Kersten Wealth Management Group - Money Sense 1-04-25

Episode Transcript

Speaker 1 (00:00):
Hello and Happy New Year, and welcome to the show.
You're listening to the advisors of Kirsten Wealth Management Group,
Kevin Kirsten and Brad Kirston. Happy to be with you today.
Was we start twenty twenty five? Brad? The market, the
overall stock market finished the year on a whimper and
is not starting the year very well either. The proverbial
Santa Claus Rally that we talked about the last couple
of shows doesn't look like it's going to pan out.

(00:23):
The overall SMP five hundred was it fy nine hundred
and seventy four prior to the official start to the
Santa Claus Rally. It's one of the indicators we look
at to see what kind of year we're gonna have
in twenty twenty five. Off one hundred and twenty five
to one hundred and fifty points off of that at
this point, how many days left? Then? Just through Friday,

(00:44):
so it's at thirty nine and it was nine hundred
and seventy four before Christmas Eve, so we'll see. I
mean there's a lot of areas of this market, Brad,
that are significantly sold off. I mean, it's not just
the s and P five hundred, SMPF five hundred is
off approximately two hundred and forty points. Yeah, if you

(01:04):
look on a closing basis, the highest to lowest highest
closed was six thousand and ninety uh and so three
point seven percent off of that close to close. If
you look at the highest point, it almost got to
sixty one hundred on the s and P five hundred
and six zero nine to nine point ninety seven, and
so that highest point to the lowest point today would

(01:28):
be not not even four and a half percent, but
minus four point four percent. So yeah, you're getting to
a point where the overall market is kind of at
that uh, not healthy but very typical correction period but point.
But there are there are pockets of the market that
are approaching ten percent off of their of their peaks
and uh and so not. You're kind of getting what

(01:51):
you expect, which is in down days you have the
value dividend paying sectors doing a little bit better. But
you also have the areas of the market like small
caps having some up days when the market is down
and Thursday gave us a day exactly like that. Those
have also been beaten up a lot more. Brad and
the mid caps are down eight point six percent from
their December highs eight point six on mid I'll take

(02:14):
a look at small here right now, but I believe
the small is even worse international stocks over the last
we can just do look at the last month here.
The one month return on international is about negative two
point four one month return on small is over nine

(02:34):
percent at the moment. Yeah, in terms of from the
high point. So you have a full blown correction going
on in pockets of the market. The S and P
five hundred not as much. And these are the areas
that really had the most optimism optimism following Trump's win.
When Trump won in twenty sixteen, small caps took off,
had a great year in twenty seventeen as well, and

(02:57):
we look at sort of mirroring that after he won
this time around, but then really fizzling out starting in December.
So it remains to be seeing what kind of year
we're gonna have in twenty twenty five. You know, we
have a lot of good things I think are going
to set up for that. But let's let's first recap
twenty twenty four for the year. And you know, there

(03:17):
there were some numbers I was looking at on this
chart too, Brad, that you were bringing up in previous
shows that I want to point out. S and P
five hundred was up twenty three percent on the year
excluding dividends, led by the communications services sector. Number number
one sector in the sm P five hundred for the year.
Number two sector was technology, Number three was financials, and

(03:37):
number four was consumer discretionary, so we did have some
value in there with financials. Large forum was only up
four point four on the year. Emerging markets was up
eight point one. Small caps had a good had a
decent year, up eleven point five, mid caps up fifteen
point three. But look at these three year numbers, and
I know it's a little bit of a cherry pick
because we're going off the high, but the further you go,

(04:01):
it's not just oh, we had one good year, one
down year, so average to two. We're now three. And
for some of these indexes, the peak wasn't exactly three
years ago today. Many of these indexes peaked out in
the summer of twenty twenty one, before the twenty twenty
two bear market. And you look here, we're going on
three and a half years for some of these indexes.

(04:23):
The small cap index only one percent higher and where
it was three years ago, midcaps only three point seven
percent higher than three years ago, and even the S
and P five hundred, which has done great, only up
eight point three percent annualized over the last three years.
The point being, you're not set up for anything other
than what would be typical five and ten percent corrections.

(04:47):
And if we move up a lot, maybe you're set
up for something more than that. But at this point,
I don't feel like you're set up for any more
than just a buying opportunity. If we have one more
wash out day, I think the buying opportunity is upon
us to set up for, you know, post inauguration and
all the momentum you're gonna see from maybe the first
one hundred days and all that's gonna happen. So how

(05:07):
do we set up in twenty twenty five for those
gains if those gains are to come. I think we
have a really nice market commentary this week, Brad, which
goes through each bullet point of what we need to
see to get those gains in twenty twenty five. So
this can be found on our website, Kirstenwealth dot com
under the Weekly Market Commentary section. The title of the
piece is Keys to Stock Market Gains in twenty twenty five.

(05:31):
Of course, we had an excellent year in twenty twenty
twenty three, followed by another really solid year in twenty
twenty four for the overall markets. Even the indexes that
had leg behind, like small and mid still had a
decent year in twenty twenty four. So how do we
set the stage for twenty twenty five. The economics are
pretty good, okay, Corporate profits are rising, The Fed is

(05:55):
cutting rates. I mean everyone's talking about the Federal Reserve
and what they're gonna do. What's the trajectory? M hm, Okay,
what's the trajectory? Yeah, they're not. They're not turning the
boat and doing a oneint eighty. They just maybe slow
down the pace of lowering or in their mode of loadering.
And and there's gonna be cuts in twenty twenty five.

