just somebody doing a soundbite and trying to find something negative in
the market. It doesn't have tobe a negative, Okay. It is
a back and forth, and especiallynow that we've had this huge bubble burst
in tech, and if you weren'taware of that, a bubble burst in
tech over the eighteen months that endedthe last week in December of last year.
Congratulations, you weren't invested there,But a bubble did burst a lot

(22:47):
of large tech companies down seventy fivepercent from high to low. Not on
a calendar basis, but that highstarted back in the middle to the third
quarter of twenty one. The overalltech portion of the SMP five hundred was
down more than fifty percent. Soif you don't think that bubble bursting makes
things a lot cheaper and a lotmore attractive, then you're not looking at

(23:10):
history. And that's why it doeslook a lot more attractive now. Tech
got rid of all of their badearnings and earnings revisions last year. When
you're seeing tech companies report now therevenue is actually going up. And the
surprising thing about that, it's notsurprising that their earnings are beating because they
cut they cut so many, somany jobs. What surprising is that you
have companies that are cutting ten percentof their workforce and the revenue is going

(23:33):
up. Well, that tells meone of two things. They had some
froth, they had some employees theydidn't need because it's not hurting their revenue.
Or the other is that they cutthe employee and they're replacing the job
with maybe some implementation of some technologythat can replace ten jobs with just the
implementation of that technology. Or they'recutting a lot of the higher paid that

(23:56):
can be replaced with somebody you knowthat is in a midpace or a low
pay scale. So all of thoseshould be something to look at. It
earnings, Okay, who was thelast company that cut Now the earnings come
in and the revenue comes in andit still beats. Well, I guess
that that cut of jobs wasn't badnews. It's probably good news. So
this whole argument about the few stocksdriving the whole market red reminded us here

(24:19):
earlier in the week of years ago, when Jamal Lewis was on the Cleveland
Browns. No, I'm sorry,he was on the Ravens. He actually
went to the Cleveland Browns later.But this is a game Browns versus the
Raves, versus the Ravens, andhe broke the record I think for single
game. Yeah, I'm not sureif it still holds, but it was
over three hundreds over three hundred yards, and the announcer said, well,

(24:40):
if it wasn't for the eighty fouryard run and the seventy two yard run,
and the sixty eight yard run.His average yards per carry really aren't
that great as if it's not partof it. Right, Well, the
market is the same way people say, if it wasn't for Apple, Microsoft,
Google, not a nation to buyor sell any of those who else
is in the top ten broad Yeah, so it would be like this if

(25:00):
it wasn't for Apple, Microsoft,Amazon, In, Nvidia, Google,
Tesla, Berkshire, Hathaway, Facebookand Exile Mobile, Marcus un up that
much. Well, that's it's likethe whole market. You can't you can't.
You could choose. It would belike me at the end of the
golf round saying, if it wasn'tfor those three doubles in that one,
I blew out of bounds and hada triple. I had a pretty decent

(25:22):
round, going, well, that'spart of the round. You don't play
fourteen holes, you play eighteen holes, right, People act like it's that
part of it. I go foreverfor this. It wasn't for the cheeseburgers,
the pizza, the French fries.I have a really nice diet.
Yeah, pretty good yesterday. Ifit wasn't for the McDonald's, I ate
had a pretty good day. Ihad a pretty good day. Well what
did you eat? Well, therewas lettuce on the sandwich. That's all

(25:47):
I so. But you can't cherrypick the market like that. Somebody trying
to find the negative in the market. One real quick one. Now,
this is a little bit unique theDow Jones. Okay, by the way,
virtually every market you see small cap, MidCap, there's a market cap
wat you'd have to search for theequal way to the market. You'd have
to search for the equal way toNow, it's never as extreme in those
indexes because there's more components Russell twothousand, and the high to low is

