Kersten Wealth Management Group - Money Sense 9-23-23

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Episode Transcript

(00:00):
Good morning, and welcome to money. Since you're listening to the advisors of
Kursten Wealth Management Group, Kevin Kurstonand Dennis Kurston. Happy to be with
you this morning on a FED day. And the Fed's going to make their
decisions sometime while we're taping this show, so we'll talk about that towards the
end of the show, but justto kind of give a little bit of
a preview here headline in the WallStreet Journal Denny is FED debates when to

(00:23):
stop raising rates what to watch atWednesday's meeting, Officials are likely to be
cautiously optimistic that we're getting inflation undercontrol. Former former advisor to Chair Poll
said, an emphasis on cautiously socautiously optimistic is one of the most overused
phrases out there right hands to that, But I think one of the things

(00:47):
that the FED has learned over theyears is that the market sort of bakes
in what they're going to do.Interest rates kind of move ahead of the
meeting, and the market bakes inwhat they're going to do. And one
thing that they've learned to create theleast amount of volatility is not only in
the months leading up and the week'sleading up to a FED meeting really get

(01:07):
out ahead of so the market canabsorb whatever policy changes they're going to have.
Get out ahead of that with interviewsthat they do and press conferences and
things like that. Not with FEDchair Pole, but with the other people
on the FED. And they've realized, we don't want any surprises, okay,
and so what's baked in is noincrease at this particular meeting, and

(01:33):
then they'll start the process basically immediatelysetting investors up for the next meeting.
That's just what they're going to do. Right out of the gate. Most
people will feel like, well,very likely that they won't do anything this
meeting and they're done yep. Sothis would only be the second time this

(01:53):
year that the FED hasn't raised ratesduring a meeting, slowing the pace of
increases to allow more time to studytheir effects on the economy. And so
this will be set for this afternoon. The FED has signaled that it will
hold rate steady and make no substantialchanges into its post meeting policy statement,
so the public attention will focus heavilyon officials quarterly interest rate projections what they

(02:15):
call the dot plot to say wherewill interest rates be in six months,
nine months, one year. That'llgive you an indication as to whether or
not investors can see if they're doneor if maybe even they'll be cutting at
some point next year. So themedium projection is likely to show officials expected
to raise rates at least one moretime. So that's what's baked in.

(02:38):
So the market, in my opinion, would respond positively if there's any hint
that they're completely done, because what'sbaked in is possibly one more increase.
You said seventy percent chance of increasingone more time? No not, okay,
Well that's that's a little bit differentthan what this story says. Could
The current range is five two fiveto five five, so you'll see those

(03:00):
markets and uh short term treasuries bumpup a little bit, as we've noticed.
So from a communication standpoint, itwould be easier for officials to project
one more increase than to opt againstit, than to signal no more increases
and then end up hiking again.So that's not to say exactly, do

(03:21):
officials expect to need somewhat higher interestrates in twenty twenty four than they did
in the in June last time?The medium projections show they anticipated reducing rates
next year twenty twenty four by onefull percentage point, so that'd be four
cuts by the end of the year. Well, that the market all responds
pretty well, both stocks and bondswhen you're in this time, this time

(03:42):
period of UH rate cut rain inending and the potential over the next twelve
months for rate cuts moments. Well, I think right right, So,
so we'll see what they come outwith. I think that they're well above
you know, the old rule ofthumb is get the Fed funds rate above
the rate of inflation and that willkeep inflation in check. Well, they're

(04:04):
well above that. Yeah, Okay, even with the recent uptick from in
the threes to over four, whichwe predicted on this show. Uh,
they're well above. They're at fivetwo five, they're gonna go, you
know, possibly if they go onemore time, they'll be at five and
a half to five seven five onthe range. So that that sort of

(04:25):
box has been checked in terms ofgetting inflation in check. So so we'll
see, we'll talk about it laterin the show. On the markets,
the markets have predictably had a roughSeptember. Uh, nothing dramatic. I
think we're about still three percent fromthe highs that we saw in July,

(04:46):
late July, early August. Sonothing, nothing that we're seeing some sort
of cascading selling. Markets behaving prettyorderly with a little bit of a sell
off leading into this FED meeting,and also the most recent cpo I number,
and we look in the last months. What I find interesting, Denny,
is if we look in the lastmonth, SMP's up seventeen percent year

(05:06):
to date, but in the lastthirty days, it's hard for me to
get too negative when the areas ofthe market that are doing the worst our
defense. We talked about it onlast week's show. Consumer staples, healthcare,
and industrials are the worst three sectorsin the last month. So even

(05:26):
though the market is down, youknow, in the last couple of weeks,
you have communication services led by Facebookand Google, not a recommendation to
buy or sell up five point three. Consumer discretionary up three point eight in
the last month. Okay, checkup two point seven better than the SMP
in the last month. What's outperformingthe SMP is growth. So it's hard.