(06:15):
There's gonna be cuts in twenty twenty six. It just
might be spread out longer. So we do have the
Fed FED cutting rates, which keeps more than likely the
bullmarket untracked investors will have to grapple with market pricing.
A lot of good news leading up to this, obviously,
with two good years in a row, but positive surprises
drove stocks higher in the last year. Uh and uh

(06:35):
that may be a little bit more difficult to come by,
but still doesn't preclude having a good year for the
overall market. So the big thing is the inflation pressures,
lingering interest rates even though the Fed's cutting. Maybe touch
on that for a second here, Brad, So I think
investors get confused by this. The Feds started cutting in September, Okay,

(06:56):
overall a net positive for market stimulative Why aren't mortgage
rates down? What? Why aren't interest rates down in general
if the Fed's cutting away, Because there's this assumption that
the Federal Reserve controls all is all powerful in terms
of interest rate. Well, the handwriting was on the wall
that they were going to cut at some point. So
the move in interest rates and therefore the move and

(07:19):
mortgage rates happened in the about four months prior to that.
And the low point for rates last year was the
day before the FED cut, And so they cut. But
what rates like rates? What rates like the Fed controls?
People say the Fed lowered interest rates? What does that
even mean? They're not lowering mortgages more lower? Thinking that
corresponds to mortgage is the lowering the overnight Fed funds rate,

(07:42):
which you're gonna have some other rates that kind of
go along with that. It's basically what the banks hold. Yeah,
you know, the banks don't have your money. They don't
have your money. Your money's at the Federal Reserve. Yeah,
and it's what they pay the banks to hold their money,
and it should be what most money markets are invested into.

(08:03):
The overnight Fed funds rate A one day excuse me,
I try, it's what the banks pay the Fed to
hold their money. And then you know, also maybe I
guess seven and a thirty day treasury is what the
money markets should be holding. If you look at the
underlying holdings, all of those are going to be affected
by what the Fed does, and so what that's what
will move with each Fed rate cut. But what moved

(08:25):
ahead of that were longer term rates in the anticipation
of where they thought longer, longer dated rates would be,
and so came down a little bit and had now
moved up a little bit. That hasn't slowed down housing,
though the most recent report for housing was a huge
beat for initial initial pending home sales, So there are
some good things out there that are kind of turning

(08:46):
the corner, and housing is one of those, even though
rates have kind of moved up off that box. So
just because you hear a news story that says the
feder Reserve is cutting rates doesn't necessarily mean you'll get
this huge opportunity to refinance at a significant lower rate
if you had bought a house in the last year
or two. So when we look at entering the third year,

(09:08):
you know, to see the bull market in particular, began
on October twelfth, that was the low point twenty twenty two.
History suggests this bull market has a good chance of
getting to the third year if you look in a
year where you don't have a recession. Okay, I don't
think that. I know a lot of people aren't calling
for it, but of course that doesn't mean anything. You know,

(09:28):
the so called experts were calling for a recession in
twenty twenty two that didn't happen, So it doesn't necessarily
mean that it won't happen. But the economies on pretty
solid footing and corporate earnings are pretty good. If we
had a recession, it would seem to be a little
bit farther off than twenty twenty five, And if you
look at a bull market where we don't have a recession,

(09:49):
the odds that you have a third positive year are
pretty good. For bull markets that get through year three,
the SMP has averaged much more modest number, only it's
only five point two percent, so it is a much
more modest number in that year three on average, and
over if you had excuse me, the bulls that didn't
make it through the third year all had either recessions,

(10:12):
a FED that was increasing rates, or in the case
of nineteen eighty seven, excessive speculation. Nineteen eighty seven didn't
make it to the third year, but at one point
in time it was up forty percent year to date,
So certainly I would say we'd probably be on this show,
Brad if we're up forty percent year to date this
year and talking about taking risk off the table. Right, yeah, right,

(10:33):
So those were the examples where you didn't get to
the third year there was either a recession or a
FED that was tightening, neither of which we have right now.
So the chances for another positive year and twenty twenty
to five are pretty favorable given the high probability that
we will have economic growth, and the FED is not
likely to increase interest rates this year. So certainly if

(10:55):
we have resurgent inflation, that could take the rate cuts
off the table. Speculation could get out of hand. Nothing's
wrong with that. As long as you prepare for it,
that's okay. The bull market could have a difficult time
getting in the third year of any of those things happened.
So year three has been pretty good if you don't
have sort of those things on the horizon. I mean,
talk a little bit about that recession. It's kind of

(11:18):
hard to see given where profit margins are and what
companies are doing. Yeah, and there's a lot of ways
to measure it, and there's a lot of there's a
lot of indicators that are leading indicators for things like that,
and they're going the other way. I mentioned the pending
home sales, initial jobless claims. Both of those were this week.
Initial jobless claims were much lower than expected, and we

(11:40):
had initial moved on Thursday morning that was up because
of it, and the same thing on Christmas Eve. You
had on the thirtieth and thirty first some housing numbers
that were both much better. And so those are just
economic indicators of growth. And so yes, while you could
have a downturn and maybe the guidance of earnings, it
doesn't look like any economic measure right now is doing

