Kersten Wealth Management Group - Money Sense 2-08-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to money.

Speaker 2 (00:01):
Since you're listening to the advisors of Kirsten Wealth Management Group,
Kevin Kirsten and Brad Kirsten. Happy to be with you
today as the market tries to find its footing in
the month of February. Here, Brad, we did just kind
of wrap up January. We did a little bit of
that in the last show. But January was a phenomenal month. Yeah,
just shy at three percent for the S and P
five hundred, three sectors negative, three sectors flat basically, and

(00:25):
then you had a number of big, big, big sectors
performance wise that got the SMP to have one of
its best Januaries of the last decade.

Speaker 1 (00:37):
Yeah.

Speaker 2 (00:37):
I mean, we talked about the fact that when January
is positive, the old saying, as goes January, so goes
the year. The market is positive ninety percent of the time,
nine out of ten times, so that's a good sign.
When January is negative, the rest of the year is
a coin flip. And the average return when January is
positive for the S and P five hundred, Brad is
a little over seventeen percent, and the average return for

(01:00):
the year when January is negative is minus one point seven.
So there is momentum.

Speaker 1 (01:05):
It matters.

Speaker 2 (01:06):
Momentum has mattered a lot over the last couple of years.
What is doing well has continued to be leadership. And
then even on the resets, you have to kind of
follow that momentum.

Speaker 1 (01:17):
And so I think the parallel I.

Speaker 2 (01:19):
Would look to to be nervous if I was going
to be a little bit nervous on the market would
be the twenty eighteen parallel where we had a really
good start to the year and the Fed came in
and just ruined it. Yeah, I mean that's what I
never stopped. And everyone looks to the fourth quarter and says, oh,
that's when Trump started the trade war with Russia. That's

(01:40):
not really where the selloff was big sell off. It
was good, and so the Fed started in February, big
sell off ten percent in a couple of days. Market
rallied a little bit through through the actually made a
new high, a new all time high going into September,
and then the Fed just kept pushing on a string
with Yeah, everyone was fine with the Fed going a

(02:01):
little bit, and then they went too far and it
just disrupted everything. We camped that a little bit. What
do you mean by where they're going. They were raising
rates yep, okay, and we were coming off of an
ultra low level zero percent. This is pre COVID coming
off of an ultralow level, seeing if they can, you know,
get back to a level of neutral. Now, here's the

(02:23):
similarities and the differences. The big difference is is they
were coming off of zero trying to get up to
three three and a half and went a little too
far and spooked the markets. Today, instead of going up
to a level of neutral, we're trying to come down
to a level of neutral. Now, how could the Fed
mess this that whole thing up if they go in

(02:45):
there and say, you know, what is their preferred measure
of inflation? Been running at the PCE like two point
eight Yeah, below three okay, but they've been targeting two.
If they get stubborn and say no, we want two
and they either, I think it would take a raise.
It would take a raise. If they raised rates this year,
it would be very unexpected. It would be very It

(03:07):
would be bad for the market.

Speaker 1 (03:08):
Yeah. Yeah, So that's the thing you have to look
out for.

Speaker 2 (03:11):
You're always looking for the positives, you're looking for the
potential pitfalls and markets for a year to me, I mean,
earnings are going to be pretty good. Okay, we have
business confidence with Trump coming in at all time high levels.
Uh So, the business investment side of things is going
to be pretty good. Probably even some foreign business investment

(03:33):
coming in which could will will be good for the
US economy. The FED, the FED is the to me
in twenty twenty five, twenty twenty six, we'll worry about
that in twenty twenty six. In twenty twenty five, the
FED is the only thing that could really mess this.
You got to think about two things with the psychology.
I mean, the FED is not just a machine. The
FED is not just They're not running at it on
AI and run it.

Speaker 1 (03:52):
On the computers. It's a bunch I wish they would.

Speaker 2 (03:54):
It's I wish they would too, But it's a bunch
of individuals that are as quite frankly, as vain as
anybody because they want to keep that job. They think
they're smarter than everybody else. And here's here's my point.
They know, you know, Trump was pretty nice when when
the FED skipped on Tuesday and said we're gonna pause.

Speaker 1 (04:13):
Trump said that's probably the right thing to do.