(05:48):
It's hard to say that things arerolling over when you have that the
other blaggard. It certainly has beensmall caps in midcaps on the last month,
small values down one, small blendis down one six while large cap
growth has led the way up threepercent. So you know that's that's the
other part of this. Interest ratesare kind of resetting to higher for longer

(06:13):
on rates, and so we haven'tseen great performance out of the total bond
index, which Brad and I talkedabout last week. This was supposed to
be the year of bonds. Ifyou bought the two year treasury, which
everybody said was the best investment atthe beginning of the year, at four
and a quarter, you're underwater almostthis year. And the aggregate bond index,
which started the year with a sixpercent yield, is up point one

(06:34):
on the year. So you've madealmost four percent in interest, yet your
total returns only point one on theyear. That's right, and you know
that will probably potentially in the nexttwelve months come down. And investors often
say the bond market is smarter thanthe stock market. Okay, well let's

(06:54):
go with that. In the lastmonth, here's the best performers on bonds.
Bank loans number one one point seven, high yield one, preferres one
point one. What all three ofthose areas have in common, they're closer
to stock, they're credit sensitive,they're credit sensitive, So the bond market
is seeing no issues at the moment. In fact, in the last three

(07:17):
months, if we go back seethree months takes us back to June,
you have the aggregate bonding next downtwo and the credit sensitive areas prefers up
one seven, high yield up onefour, and bank loans up four.
So these are these are bonds thatare tied to companies, but not just
any company. These are companies thatare B plus, not the best rated

(07:42):
companies out there, and the marketis not concerned at all. So this
is a normal consolidation leading us intothe fourth quarter, which is historically very
very strong for the overall market,especially in the year after a mid term.
You know, you mentioned all thevarious there's really a big disparity this
year when you look at in nexusbetween the NATSNA, the SMP five hundred,

(08:07):
which was what twenty eight percent technologyis almost all technology, and the
Dow. The Dow has a lotof those names or areas in the market
that are not up as much.When you look at year to date numbers.
Right now, the utilities are downseven real estates down point one,

(08:28):
healthcare down two, energy is downexcuse the consumer snaps down one and a
quarter. So a lot of thoseareas are are are in the negative column.
And winter finance financials are up.Finantial up three for the year,
but there are a lot of themthat are still underwater, and the financials

(08:50):
from that fallout from the February Marchbank failures. Right, that's correct.
So other things, I mean,there's things that are out there right now
now that we might as well mention, Denny, but I don't think their
market movers. And some of thesehappen like once every two years or once
every three years. Government shut downand also the strike, the strike that's

(09:18):
going on in automakers. Yeah,so let's talk about the government shutdown.
Government shutdown looms. If you're ifyou're a conspiracy theorist out there, that'll
start hitting your Wait a minute,I'm going to yawn here, Yeah,
it'll start hitting your feed. Right. So, whoever is against the government
shutdown depends on who's in office,right, Yeah, if you're if you're

(09:41):
in office and you're I don't know, if you're a Republican president who cares
about a government shutdown. Then allthe Democrats say it's the end of the
world. The Republicans president, allthe Republicans say it's the end of the
world. Okay, it has neveraffected the market very much. So.
The government has had twenty shutdown sincenow seventy six. The average length of
those shutdowns was eight days. Themost recent was December of eighteen, extended

(10:05):
into nineteen, was one of thelongest in histories at thirty four days.
As it, as it has areputation of doing, the stock market has
been able to shrug off this gridlock. In fact, during the thirty four
days of the most recent shutdown,the index returned ten point two seven percent
during the shutdown. I think theoverall average for all of the shutdowns is

(10:28):
the market is positive during those periodsof yeah. The simple average return in
the SMP five hundred during twenty governmentshutdowns is plus point zero four, with
December of eighteen being the best ever. Not only does the market usually hold
up while lawmakers ditherer, but historyalso shows it bounces higher shortly after the
resolution has been reached. During theone in three month periods following the budget

(10:50):
being passed, the SMP returns areone point two and two point six,
respectively, much much better than theoverall average. That said, certain segments
of the market that rely on thegovernment can be more susceptible. Typically,
segments such as defense and life sciencespull back as their revenue sources become less
clear. So those are some thingsthat you could look at on a sector

(11:13):
basis, but the market as awhole does not care. That's the end
of that conversation, right, Butyou know, plenty of new stories out
there about you know, what willhappen and we should be worried about it.
Ye. Yeah. And the otherone, which maybe we'll talk a
little bit more bigger picture about,is the UAW shutdown or UAW strike or

(11:35):
whatever you want to call it.And see, they just announced this morning,
Denny, that they're laying off peoplefrom JEEP and Toledo. But they're
you know, they're I don't evenknow what it is they get they lay
them off, But is is itreally they lost their job? Are they
still getting paid? Well, theyhave they strike fund all of the automators.
Okay, they're not paying them whatthey make during the strike, what