(12:02):
anything but turning around and accelerating. And so in the
next quarter or two, there are not many measures of
the leading economic indicators that would show any recession coming up. Well,
and look at some of these figures here too, Brad,
when you're looking at whether or not stocks rise or
fall when Fate Fed rate cuts begin. The FED rate

(12:26):
cuts here in this case began versa with September right
September September, we have double digit gains in April of eighty,
April of nineteen eighty, October of nineteen eighty four, when
the FED was cutting rates, June of eighty nine, nineteen
ninety five. There's a lot of similarities right now going on,

(12:47):
and then of course August of twenty nineteen, all had
double digit gains six and twelve months later. But here
were the negatives. Okay, when the FED was cutting rates.
They started cutting rates in September two thousand and seven. Okay, Yeah,
that was in response, and it continued to basically a
complete meltdown. Yeah, to slowing economic numbers, but they were

(13:11):
cutting rates not because inflation had moderated, but because the
economy was slowing down, because the economy was melting down.
How about January of two thousand and one cutting rates. Yeah,
once again, in recessions, we need to step on the
gas a little bit. Things are slowing down too much.
That's right. June of nineteen eighty one. Not a lot
of people remember it, but there were some similarities to

(13:32):
those early nineteen eighties to what we had in twenty
twenty two. The FED was cutting rates in June of
nineteen eighty one because nineteen eighty two had a recession
and they were trying to stimulate. And then of course
July of seventy four, nineteen seventy three and seventy four
were really rough years for the overall markets, and so
in July of seventy four the FED was cutting. So

(13:53):
if you look at these other periods of time, it's
in my opinion, much more similar to what we have
going on right now. Yeah, And if you think about
the other ones you mentioned there, the Fed's cutting because
the economy needed it, and here the FED is backing
off because the economy doesn't need it. You exactly. You
really have to go away between the lines of what
the FED is saying. The economy doesn't need us if

(14:17):
lation is slowing down, so we're gonna cut a few
more times, but things are too strong for us to
keep going. We do not want an overheated economy to
where we have to step in and go the other way.
We're just gonna slow down, be a little bit Dowta dependent,
and if things slow down, we'll be here, and if not,
we're going to back off and only cut a few
times next year. Those are all positive things, and post meeting,

(14:40):
all the economic indicators have proved the FED right with
those statements because everything has been a little stronger than
I anticipated. Number three on here in terms of what
we're looking for to see if the market can continue
into year three and have a positive year once again.
This cann be found our website Kirstenwealth dot com. Corporate
America must continue to deliver strong earning strowth, There's no
question and about that. The estimates around two hundred and

(15:02):
seventy five per share for the S and P five
hundred in terms of earnings. That makes evaluations, you know,
slightly above twenty times earnings but that's a pretty good
in terms of if that estimate pans out, that is
about almost a fifteen percent increase from the year prior.
So if we can certainly grow at that double digit pace,
that will certainly support stock prices overall. The one thing

(15:24):
I keep hearing Brad in terms of earnings and things
like that, tariffs present one of the bigger risks of
profits because of potential impact on profit margins and the
likelihood of retaliation. I I think the tariffs are not
a non story. Yeah, I do too, And I think
any any markets sell off because of it is I
hope it, Yeah, a reason to buy because two things.

(15:46):
I love it when the market sells off on nonsense.
Oh isn't that's the best? Or how about on something
you know that's going to be temporary? Right, tariffs are
not going to stay there any more than they have
to to negotiate geopolitical stuff. Same thing, very temporary and
geopolitical seems to not have any effect anymore because one
people realize it and two or more energy independent. So

(16:07):
it is a non story. But the tariffs, to me
are a non story. We kept a few tariffs on
longer term, but show me where they had an impact
on anything in the economy for the long term. I've
yet to find it. But any of the tariffs we're
talking about here are ninety percent negotiation tactics to get

(16:28):
better trade deals and nothing more. And then the last
thing on here, fiscal regulatory and trade policy offers more
upside than downside. Markets were, i would say past tense.
Now at this point, Brad, markets were pricing in a
lot of optimism for twenty twenty five. Trump is expected
to reduce regulations and cut taxes while using the threat

(16:51):
of tariffs more than the threat of tariffs, more than
the tariffs themselves, to achieve policy objectives, including slowing illegal
immigration and reducing barriers. Yes, there was a lot of optimism.
Trump came to the floor and rang the bell that
was getting everyone excited. But at this point, are we
are we lower on the S and P than the
election Dight? No, We're slightly higher, okay, but barely so.

(17:15):
That optimism. Yes, I like the fact that we're going
to stimulate the economy by deregulating, cutting red tape, and
improving taxes. But the narrative up until about the last week,
Brad was okay, that's great. We think all Trump's policies
are great, but it's already priced in. Yeah, not anymore.
It's definitely not. It's definitely not. And I don't think

(17:36):
the full impact of tax cuts for corporate earnings can
be is going to be priced in. There will be
a little bit of momentum with small companies, there will
be maybe a little bit of a knee jerk reaction
for them to outperform a little bit, but we won't
really know until twenty twenty six, six and seven how
much it's going to affect the bottom line. And I

(17:57):
think that's where you could get some real upside surprises. Yeah,
and I you know, it's funny how narratives go with
any of this stuff. Once a narrative sort of locks
in no matter what happens in the market, no one
ever changes. And so the narrative, because of the rally
that happened in the what week and a half following