(26:12):
not as extreme. The SMP isactually the most extreme. The NASDAC one
hundred, he's even more extreme.Okay because NASA one waiting in the top
the weight down. Yeah, becausethe NASZAC one hundred actually has some midcaps
and small caps in it, whereasthe SP five one hundred is all large
caps. But the Dow Jones isdifferent. People think they know how the
Dow Jones works. The Dow Jonesis actually price weighted. So what does

(26:33):
that mean. So the higher theprice, the higher the weight. So
United Health Group is four hundred andeighty six dollars a share, not a
recommendation buyer sell that it's the numberone component for the Dow. Meaning if
United Health Group comes out and hasgood or bad earnings. Let's say it
has bad earnings, it's gonna movethe doll If it drops ten percent,
that'll be a day where the Dowis way down and other indexes are up

(26:57):
in the market. So the topten of the Dow, okay, And
this is nothing to do with thesize of the company, because if it
did, Apple would be number onein the Dow. Apple is fourteenth.
Think about that, Apple's fourteenth inthe Dow. Okay. So the Dow
order meaning order of how it movesthe Dow, Jones, United Health Group,

(27:18):
Goldman, Sachs, Microsoft, McDonald's, think about that McDonald's, McDonald's
a bigger waiting. Yeah, thensay Apple, Home Depot, Amjin,
Visa, Caterpillar, Bowing, Salesforce, Honeywell, Travelers, Chevron, Apple,
Johnson and Johnson. So you haveto get through fifteenth to get to
Apple. Okay. So you thinkabout something, you say that the biggest

(27:40):
one is over four hundred, somethinglike Cisco's trading at forty six. It's
a tenth of the waiting. Soif if if one of them's ten percent,
the other ones one percent, ifone of them is twenty percent the
other ones two percent, this wouldnever happen, right, But so think
about that one. It's a tenthof the waiting of United health Group,
which means if United health Group dropsten percent, that is the same drop

(28:06):
of the DOO as Cisco going bankrupt, right right, right, So it's
why you get these unusual moves,right. Uh, think about with United
Health Groups decides to do a fourfor one reverse split. Instantly they go
from a ten percent waiting to aone percent waiting. Yeah, as they
go down to forty dollars or wouldI say at four for one, so
they go they it would be dividedby four. There you go for a

(28:29):
ten percent waiting into a two anda half. So really, when you
look at the bottom five and theDow thirty, the Dow is thirty stocks,
they don't really they're affected, they'remeaningless. So the bottom five are
Intel, Walgreens, Verizon, Cisco, Dow Ironically enough, and uh say
Intel and uh, Intel's the lowestwaiting and Coca Cola. I wouldn't be

(28:51):
surprised honestly to see Intel h comeout of there at some point just because
doo is I mean, they dokind of push these companies to do you
know, I'm surprise the United HealthGroup as getting pushed to do it,
but push them to do uh,stock splits to get their price a little
bit more in order what you reallywould ideally like if you're gonna have the

(29:11):
Dow Jones originally came out because itwas supposed to be there was no SMP,
right, so it was supposed tobe representative of the whole marketplace.
Ideally you have most of the stocksthrough splits and things like that, even
if they have varying performance, havefairly close to the same waiting. Okay,
well it's pretty unusual right now,what we I mean you in a
perfect world, you probably have everystock trade between say fifty and one hundred

(29:34):
and fifty, when you end upwith stocks that are three hundred four.
This is why Berkshire Hathaway, bythe way, could never be in the
down right right, even though it'sone of the top ten companies in the
SMP. Correct, Yeah, BerkshireHathaway is what fifty sixty seventy eighty thousand
over one hundred thousand. I thinkyou're thinking of the B share. The
B share, I think I thinkthe A share is three hundred thousand.
I'll look it up for a second. If they put Berkshire Hathaway in the