(12:00):
they would normally make, you know, So it's not it's not this.
You know when they say the headlinein terms of you know, the headline
in the in at CNBC was peopleare losing their jobs, it's they're they're
not losing money though for a certainperiod of time. Is that right?
You know? As part of this, what about the recent government mandates for

(12:22):
electric mails? I mean they're losingfour announced they lost three and a half
the four million dollars from their electricvehicle sales. Well and and and we'll
talk about that because here's the thingthat between pet projects that lose money.
I mean, uh, Facebook wasfamous for this. Not a recommendation to

(12:43):
buy or Facebook. Buy Facebook.I know I have to do that,
but you look at the metaverse thingthat they did, and they were losing
billions of dollars and they actually hadto shift course because this this experiment.
They've said, go back to makingmoney. You're you're publicly traded company.
Well, the automakers may soon bethere with electric vehicles as well. But

(13:03):
interesting to look at two strikes andyou gotta be careful here. I think
the headline in the Wall Street Journalis this is a economic reality test.
Non union Tesla has a huge costadvantage over Detroit's Big three, and let's
look at some of these numbers.And maybe more so than ever, Denny,

(13:24):
every company, every company, it'snot just United All Workers and GM
and Ford, every company is closerand closer to full automation as an option.
Right, if you're going to demandincreased to minimum wage or increase in
that, there's this graph. Okay, there's this graph that goes where it

(13:46):
is the cost of my employer employeesand the cost of automation. And as
we know with technology, what happensover time, the cost goes down.
So as the years go on andtechnology becomes more efficient and cheaper, right,
and all of a sudden, thelabor costs is going up. Where

(14:07):
do those two lines cross on thegraph? That is where they will let
those people go and never hire themagain. Now, people say that's horrible,
we need to stop that. I'veheard Tucker Carlson say that. I
disagree. That's creative destruction. Thereis a whole new company making the kiosk

(14:28):
at McDonald's where you don't have togo to the counter and type everything in.
Okay, why are they doing that? Well, because the over the
last couple of years since COVID,those wages are going up fifteen sixteen seventeen
dollars an hour for someone in fastfood. All of a sudden, you
multiply that by a forty hour workweek, and the cost of putting those
chios in doesn't look as bad.But replace my other coms that produce the

(14:54):
chios produce correct to create all ofthat. So back to auto workers here
for a second. I want toget to your big losses in electric here
at a second. But Sean Fayne, the president is demanding twenty one percent
raise over four years, citing corporategreed as the mantra. Okay, that
may or may not be true.I don't know, but if you look.

(15:18):
Uh. He goes on to criticizeElon Musk. He says, Elon
Musk is greedy and building rocket shipsto shoot himself in outer space while his
employees suffer. And it is truethey make less the median worker at Tesla,
and there's a lot less of them, by the way, because of
the automation that Elon Musk is puttogether thirty four thousand, eighty four dollars

(15:39):
last year versus eighty thousand at GMand seventy four thousand, six ninety one
at Ford, Chrysler is sixty wellStilantis is sixty eight six eighty three.
Okay, so US accounts for alarger share of Tesla's workforce than it does
at Ford and Stilantis. A largereason for the paid disparity verity is Detroit's

(16:00):
higher retirement costs for reported one pointtwo billion costs last year for US worker
retirement benefits. So Detroit automaker scrapescrap to find benefit pension plans and retiree
medical care for new workers and ohseven as they lurched towards insolvency. Fan
wants to restore those benefits for allworkers, which we create enormous new unfunded
liabilities. Tesla offers instead it's workersa four oh one K with a match

(16:26):
of up to three thousand dollars sothey can keep a lid on future legacy
costs, which is not just bythe way, that's not just Tesla.
You look nationwide, pensions are goingaway. Okay, Yeah, so I
think that when you look at it, if you for Jim Farley Afford said
last week that the uaw's demands wouldmore than double his companies union related labor

(16:49):
costs and drive it into bankruptcy.He notes the average pay would be nearly
three hundred thousand dollars for a fourday work week. Well that's that's the
other thing. They want to thework week, okay, from whatever forty
down, thirty two or thirty six. Yeah, yeah, so we'll see.
I mean, if I'm the CEOof Ford or GM and and here's

(17:11):
here's where Tesla, it's as aninteresting, more interesting story. Okay.
Those factories at Tesla are more automatedthan any other factory. Okay, does
does Elon take his technology and farmit out? Yeah, and say,
hey, we'll come in and we'llretrofit your factory for what we do with

(17:32):
our automation, and you pay usa subscription or something like that. Stations
two, I mean they're yeah,they're they're over here in Meyer now in
paris Burg, and it's a Teslacharging station. So it's interesting. It'll
be interesting to see if they can'tcome to an agreement or maybe this is
just the long term trajectory. Soit's it's kind of be careful and I