(18:17):
the election, Yeah, one huge day and a few more
follow on days, the narrative was all the great things
that are going to come from the Trump presidency have
been pulled forward, and even now that the market has changed,
people are still sticking with that narrative. Well, it was
just a big pull forward. Well have you seen the
levels of the market, right, It's like, what's going on?
You can't continue to say that if the market is

(18:40):
basically what, modestly higher from election day? Right, So you know,
And here's the other funny thing. I see investors make
the same mistake too, Brad. They'll they're nervous, they sat
out whatever, And there's this big increase after Trump Trump won.
If only I had got in at that price, I'd

(19:02):
be fine. I'd be fine. I can't believe it. I
met and then it comes back down. I was like, well, yeah,
it looks like things are worse. So here we are, though,
you know, I will look up election the day before
the election, the day after the election, right, just let
let's talk about that, because we're almost back there. We're
not quite back there. But there was a lot of
people who said, jeez, I should have bought right after

(19:23):
the election, and they didn't. And now you're getting a
chance again. Nothing's really changed, The narrative has not changed.
The only thing new in the news was two terrorist
attacks two nights ago. But nothing else has really changed.
And the anticipation of what's gonna come with what the

(19:44):
wind at the back of companies with the regulation and
taxes is still to come. So let's think about that
and talk about a strategy for getting fully invested for
twenty twenty five. You're listening to advisors of Cherson Wealth
Management Group. We'll be right back and welcome back. You're
listening to advisors a Kerston Wealth Management Group and Kevin
here with you this morning. Kevin, we were talking about
the current level of the market that has now sold

(20:05):
off about three and a half to four percent, depending
on how we finished the week out here. But the
post election rally has kind of faded. And where we
sat right before the election the Monday before the election,
about fifty seven hundred slight upday on that Monday, slight upday,
maybe close to one percent on Tuesday election day to

(20:27):
get us to the high fifty seven hundreds. And then
you had this big two percent upday post election once
the results were in. And so where did that bring us?
It brought us It went from fifty seven fifty, call
it on average the day or two before the election
to about a little above fifty nine hundred. And where

(20:47):
are we today. We're below fifty nine hundred. So if
you had said, wow, I didn't want to buy that
big day after the election, and then it kept moving
and then I had to wait. But now it's coming
back down and I don't know where the bottom is.
You're you're basically buying lower than the day before, the
day after the election. You're buying a little higher than

(21:09):
the day of the election and the day before the election.
But at some point you have to say to yourself,
am I am I a trader? Or am I an investor?
Am I a short term investor?

Speaker 2 (21:18):
Or?

Speaker 1 (21:18):
A long term investor? And for anything that is a
longer term dollar, when you're looking at three and a
half percent closed to close sell off like we're looking
at now, or a five percent sell off if it comes,
you have to decide what is my strategy? And at
some point I'm going to get fully invested and if
you and I'm going to take a little risk off

(21:39):
the table later, I need to have a plan for
how I'm going to do that. But a certainly any
high to low five percent sell off needs to be
considered as an entry point for people, right. I mean,
if it's if this is long term money, which it
is for almost everybody, or you shouldn't be buying in
the first place. You should be happy anytime you have
any sort of those correct any of those correctives of phases.

(22:00):
So Brad changed the topic a little bit, a word,
a little bit I get, I get asked. It's a
consistent ask. It's you know, there's really no period of
time where I'm getting asked about this more. I'm getting
asked about this less. And that is and probably some
of this is as a result of the huge marketing

(22:22):
blitz that goes on to try to sell golden precious metals. Yeah,
and I even want to segue it a little bit
to cryptocurrency a little bit because one of the things
I hear about cryptocurrency and who knows, we're we don't
like it, We don't. You don't have to invest in
everything that we like or don't like it. It's not,

(22:42):
it's just not. There's a lot of investments it doesn't
fit with what we do that that that don't fit
a retirement portfolio. Can invest in art or collective collect cars,
baseball cards. It doesn't fit in the retirement portfolio for
what for what we do. But the one thing that
I don't know if I was in the cryptocurrency space.
I keep hearing and I feel like they sell it

(23:03):
this way to make people feel better, but based on
the track record and the history of the performance, should
kind of make you feel worse. And that is Oh,
it's digital gold. Well, if it's digital gold, I'm looking
at this one hundred and ten year chart of gold.
I'd want to stay away from that, moniker. Yeah. Yeah,
I don't know how gold gets this safe haven moniker

(23:26):
because or that it's some some good investment. Here's the thing.
If I saw a chart of gold, that would not
like it without it, that looked like the Dow Jones
from one hundred years ago. Either. The reason I find
comfort in history and facts and looking at what's happened
is is it is. It is a little bit of

(23:46):
a guide for us. It's a it's a it's a
guide line for where we're gonna go. Yes, there's gonna
be fits and starts along the way. And I look
at this chart of gold. I don't know how anyone
can ever say that this is something that's gonna help
me with my long term wealth. Yeah, prospects Okay, So
Brad in nineteen fifteen, Okay, I'm about factoring in inflation,

(24:10):
just just the raw number. I don't know where the
DOW was in nineteen fifteen. You're probably looking up you
can probably look at up ten probably something like that.
Thousand was at forty four thousand recently in forty two thousand. Now, well,
I know that in nineteen eighty seven when we had
the huge crash we had, I don't think we had
ever had a two hundred point day up or down

(24:31):
right now, So think about what that means. We have
to look at it when I'm talk While I'm talking
about this, gold was at six hundred dollars announced in
nineteen fifteen. Everyone's really excited about it now that it's
at what two thousand, four hundred, two thousand, five hundred
something like that. I don't really follow eighteen fifteen. It
was a six nineteen, nineteen fifty, nineteen one, five fifteen.