(29:56):
Dow, it'd be it'd be theDOWBT, it would be the Dow.
So it can never happen with acompany like Burshore Hathway, although there's four
or five large components of Berkshire Hathawaythat are in the Dow anyway, So
just a little one on one onhow these indexes work, Brad And when
someone says, you know, I'lllisten to any argument as to why the
market's healthy and why the market's nothealthy. But one argument that anything is

(30:18):
nonsensical is that up or down isbeing driven by the top ten, because
that is always the case. Therehas never been a year up or down
where most of the performance did notcome from the top the largest companies one
hundred. I mean, last yearit was the same thing. The negative
performance came from the top ten.This year the positive performances come. Now,
you could have a year where smallcaps outperform large caps. But if

(30:41):
we're just talking about the SMP,which is the only thing people talk about
on TV. It is always drivenby the top ten. Yeah, Berkshire.
Hathway to close this out is tradinga five hundred thousand dollars a share,
not a recommendation or buy or sella couple shares of that. But
it could never be in the doubt. No, it could never be in
the dow and it will never happenunless Uncle Warren agreed to a split.

(31:02):
So we'll take our next pause.You're listening to money Sense, Kevin and
Brad Kurston will be right back andwelcome back to the show. You're listening
to the advisors of Kursten Wealth ManagerGroup. Kevin Kurston and Brad Kurstin happy
to be with you this morning.As a reminder, we are professional financial
advisors. Our offices are in Perrysburg. You want to give us a call
throughout the week to set up yourown consultation seven two zero zero six seven

(31:22):
or check us out online at Kurstonwealthdot com. You know, people use
a lot of different reasons for reallymore than anything talking themselves out of investing
in various things. Brad. Thepeople who just methodically put money in month
after month, they don't really needa reason. Those are probably the best

(31:45):
kinds of investors, right, Butsome people it's like, I need a
reason, I need a reason becausemakers they're out, and then they got
a find I need I need areason to feel good about it, right,
And so they'll find a million reasonsto feel bad about it. Okay,
they'll say, yeah, but thedebt, the debt ceiling debate,
thirty two trillion of government debt,inflation, this money, money supply,

(32:07):
That money's you know, the valueof dollars and all the other things that
they use. And I think youknow, obviously don't hold dollars, right
because that power has gone down.You should invest money in various things.
But I think that if you thinkabout the market as this engine, and
I think you're going to talk alittle bit about this and answer one simple

(32:29):
question on every single industry in themarket, and that is, will it
be better or worse in five toten years? Okay, So go write
down the list of sectors of theSMP that make up the whole stock market,
and then therefore the whole economy willwill your healthcare in terms of the

(32:50):
quality of your care? The advancementsin your care, the the technology that's
used to cure diseases, Will thatbe better or worse in ten years?
Better? So invest will technology?Will the technology we have look at where
we were ten years ago, whereit was basically the start of the smartphone.
Yeah, okay, we'll look atthe same thing with healthcare I mentioned

(33:13):
go back. Will technology be improved? Will the microchips be faster and more
intelligent in twenty thirty three versus twentythree? There's no question about it.
Will industrial and manufacturing be more efficientand and and the logistics that goes along
with it in terms of shipping andeverything else. Will that be more or

(33:35):
less efficient and better ten years fromnow? The answers are resounding yes,
yes, okay, Well, theproducts and services you use in the consumer
staples area, will those be betteror worse? So you can go right
down every sector of the SMP fivehundred, and it's very hard to find
a sector. The rest are materials, real estate. What else am I

(33:58):
missing here? Communications? Financials,which be five financials? Okay, that
would probably be the one. Althoughthere's been huge advancements in financials. I
would say that if there's a placewhere you could say it's not going to
be better, but it's going tobe the same. There's where your deflation
comes in. Right, you thinkabout the TV that you just bought versus
the TV you bought, say eight, ten years ago, it's about the