(17:53):
don't even fault the workers because thisis just the higher ups in the union
trying to make a name for themselves. It's not the worker's fault, so
we gotta take our first pause.Denny, you're listening to Money Sense the
advisors of Kurston Wealth Manager Group.We'll be right back and welcome back to
the show. You're listening to theadvisors of Kurston Wealth Manager Group, Kevin
Kurston and Dennis Kurston. Happy tobe with you this morning. As a

(18:14):
reminder, we are professional financial advisorsand our offices are in Perrysburg. If
you want to give us a callthroughout the week to set up a consultation
to just get started or review yourcurrent plan, or if you're in retirement
or approaching retirement, would be happyto sit down and go over things with
you four one nine eight seven twozero zero six seven or check us out
online at Kurstonwealth dot com. Denny, we're talking about the UAW strike and

(18:38):
and CEO of Ford came out andbasically said, if we agreed to this
as is, it would bankrupt us. Well, maybe part of the problem
is they're they're they're losing so muchmoney on electric vehicles too. That was
another story that maybe goes on topof this, and this is way where
maybe you don't feel so bad forthe higher ups complaining about wages, because

(19:00):
the higher ups at many of thesecompanies, my opinion, as it pertains
to electric vehicles have made some prettybig mistakes. Well, some of that
has been driven by the government mandates. You know. Joe Biden earlier this
year came out with the certain namesin the near future that two thirds of

(19:21):
new passenger hours and as well astwenty five percent of heavy trucks sold in
the US are all electric. Now, this is the EPA and this is
not elected officials, although minus doingthis through the EPA mandating these things,
and then the automates they kind offall in the line saying, Okay,

(19:41):
we're going to spend millions of dollarsrun through fitting all of our factories and
producing these vehicles. One older headlineI said, I saw stated this fact
that the gasoline powered engines are helpingpay for the automateers funerals as far as
going out of business. And youknow the bottom line is that I question

(20:04):
how good for the environment electric horsreally are. Okay, let's talk about
help the things. What powers andelectric are, uh, coal, natural
gas and also a little bit ofwind and solar I'm reminded of press conference

(20:25):
a year up in Lansing where theywere promoting the unox all electric Old lady
doing the press conference and somebody askedher question, can you tell me where
the electricity comes from to, uh, you know, charge these batteries.
Her first response was from this buildingover here behind me. Oh, well,

(20:47):
where does that building hit their electricityfrom? Oh, the city of
Lansing. Oh where's the city ofLansing hit their electricity from? Answer?
Seventy percent coal, So we're electricbatteries. I don't, by the way,
what goes under those batteries minerals?How are those minerals produced by using
diesel engines to mine the lithium andeverything else? Whereas most of that done

(21:14):
China. Well, I don't thinkanybody would argue with an all of the
above strategy and give giving consumers options. But to say we're going to completely
get rid of one in favor ofthe other, I just don't. I
don't get it. It doesn't Itdoesn't seem to me based on what goes
into making a lithium battery, whatgoes into our electric grid, and then

(21:38):
what goes into disposing of it Whenit's old and done with. Someone's got
to explain it. Let's not eventake a political stance. Someone's got to
explain it to me. Why it'sbetter for the environment. I don't understand.
It doesn't make any sense. Whatdoes it cost to Let's say you
have a three or four year oldelectric power and you have to replace all
then you might have paid forty fiveif thousand dollars for When does it cost

(22:00):
to replace the matter or something?Oh? Mad, fifteen or twenty thousand
dollars? Yeah? Yeah, Soit's fully when you say all of the
how about this, Let the freemarket decide. If there's a market for
electric cars, then companies will produceelectric cars. Some people won't buy them.
But why have government mandated requirements tobuy electric cars that are not good

(22:26):
for the economy period economy. Idon't know that it's good for the environment.
Someone has to explain it to me. Right, So the main thing
you gain is zero emissions, okay, from the vehicle itself, But is
it really zero emissions to the tothe environment when the things that go into
the car produce emissions? Is itreally zero emissions when tricity the battery itself

(22:52):
is toxic waste when it's done.I don't I don't get it. And
the electricity, the charge the batterycomes from carbon. I've heard from people
though who have bought electric car andthey say they like it. It's really
really convenient. It's wonderful to nothave to go to a drive up to
Costco and wait in that line forthe for the gas. So I have
heard people who have really liked itand uh, and like the convenience of

(23:18):
charging at home. But once again, if there's a market for that,
then then so be it. Thegovernment out of it. Yeah, absolutely
so, So Denny, I sawarticle about I think we were kind of
maybe talking about this a little bitwith pensions going away and how four oh
one KSE and the IRA has changedthe stock market forever. And I do