(24:52):
So if you had bought it one hundred and ten
years ago, okay, you'd have made you know what, four
times your money over one hundred and ten years. Okay.
But here is even worse. There was a huge increase
to the value of gold going into the nineteen eighties,
and it was at two thousand and five hundred in

(25:13):
nineteen eighty and just got back to two thousand, five hundred. Yeah. Yeah,
And I think that's what people miss when they hear
gold at all time high. Yeah. I took it twenty
years to get there. Twenty This is forty five. Oh,
took forty five years. So all time high means it
went sideways for how long? And in this case it
was forty five years. So I'm looking at something that

(25:34):
is basically not even kept up with inflation. So they
call it a store of value, but I'm pretty sure
inflation from nineteen fifteen is more than this. But the
Dow Jones, I know, in the early nineteen thirties was
at like one hundred. I don't know where it was
in nineteen fifteen. I have it here. So nineteen fourteen
the Dow closed at fifty four point five eight, so

(25:55):
I can call it fifty five dollars nineteen fifteen. I
don't know what's going on in fifteen, best year in
the history of the stock market ever eighty one point
sixty six percent up and closed just below one hundred.
So you were almost dead on when you said one hundred. Yeah,
the Dow was basically out one hundred and nineteen fifteen. Okay,
so one hundred to forty four thousand. That does not

(26:15):
even include the dividends you would have received. Gold pays
no dividend, right, Silver pays no dividend. Crypto pays no dividend.
H Okay, So we're going from six hundred to twenty
five hundred versus going from fifty oh okay, sorry, yeah,
gone to forty four thousand. Yeah. Well, clearly, you know,

(26:36):
because the sales pitch on the radio is clearly you're
gonna the stock market's gonna drop. Clearly it always starts
with that, Yeah, there's gonna be a drop of fifty percent.
I think we clearly know which one it's gonna it's
gonna be. Well, the gold regularly, from nineteen fifteen to
nineteen twenty nine, gold drop from six hundred to two hundred,

(26:56):
then rallied back to eight hundred, then for the next
thirty years proceeded to fall to one hundred. I mean,
you're not saving yourself volatility here. Silver's even worse. I
hear people talk about silver. Oh, silver is great, It's
even worse. In nineteen fifteen, silver was at twenty dollars
an ounce. It was just recently at twenty dollars an ounce.
Now it's it's what in the thirties. And silver peeked

(27:20):
out in nineteen eighty at one hundred and forty dollars
an ounce and is in the thirties right now. So
if you bought it in the eighties, you're still just
waiting to get back waiting to get back to even
forty five years later. It was like, wow, it helps
with inflation. You know, you want to own precious metals
for inflation. What did stuff costs in nineteen eighty compared
to today, Because if you put it all in silver,

(27:41):
you're not keeping up with So that's the other narrative
that I don't understand. Brad Well. We always talk about
the batting average of if you have higher inflation, what
keeps up with it? The batting average for stocks is
pretty good. It's way better than the average up year
for the stock market when you have inflation at a
low point, going higher or just going higher. In general,

(28:02):
gold and silver are barely above a fifty percent on
those inflationary years. Well, and then you go back to
the to the third thing I mentioned at the beginning,
of the segment there, which is cryptocurrency is like digital
gold the fed. Jerome Pile said it. Jerome Pole said it, Well,
if by digital gold you mean I'm going to buy
it and it's going to be worth the same forty

(28:23):
five years later. I don't know if I was in
the marketing for the various cryptocurrencies, I don't know that
i'd want. People won't figure it out. But yeah, it's
amazing to me that something that has this bad of
a track record can have this big of a follow
or how long it can keep up the the ruse
of it's a good investment. No. Yeah, now I just

(28:45):
said something with this bad of a track record can
have this big of a following. Yet you and I
still root for the Cleveland Browns. So the Cleveland Browns
of investing gold and silver, yeah, have had it. Yeah,
they both have a huge follow and a delusional fan
base that thinks next year is going to be the year.

(29:05):
Oh my god, you didn't realize how many similarities are
kind of realized every similarities there were gonna be. We're
gonna take our next pause. You're listening, money Sense Bred
and Kevin Kirsten will be right back and welcome back.
You're listening. Advisors A Kirsten Wealth Manager Group, Brad and
Kevin here with you this morning. Kevin saw a consumer
confidence chart and it's definitely one that I think most

(29:26):
investors would get wrong if they looked at it. When
consumer confidence is low, you actually want to you want
to be a buyer in that. We're kind of sitting
right in the middle, and we've had a few up
months and then a few down months. Actually it's it
just ticked down, and I'm gonna make a prediction that's
gonna tick up. For one reason. Gasoline prices are at
a three and a half year low. Cheapest is May

(29:47):
of twenty twenty one, and I saw some coming back
from Columbus this weekend that were in the low twos.
And I know you think it's insignificant to the bottom line,
but when people over time spend less at the pump, one,
they feel more confident about the dollars they have in
their pocket and they will spend more. And that works