Speaker 2 (04:15):
Things look like they're they're you know, hum and along.
We probably don't need it just yet. But the Fed's
doing a great job. He was pretty complimentary. But if
they raise, they know what's coming. Trump's gonna probably try
to fire Pole. He's gonna definitely talk about the FED
more than the FED wants to be talked about. And
so they think they're the smartest man in the room.
Therefore they want to keep that job. And the way

(04:37):
to keep that job is to stay under the radar
while Trump's doing all these other things. And the same
goes for everything that we're gonna talk about the rest
of the show, which is everything that Trump's doing. Trump
is vain enough to not want the stock market to
be disrupted. You have to know that's the backstop. Trump
four years from now wants to be able to say,
in a Trump voice, who's the greatest stock market in

(04:58):
the history of stock market?

Speaker 1 (04:59):
Right?

Speaker 2 (04:59):
Well, he can only do so much, though, Brad, you know,
if it was that easy for the president to control
the stock market, George W. Bush would have done something
in two thousand and two thousand and eight. But I
will say there's that side of it where you think, Okay,
they don't want to have this big battle with Trump
in the FED. But it's really hard to gauge what

(05:22):
Powell and a lot of the other FED governor's politics are.
And I hate to say it, I hate to be
cynical about the whole thing, but they may hate Trump.

Speaker 1 (05:33):
And they want to disrupt that stock market. Yes, and
then they could just blame it on inflation is too high,
we need to raise.

Speaker 2 (05:40):
And they could blame it. They'll blame it on Elon
and Doze or something like that. Certainly could So I
don't know their politics. I mean, it's kind of hard.
They've done a good job. A lot of these Fed
people have done a pretty good job of you not knowing.
But I feel like the burden of proof is on
prove to me that they don't hate Trump, because I
feel like every bureaucrat, yeah, hates Trump.

Speaker 1 (06:02):
But Pow is a Trump appointee. Let's not forget that.

Speaker 2 (06:05):
I mean, I think there was a little bit of
vetting when that happened, to know that he is going
to be at least neutral, if not on Trump's side
when it comes to.

Speaker 1 (06:17):
The politics, like you're referring to right, right.

Speaker 2 (06:19):
So the S and P is now up two percent
year to date, not a little bit off the all
time high that we saw at the end of January
or toward the end of January, I think it was
the day before the last day of the month. We're
gonna have communication services coming in because Google missed on
revenue and they're the biggest holding there. That was the
number one sector for the SMP going into February. Here,

(06:43):
healthcare is up seven point two beaten the SMP quite substantial,
substantially just this year, but the last three months post election,
healthcare really struggled. Yeah, six point one financials, five point
six materials. So we're talking about a month here. Here's
there's some good value names in there though, Brad. Yeah,
but they're already a good six month and we're talking

(07:04):
about a one month. Everyone just needs to kind of
relax on these these these movements that we're seeing because we've.

Speaker 1 (07:12):
Already moved a lot in one month. But look at
these figures, Brad.

Speaker 2 (07:15):
One month numbers, year to date numbers four point two
on large cap value, large cap growth flat, Okay, mid
growth of the most telling this is interesting. MidCap growth
almost six percent higher while large cap growth is flat.
We've been saying this for months, if not years. Why
not listen all these big names. And this is not

(07:38):
a recommendation of buyers selling these names, but the megacap seven, Apple, Amazon, Nvidia,
Google great, all great? Okay, Amazon, Tesla all great? But
why not try to find the next one? We talked
in previous shows about how the top ten of the
S and P five hundred turns over every decade pretty dramatically.

(08:00):
Why not try to find the next name. And that
next name might end up in the next decade Brad
in the top ten, but it also might be a
company that does so well that one of those other
companies buys them out. That's right either way. Yeah, that
middle middle ground, mid cap growth is a great place
to be. Now, MidCap growth isn't as tech heavy as

(08:22):
large cab growth. There's more industrials and healthcare in there too.
But why not own the next in video? Why not
own the next Google? And where are you going to
find that in video? And we'll probably not Google because
it iPod so bigly.

Speaker 1 (08:38):
That's a Trump Trump phase.

Speaker 2 (08:41):
In video was a MidCap grow stock and video has
been around for decades. Okay, it was a MidCap growth stock.
Tesla two, Apple was a MidCap growth stock because it's
been around for fifty years. These were all mid cap
growth stocks before they got into the S and P
five hundred.

Speaker 1 (08:57):
So let's find the next one. Let's find the next The.