(34:20):
same. I mean, the picturemight be a little better. But if
you bought the same TV that youhad ten years ago, you just got
a new one, it's going tobe a quarter of the price. Right,
that first flat screen you bought probablycost you four grand, and if
you bought the same thing or evensomething better, it might cost you four
hundred dollars. So in areas ofthe market where it's the same, you're
gonna have deflation, and you mighthave both. You might have better and

(34:42):
deflation. Well, and where Iworry about the financial sector as a whole
is given every single time where we'rein a crisis, the government has to
step in. You do have towonder if our financial and banking system will
become more and more like Europe,for example, where there's there's a lot
more government control. Now that scarespeople, I get it, But the

(35:05):
utility sector, for example, isvery highly government controlled and it still can
be a viable investment. So someof those areas where you might not see
huge advancements. Maybe maybe you don'tsee that big jump in performance of the
underlying assets. But I ran throughthree, four, five, And if
you're worried or scared about investing,and yet you're saying, yes, that

(35:29):
will be better in ten years.Yes, technology will be better in ten
years. Yes, healthcare will bebetter in ten years, and yet you
don't want to invest in it.Yeah, that doesn't make anything. You
want to have a more positive reactionabout is it a good time to invest?
Today's Wall Street Journal had a sectionthat was a five G sections about
as an insertive, about twelve pages, and they're giving story after story about

(35:50):
how five G will change an industry. Now, I don't remember even seeing
five G is just faster, andI was the same way. I'm thinking
about how it affects me, andI'm thinking, do I need faster Internet?
I'm already streaming all my TV shows, nothing lags anymore. My phone
is fast the internet. How muchfaster do I need my searches on my
phone to be? It's not that, it's that if it's faster, then

(36:15):
a company can use it to dosomething else. Right now, I actually
can have a car that is runby a computer. Instead of Uber driver
picking me up, it's just acar that comes and picks me up.
In San Francisco, they have thatall over the town. You see these
these probably I think they're operated byGoogle cars with a big dome on the
top. And the reason they cando it is five G. Right,

(36:36):
if you were worried about your Internetsignal, you wouldn't want to get in
that car. But five G isso much exponentially faster than what we had
five years ago. And they're alreadytalking about five point five and six six
G and that will just be aninstantaneous fixed to a lot of the things
that we want to be able todo with technology but can't. But throughout
this section, and this is reallywhen I get to the end of this

(36:59):
section, what is I see howsomething like a technology like five G will
make all industries more efficient, cando things that they couldn't even do with
an actual employee. The story someof the stories they gave were in mining,
going down under the ground, notwith people, but after they blast

(37:20):
a hole, having machines do itall. Because we can have five G
under the ground delivery drivers, havingdrivers and trucks out on the road,
but also delivery of various things thatcan be done with without needing people,
and they can run twenty four toseven industrial plants being run. We're moving
product from this end of the plantto that end of the plant, and
we have to have people to doit. Well, now we can just

(37:40):
have an automated vehicle be doing it, and because of five G you can
actually do it. And all thosethings, once implemented, are deflationary and
I think that you don't have topick the tech winner to do it.
There's almost no mention of what companyare investing to do it. The stories

(38:01):
in there were how companies were goingto be able to use five G to
do things that they couldn't do orthey couldn't do without extraordinary expense, and
all of that then gets passed ontothe consumer to create a cheaper product all
around. Well, I think atthe consumer level, the big thing that
stands out is the fact that youyou already have a phone, you'll no

(38:21):
longer need to pay for high speedinternet. Well that too, Yeah,
that's cheaper because you will your modemwill be your phone, your modem for
your whole house will be your phone. Well, and that's that's the obvious
one there, but that doesn't reallythat's not life changing, that's not industry
changing, you know, obviously hurtsthe local cable companies, but it is.
It is something where whether it's industrialand manufacturing or healthcare, you're describing

(38:46):
things where companies want to say,boy, we'd really like to do this
and you and they can see itoff into the future. But there the
technology hasn't caught up. The technologyhasn't caught up, and it is getting
there. Yeah, So there isa here. This Sometimes on a business
channel they're talking about Moore's law.Moore's law is it started in like the
sixties where they were looking at howmany transistor transistors it took to accomplish a

(39:09):
task, and the amount of thetask went quicker with less transistor. I
don't even know what it was.It's the doubling of technology and it kind
of has held through all cycles oftechnologies. Moore's law, and it's doubling,
doubling, doubling. So here weare even doubling of speed of internet
and the signals it's doubling. It'severy two years, is Moore's law.