(30:07):
consumer spending. Although it's a smaller portion than say government
spending in our economy, it can trickle into just spending
in general over time. And so if we have persistently
low gasoline prices this year, I'm saying that consumer confidence
will go up because people will feel like they have
more money and they will be spending more money and

(30:30):
investing more money. And so both of those are good
for the stock market because it's good for stock earnings,
but it's also good for just regular flows into the
stock market. When people have more money, they're making more
contributions into both retirement plans and accounts and also into
non retirement accounts when they're getting those. So yeah, I

(30:51):
think there's a lot of good and not a lot
of bad you can find in gasoline prices being persistently
low here for the last three and a half years. Well,
and a couple things on the consumer sentiment part of that.
I mean, if you look historically at the stock market
and consumer sentiment, and when consumer sentiment was at its
highest point, how far back you have the chart going, oh,

(31:14):
this is gasoline sorry consumer sentiment, Uh, give me a
sec out here, I'll pull it up. So it's at
some pretty bad times to invest. So I think that's
part of what you have to be killed. Yeah, because
when you have a stock market tanking, consumers are not
going to feel good so that it's not just the
dollars in their pocket or inflation. They feel the absolute

(31:37):
worst when their four to one k portfolio has taken
a hit. So yeah, there are these ebbs and flows
high range, low range, and then there's these spikes down.
So yeah, it's it is a little bit cherry picking
to say, let's just take the and we've done this
the eight lows and the eight highs and consumer sentiment,
and when would you want to be an investor over
the long term. Obviously it's the trust because you're buying

(32:00):
the dip. You're not just buying the dip, but you're
buying say the eight lowest dips of the last fifty years.
But I'm talking about when we're just in that range,
and when you're at the low end of the range,
you also want to be a buyer because it means
that that one you might have gotten a short term
dip in the stock market, but two you're on your
way up to better times for how consumers feel because

(32:24):
they're going to be spending more money. It's true. But
also another number that that just came to mind that
I just looked up is does it has it over
time become less and less of a percent of someone's income.
Therefore not as you talk about that fill in the tank, right,

(32:46):
So if you look it has to because we're one
of the If you look at one of the high points,
which was two thousand and seven, the consumer spent about
six percent of their income on gas. Today, we only
spend two point seven percent of our income on average
on gas. And if we're going we're going to stay
in this range. You're right, yeah, you when you get

(33:06):
down into the twos again, and we were in the
twos in two thousand and eight, sure absolutely. I mean,
when you get to that low NGE, it might be
half of what somebody was spending, So you're right, it
doesn't have as much of an impact, right, And we
spent most of the nineteen nineties between two and three percent.
The spike really came from really from the later years

(33:29):
of the Bush administration. That spike where the first time
we ever got over three dollars per gallon. It's amazing
though that is now fifteen sixteen years ago on gas prices,
depending what your starting figure you're looking at, if you
go back fifteen years, gas prices really haven't moved that much.
But what has changed dramatically. Is how that what percent

(33:53):
that is of someone's income. So the first time around,
when gas prices in two thousand and six and two
thousand and seven went over three or four dollars a game, Allen,
it was much more painful than it is today to
the to the average consumer, I don't hear much talk
about it, but when you get these wild spikes up
or you get these historic lows, I mean, you know
that big spike like you mentioned in the at the
end of two thousand and seven and then plummeting down

(34:16):
to at the beginning of two thousand and nine to
be for regular gas almost a dollar fifty. We got
almost down to that during COVID just because of excess
supply and nobody being able to go anywhere. But one
year later you went from a dollar seventy five to
over five dollars because everybody is out driving and you
have an increased supply that much, and rigs got pulled

(34:39):
up and took a while to really increase rig supply again.
So yeah, that was a dramatic impact. But we have
kind of steadily gone down now since that peak, and
so now here at a three and a half year low.
I think over time here, if we're staying here in
this low range, it will mean a little bit more
dollars in everyone's pocket. Yeah, that's right. So yeah, and

(34:59):
I think think that you know, any sort of savings
that can be you know, directed, more than likely that
money is directed right into the economy. Not necessarily, well,
it could be. It could be usually short term adjustments
like that aren't really directed into savings or anything like that,
where people say, now I saved a little bit of
money at the gas, so I'm going to increase my
four oh one K. Yeah, no, no, no, right, no,

(35:21):
you might just spend a little bit more. Yeah, a
big tax check might be that a bonus increase pay.
I okay, every time I get increase of pay, I'm
going to increase my four to one K contribution. You know,
those three are probably more typical for let's get some
increased spending or increased investment going. But that little bit

(35:43):
of incremental money that you say, because inflation is going
down or paying at the pump is going down, just
all the inflationary numbers in general, just like they were
bleeding out of spending as inflation was going up. And
we felt that in twenty twenty two, the opposite is
still happening. You do have inflation coming down. Yeah, and
well this year is going to be the inflation numbers.