Speaker 2 (08:59):
Biggest mistake you can make is to say this is
the one that I'm gonna buy out of that top ten, okay,
because yes, like we said last week, one or two
of these are not going to be They're gonna shrink
over the next ten years. You just don't know which one.
So that'd be the biggest mistake is not to diversify.
But the other for me in twenty twenty five is
we have two looming issues and both of those are

(09:23):
One of those is definitely not going to help the
large multinationals, and that's the continued and whether they get
implemented or not. We just saw two tariffs get threatened
and then negotiated before they even got implemented. But with
China and Europe, it's gonna probably go on a little
bit longer. So know that we're gonna have a little
bit of this push and pull until we get what

(09:44):
we want as a nation with concessions on already existing
terroiffs from foreign countries and getting them to come down
and get them to come down because you know we're
putting it on. Let's both come down. And that's how
it's gonna work. With China or sorry, with to Go
and and Canada. It was I want concessions on some
of the board.

Speaker 1 (10:04):
That's a little bit easier.

Speaker 2 (10:06):
I mean, it's all difficult stuff, but it's a little
bit easier on Canada and Mexico, I think, Brad, because
it's one hundred percent drug border related. Yeah, you know,
we're guarding our side. Can you can you least step
up and guard your side a little bit? And so
it saves us money. And all of what we're talking
about in the first one hundred days is going to
be where can Elon save the government money? Where can

(10:28):
Trump save the government money? Where do we have waste
that whether it's improper payments or just waste for things
that are not important to the average voter. But then also,
if we're going to have to spend a bunch more
money at the border, can we get help doing it?
And that's what that's what this week brought. But the
point I was going to make with what's going to
go on the rest of this year is mid and
small are a little bit immune from this tariff talk. Now,

(10:54):
they had some disruption on Monday also, but you take
we still have tariff talk today Thursday, our Wednesday here
as we're taping this with China overnight they shut down
shipments coming in from China and Hong Kong. But do
large companies are they affected a little bit more than
small companies? With that, yes, small companies are mostly domestic

(11:16):
only and buying from domestic only, So a way if
you're worried about that, one way to invest is to
not be invested in the largest of the large, which
might have more bottom line impact from the disruption for
the next year that we're going to see. But then
the other is we get to six months into the year,
we're going to know the framework for the new tax

(11:36):
plan and maybe even a lowering of the corporate rate,
and certainly mid and small are going to have more
bang for the buck on tax savings than the large
companies are because large companies figure out a way not
to pay that rate anyway. So if the corporate rate
goes down, men small are going to have the wind
that they're back going into next tax year. It's been
a good start to the year for diversified portfolios that

(11:57):
have mid, small and international and like you said, large cap.
You know, if you did what worked the last couple
of years, you're barely up on the year. Okay, So
you know, pay attention to that, you know. I think
that the negotiations, like like we were talking about before,
what do we want from Europe? I mean that's a

(12:18):
trickier one to me. I mean, obviously, we have NATO,
which we basically put all the money in, so that'd
be one thing to negotiate.

Speaker 1 (12:25):
Well, he already bowed out of the UN.

Speaker 2 (12:27):
We don't have a border with Europe, so there's not
anything there to negotiate. And also I think, well a
couple different things that I think could be on the table.
One of the things in Europe is I don't understand why,
in particular in the healthcare space, why we do all
the work well technology as well, why we do all

(12:50):
the work here in the United States, all the research
and development, all the research and development. Then Americans pay
triple quadruple what they pay for the drugs we invented
here in the United States, basically paying for all the
research development, and they're getting generic drug prices, dust, they
end up getting the drugs, and they've they've spent no

(13:12):
man hours or money on the research and development. So
I think there's something there. So yeah, maybe just like
the border negotiats, Hey we're going to secure the border,
but we want your help. Okay, we'll do the research development,
but we want your help.

Speaker 1 (13:23):
To pay for it. I think so.

Speaker 2 (13:25):
And then the other thing is, and it could just
be investment. It could just be investment in research and development.
But the other thing is, and this is also border related,
is some of the drugs, in particular fentanyl, are originating
in China. So even though we don't share a border
with China, there certainly can be a negotiation, you know,

(13:45):
a negotiation tool to say, hey, China, can you crack
down on the fentanyl?

Speaker 1 (13:49):
Yes?

Speaker 2 (13:50):
And so you'll hear this the talk this week. It's
the it's the the drug that makes the fentanyl. The
precursors are what are coming into Mexico. They're making the pills,
they're making the refined drug in Mexico and shipping it over.

Speaker 1 (14:03):
But it starts with with China.