(23:41):
think that there's a certain component tothis. I think this is pretty interesting
that really changes the the historical Welike to talk historical on this show with
the market, right, and butnothing's really perfect because the investing environment in
nineteen eighties a lot differ than theinvest environment of twenty twenty three. And

(24:04):
it used to be that if youto invest in stocks, it was just
rich people, right, I mean, nineteen seventy people didn't invest in stocks
regular joes. You didn't do it. It was invested in your pension plan,
but you didn't have any control overthat. So what I think is
interesting is when we look at priceto earnings ratios historically, or fundamentals like

(24:27):
valuations, earnings, and dividends,I think you have to look at one
of the things which is not aroundanymore, which is barriers to entry to
invest It's much harder to invest inthe stock market in the past, so
it was wealthy households who did so. And it wasn't just the market itself
that was difficult to access. Therewere also barriers to information. People in

(24:48):
the past didn't have the data.We didn't have the internet to research companies
and what to invest in. Addit all up and we should see ever
rising allocations to stocks over time,which provides a little bit of a benefit
to the market going up over time. You look at this chart from Goldman
Sachs look at equity allocations to stocksand bonds and cash since nineteen fifty.

(25:11):
In nineteen fifty, the average personhad twenty percent in stocks. Okay,
if you look at all investors,the low point was the early nineteen eighties,
it was under ten percent. Okay, Today that allocation to stocks is
forty percent, and over time,the allocation to both bonds and cash have

(25:36):
pretty pretty consistently dropped since the earlyeighties. Allocations to bonds in cash as
well, so from twenty percent nineteenfifty from ten percent at the low,
now the average investor has over fortypercent, which I actually think that's probably
going higher over time. Household allocationsstock market have been volatile, like you
mentioned in the seventies, but mostpeople in the past didn't either didn't invest

(26:00):
in the stock market or didn't havethe ease of access to as we do
today. The stock market allocations werea little bit higher in the fifties and
sixties, but those numbers that aredeceiving. Most people simply didn't invest money
in those days. I mean,what do people do in the fifties and
sixties. You put your money inthe bank, right, That's what you
did, So you know that.I think that that's an important driver of

(26:25):
comparing historical time periods, but alsoimportant driver of just money flowing in month
after month into the market through fouroh one k and ira contributions, so
if you look at some of thesome of the news stories that were out
in the nineteen eighties, ten millionhouseholds with money market funds represented the first
wave of perspective IRA and four oone k customers. Every employee person in

(26:49):
the middle class was a potential customer. At the time the new IRA's rules
went into effect, thirty six pointfive million households with incomes of twenty thousand
or more were sort of the peoplethey were going to. This would translate
to fifty million households today, butwhen you look at it, the potential
was around fifty billion annually going intothe stock market. It wasn't even close.

(27:12):
By nineteen ninety two, IRA accountswere putting seven and twenty billion into
the stock market, and they werepredicting fifty fifty billion. Okay, When
they were looking at iras, theysaid they became convinced that iras were truly
the financial device that brought home therealization the American middle class was going to
have to take control of its ownfinancial future. It was the first real

(27:34):
incentive in the early nineteen eighties forthe number of Americans to put money away
for the long term, and thesewere generally people who up until then hadn't
seen themselves as having any control overthe long term. It was a device
that was made for people to feelempowered as much as much even as inflation.
It caused people to begin learning whatthey could do with their money.
By nineteen eighty seven, fifty fivemillion people knew people that have opened mutual

(27:57):
fund accounts, and most of thesefunds were invested in stock. The nineteen
eighties bull market was one of thefirst in history to include the middle class
and younger investors. The addition oflow cost broke which is four oh one
K accounts roth iras also played arole later on, and investors have broader
access to now index funds, targetdate funds, automated investing tools. No

(28:18):
wonder equity allocations have been rising overthe last five decades. This does matter.
I think overall it's an interesting storyabout the long term growth of the
S and P and the DOO withjust every two weeks money going into the
market. Well, the tradition pensionplan who percentage why diminishing in favor of

(28:41):
four old one K define howmution plansright? And I think the typical investor
in a four old one k ismore in the stock market than those old
pension plans were. Yeah, andfor good reason, if you have the
long enough time horizon. Right,So take our next pause. You're listening
to money Sense. Kevin and DennisKursten will be right back and welcome back
to the show. You're listening tothe advisors of Kursten Wealth Manager Group,

(29:03):
Kevin Kurston and Dennis Kurstin happy tobe with you this morning. Dennis.
Uh, you and I were talkingbefore the show and we found a couple
of headlines on this. Something that'shitting people in the pocketbook and really goes
to inflation as well, is thecost of auto insurance and homeowners insurance has
been increasing dramatically, uh, overthe last couple of years. And last

(29:26):
year alone saw you have the articlethere saw an increase of huge increase to
car insurance and homeowners insurance. Homeownersinsurance and auto insurance is seventeen percent in
the last year. And you knowthis was simply inflation. I got teenagers
driving it's even more well, Iremember that. You remember this, Yeah,

(29:48):
absolutely, you know you have inflationand the cost of you know,
repairing everything. You know, laborcosta are in there, autos have more
advanced feel there's more things can gowrong. You lose your your little iPad
screen, it's five to six seventhousand dollars to replace it. Yep.

