Kersten Wealth Management Group - Money Sense 12-21-24

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money cent. You're listening to the
advisors of Kirsten Wealth Manager Group, Kevin Kirsten and Brad Kirston.
Happy to be with you today. Brad, we have some
volatility this week. We had a FED meeting this week
and we really don't have that much that many days
left of trading for the year as we tape this
show here on Thursday. What are we looking at next week?

(00:21):
We have half day on the twenty fourth, twenty fifth
is closed, so you really only have three and a
half days next week, two days the following week, so
that's five and a half, six, six or seven trading days.
Was a half day mixed in there left to go
for the year, and the market is hitting its normal

(00:42):
December a little bit of a slow down. December historically
is a very good month. But if you look historically
where the volume slow down, but also the where the
weakness sometimes lies in the month of December, it's right
smack dab of where we're sitting. Ryan Dietrich, formerly of
LPL for Nance, posted this that.

Speaker 2 (01:01):
The the market tends to kick off December pretty well,
hits a short short term peak right around December fifteenth,
tends to be weak going into the Christmas holiday, and
then the famous Santa Claus rally typically does kick in.
More often than not, the Santa Claus Rally does happen

(01:22):
a couple different things on that rally. We can maybe
start talking about that now. Is it's a precursor to
a couple things that if you check the box, more
than likely you're going to have a good year. You
look at the Santa Claus Rally, the first five days,
and the January indicator. When all three of those hit,
you typically are over ninety percent on getting a positive

(01:42):
year for the stock market. So we're going right into
the period where you can will at least check those
first two boxes on what the market's going to do.
And I would say somewhat healthy that you got this
kind of big snap back, But more importantly that the
day after the one day correction that we had, and
it was kind of a typical correction, right, the things

(02:04):
that were up the most, tech stocks sold off the most.
The Dow was was not off as much, but it
wasn't up as much, and and you didn't have a
follow through, And so what the characteristics of a bull
market versus bear market when you're looking at these individual
days would tell you we're still in a bull market,
because what you get is you get these these kind

(02:25):
of wild days like you got in August and like
you just got this week after the Fed announced pretty
much what everybody expected, and we'll talk about that in
a little bit, and then you have a slow grind higher.
The opposite, when you're in a bear market, you have
a slow grind down. Then you have a glimpse of
good news in the market spikes up for a day
or two, and then a slow grind down where you're

(02:45):
making lower lows and lower lows, and so the opposite here,
you've had a grind higher. You had a few down days,
but they are not they they're not followed up with another,
in most cases a second even day or certainly a
down week, and you have everyone that's missed out kind
of slowly putting themselves in, and a slow grind higher

(03:07):
is what you should expect if you're in a bull market.

Speaker 1 (03:09):
Yeah, you've often heard it referred to as if you're
in a bull market and the market is trending higher,
your your corrections look like the elevator, and the market
up looks like the staircase. And conversely, when you're in
a bear market, your rallies look like the elevator up
and the market trends down like a staircase. And so

(03:30):
that's where we are right now. We saw sort of
elevator down with that FED meeting. We'll get into that
in a little bit. Going back real quick, Brad to
that Santa Claus rally. Officially, it's a little bit different
each year because it is the last five trading days
of the year, So it depends on where Christmas falls.

Speaker 2 (03:46):
So where is it this year?

Speaker 1 (03:48):
It starts exactly on Christmas Eve, It starts exactly on
Christmas Eve, and it goes through the first two trading
days of the year, which this year would be Thursday
and Friday, January second, January third. So really, when you
look at that, that's gonna be one sort of tell
as to what kind of a year we're gonna have
in twenty twenty five. And then the full month of January,

(04:10):
when you add that on top of that, really gives
a very good indicator of whether or not you're gonna
have an up or down year.

Speaker 2 (04:17):
Yeah, and it's not just superstition or like calling the
Super Bowl rally. It is more about the market sentiment
and about how investors feel about the market and news
and prospects of the economy, and so they want to
be fully invested. They want to be fully invested at
the end of the year. They want to be fully

(04:37):
invested at the start of the year, and they stay
invested in January regardless of what the news is. So
it's a little bit more than just fingers crossed. Let's
hope we get a good January so that the market
can be out.

Speaker 1 (04:48):
So if you're getting a little bit nervous about the
volatility that we saw yesterday with the big down, whoosh, really,
I mean it was just the last two hours of
the day.

Speaker 2 (04:56):
Yeah, that's what made it even seem a little bit
more dramatic. It's just a slight cell off until really
the middle of FED chairman's speech.

Speaker 1 (05:06):
But let's give you five reasons why you could stay
bullish and stay optimistic into the end of the year, Brad,
December is the most likely month of the year to
be positive. It is not the month that has the
highest return, but it is the most.

Speaker 2 (05:22):
Likely matting average for being positive.

Speaker 1 (05:24):
For being positive, seventy four point three percent of the
time December is positive during an election year, it's the
most likely month also to be positive. Eighty three point
three percent of the time December is positive. The stock
market has never never been lower in the month of
December when the SMP is up double digits at the

(05:46):
midpoint of the year. So we were up double digits
on June thirtieth. December's never been negative in that as
it was in twenty twenty four. Certainly, the Fed was
expected to cut interest rates on Wednesday, which was the
last big event of twenty twenty four. Economically, that opens
the door for a two week period here where we're
gonna have little news, so there's not really gonna be
a lot to move the market. Stocks tend to do

(06:07):
well in the absence of news, and this is why
strength around the holidays tends to occur. And finally, certainly
signs of stocks are over sold going into the cell
off we saw yesterday, Brad, the Dow Jones had nine
consecutive losing days, in many cases near the same oversold
levels that marked the bottom and stock prices earlier this
year in both August and March. So looking at that,

(06:29):
that gives you some reasons to be optimistic even though
we had a big down day yesterday in the overall markets,
and it certainly looked a like looked like a lot
of just programmed trading with the language of the FED,
but pivoting to the FED. It really wasn't much of
a surprise.