Speaker 2 (14:05):
So you're talking about they're looking at the raw material
that goes into fenanel. Yes, it's it's kind of interesting
because you just ran into this with something else here
this week. Yeah, your son had a had to get
actual suit of fed after trying a bunch of other things,
and the doctor said, just go and get suit of fed.
It'll be behind the counter, even though it's over the
counter because you have to give him your driver's license

(14:28):
to fill out some paperwork. And and the show making
the show Breaking Bad, made it so that you know,
the the the the precursor to making that comes from
the same drug that's in pseudo fed, and so it's
just the same thing. So the so in the in
the show Breaking Bad, originally he was batch he was
making he was he was buying a bunch of suit efed.
He was buying suit a fed to make this. And

(14:49):
in the United States, law enforcement has become aware of this,
the regulators have become aware of this, and if you
want suit a fed now it's it's behind the counter
and locked up. So China is allowing this, this precursor
drug to get shipped out. They know of it. And
so if they know that it's going to eventually become fentanyl,

(15:10):
stop it at your border, not ours. So that would
be one where you know that doesn't cost China anything
that doesn't cost you know, it's not like we're going
to come in here and say tariff. There's tariff that
a lot of the concessions that Canada, Mexico, China, like
the border concessions and the security.

Speaker 1 (15:29):
This is good for everything. It is right, it's good.

Speaker 2 (15:32):
Now it does cost them a little bit more, but
they're willing to do it because they don't want the
tariffs on the teriff forard negotiation tool to get it done.
But the other things that that Trump's doing immediately, and
we're going to talk about everything that everyone's panic about,
panicking about with those that you don't need to but
he's going to get out of again, the Paris Climbate
Accord he got out of this week, the UN Human

(15:54):
Rights Council. All these are just boondoggles that make ten
to one hundred people rich and do very little.

Speaker 1 (16:01):
And the same with the.

Speaker 2 (16:04):
USA aid, the foreign aid forty two billion dollars a year.
Does some of it do good? Yeah, probably ten billion
dollars worth, But the rest of it is just a
money laundering scheme with kickbacks and things that are that
are taxpayers are paying for that.

Speaker 1 (16:21):
They don't need to.

Speaker 2 (16:22):
Let's get into a that a little bit more deep
deeply bread we come back from the break. But yeah,
I think that what I'm tired of hearing is, oh,
it's just a tiny amount. We have a trillion dollar.
It's just a tiny amount. Well, the only reason that
it's become that is because our budget has ballooned so much.
So don't tell me, oh, it's just a tiny amount.

(16:43):
It's just a tiny amount. Everything adds up.

Speaker 1 (16:46):
You know.

Speaker 2 (16:46):
As financial advisors, you know what we believe in is
the long term benefits of doing the right thing financially
over five, ten, fifteen years. Okay, doing the right thing.
Charlie Munger said, the most important thing about compound interest
is never interrupting it the benefit of doing the right

(17:09):
thing a little bit. Oh, it's cost investment. We scrutinize
tents of a percent, get the one to another, and
it all matters. But it doesn't matter in the moment. No,
it matters over time. Okay, it matters over time and
all these things that they're talking about now, yes, will
it matter to the budget this year or next year?

Speaker 1 (17:29):
Maybe not?

Speaker 2 (17:30):
Will it matter over time because of the compounding effect
of this wasted money. Of course it will, okay, And
the only reason we got here with this balloon budget
is because we ignored how these compounding effects of wasting
money can affect us over time. We ignored it. And

(17:52):
why did we ignore it? Because we said, oh, it's
just a billion. Oh I don't want to hear. Oh
it's just a billion. Oh it's just one hundred million.

Speaker 1 (18:00):
It all matters, It all matters. Every year, all of
us are writing checks or having money pulled out of
our paychecks and sending it to these people. Now you
scrutinize everything else you do in your life.

Speaker 2 (18:13):
Yeah, okay. You go to a restaurant and you get
a bad meal or something's wrong, you probably talk to
the manager. Well guess what Elon's doing. Yeah, Elon's talking
to the manager. We come back from the break, I'm
gonna give your example because we had a small amount
that was going out to Panama that we sent out
nine hundred and ninety eight times over the last ten years.

(18:33):
And just think about if nine hundred ninety eight individuals
who had a natural disaster were to get this payment instead,
would that be my money better spent? Let's talk about
Panama first, we come back from the break. You're listening
to Money Cents Ad and Kevin Kirsten.

Speaker 1 (18:45):
We'll be right back. Welcome back to the show.