(30:08):
So what's what's somebody to do.Everybody's trying to combat inflation in their households,
right, everybody's trying to whether you'reretired or you're working, trying to
get costs under control. What's somethings that people can do with the homeowners
and the automobile insurance, Well,one main thing is your deducibles. With

(30:30):
an auto insurance, you have variouscomponents of an insurance policy. One of
them collusion, which is primarily inthe damage to your own vehicle. And
you know the deductibles on that maybestarted one hundred dollars to fifty. Maybe
you and increase your deducibles four example, on average, if someone had a

(30:55):
collusion deductible of two hundred and fiftydollars, if they increase that to five
hundred, they would save one hundredand fifty four dollars a year on average.
So you have to look at pervehicle or well per driver, per
I doesn't see here, just oneon one vehicle, one veil yeah,
yeah, So and to increase fromsay two fifty, they're in me from

(31:21):
five hundred to a thousand, yousave another one eighty a year. There's
there's diminishing returns potentially. So thequestion is two things here. What's the
break even? I mean, doyou have a collision claim every three or
four years or is it you know, once every I don't know what,
hopefully not alone never maybe, butuh, you know, what are you

(31:45):
saving every year? Let's do themav and and say to yourself, Okay,
after however many years, if Ihad a if you're increasing the first
example here from two fifty to fivehundred, and you're saving one hundred and
fifty a year, I mean aftertwo years, you're ahead of the game,
right, So and you know you'llsimply do the math on the flip

(32:07):
side of that if you have tobe able to cover the difference side of
pockets. So do you have alittle bit of savings where you cover that
thousand dollars? ND optimal If you'regonna go from say two fifty to one
thousand, and the money is saving, is right even after three years?
I think it's worth it, that'sright. So it's certainly something that that

(32:29):
people should look at in terms ofdeductibles. But there's other things in there
too. I mean, you canlook at, uh, saving money from
there's certain discounts that are built in. You want to make sure you're taking
about it. Whether it's multi policydiscounts for having your homeowners and car with
the same company, should be lookingat that. You could be looking at

(32:49):
if your kids get good grades,that's something that can reduce the overall costs.
I've even seen some auto insurance companiesand boy, this this is sort
of big brother looking over your shoulder. But there's certain things you can install
on your phone that monitor you're drivingand if you can show that you don't
speed or rapidly accelerate or rapidly breakor text, they can even tell if

(33:15):
you're texting or using your phone whileyou're driving. You can get discounts that
way too. Same thing on yourhomeowners. You know you're I think maybe
a five hundred dollars an optimal ondamage you know to your house is common.
If you increase that to a thousandand what you know, you there's
another five hundred dollars out of pocketif you have a claim and one of

(33:37):
your annual savings. If if yourbreak even is three years or whatever,
it's worth it. So you know, that's something you can consider. Some
other things I don't know people haveactually thought about, Kevin is if people's
assets increase, everyone should have enoughliability insurance on their on their auto and

(34:00):
homeowners policy to cover the amount oftheir at least the amount of their assets.
So your standard in the state ofOhio, for example, the most
basic automobile liability coverage, you haveto have a minimum of twenty five thousand
per person in fifty dollars per acts, fifty thousand per accident. And that's

(34:22):
very very low. And you knowmost people have in the neighborhood of two
fifty, three hundred or five hundredthousand of liability. But if you have
assets that are more than that,everyone should consider having an umbrella policy.
And an umbrella policy on your generallywill cover you for liability over and above

(34:45):
the minimum liability. And you generallyhave to have in the neighborhood of three
hundred to five hundred thousand on yourunderlying policy before you add the umbrella on
top of it. Now, it'snot that is not that expensive. And
even if someone says, you knowwhat, I can afford my insurance,
but I don't have an umbrella policy, and probably pay for that umbrella policy

(35:07):
by increasing your deductible on the underlyingAnd it may be worth it in in
an extreme scenario where you have abig claim, it may be more worthwhile
to you. Now, all thisstuff with deductibles too, This doesn't affect
the state mandated insurance minimum. Youcan that's that's the liability and the collision

(35:29):
part of it, right, youcan do it as a liability that yeah,
you can do whatever deductible as partof that that you want. There's
allusion right, yes, right,collision and how prehensive it like you know,
right in your windshield or something likethat, theft right, right,
things like that. But as anexample, if someone had, you know,

(35:51):
two people in a household, onehouse, two hours to have a
million dollars umbrella policies in the neighborhoodof two hundred twenty two hundred and fifty
dollars a year, okay, upto save five million, which about six
hundred a year, right, notnot much yeah, right, for the

(36:12):
for the peace of mind that ifthere was ever a serious lawsuit or something
that's a result of you know,an accident or you know somebody in a
house that has a swimming pool.Maybe there was another reason there to have
an umbrell up policy if you don'thave one, right right, I mean
there and there's some other things too, by the way, that you got
to be careful of. You mentionedswimming pool and trampolines and things like that.