(39:31):
So if we're doubling all of thesethings every two years, you do get
to the point of law of largenumbers where you get to become an exponential
factor of how much technology is ineverything. And even the phone is the
example everybody has right in their ownhands. If you think about what you
thought it was going to be doingversus what it's doing now. It is

(39:53):
a full bone computer and even ifyou're spending a thousand dollars on it,
it's a far cry from what youused to spend a desktop to do,
far less than what your phone.Yeah, I think the the instinct is,
well, this is just dangerous,this is terrible. And there hasn't
been a new technology from the automobileto the commercial airliner that people weren't skeptical

(40:15):
of and said it was terrible.And this is I mean, let's face
it. When the automobile first cameout, people were dying, right They
people getting in crashes and dying.We didn't have rules roads or safe seatbelts
or anything. And it got improvedupon even commercial airliners. I mean that
that that safety has gone through theroof, and so people get very scared.
Now it's alternative intelligence, and whatcan happen from that and people are

(40:37):
scared of that. But you know, it's strange because the commercial that Larry
David did for UM the Super Bowlfor UM Yeah it wasn't Bitcoin was sam.
It's actually a good commercial with ahorrible you know, because it was
ftxea. It's now. It's alittle bit of a just to describe what

(40:57):
the super Bowl commercial was. Itwas Larry David and old old guy going
all throughout history of all the thingshe was skeptical on that are just commonplace
now right, that will never work, And they were trying to use it
for cryptocurrency, which was obvious.Now the old guy's gonna be skeptical of
that, but it's obviously going towork because all these other things he was
skeptical on worked. But there issome truth to going back throughout history and

(41:20):
looking in that. People were skepticalof automobiles, people were skeptical of commercial
air travel. People were skeptical ofthe transistor, Like you said, yeah,
and the and the oh this computer, look at this computer, the
first computer. What did it do? It played that little pawn game with
the ball going back and forth.What this is useless? What how is
this going to change the world.Yeah, right, because when people first
saw the computer, it didn't dovery much an even an iPod. Oh,

(41:45):
I can put one hundred songs onit. Who cares? Who cares?
I like? I like my CDwalk of it. It's the beginning
of something big. It's the beginningexactly, so you know. And if
you look at that bigger picture andstep back and say where will we be
not from a stock market, where'sthe dow going to be? You don't
have to worry about that part.It takes care of itself. Yes,
okay, where will the technological improvementsbe? And will it be better or

(42:09):
worse in ten years? You can'tsay worse. It's it's almost not part
with this discussion about five G andits tentacles. You don't have to worry
about how I'm going to invest.It's going to affect every industry. So
take our last pause here you're listeningto money Sense Kevin and Brad Kurston will
be right back and welcome back tothe show. We've only got a couple

(42:29):
of minutes left. You're listening tothe advisors of Kursten Wealth Manager Group,
Kevin Kurston and Brad Kurston. We'rejust at the pause and we're kind of
having a debate. Next week isthe FED meeting. I want them.
I want the FED to raise Iwant them done, and Brad wants them
done. I don't want to talkabout the FED anymore. Oh well,
I don't want to talk about theft anymore. But I personally think that

(42:52):
there is still way too much frothin real estate. I think there's way
too much speculation in real estate.I think when you look at people and
they say, you know, ohit's you know, three years ago and
I doubled my money, that shouldnever happen. Okay, the long we
talked about it in the last week'sshow. The long term return of real
estate is three and a half percentper year plus any income you get from