Speaker 2 (06:45):
I mean, no, that was the most likely scenario that
they cut, changed their language, and then give some some
verbige to say we're gonna be slowing down the pace
of change and maybe even hinting that January will be
a a month where they skip that meeting from from
having a cut. But I want to go back to
where are we in December? We're down two percent now

(07:10):
on the month. So even on the S and P
five hundred, where did we start the month, you have
that like just over six thousand, six thousand and thirty three,
and so yeah, down two percent. That's you know, we're
talking about how few trading days we have left. That'd
be a pretty sizable move to be positive on the month,
be up two and a half or three percent from
here would be a pretty sizable move. And the follow

(07:33):
through not getting the follow through negative day after that
FED meeting and that down day, I think is a
very good positive for the rest of this year.

Speaker 1 (07:42):
So let's talk about the FED meeting yesterday and what
they did. They lowered rates. Let's start with that they
did lower rates. They got lost in the shuffle by
a quarter of a percentage point to between four and
a quarter and four and a half. Okay, the market
had already been pricing in not only the they were
gonna cut rates, but they were gonna slow down the
pace of rate cuts dramatically, and the proof was in

(08:07):
where the one year and the two year treasury is training.
You think about the FED funds rate, which is not
exactly correlated to any treasury. Okay, it's not. It's a
completely different rate. People think on mortgages. Fed's gonna lower rates.
My mortgage rate's gonna go Now, no, it's it's not
the same thing. It it can be associated with it.

(08:30):
But if you actually look when the FED started cutting
rates in September, mortgage rates have actually gone up. Okay,
So it's not perfect on mortgages. It's definitely not perfect.
On the ten year. It is most closely associated with
the one in the two year and the six month treasury.
Why well, typically the six month treasury, the one year treasury,
the two year treasury are.

Speaker 2 (08:49):
Going to predict where they think Fed funds is going
to be in six months, year or two years. And
those rates were all.

Speaker 1 (08:57):
Above four percent, they weren't it. You know, at one
point when the Fed indicated they were first gonna start
cutting rates, what what did you hear in terms of
where they were going to be in a year or two, three,
three and a half, two and a half three, Yeah,
At no point did the treasury market trade at that level.
So people were talking, and you could talk all you want,

(09:18):
but when people put their money where their mouth was,
they were saying, in a year or two the Fed
funds rate's going to be four yeah.

Speaker 2 (09:26):
Okay.

Speaker 1 (09:26):
So if you look at the yields right now and
the reaction yesterday, Brad. Interestingly enough, the one in the
two year didn't really move that much because they were
already there.

Speaker 2 (09:36):
They were already priced, they were already icing that in
that they're pricing in this cut and a slowdown of
cuts and pricing in really just two more cuts for
the rest of next year next year. Right, So the
two year treasury, which is now back down today is
four point three to one, which is almost exactly if
you look at the midpoint four and a quarter four
and a half, almost exactly. In fact, I think the

(09:56):
Fed just announced because they do this every day. They
stay between four and a cou and four and a
half now and then they announce every day what their
rate is. Yesterday's rate was four to thirty three, the
two year is four thirty one, the one year is
four to twenty seven. So what you're.

Speaker 1 (10:11):
Saying, what they're saying is longer run, we think rates
are going to be right here in a couple of years, which,
by the way, interest rate stability is a.

Speaker 2 (10:19):
Good thing, okay. And shorter term, we're going to price
in a small possibility that of maybe one more cut
in the next six months. So if you look at
the six month four point three, Brad, you look at
the UH one year four point twenty seven right now
in terms of what the market's pricing in, which I
think is a good place for the Fed to be.

(10:40):
The market doesn't think the Fed's gonna cut at all
next year, Okay, that would be okay, But now the
Fed has this wiggle room that they can cut and
deliver a positive surprise. Yeah, because if the market expects
it and the market's already moved. Cutting does nothing correct. Correct.
If the market needs your help and you cut and

(11:01):
it wasn't expecting it, it will actually be a boost
to the economy.

Speaker 1 (11:04):
So what was strange about the reaction brand is all
the Fed did was with their language was come in
line with what the market was already saying on the
bond side, on the.

Speaker 2 (11:15):
Bond side, and talk positively about the economy. I think
that's the other thing that was missed. They're saying, the
economy is strong and stronger than it's been in the
last year, and now you don't need us to stimulate
the economy.

Speaker 1 (11:30):
Absolutely, And it is a tricky situation. I mean, when
you think about it, it's very easy to be the
FED chair in an eight scenario. Why because you just
fire everything. Yep, you lower rates to zero, you stimulate
the economy, you inject liquidity. That's the easy time. Where
it's hard is you have a situation right now where

(11:52):
the economy is doing very well.

Speaker 2 (11:55):
We're more worried.

Speaker 1 (11:56):
About something that hasn't happened, which is there might be
a slowdown, so we're kind of worried about it. Plus
interest rates are higher than inflation, so we need to
come down. But we don't need to come down to
stimulate the economy. We just need to come down to
get to a level of equilibrium.