(36:34):
Sometimes that costs you a lot moremoney. Uh, if you're thinking
about getting one, uh, thatwould be something that would increase your premiums
as well. So but also takea look at all the various discounts that
you could possibly get. I mean, I've seen I've seen people save money
based on their age. I've seenpeople save money based on various organizations that

(36:54):
they're members of. If we havea few clients who did their insurance through
Costco, Now it's not Costco,it's it's insurance company. I think it's
some Berkshire Hathaway company. I thinkthat it's backing it. But you know,
there's other discounts that you can useto shop things around to make sure
you're getting the best possible rates.Now, something that people don't often think

(37:15):
about. They don't review it they'vehad it for a long time, maybe
they haven't had any claims or whatever. But that is something you should your
auto and homeowners insurance agents. Hopefullyit's an independent person where they can shop
it around and just review your policies. Look your dedoctors. Can you raise
your dedoctor moles and save money?Do you have an umbrellent policy? Does

(37:37):
that cover you? I'll give youone more that Brad just saved money on
himself and he told me about yourkids go away to school, they're not
if they're not driving. Yeah,that's right. You can actually note that
they are not driving. They'll stillhave coverage, but you can note that
they're not driving, or they're drivingvery little, or they're driving less than

(37:57):
so many miles per year, andthat can be a safe And that's another
thing. If you change the jobsand you improve, you don't drive that
much to work anymore. Maybe youwere work from home. Yeah that's right,
and save money in there. Yeah. Absolutely. So there's a lot
of different ways that that you canadd to your bottom line by reducing your
expenses and hopefully uh keeping the inflationnumbers at least on the insurance side of

(38:21):
things in check. Take our lastpause. We get back, we'll talk
about the results from the FED meetingand hopefully it'll be not not much of
anything that would be ideal, butit doesn't look like they're going to do
anything. You're listening to Money SenseKevin and Dennis Kurston will be right back
and welcome back to the show.You're listening to the advisors of Kurston Wealth
Management Group, Kevin Kurston and DennisKurston. Just wrapping up here our last

(38:45):
segment. Here, Dennis and wehave the results from the FED decision is
a little bit more hawkish than someinvestors had expected. Uh, slightly down
on the market as an initial reaction. We'll we'll wait and see in the
next day or two what the longerterm reaction is. But the indication was

(39:05):
from Powell was they held rates steady, They did not increase interest rates.
Stronger growth prompts officials to project thatrates will stay higher for longer. In
twenty twenty four, they voted tohold interest rates steady, but signal they
were prepared to raise rates once morethis year to combat inflation. We kind
of talked about that on a previoussegment, that that was a possibility on

(39:27):
the way up. It's typical thatthey want to over promise an under deliver,
Yeah, a little bit, exactlyexactly and so. But it was
mentioned that economic activity has been strongerthan anticipated. Most officials also expect they
would need to maintain interest rates whenthey're done at the current level, through
the end of next year. Accordingto projections released on Wednesday, Beneficials raised

(39:51):
their benchmark FED funds rate at theprevious meeting from five to two, a
range of five two five to fiveand a half, so that would indicate
a peak if they go again offive and a half to five point seven
five so still a historic increase onthe FED funds rate over the last year
and a half. Wednesday's decision marksthe second meeting this year that the Fed

(40:14):
has paused. Also paused in June. Let's see here. Powell last month
signal he was reluctant to declare victoryon inflation. Recent progress of slowing infation
is only the beginning of what isneeded to build confidence that inflation is moving
down sustainably. He said. Signsof stronger than anticipated economic activity could put
further progress at risk. The neweconomic projestion projections show twelve of nineteen officials

(40:38):
expect to raise rates one more timethis year, so you know, not
a complete consensus on raising rates onemore time. So you know, the
level we're at now, I'm lookingat over the last twenty twenty five years.
We haven't been this high since theearly two thousands on the Fed funds
rate, even one o six whenrates went up, I think we topped

(41:02):
off at about five and a quarter. So, uh, you know,
pretty high from at least in thein the recent past, over the last
twenty or twenty five years. Sothe inflation owing up a little bit,
there was a fair amount of energy, and that recent up wasn't there well
absolutely, I mean yeah, andsome of the stuff that it's back and