Speaker 2 (18:47):
You're listening to the advisors of Kirsten Wealth Manager Group,
Kevin Kirsten and Brad Kirston. 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 to
review your financial plan. Whether you're just getting started, well
on your way to retirement, or already in retirement, we'd
be happy to sit down and go over things with

(19:08):
you four one nine eight seven two zero zero six
seven or check us out online at Kirstenwealth dot com.
Get a lot of good information on our website, including
our weekly market commentary this week. And this is kind
of a little bit what we're talking about us exceptionalism
is it still intact talked about all the different things,

(19:28):
whether it be the research and development we do in healthcare,
the advancements we make in AI and also in just
technology on the whole. That to me keeps us exceptionalism intact.
In terms of where the innovation comes for from the world.
And the other thing is the stability and the the
safety of the US dollar. How it is still the

(19:50):
reserve currency, which is the case. I mean, the dollar
has been very, very strong in a way, almost to
the detriment of multinational corporations who have overseas earnings. But
when you look at what the dollar has done, you
can't help but argue that US exceptionalism is still in place.
The US dollar strengthening at a time where the tarifts

(20:11):
are being talked about certainly would do almost negate any
effect from what everyone's talking about with inflation.

Speaker 1 (20:18):
I mean' put.

Speaker 2 (20:18):
The other thing that's in this market commentary is US
stocks as a percentage of world stock market cap. Now
this could be a little bit of a contrarian signal
too to diversify and have a little international but the
US stock market is now over fifty percent as a
percentage of the world stock market. If you go back

(20:41):
to about the bottom when we had that drop in
twenty eighteen that we were referencing earlier, it was thirty percent,
So kind of crazy. When you look at the percentage
of the world stock index that's in the United States.
So all those stats found on our market commentary on
our website under the publication set kirstenwalth dot com. Kevin

(21:02):
I mentioned, we've had a lot of news stories here
just in the last four days, so I'm just going
to recap a few things. So Secretary of State Rubio
does is doing. I think it's a ten day trip,
stopping at Panama over the weekend, and on Sunday night
we find out that they made the deal that they wanted,
which was to get rid of the deal they had

(21:23):
in place for China to come in and basically run
I think it was basically for China to run security
along parts of the Panama Canal, to get us preferential
treatment for ships going through the canal, and then also
for our navy ships not to get charged. Now Here,
here's the we were getting charged three hundred and forty
one thousand dollars per warship going through the canal. We
don't have a lot going through. I saw an estimate

(21:44):
that it was just shy of a thousand, nine hundred
and ninety eight over the last twenty years. And while
that's only three hundred and forty million, the point being
if if victims of say the North Carolina mud slides,
you were to find a thousand of them to get
three hundred and forty thousand dollars instead of the Panamanians

(22:06):
to get three hundred and forty thousand. Every time a
ship goes through, I think it would be everyone would
say that's money better spent, and so any savings is
a good savings, even though it's only the navy. Ship's
not getting charged. But we got some concessions there. They
did what they said they were going to do. Then
he's off to El Salvador and gets them to take
any of the criminals that we have in our jails

(22:29):
that are that are not citizens of our country, to
take them back to their jails. Again, that's a savings.
We don't have to pay for that prisoner. And so
times a thousand, times ten thousand, we're getting them out
of our prisons to not have to spend the money ourselves.
And they're all savings, every one of our savings that
everyone has been ignoring and didn't want to do. Then

(22:51):
we wake up on Monday morning with the Canada and Mexico.
I think actually it was on Sunday, Canada and Mexico
five percent tear off on a number of goods and
in some cases maybe across the board, and why to
get a little bit of concession. So Monday morning we
open Actually even before that, I think the Dow was

(23:11):
down as much as nine hundred points. Overnight, we wake
up and there's plan negotiations with Mexico that I think
we're at eleven o'clock in the morning, So the dow
doesn't even I think it opened up down five hundred.
By eleven o'clock it was maybe down three hundred. Come
off the A one call with Mexico, and we have
the deal, and we're doing a thirty day reprieve just

(23:32):
to make sure that they actually are sending troops to
the border, and we're going to get them to spend
some money that we don't have to spend at the border.
And and then with Mexico it to elite my in
my opinion, a little easier to then just take those
tariffs and extend of further Canada digs in a little
bit more. But by the end of the day, their
scheduled calls, they have two different calls and they basically