Speaker 2 (12:11):
And to your point, I heard a manager who I like,
a Morgan Stanley fund manager. Today. They're asking him about
the FED and the reaction and all this, and he says,
all they've done is extend the bowl market. The problem
as a manager when you want to stay fully invested
is if things get too hot, then what, Okay, we
know we can't sustain twenty five percent returns year after

(12:33):
year after year. If they tap the brakes a little bit,
we can stay fully invested. And no, we're going to
get slow study returns and we're not going to get
too overheated so that we get twenty percent sell offs.
And it's a good thing. So everybody can just calm
down and stay fully invested. Ironically, what they did longer term,
what the FED did longer term for the stock market

(12:54):
was lower volatility. Yeah, they decreased volatility. Yeah, because drastically
lowering rates potentially can have a bubble form in certain
areas of the stock market. Yeah, now we're not gonna
do that. We're gonna try to lower volatility. And by
the way, next year, if they're barely cutting at all.

(13:15):
Here's the other good thing for the markets. The FED
won't be in the news as much. Yeah, so that's
also a good. Now the fundamentals and earnings and things
that really matter, and individual investors won't feel like they
have to chase because we won't have this excess that
we have had for the last year. There have been
pockets of excess, and it can hurt investor behavior by

(13:35):
feeling like you have to chase these things.

Speaker 1 (13:36):
Well, I think most retired investors too, don't want to
go through another twenty twenty two where the aggregate bond
index lost fifteen percent. Well, if you lower rates back
down dramatically, you're just setting yourself up for another twenty
twenty two. So we've locked in a level for interest rates,
which is nice. There certainly is the possibility that the
ten year Treasury goes quite a bit higher. That's why

(13:57):
we've been advocating for short enration, intermediate duration on everything. Yeah,
you're talking about these these what six months one and
two that maybe we'll tick down a little bit. That
helps bond prices and if everything else, because the Fed's
not going to cut longer term as much as everyone thought.
You might see ten and twenty and thirty year treasuries

(14:17):
and corporates go up, and that will hurt those prices.

Speaker 2 (14:20):
So until that happens, you need to avoid anything with
duration and your bond portfolio, especially next year. If you
want to get conservative, the words short or ultra short
or low duration better be on the title of your
bond font Just stay under the index and you'll be happy. Yeah,
the index is what six and a half year duration?
We look at portfolios that have anything probably three and

(14:42):
a half or less, yeah, probably trying to average more
like two. Yeah.

Speaker 1 (14:46):
Yeah, So on the ten you're interestingly enough, today it's
up to four point five to five and the two
years down. Now, we always hear the story and I
don't buy into it, but if one is true, then
the inverse must be true as well, and that is
when the yield curve inverts. That's negative for stocks. In
the last day and a half since the FED made
their call. I know, we already uninverted, but now we're steepening.

(15:09):
And so you're right. If if one's bad a a
inversion of the yield curve, then the other must be okay,
And the difference right now is a quarter of a
percentage point okay between the two year treasury that's the
inverted curve and the ten year That is the largest
spread for the entire year two years, probably two years.

(15:30):
I know it was the largest last year. I know
it was the largest of twenty twenty four. So really
not large by any stretch. No, it can definitely steep
and further. So if you're long dated, on your on
your on your bonds, you're gonna have some negative months
and quarters. So I definitely think we're at a place
where the Fed can now surprise again with even one

(15:51):
rate cut would be a surprise according to what the
bond market is saying. And you really could end the
year next year, Brad, with the short term rates around
four and the long term rate.

Speaker 2 (16:00):
Five or higher. You know, it's interesting. I keep hearing
five or five and a half or six. Oh my god,
there's no way the stock market could rally if it
was five. I went back to nineteen. In nineteen ninety four,
the Fed raise rates and then we're almost in the

(16:21):
same situation where the economy is doing really good. They
raised rates and then they got to a point where
they felt like there wasn't gonna be inflation, and they
lowered rates a little bit. They got all the way
up to the high sixes fund on fed funds, and
when they lowered they stopped about five and a quarter.
We're talking about we went up to five and a
half and we're gonna stop at four. So not even

(16:41):
as extreme as the nineteen nineties. And I looked at
the ten year treasury. It was over seven percent at
one point, and then that was happening at the early
part of the rally. So to say that stocks can't
go up if that happens doesn't look at history. And
so let's take a break.

Speaker 1 (16:56):
You're a little bit older than me.

Speaker 2 (16:57):
Hold on you.

Speaker 1 (16:58):
You probably remember a little bit more than me.

Speaker 2 (17:00):
But I've remember my first mornings was seven and a half.

Speaker 1 (17:03):
Yeah, any point in the nineteen nineties did anyone ever say, well,
you know, the ten year treasury is seven percent, No
way stocks can rally when that happened.

Speaker 2 (17:12):
No, but it is a little bit of where things
were coming from. But they were down to seven percent,
they weren't up to seven percent. But here's the thing.
To go back a decade, and things were multiple double digits,
I'll go back to you know, people longing for those times. Yeah,
And people will say things.

Speaker 1 (17:28):
Investors will say things like, if it ever gets to
five and a half or six or whatever, I'll I'll
load I'll sell all my stocks, I'll load up.

Speaker 2 (17:35):
No, you won't because you won't want it, because stocks
will be doing it. People will say, when do you
think the rates And I do think that there is
a ceiling on the tenure for this very reason. When
do you think that rates will go to six? Again?

Speaker 1 (17:49):
I would love that if they went to six, And
I give the same answer that I would have given
because we watched the nineteen nineties. It'll go there when
you don't want it.

Speaker 2 (17:58):
Not just you, No one wants. That's how it gets.
When you first started working, if you would have sold
someone a ten year treasury as an investment at seven percent,
how many clients would you have gotten at that point? No? Yeah, no,
you had You had the gross side of your portfolio
doing that in a month. So that's the point.

Speaker 1 (18:18):
The point is people act like those rates will go
and everyone will just back, you know, back up the
truck up.

Speaker 2 (18:24):
No they won't, No, they won't because they it wouldn't
get there if that were the case, and if it did,
if it does go there, by the way, people, oh,
I'm so worried about the ten year treasury troll price.
Put that out.