(41:24):
forth, right, and energy camedown dramatically in the early part of this
inflation fight and now is ticking backup. And now things that that was
slowed by you know, COVID andthe whole back to work and people will
not you know, out and aboutthey used and then and then other things
that that were a little bit morestubborn, like used cars and housing and

(41:45):
rent which all goes into the housingnumber, are finally starting to at least
level off. So uh interesting thatthe average projection still is that the rate
will be five percent by the endof twenty twenty four. So I find
that find that interesting that even thoughthey're talking about one more increase and holding

(42:05):
study for a while, three isn'tit. Yeah, well that would be
well, they're talking about the endof twenty twenty four, so that would
imply two or sore two or socuts around two cuts sometime in the back
half of next year. So lookingat projections for economic growth, take this
with a grain of salt, becausethey're never right. But they were saying,

(42:29):
uh, most officials see the unemploymentrate rising a little bit to four
point one next year. You know, they were predicting two percent inflation and
end up being nine. So uh. Their projection for core inflation which excludes
food and energy, edge down tothree seven for the fourth quarter compared to
in June when they had it atthree nine. So they're they're showing a

(42:50):
little bit more confidence that the inflationnumbers are coming down. So we'll we'll
see. I mean, it's afairly benign reaction. The market did have
about a two hundred point gain onthe Dow Jones, and it certainly has
come down a little bit from there. Yeah, that we'll see. It
takes a while to shake it outand look at it. But you know,

(43:13):
I mentioned this before that they almostexclude food and energy, like we
never use any energy or food.But it goes beyond that. You know,
petroleum products go into so many thingsthat we never realized, you know,
my cycle tires, upholster addresses,consents, dishwasher parts. I mean,
I think there's about six thousand inthe in the list here, antihistamines,

(43:38):
vitamin apsles, putty, dies lifechecks. I mean, it goes
on and on. So to excludethe price of energy saying that, you
know, it's the volatile thing.How about diesel fuel that delivers all these
products to our to our homes orto the store shelves, It really matters.

(44:00):
And I blame that completely on JoeBiden's policy of h less production.
We're not at the same production levelas we were by a long shot.
Uh. They've stopped all the leaseson federal lands. They he killed the
Heathstone pipeline. Uh and uh,you know, drained the strategic oil reserve.

(44:21):
Uh. And now we are buyingmore and more oil from countries that
have the control over US hunting production. So there we are dependent on other
countries, uh for our oil whenwe are producing a whole lot more.
And that's because chop Biden and hisadministration. I think you want to get

(44:45):
that in. Let's I'm very clear. Sorry, we had to put me
down. Maybe I had to moveour mics there for a second, so
had a little bit of feedback.But uh, yeah, yeah, that's
fine. Yeah, sure it is. But what are you gonna do?
No, I know, but Iget it. I like to break it

(45:05):
down once again when it comes toinvesting about things that are in your control,
things that are out of your control, things that are partially in your
control. And if someone's going tochoose between saying how awful Joe Biden is
or bumping up their four oh oneK contribution, I'd pick the ladder.
Well, that's true. And hereand here's the thing. There are people
that it really hung up on thatand don't want to invest at all.

(45:28):
Yeah, and I this way,the windows either your back or you're you're
into the wind a little bit andstill your destination. Well, I just
and you and I had this debatea couple of weeks ago, Daddy.
It's the fact that, yeah,you could get everything you want. You
could get Trump is president, youget everything you want. It's not going
to fix all of life's problems,and so you certainly have to focus on

(45:52):
their situation and what's going on.And you can't control oil prices. There's
nothing you can do about so youstill got to keep going to the pump,
and you still gotta keep doing whatyou're doing. I feel that way,
but it doesn't change how I've beeninvesting right absolutely for ourselves, are
for our client right right. Yeah, And that was to some extent here
and there, but not all ornothing. It's on the margin, and
and it's important to point it out. I mean, I do think that

(46:15):
we could have a more open andenergy policy, where we mentioned early in
the show, nothing wrong with theall of the above strategy, and we're
not doing that at the moment.And even if we want to get to
the point where we're less reliant onfossil fuels, you can't just rip the

(46:36):
band aid off and do it allat once, That's right. So thanks
for listening, everybody. We'll talkto you next week. You've been listening
to Money since brought to you eachweek by Kristen Wealth Management Group. To
contact Dennis Bread or Kevin professionally calledfour one nine eight seven two zero zero
six seven or eight hundred eight sevenfive seventeen eighty six. Their email address

(46:59):
is Christinwealth at LPL dot com andtheir website is Kirstenwealth dot com. Opinions
voiced in this show are for generalinformation only and are not intended to provide
specific advice or recommendations for any individual. To determine which investments may be appropriate
for you, consult with your financialadvisor prior to investing. Securities are offered
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