(23:54):
do the same thing they had in place. A one
point two or one point three billion that they were
going to spend at the border, but they had kind
of slow walked it, and so Trump got them to
agree to to do it right away, send ten thousand
more troops for them to the border and actually spend
the money that they had appropriated to spend at the
border and not just have it on the shelf. And
so it's to me on Tuesday night, when I'm looking

(24:17):
at X at what's trending, it is amazing to me
that two things side by cyber trending. Canada caved, Trump caved.
Both of them were trending two and three in Twitter.
At all the liberals will say, oh, Trump caved. He
was gonna do tariffs and then he didn't. That's always
been the plan. So we had nothing, we got something,
and the talk is Trump caved. This is the whole

(24:41):
point of why you shouldn't worry about any of this stuff.
All we're doing is a little pushback so that we
get another country to do something that we were gonna
have to spend money on. And all four of those
cases were money that we don't have to spend that
we were going to have to spend anyway.

Speaker 1 (24:56):
And the same will happen in Europe.

Speaker 2 (24:57):
We're going to bow out of some of the the
things that are councils that we're spending money on that
we don't have to because it doesn't benefit us at all.
And the same with the Foreign eight. The State Department
runs USAID. It's forty three billion annually and that's where
all the fraud is happening. And so they showed one

(25:18):
of the things that was trending for Foreign A Brad
over the weekend was the sheer number of people in
particular in Africa who are applauding US pulling back for
an AID because they say that all it does is
fuel corruption and theft. You're making the people at the
top rich and it never filters down, never makes us

(25:38):
way down. So the only way to get those people out,
or to level the playing field is for the US
to stop handing them money that never All you're doing
is handing it to the president or the corrupt politicians
who run that country too much money to even know
where it's going. It's filtering through all sorts of organizations.
I saw this morning one of the senators, you know,

(25:58):
because they did open up the books basically and with
all this transparency that Elon and Trump are doing. We're
seeing the money flow. So one of the things that
was not supposed to be happening from twenty fourteen to
twenty one was not supposed to be any US aid
to China. And the only way it was happening, and
this is the whole point of FAUCI funding the Wuhan

(26:20):
Institute is we didn't hand any money to the Wuan Institute.
Eco Alliance did. Well, Now we know because you can
see the path of the money. National Institute of Health
was actually giving money directly to Wuhan. They were also
giving money to Eco Health Alliance, who was giving money
to Wuhan. This is like a mobster Brad who gives

(26:41):
the bag of cash to one guy so that oh,
I didn't give no, I gave it to that guy.
I gave it to that guy and then he gave
it to So they were also giving money to the
University of California, who was giving money to the Wuhan
Institute of Virology. They were also giving money to Duke
that was giving money to an institution that was giving
money to Wuhan. They were also giving the US Agency

(27:01):
for International Development was giving money to University of California Davis,
who was giving money to Eco Health Alliance, who was
giving money to the Wuhan Institute of Virology.

Speaker 1 (27:10):
As it turns out, we might have been the only
one funding the.

Speaker 2 (27:13):
Wuhan Institute of Virology, and so while it got released
in Wuhan, the United States might be guilty of being
the only one that funded that institute that caused the
biggest pandemic of the last century. So now the books
are open. Elon's making it all open. And everyone has
had the same argument on the other side over the

(27:34):
last three days, which is an unelected bureaucrat, an unelected
person is now doing all these things. Well, guess what,
there's three million people that work for the government. Well,
hold on, hold on, you just went through. Was Fauci elected? Yeah,
Well that's gonna be my point. There's three million people
that work for the government. Five hundred and thirty five congressmen,

(27:54):
a president, and a vice president. Those are the only
elected people. Okay, you have three million people that aren't elected,
and yet all these senators in the House are all
saying an unelected person fed chairs not elected, the cabinet's unelected.
Everybody who works for you that's an assistant in the
Congress is unelected. Everyone who works for most departments is unelected.

(28:17):
And they're talking about they opened up the treasury for
a read only so that they could see where these
payments were coming from and going to. And they say, well, geez,
now Elon and his six engineers have our social Security numbers.
For one, Are we worried that Elon's going to open
up a credit card in your name? He's the richest
man on earth, Okay, so why are we talking about
I'm gonna pick, If I'm gonna pick in terms of

(28:39):
somebody who is least likely to steal money from the government.
I think it's the guy worth two hundred billion. Yeah,
he doesn't need your money, okay. And then the other
thing is they're saying, oh, he's got all our social
Security numbers. So does the IRS. And there's one hundred
thousand people that work for the IRS, so you're social
Security numbers already out there. Oh, they might have my
bank account if I get Social Security payments. Yeah, so

(29:02):
does everyone you write a check to your bank account,
number is on your checks that you write. So let's
just stop with I'm so worried about my security. What
you're worried about, you should have been worried about years ago.
Then if you were worried about it, because everybody in
the government's already got.