Speaker 1 (18:33):
The tenure might get to six percent, But if you
read the fine print of their report, they're only saying
that because they're wildly bullish on the market and the economy,
that you would have to be.

Speaker 2 (18:42):
The only way it could get there is if stocks
were outperforming everyone's expectation and nobody wanted it, And so
you should want long term rates to go up there
because the only way they get there is if the
if the rest of your portfolio is doing great, that's right,
that's absolutely right.

Speaker 1 (18:56):
We're gonna take our first pause. You're listening to Money Cents.
Kevin and Brad Kurston will be right back and welcome back.
You're listening to the money Sense. The advisors of Christen
Wealth Management Group here with you this morning. We were
talking about the FED meeting and the one day reaction
from the market, and I think it is worth a
look to remind people because of what history would tell

(19:16):
you with how often corrections happen, how often down days happen,
and even bigger market moves, so that we can be
ready for it with our expectations. Because most people look
at the returns of the underlying their underlying positions in
their portfolio and thinks that's what I'm doing. But they

(19:36):
can be their own worst enemy. It's not just the
underlying returns of your investment that are going to give
you a return. The most important thing is the one
that's most manageable, and it's your own investor behavior and
how you react to what the market is doing, and
even when you have new money, that you're not overreacting
to be too cautious when the market gives you an

(19:57):
opportunity to get in. And so if you're one of
those investors that gets too excited when the market's up
and too nervous when the market is down, you need
to have a more systematic approach to how you're putting
money to work or how you're taking your withdrawals out
and know that if you're in that distribution phase, that
you're continually replenishing my short term buckets so that at

(20:19):
no point do I ever have to sell anything that's down.
If I need money, I have some cash or cash
equivalents on the sideline, and I keep replenting that bucket
even when things are doing really well. It's hard to do.
I want to sell this.

Speaker 2 (20:33):
Thing that's doing well, to put it in something that
won't go down to the market corrects. It's a tough
thing to do. But if you know history and you
know that corrections are inevitable, then it's a little easier
to do. So let's take a look at five percent corrections,
they actually, on average, if we look at the market,
going back on my chart here goes back to nineteen
forty two happened three times a year, and so yes,

(20:55):
some of those could be ten, some of those could
be twenty. But on average, ones that get to a
five percent correction happened three times a year. We had
two this year, we had two last year, and so
we're a little below average.

Speaker 1 (21:07):
In the near term, you'll see what happens. This one
certainly feels a lot more like the one in August
with that big singular down day.

Speaker 2 (21:17):
Yeah, that one was kind of the bulk of it.
Ninety percent of that downturn was over in four days,
but you did have one big down day. If we
look at ten percent corrections, they happened every sixteen months.
We did not have one this year. The biggest sell
off this year was eight and a half percent the
middle of the summer, the last ten percent correction. Everyone
forgets these ten percent correction. You could be a year

(21:38):
out and nobody ever remembers we had it. It's fourteen
months ago. Ended on October twenty seventh of twenty twenty three.
That sell off, which I think ended up being about
eleven and a half, was actually bigger than the sell
if we had earlier in the year when the bank
failures happened. That one just got to ten percent earlier
in the year. But everyone remembers that one because it
had you know, it had a root cause. But sometimes

(22:00):
the market can correct for no good reason at all,
just that it gets a little ahead of itself. People
get nervous and really no reason at all, And that's
kind of what last year's start of third quarter selloff
was ended October twenty seventh. It was fourteen months ago.
And on average you get one every sixteen months, fifteen
percent corrections once every three years, and twenty percent corrections

(22:23):
once every five and a half years. The unusual thing
about the most recent twenty percent corrections is we had
one in the fourth quarter of eighteen, then we had
another one for COVID first quarter of twenty. Then we
had another one that really started at the beginning of
twenty twenty and lasted ten months. That five and a
half years, and you had three twenty percent corrections. Now

(22:44):
prior to that, you went the longest time ever without
a twenty percent correction. And now we've gone, you know,
not five and a half years, but we've got a
little bit here without another twenty percent correction. But that's normal.
And I think people are calling for something big but
aren't looking at history on the average. And that's the
other thing with bull markets and bear markets. The bear

(23:04):
market and market that goes down by twenty percent on average,
going back to nineteen forty two, it only lasts eleven
and a half months, eleven point one, almost exactly what
we had in twenty twenty two is exactly. Yeah, if
you look at the broad market, it was ten months.
If you look at tech stocks, it was a little
bit longer. So call it the average, but people miss
out on how long the average bull market is. The

(23:25):
average bull market is over four years. If we go
back to nineteen forty two. It's about four and a
half years. And they're all kind of different. Right, We've
had some long ones, we've had some short ones. So
let's just take a look at how long the most
recent ones are to give you a little bit of
perspective here. The two most reasons are relatively short. And
I mentioned these twenty percent corrections that cut these bull

(23:46):
markets off. The one that we're curly in call it
a little bit more than two years. We're up off
that October twenty October of twenty twenty two bottom about
two years. The one before that was about two years
one point eight years.

Speaker 1 (24:01):
Yeah, and even if you want to make the argument
about COVID, you could add that to the last one.
You could, and I think that would make it even
more dramatic, Brad, which would make would go all the
way back to two thousand and nine.

Speaker 2 (24:13):
Yeah, so that one was eleven years. But yeah, you're right,
you could call it. You could call it thirteen years
because you had the blip of COVID. Yeah.