(36:05):
Maybe in twenty twenty five, BRAD might be as important
as any other number, because we had the huge spike
up in inflation in twenty twenty one, in twenty twenty two,
even started in twenty twenty and so we kind of
knew the writing was on the wall, just when when
is this going to end? And it eventually peaked out
and started falling. Okay, So then we're on this trajectory

(36:28):
where we're coming down from nine percent inflation, and now
that we've sort of landed somewhere in the three percent range,
what's the next move? You know, is it to four,
which would be very concerning, or is it to three
or lower, which would really, you know, be what the
Fed's goal would be. You start seeing that inflation number

(36:49):
tick up. I think that that is the one danger
for stocks in twenty twenty five, because you know the
first step would be the Fed would say we're not
doing anymore, and then if it lingered in continued for
six to twelve months, they have to go the other way. Yeah,
that's the big risk for stocks. Yeah, that'll definitely be
one where you could get a while no one's paying attention,

(37:11):
you get start getting some under the hood inflationary numbers
that are gonna scare the market. You'll you'll you'll get
some sell offs and people will say what happened, And
the question would be, where's it gonna come from? Okay,
because as you mentioned, gas prices have already moderated, okay,
and a lot gas prices go into a lot of
things that create inflation, so those have already moderated. The

(37:33):
other big number on the inflation chart is housing and
the costs of housing. Well, even though the Fed cut
rates a couple of times, interest rates never dropped from
from a housing standpoint to the point where we would
get this big, you know, additional boost up in the
value of houses. You know, if rates went back down

(37:54):
to four percent, yeah we're gonna see the value of
homes start to shoot up again. But that never happened.
I mean, just the ten year treasury really never dropped
dramatically enough. And what you are seeing now is investors
in the housing market or people just buying in the
housing market, I think, are getting more used. You know,
take some time, you get more used to a six

(38:16):
percent mortgage a seven percent mortgage. Initially the thought is
I'm never gonna move because I don't want to go
from three and a half to seven. But then life
changes and eventually people have to pull the trigger in
a lot of cases to move. They get a new
job or whatever it might be, and so that initial
feeling of a seven percent mortgage is the worst thing

(38:38):
in the world kind of changes a little bit. But
where it's really going to change for the housing market
is those reluctant sellers are going to start to list
their homes. And that's actually good for the supply demand,
but it also is good from the standpoint of it's
going to keep a lid on prices. If those reluctant
sellers now come to the market and start selling their homes,

(39:00):
that's going to keep a lid on housing prices. So
that's a big component. And even for new builds, I mean,
if a builder felt like they had a little bit
of pricing power versus having some competition from from somebody
going to buy a existing home, they can come down

(39:20):
and squeeze their own profit margin a little bit. And
with bigger companies, they're already coming down, and just the
home builder isn't coming down in price because they didn't
have to. But maybe we get to a point where
they have to, and the same with other sectors of
the economy. Now that they have they're not going to
maybe lower prices, but increase prices for goods maybe not

(39:40):
as much. Even wages. Maybe wages don't increase quite as
much because they don't have to. And so a lot
of that will be that all things that keep a
lid on inflation not only keep a lid on inflation,
but you might see lower inflation because the increases don't
just keep going right. And that's probably what's more realists,
I would look at the housing inventory as something in
twenty twenty five that we can pay attention to to

(40:01):
see how that compares to the last two years, how
many houses are listed for sale. If it's a higher
number than the last two years, you're not going to
get that inflation number out of the housing component of inflation.
Or take our last pause. You're listening to money Cents,
Kevin and Brad Kurston will be right back, Welcome back.

(40:22):
You're listening to the advisors of Kristen Wealth Management Group. Brad
and Vin here with you this morning. As we've probably
mentioned in a prior segment, but if you're listening on
the podcasts or on iHeart and you don't hear any
of our ads, we are professional financial advisors in Perrysburg, Ohio.
Find information about us on our website Kirstenwealth dot com
and how to get in touch with us. I mean,
we are at that beginning of the year, end of

(40:42):
the year season where people are thinking about retiring or
changing jobs. That's the perfect opportunity to talk to a
financial advisor. A lot of times we're somebody's first and
last financial advisor because on the four to one K
they don't really have anyone they can talk to, especially
with the bigger companies. A lot of people don't realize
that in the K is the provider of the four
to one K is. The client is the employer. And

(41:06):
while you can call and call call center and talk
to some people, their fiduciary duty is to the employer.
And so if you want a second opinion on what
you're doing in the four to one K, or what
you have coming up for retiring, changing jobs, any kind
of life event, that's really what we're here for, so
give us a call at our Perry'sburg office. Kevin. I

(41:26):
saw a news story that made me think this is
probably a little bit of an aftermath of the bud
Light effect from I don't know if that was last
year or twenty twenty three when bud Light kind of
made everyone mad and everyone went to go find a
new beverage. Guinness was up fifteen percent last year, and
it was kind of unexpected because it wasn't right after

(41:49):
the bud Light thing, but there was just this continual
Maybe people tried Guinness and didn't stop and on some
of the other ones, maybe they went to Medello and
came back to bud Light. I know bud Light did
has increase sales last year, but Guinness never had a
slowdown and got to the point or at the end
of the year last year, especially in the UK, there
was a shortage of Guinness. And then this week I

(42:10):
see that there was a heist of thirty five thousand
pints of Guinness from I think several delivery trucks. So
people are going out of their way to make sure
for New Years they could have their Guinness because there
is a shortage in the UK. The shortage was so
bad that that pubs were trying to make sure if

(42:31):
they if they knew they were going to have a shortage,
that they would they would give people a token and
they had to get for every one guinness, they had
to get one other drink, or for every one guinness
they had to get two other drinks. Call it. They
had to slow down the consumption of guinness because people
were coming in and only buying guinness. And I know
even around here you don't go many places without seeing