Speaker 1 (29:19):
Kind of weird on checks you write. That is kind
of weird. I write a.

Speaker 2 (29:22):
Check to a stranger. He's got my check account, my
count and your routing number and my routing number.

Speaker 1 (29:26):
Yeah, that is kind of crazy. And I don't know
why I never thought about that.

Speaker 2 (29:30):
But well I heard somebody say, oh, but they send
me so security payments directly to my checking account, and
somebody had to say, yeah, everybody can get your check out.

Speaker 1 (29:37):
I think, like, you know, little.

Speaker 2 (29:39):
Stuff like uh, let's say, for example, you were you
were renting a place somewhere and you were deciding between
Venmo or writing the person a check. Yeah, if you
don't know the person, Yeah yeah, Venmo would be way better, right,
and you've write the check. I mean most times when

(29:59):
you're doing direct deposit, they just asked for the account
number and routing number.

Speaker 1 (30:02):
Yeah, that's it. Yeah, set it up right.

Speaker 2 (30:04):
But you'll have people. I'm sure there's been people over
the phone if they were to ask for some of
the build I'm not going to give you my account number,
I'll write you a check.

Speaker 1 (30:11):
You're like, well, okay, okay, that's fine.

Speaker 2 (30:14):
So I think all this fear that Elon is is
has access to the books, not only I don't.

Speaker 1 (30:22):
Think there's as much fear as you think. I don't.
I think that I feel like there's so much talk,
so much reference to unelected people.

Speaker 2 (30:28):
It's the usual suspects, Brad and the other thing that
I found it's the usual suspects. I found it interesting
though that on the Foreign Aid and Elon said this,
he said, if you want to know who's corrupt and
who's stealing money through Foreign Aid, check out who protests.

Speaker 1 (30:42):
As soon as I shut it? As soon as I
shut it down.

Speaker 2 (30:46):
And obviously there was a big protest right outside the
Foreign Aid Office, and they actually storm the building. By
the way, yep, I don't know if that was January sixth,
those people all would get arrested, they would get wrested.
They call it an insurrection. But you can storm the
Foreign Aight Office. I mean, it's just a strange thing
to be against saving money. It's just a strange thing

(31:07):
to be against the only people that are against it
are the people that are enriching themselves with that same moment,
So you won't find a taxpayer against it. Yeah, what
taxpayers can. So I found two different studies from last year,
So during the Biden administration, House Budget Committee and also
the Government Accounting Office did two different studies on improper
payments last year. So this came out in December. So

(31:29):
their estimate for last year was two hundred and thirty
six billion dollars of improper payments. We paid too much
or we paid somebody we weren't supposed to. Two hundred
and thirty six billion. The estimate for the last ten
years was over two trillion dollars, so most of that
came from this USAID, but it also came from other
parts of the treasury. If all we did was cut

(31:49):
that out, we're already saving two hundred and thirty six
billion dollars a year just the fraudulent payments. And to
be mad at the person that is going to now
figure out where the those are coming from is really
mind boggling. It's like somebody making an anonymous call and says, hey,
I think a bank is being robbed, and then you
arrest that person who made the phone call instead of

(32:12):
the person robbing the bank.

Speaker 1 (32:13):
Elon's telling you the banks being robbed, and you're mad
at Elon.

Speaker 2 (32:17):
There are people robbing your tax dollars and a lot
of this is misguided, and maybe it's from the media.
I don't think you're going to find too many people
mad at Elon for figuring out which government officials are
stealing money. And I think that's maybe where the Democrats
are going to get this wrong. Is there going to
be a lot of moderates that say, why do you

(32:38):
want me to be mad at the government saving money?
I thought I was supposed to be mad that we
were running a deficit. I thought I was supposed to
be mad that we're running up a big bill that
we can't pay, and yet here we are going the
other way figuring it out, saving trillions.

Speaker 1 (32:52):
Well.