Speaker 1 (24:20):
Yeah, whether COVID was a bear market in the sense
that you know, like what we had in twenty twenty two,
we had eleven straight months down and that's to me
that's more typical of some of these bear markets that
you see, but certainly not unprecedented to have a bull market.
I mean, the one that ended in the year two
thousand was over twelve years, right, and so but you

(24:43):
look at this current one if you exclude COVID and say, well,
the COVID one only lasted one point eight years. That's
why you know, to me, it's a little bit different animal.
But you look right now at two point one years,
excluding COVID, it would go down as the shortest bull
market in terms of time ever going back well I
shouldn't say ever going back to nineteen fifty, so it's

(25:05):
interesting to look at it before that. There was a
short one from eighty two to eighty seven, so you know,
certainly that was a bear market in eighty seven that
wasn't didn't have a recession with it.

Speaker 2 (25:17):
Probably more similar to the COVID blip, where it was
kind of there was a root cause that came and went,
and when it was gone, everyone kind of resumed resumed trading,
if you will.

Speaker 1 (25:29):
But excluding the COVID blip, like you're like, you're calling it,
five years is the shortest. Five years is the shortest,
and we're only at year two. Yeah, so yes, will
it feel like it's over if the market corrects, say
fifteen percent, Yeah, a lot of people will be calling
for that. I'm sure there'll be people out there saying, yeah,

(25:50):
see it's over. But that doesn't mean the end of
a bowl market. If you look at the twelve or
thirteen years from nine through through COVID, you had a
nineteen point nine percent correction in twenty eleven, In twenty ten,
you had a seventeen percent correction. In twenty twelve. I
believe you had a double digit correction in that. You

(26:11):
have to go take a look at twenty twelve.

Speaker 2 (26:13):
Yeah, was ten percent, ten percent, twenty fifteen and sixteen
back to back fifteen's twelve and eleven and a half. Yep,
twenty eighteen was almost twenty percent nineteen point nine. So
it does.

Speaker 1 (26:27):
Even if you're saying, hey, the ball market's going to
keep going, it doesn't mean there's not gonna be some
pain in the middle. It just means it would be
very unlikely for it to end here, meaning we're gonna
go down twenty.

Speaker 2 (26:38):
Pen And I think that's the reason to look at
your history and know that these corrections are normal so
that you don't think it's over, but it's more the
normal process of a bull market, and you're ready to
buy those dips, or you're also ready to derisk your
portfolio so that you can buy those dips if if
if you have new money that you're going to put

(26:59):
to work, it's okay to wait for one of those.
But also if you have new money that you're putting
to work and you get off to a good start,
it's okay to pull a little bit to the sidelines
so you can kind of preserve your early gains and
kind of live to fight another day at some slightly
lower prices. Because it's been a little while here since
we've had a ten percent correction, and if we go

(27:19):
another four or five months, you're gonna have some euphoria
built around this market and Trump and the tax cuts
and things like that. And that euphoria is what the
bell of the near turn top should sound like. Is
you can't find anybody anything, any articles out there, or
anyone saying anything bad about it. They give up on
bubble talk and they just throw in the towel and say, Okay,

(27:39):
we're all in. That's the sign of a near turn top.
And I don't think we could ignore what happened in
the month of November, especially with small caps. Small cats
got hit pretty hard yesterday, But in the month of November,
Brad the Russell two thousand was up double digits in
the month. Only twenty two other times has it been
up double digits in one month, and six months later

(28:00):
it was higher ninety percent of the time, and a
year later it was up on average fifteen percent. You
have the small cap index, which in November went to
make a new all time high in fifty two week high.
To me, when you make a new fifty two week
high in an all time high after three and a
half years of going nowhere, typically that's not the sign

(28:24):
of the top. If we look at other markets that
went a long time going sideways. You think about the
S and P five hundred brad in fourteen, fifteen sixteen, Okay,
when it made a new all time high in sixteen,
that was the beginning of another leg up, not the end. Yeah,
it was the beginning of a long period of very
consistent returns without monthly negatives for over a year.

Speaker 1 (28:47):
Yeah, the only one you can really point to. We
made a slight all time high fifty two week high
in two thousand and seven for the S and P
five hundred, and that did not it did go on
to make new highs obviously five years later, but it
did go right into the two thousand and eight recession.
That's one of the few examples where you go for

(29:08):
a long period, because that was five years having actually
more than that, seven years having gone nowhere, So that
that is the one example that a lot of people
point to. Certainly don't see signs of a two thousand
and eight style financial crisis at the moment, so to me,
it would have to be something else. What the Federal
Reserve has done with housing. People worry about that, but

(29:29):
really all that does to me is stabilized the price
of houses because people are still stuck in those three
percent mortgages and they're gonna there's not gonna be this
big flood of housing supply that hits the market which
would take prices down. So I don't think that there's
very much precedent for two, especially in that short of

(29:51):
a period of time, two recessions or crises being identical,
and banks don't lend the way they used to in two.

Speaker 2 (29:58):
Thousand and oh No, no bank balance ye. I mean
that's one of the reasons that everyone's waking up. And
while financials are number one step better, financials are better
sector performance wise this year than tech. It's because of
how clean those balance sheets are. And it's not just
big banks, it's all components of financials are much healthier
than they were a decade ago. And the earnings are

(30:19):
really picking up. Whether it's whether it's banks, insurance companies,
credit card companies, or even the investment companies. All very
good earnings and very supportive of the price movement that
they've seen that probably even slightly undervalue when compared to
the really good earnings of tech.

Speaker 1 (30:37):
That's right, So we take our next pause. You're listening
to Money since Kevin and Brad Kirston. We'll be right back.
Welcome back to the show. You're listening to the advisors
of Kirsten Wealth Management Group. Kevin Kirsten and Brad Kirsten
happy to be with you today. As a reminder, we
are professional financial advisors and our offices are in Perrysburg.
Give us a call throughout the week if you want
to set up a consultation or review your financial plan.
We're at the end of the year here, a lot

(30:57):
of people are retiring, changing jobs, making adjustments. Going into
the first year. It's a perfect time to sit down
with the financial advisor and make sure you're on track,
whether you're just getting started, well on your way, or
already in retirement. Give us a call at four one
nine eight seven two zero zero six seven, Brad. The
other thing that's in the news, government shut down, the

(31:19):
spending bill. Government shutdowns in the news. Kind of a
ridiculous bill. Mike Johnson, you know, you never know what
these with these senators and these people in the House.
It's I'm a Republican, I'm conservative, and then they get
in office and they don't really let's go.