(42:52):
guinness on tap, and geez, ten years ago that was
not the case. You would you could maybe find it
under the bar, but not taps everywhere, and now you
see it everywhere. Well, it got labeled the healthy beer
for a little for a period of time there. Well, yeah,
it's even though it seems like a full bodied beer,
it is not strong and it's alcohol. It's definitely under

(43:13):
five percent. But it's almost because of that, it's lower
calorie than some of the other full body beers. So
I think that's always on somebody's mind and why they
maybe keep drinking it after they try their first Yeah,
that's that. I think there's the mentality with that particular
beer that it's like, oh, that looks so thick and
it's but it's actually a lower, lower calorie one. So

(43:35):
it's interesting to see Brad. A couple of headlines I saw,
just to kind of close it out, we follow a
gentleman named Ryan Dietrich. He used to be with LPL Financial.
But here's a real quick seven important things remember in
twenty twenty five, just to kind of get us kicked
off for the new year. And I'll run through these

(43:56):
pretty quick because we only have about five minutes left
in the show. But first off, going into the new year,
because it's been a little bit, a little little while,
we had about eight percent sell off the last time
we had anything of significance last August. But number one
here on the list probably pretty important going to the
new year. And even if we finished the year, finish

(44:17):
the year with a positive gain, expect a double digit
decline in most years. But given that we didn't even
have one last year at all, or twenty three or
twenty three, expect at some point this year we might
have been twenty one of those might have been just
over a double digit. But you're going two years without
is pretty rare. And the last time that we went

(44:37):
two years with two big years in two big years
was nineteen ninety five. You have that chart. You have
that chart year. I mean, give me some examples of
years that had double digit declines that were just fine.
Let's talk about the nineties again, So that ninety five
and ninety six we had two big years without ten
percent selloffs entry year and then ninety seven, ninety eight,

(44:57):
ninety nine gave us a minus eleven, minus nineteen, and
minus twelve, even though those years were thirty one, twenty seven,
and twenty positive before the end of the year. Other
times though recent history, in recent history, back to back,
you got to go to twelve or sorry, thirteen and
fourteen you had minus six and minus seven. The following

(45:18):
year was minus twelve. The five about a double digit
correction in a good year, Oh, you have that all
the time. I mean, even COVID year was a minus
thirty five and you finished up sixteen. You had let's
get a bigger one here. So sixteen was a positive
year by the end of the year after the election,

(45:38):
but had minus eleven. Twenty and nine was a little
bit deceiving because the selloff was all the beginning of
the year a continuation of two thousand and eight, but
it was minus twenty eight in the first three months
of the year and then finished up twenty three. The
following year was minus sixteen and finished up thirteen. So
you can have double digit positive years even though you

(46:00):
have an intry yourself off. That's double digit. You gotta
we have to talk about it. You have to be
ready for it because you want to take action when
it happens, and you don't want to be waiting for
You don't want to be waiting for it and then
let it pass you by. Second thing he has on
this list here is pay attention to the long term
history of the market. Days are a coin flip. Weeks

(46:23):
are positive fifty six percent of the time, months are
positive sixty percent of the time, years are positive seventy
two percent of the time. But if you invest for
the long term, the five year batting average is eighty
one percent, ten years are ninety one percent, and there's
never been a twenty year period where you lost money
in the market. Look at valuations on the overall market.
You got to be really careful. Many people are saying

(46:45):
the market's too expensive right now. But certainly you could
have said that a year ago, and we had a
pretty good year in twenty twenty four. So evaluations are
you know, they're an okay tool to look out a
decade or more. Ear his growth batter is more, yes,
and so that that'll keep all of that in check.
Don't mix politics and investing, he says, I can't tell

(47:06):
you how many people I met over the years that
didn't invest in the stock market, because who has ever
in the White House. A lot of people didn't like Obama.
Stocks did great, a lot of people didn't like Trump.
Stocks did great, A lot of people didn't like Biden.
Stocks did great. Okay, so ignore the scary headlines. They're
always out there. When you look at some of the
things that happened, you know, the Hamas attacks in Israel,

(47:27):
Russia invades Ukraine, COVID nineteen, European debt crisis with Greece
nine to eleven, the tech bubble. The scary headlines are
always going to be out there. People will say, you know,
always trying to come up with an excuse not to invest,
and usually it's headline related. And in this case, it
could be terrorist attack, it could be whatever it is.

(47:48):
Those scary headlines don't really and should not affect your
long term goals, so you know, looking at it overall,
you know there's a couple more on here will come
to the end of the show. Revisit this in a
future week because these are all some good guidelines to
go by if you're a long term investor. Thanks for

(48:08):
listening everyone, We'll talk to you next week.

Speaker 2 (48:14):
You've been listening to Money since brought to you each
week by Kirsten Wealth Management Group. To contact Dennis Brad
or Kevin professionally, call four one nine eight seven to
two zero zero six seven or eight hundred eight seven
five seventeen eighty six. Their email address is Kirstenwealth at
LPL dot com and their website is Kirstenwealth dot com.

(48:35):
Opinions voiced in this show are for general information 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 financial advisor prior to investing.
Securities are offered through LPL Financial member FINRA SIPC.

Speaker 1 (49:00):
The