(43:14):
it. Okay, you should neverdouble your money. That is a problem.
Okay. And until people wise upand say, okay, now maybe
from three years ago, I shouldn'tbe doubling my money and those prices come
down, I think the rates haveto go hired to get that under control.
Otherwise it'll just be continued speculation andit will cause an even bigger problem

(43:35):
with banking down the road to yourpoint people are whining about six percent mortgages.
That's not a mortgage to whine about. Ask your parents what their first
mortgage was. Well, and beingable to do a thirty year probably shouldn't
happen either, But that's not goingaway to your point. If you look
at the economic calendar from this week, the only thing that was frothy is
new home sales. The expect thelast month was six twenty three sign twenty

(43:58):
three thousand. The expectation was sixthirty thousand, came in six eighty three
six and eighty three thousand. Newhomesales was the only thing frothy is is
everything housing related? The reason Iwhat I'm done is I think we're already
seeing too many cracks in both employmentand what's happening with the banks. There
might be another bank failure here inthe next week, and if they raised
their the likelihood is going up thatthere's going to be another bank failure.

(44:19):
It's another California bank, and Ithink it is counterproductive to have to have
the Fed go be bailing out andbuying bonds and doing stimulus on top of
doing the opposite with raising rates.I think I wish they just stopped.
I think the term bank failures anoxymoron. Yeah, what failed with Silicon
Valley Bank. No one lost anymoney. Everybody had to wait one day
to get their money out, right, So anyone who had money deposited was

(44:42):
made whole, right, and abunch of people lost their jobs. The
term bank failures an oxymoron. There'sno such thing. Yeah, it would
be like a company going belly upand then the government coming in and paying
all the creditors and just there's nosuch thing as bank failures. So I
there's way too much froth. Youmentioned it, and people need to be
pushed into new home construction. That'swhere people need to be going, okay,

(45:07):
and that's what's going to solve theproblem of real estate. One of
the reasons why real estate prices areso high not enough inventory, because people
are locked into thirty year mortgages.And unless the government's going to come in
and abolish the thirty year mortgage,which they're not going to do, the
only way out of this is tobuild our way out of this and create
more inventory. Well, it's aproblem with the number of workers we had.
And I did see a story andI don't remember exactly where it was.

(45:29):
But there's an entire community being builttwenty four seven by three D printing,
and so if again technology will finda way. If I can't find
anybody to build the house, I'mgoing to invest in this technology that will
three D print the entire house.So I don't even know how well that's
the cost of the raw materials ofa home have come down there most areas,

(45:50):
lumber, concrete, those things areall lower than pre COVID. The
one thing that is not that itis still stubbornly high is the cost of
labor. So it's interesting how companiesare evolving and figuring out ways around that
cost of labor. One of thethings you saw was the three D printing.
But so I know, I thinkthat they're not there yet because I
think that there is still this waitinggame with people investing in housing that are

(46:15):
saying, the moment the FED stopsand rates get under control, we're just
gonna pile right back in. AndI don't think that's healthy. I think
that the real estate market went uptoo much in the last three years,
and there's there's only two ways outof it. The price crashes, which
is not healthy, or those pricesare the same prices ten years from now.
Next week's show will be a raiseor not raised story, and we'll

(46:36):
continue to talk about the economic newsrevolving around that when we get to next
week's show. Thanks for listening,will be back with you next week.
You've been listening to Money since broughtto you each week by Kirsten Wealth Management
Group. To contact Dennis Brad orKevin professionally called four one nine eight seven
two zero zero six seven or eighthundred eight seven five seventeen eight six.

(47:00):
Their email address is Kurstenwealth at LPOdot com and their website is Kurstenwealth dot
com. Opinions voiced in this showare for general 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 memberFINRA SIPC