Speaker 2 (31:35):
He said, we're not doing that anymore with the obnos
spending bills at the end of the year that everybody
is forcing. And then all the other Republicans were predicting
it's gonna happen again. They're gonna do it again. They're
gonna say, if you want to go home and have
Christmas with your family, you gotta sign this bill that
you haven't read yet. And here we are again. They're
doing it again.

Speaker 1 (31:51):
Yes, and they're gonna go home and have Christmas with
their family anyway.

Speaker 2 (31:54):
That's a ridiculous thing.

Speaker 1 (31:56):
Quite frankly, the perfect time to shut down the government
is right around Christmas. Nobody's gonna work anyway.

Speaker 2 (32:01):
Well, what does this mean?

Speaker 1 (32:03):
There's all these scared tactics that are out there too.
I heard a Keem Jeffrey say that if we don't
pass this, then Trump's gonna take your soul security.

Speaker 2 (32:10):
Like, what what are you talking about? That's the non essential.
And then when you see what the non essential is.
And by the way, everyone it never needs to come back.
No one loses a dime. They get their paychecks, yeah
plus plus Yeah, okay they might Everyone gets their money,
don't there's this thing that all this these certain workers

(32:32):
aren't gonna get their money. Hey, guess what if you're
taking a vacation and there's a national park, here's a
good thing. You won't pay to go in because there
won't be anybody to take your money. Yeah, how about that.
That'll be wonderful. If you go to Washington, DC around
the holidays, no one will charge you to go see
the Lincoln Memorial great or whoever wherever they charge to
open anyway, anyway. You know the ones that they charge
oh yeah, yeah, the ones where you have to pay

(32:53):
a fee to get into the National Park. There's not
gonna be anybody there. You just go in.

Speaker 1 (32:57):
Yeah, So isn't that It's just not that big of
a deal. And you look at the garbage that was
in this spending bill. This is the thing that Trump
ran on. This is the thing that Elon and Vivek
Ramaswani have been talking about from day one, is these
giant bills with all these just different Christmas ornaments on it,

(33:18):
and they talk about the bigger thing, we don't want
the government to shut down, but no one opens it
up and sees what's in it, and it's a big,
you know, flaming pile.

Speaker 2 (33:28):
No, it's a perfect example of what they're trying to
get rid of, is everything that's in these bills. So
I thought a.

Speaker 1 (33:34):
Couple of these things were interesting and looking at it.
So in the joint statement, Vice President elect Jade Vance
and mister Trump trash the fifteen hundred page legislation that
would fund the government till March fourteenth. Let's make it clean,
is what they said. We need to clean measure the
debt ceiling is one thing that I'm this whole ridiculous

(33:59):
thing about every single time we're gonna vote to raise
the debt ceiling when really we don't have a choice.
So they they're talking about Trump wants that to be
part of it, where we're gonna we're not doing that.
We're not doing debt ceiling, We're not doing that deb deat
ceiling anymore.

Speaker 2 (34:14):
Well, the market doesn't even react to debt ceiling or
the government shutdown stuff anymore at all, because it's just
all this all this puff your chest out, it's gonna
it's gonna take things down, and then then your constituents
are gonna be mad at you if you don't pass
this bill. It's it's quite the opposite. We need.

Speaker 1 (34:30):
We need to start calling calling people out for what
they are. Just because they have a Republican next to
their name doesn't mean that they always do good things.
And and same same thing on the Democrats side, they
need to do that as well. I mean, I'll I'll
give you this doesn't really have anything to do with
the spending bill, but i'll call it out right now.
Have you seen Mitch McConnell lately.

Speaker 2 (34:51):
Well, he's zoned out a couple of times where the
people thought he'd died. Well, now he's walking around with
this giant bandage on his head like he's the Nutcracker prints.
Oh okay, And I saw someone post it and be like,
you know, if we're gonna rip on Joe Biden and
you have Mitch McConnell stumbling around, if Republicans want to
be consistent, he needs to step down. Yeah.

Speaker 1 (35:10):
I mean, it's completely ridiculous. The guy is gone like
Joe Biden, and he's walking around with this huge bait.
I'm not talking about a band aid on his head. Brad,
he your kids did dance. You saw the Nutcracker enough.
He is walking around like the like the Nutcracker prints. Okay,
with the huge handkerchief around his head. But anyway, back

(35:33):
to the spending bill, Trump and Vance posted, Republicans must
get smart and tough. If Democrats threatened to shut down
the government unless we give them everything they want, then
call their bluff. The president. Alex kiss of death capped
a day of anger on Capitol Hill. So if you
look at the fury on social media where Trump's government

(35:54):
efficiency advisors Elon and Vivek denounce the bill, mister Ramaswani said,
it's full of acts of spending, special interest giveaways, pork
barrel politics must call the bill outrageous. House Speaker Johnson,
who hoped to clear the runway for mister Trump by
passing the bill, was forced to abandon his plans. In

(36:14):
addition to funding the government, this included ten billion in
aid to farmers, one hundred billion in disaster relief for
victims of Hurricane Selene and Milton.

Speaker 2 (36:22):
Okay, but it's also.

Speaker 1 (36:23):
Loaded with spending in sweetheart deals for Democrats, including listen
to this, this is the spending bill. The spending bill
included a legal shield for any Democrat member of the
January sixth committee. Oh, so that the Republicans are going
to pass that. I don't think Trump's going to waste
time with going after these people unless they truly broke

(36:46):
the law. But why do you need a legal shield?

Speaker 2 (36:51):
What to tell that you're nervous about what you did?

Speaker 1 (36:54):
Lead It's like when Biden gave Hunter a pardon for
eleven years in the past on anything that might come forward. Yeah. So, yes,
so this was part of this, Brad and a legal
shield for anyone on that committee. The measure also enabled
a pay increase for lawmakers. So there we go, three
point eight percent increase for lawmakers on their salary. So

(37:15):
let's just slip that in there while we're at it,
and I'm going to get a pay raise. Another provisions
continues to exempt lawmakers from purchasing Obamacare Obamacare marketplace insurance
allows them to enroll in the gold plated Federal Employee
Health Benefits program. So that's nice for them. That's already there.

Speaker 2 (37:32):
That MutS to just be an extension.

Speaker 1 (37:35):
So, you know, just talking about mister mister Trump and
mister Vance frowned on the congressional pay raises, which they
said would would have been given while many Americans are
struggling this Christmas. So it's just interesting to see, you know,
Hakeem Jeffries, who's the minority leader, says Republicans will have
to own the consequences of a government shut down.

Speaker 2 (37:55):
Okay, good, no, well fine, O got it your last statement.
I mean, Trump advanced saying everyone's struggling. I mean, what
are we talking about? The stock markets at are very
close to an all time high, unemployment's almost never been lower,
the economy is growing faster than anyone expected, what are
we talking about. Well, if we're going to call out BS,
yeah that's BS. Okay, come on, you're gonna call out

(38:16):
be struggling struggling.

Speaker 1 (38:17):
But if you're going to call out BS, I guarantee
that rhetoric changes on January.

Speaker 2 (38:21):
Yeah. Yeah, everything's fantastic. Everything's going to be fantastic. But
I mean, like you said, with everything, they're all politicians
in the end, even Trump, they're all politicians in the end.
But when they when they gaslight you and say things
are so terrible right now, but in three weeks it's
gonna be great. It's like, come on, because of what

(38:43):
we just did. Right So, but this is the kind
of stuff that the American people don't even understand, right.
It was like, do you want to shut down the God?

Speaker 1 (38:54):
Well, no, I don't want that, But they have no
idea what goes in and what little pet things, pet
projects go into these giant spending bills, and then we're
all surprised when we have.

Speaker 2 (39:07):
Quite frankly, I hope they just shut it down until
January twentieth. Just do that, don't do anything. It seems
like they're doing a lot. It seems like they're starting
there they're stoking the fire of wars, they're spending too
much money, all at the last minute, we're pardoning people
all this stuff. Let's just shut it all down until
January t.

Speaker 1 (39:22):
I mean, if you're the incoming president, it's the perfect
time to recommend a shut down. Yeah, yeah, don't mess
don't don't mess up the room before I get there, right, exactly.
So we've had them before. I mean some have lasted
what thirty forty days on government shutdowns.

Speaker 2 (39:39):
Yeah. I feel like every time I look at the
government shut down they're shorter than I think. I don't
think we've had one go No, I know, I think, well, yeah,
maybe not.

Speaker 1 (39:49):
Well the debt ceiling one, Okay, that's the one that's
hardly ever been shut We haven't raised it, and then
it's been like a day or two, and then the
Treasury secretary always comes down and be like, I can't
pay the bills.

Speaker 2 (40:00):
Yeah, it's so ridiculous. What am I gonna do? I
can't pay the bills? And now you sign this bill
and suddenly my checkbook's clear, right, right, that's the one
that's very short. The government shutdown one. We'll have to
go back and look, especially if we get the shutdown
and how long they've lasted, and then I'm sure we
can find the information of what the stock market has
done too, by the way, because it's not that bad.

Speaker 1 (40:21):
Yeah, it's not bad at all. Quite frankly, the stock market,
I'm sure is just I.

Speaker 2 (40:25):
Remember being in DC during one of the government shutdowns,
So this probably goes back to twenty ten and the
outdoor memorials, like the World War II Memorial, which is
the thing you just walk around. It's out in the open.
They put a fence that they had to erect around
it so you couldn't walk into it. So here we
have something that doesn't take any people for you to
look at, and we took time, effort and money to

(40:48):
erect a fence around it, and they had to sign
on it says because of the government shutdown, you can't
walk into this open, open thing that requires no people
to run.

Speaker 1 (40:57):
But we had to pay people and spend time to
put the fence.

Speaker 2 (40:59):
Up and then spend money to take the fence down.

Speaker 1 (41:02):
You know why, because that fence ends up on the
on the screen on CNN.

Speaker 2 (41:06):
Yeah. Yeah, look, government shut down causing you to not
be able to walk. You show like a crying child
to it like maybe a field trip. No, no, no, no, no,
I know exactly what they showed. They showed it an
old World War II veteran standing there with his family
in a wheelchair.

Speaker 1 (41:21):
He couldn't go in, he couldn't go in. Or maybe
there's like a field trip of field trip of elementary
students all crying.

Speaker 2 (41:26):
Yes because they could was what they wanted to say.
This was our trip of a lifetime and we couldn't
do it. Don't fall for it, everyone, don't fall for it.
It's all ridiculous. Or take our next pause. You're listening
to money sens. Kevin and Brad Curston will be right
back and welcome back and listen to the advisors of
Kers and Wealth Management Group. Brad and Kevin here with
you this morning. Ken, I saw an article in the
Journal today about GM and Dan Gilbert's plans continue plans

(41:49):
for Detroit. You know, Dan Gilbert had spent a lot
of money to expand UH and and rebuild things in
Quicken Loans, right or Rock No Rocket Mortgan Rocket Mortga. Yeah,
probably also Quicker Loads, but Rocket MORTGANE is the parent company,
and now he wants to continue it with GM and
revitalize the Renaissance Center place, the big office tower, all
the buildings around it, a few there's a mall there.

(42:11):
I guess that nobody goes to but tear down a
few buildings, rebuild, revitalize that entire area. The plan is
that GM and Dan Gilbert are going to spend one
point six billion to redo this, and all they want
is five point five I'm sorry, three hundred and fifty
million of tax subsidies. Okay, So we're gonna do all this,

(42:32):
and we want to make sure it's profitable for us
in a quicker amount of time, or not even just
profitable that we don't lose too much money where we
were gonna build it. But we don't want to get
taxed on our real estate before we put people in it,
and we don't want to get taxed on on things
before we have time to recoup the building.

Speaker 1 (42:52):
It's going to create jobs, yes, okay, when it's done,
it's going to create jobs for not only that.

Speaker 2 (42:58):
But you give we're gonna do the hard work. And
then what happens is all these other businesses and people
come and live here, and they spend money, and we
have more businesses and we have more restaurants and we've
revitalized your entire area. We're spending all the money. All
you have to do is not taxes for a certain
amount of time. And what's happening After Dan Gilbert has
saved the city, they're fighting him on this and GM

(43:20):
has said, we're gonna we're gonna tear the building down,
we'll clean it up, and we're gonna leave the space abandoned.
And Dan Gilbert says, either get the subsidies or I'm
not doing anything else. So I'll go back to Cleveland
and I'll build something there. And so it reminded me
and I had to go back and look of AOC.
After Amazon their headquarter to headquarters two point zero was

(43:40):
gonna be in Queen City, New York, and a it
was AOC's district, and she kicked them all out because
they they agreed to subsidies. That's why they took it.
They took it there. Second place was Arlington, Virginia. Amazon said,
we want tax subsidies. If we're gonna build and create
forty five thousand jobs for you, we want some tax subsidies.
Everybody's in competition who wants our headquarters Queen's wins, AOC

(44:04):
kicks them out, they leave and go to Arlington. And
I saw a year ago AOC was doing a victory
lap because there was some news story of Amazon halting
some of the build Well, all they did was they
finished Headquarters two point zero and then they were going
to expand, and they said, well, until we until we
fill all the jobs that we have available twenty five

(44:24):
thousand jobs, initially, we're going to halt the building of
our expansion of headquarters two point oh. And they are
fully done with Headquarters two point oh in Arlington, Virginia,
and are still filling about a couple thousand more jobs
of the twenty five thousand that they're they're that they're building,
and so more people living there, more housing, more aparkming house,

(44:45):
building houses, spending money in your community. And AOC didn't
want it. And even when she heard that they were
slowing down the rapid two point five billion dollar expansion
that they're doing in Arlington, they're slowing it down and
waiting until they follow the jobs. And she's doing a
victory lap, see told you, and points out the story
of how some of the construction work was just temporary. Well,

(45:06):
do we think we're gonna build for the next hundred years.
Of course, the construction works temporary. It's over when the
building is done.

Speaker 1 (45:13):
Yeah, but when the construction job is temporary, of course
that construction worker goes on to another construction job, which
is the same. That would be true of any job.

Speaker 2 (45:23):
I like saying, after I build my house, I have
to fire the people that worked on it.

Speaker 1 (45:27):
Yeah, that's how it works. That's how construction works. But
in addition, the construction worker doesn't lose his job. He
moves on to the next job.

Speaker 2 (45:35):
But there's an article of AOC saying, see, Amazon costs
that community jobs.

Speaker 1 (45:41):
But what happens is the twenty five thousand workers come in. Okay, there,
the construction worker already lives there.

Speaker 2 (45:47):
Yeah, he's already there, he has a house, he's doing
just fine.

Speaker 1 (45:51):
He already has a job.

Speaker 2 (45:52):
But Amazon's hiring twenty five thousand new people who pay
taxes in the community, spend money in the community. They
they live there, and maybe it creates another apartment or
a house that has to get built.

Speaker 1 (46:04):
This is where people have to wake up. I guarantee, Brad,
if you go into that school district, that school district
where Amazon went. They're probably building all sorts of beautiful
facilities now, by the way.

Speaker 2 (46:13):
Because there's all this money from the Amazon revenue from
not just Amazon, but all the people who have to
work there and commute there and move there and move
there and spend money, and all the businesses are thriving.
Let me know how Queens is doing if anybody visits Queen.
I'm sure Queens is fine. But the point is, cities
you should want businesses to come there because now you

(46:34):
grow and people move there. Yeah, because they're gonna work there.
That's how it works. And in order to get people
that the businesses to come there, you give them tax subsidies.
And guess what when the tax subsidies run out. And
Detroit would be the same way. Not only will you
get all the revenue from GM and everything that Dan
Gilbert is building, but you also get the revenue for
everything that came in. But eventually the tax subsidies run

(46:55):
out and everybody pays. So what they're missing is you're
going to get z Z. You're gonna get You're gonna
get whatever the tax is, call it twenty percent, you're
gonna get twenty percent of zero, or you're gonna get
zero on this small portion for a set number of years,
and then you'll get your twenty percent of everything else,
along with all the jobs that were created and all

(47:15):
the people that moved there.

Speaker 1 (47:16):
It's the kind of short term thinking that makes, especially
on the economy side of things, make the Democrats fail
over and over and again. Thanks for listening, everyone. We'll
talk to you next week.

Speaker 2 (47:30):
You've been listening to Money since, brought to you each
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or Kevin professionally, call four one nine eight seven two
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(47:51):
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