Speaker 2 (32:52):
And the other argument that you often hear is you
can't save any money unless you attack social security, Medicare,
and defense, which are the three biggest items in the budget.
This is true to a certain extent and falls to
another extent, which is do we want take soci security
for example? Do we want payments cut? Of course not,
but what in terms of that budget line item, which

(33:15):
is the biggest line item Social Security. What portion is
administration and what portion is being wasted through administration? The
same thing with medicare, the same thing with defense. There's
a case in the Defense Department, Brad It was back
in two thousand and seven, but it was on American greed.
So I looked it up. Charlene Corley, a former defense contractor. Okay,

(33:37):
so do we want to cut veterans payments? Do we
want to cut you know, people who are signing up
for the army and cut those numbers?

Speaker 1 (33:46):
And of course not.

Speaker 2 (33:47):
But if you look, I mean just DEI alone, it
was it's over one billion now in terms of DEI programs.
My one daughter has a friend who's in the Bowling
Green ROTC program, and he said their syllabus the entire
second half of this year at Bowling Green for ROTC
was DEI. And he showed up after the inauguration and

(34:10):
the teacher's like, not really sure what we're going to
do for the rest of the year because we were
scheduled to do all DEI for the rest.

Speaker 1 (34:15):
Of the year.

Speaker 2 (34:16):
But this Charlne Corley. Hold on a second, is Charlene
Corley in two thousand and seven or the course of
nine years, the company owned by Corley and her sister
twenty two million dollars from the Department of Defense. So
this is one little person. I understand that it's twenty
two million dollars, but that line item is inside the
Department of Defense. And here's what they were doing. They

(34:38):
were shipping tiny little products elbow pipe, machine thread plugs,
machine screws, washers okay, And here were some of the
big biggest line items they had. They would ship an
eight dollar elbow pipe to the Department of Defense and
they would charge four hundred and forty four thousand dollars
in shipping, and they would pay it, and they would

(34:58):
and they would pay it. The Department of Fens would
just pay it. The one that was the most egregious
was finally the system red flagged it when they tried
to do nine hundred and ninety eight thousand dollars in
shipping for six washers that cost nineteen cents, and they
finally flagged. They finally flagged. So when somebody says to you,

(35:18):
we can't cut defense, be like, we're not cutting defense,
we're cutting defense fraud.

Speaker 1 (35:22):
Okay.

Speaker 2 (35:23):
So the number already so that they cut one almost
exactly a billion out of the DEI budget. It's real
enforcement employees, anyone across any government agencies that had to
implement the new DEIOS. That savings is one billion dollars.
But the canceled total canceled contracts already in these first
what are we fifteen days is one point two billion.

(35:45):
So the halt on USAID is forty three billion, but
probably most of it's coming back. Maybe we'll get to
five billion. You cancel, but you already cancel one point
two billion out of canceled contracts of stuff that's not
going to come back.

Speaker 1 (35:58):
The estimate it was.

Speaker 2 (36:00):
Twenty percent of government employees would take the buyout and
that would save one hundred billion dollars a year for
the employees that are get cut. They're not getting that number,
by the way, Yeah, it's going way higher. No, they're
not getting that number. You mean on twenty percent taking
the buyout. Yeah, oh, I was hearing this this week
that the estimate now is thirty one percent.

Speaker 1 (36:17):
No, they're not getting anywhere close to that, but we'll see.
I mean, the people still have time.

Speaker 2 (36:22):
But so but when they're cutting these government employees, most
of them, they're not going to hire back, they're going
to replace it with technology and just you know, you
had bloated parts of the government that don't need to
have all these people working there. So there's going to
be some savings there. But all of that should make
everyone happy. And so especially the USAID is the one
that just makes it blows my mind that people are

(36:44):
upset about we're getting nothing out of this. We're paying
to have countries hate us, We're paying to have individuals
in those countries hate us and for and aid. I
saw Ron Paul quote that let's sum this this, we're
only at twenty thousand so far on the buyout and
twenty percent of what I say it was three million,
twenty three million, well six hundred thousand, so we're not

(37:05):
at six hundred thousand yet, know right, No, So I
saw this Ron and Paul quote, not not Rand Paul,
but Ron Paul. Foreign aid is taking money from poor
people in a rich country and giving it to rich
people in a poor country. And that's exactly what you
were referring to with the South Africans being happy that
we were cutting off the aid to that country, because

(37:26):
it's just making, it's just making. It's a it's a
poorer country and making the rich people richer so well.
Next up on the list is Medicare, and we'll talry
about that when we get back from the break. They're
going after looking for fraud payments, not looking to cut
anyone's Medicare, fraud only, fraud only, and they talked about

(37:46):
that in the Wall Street Journal today, so we'll talk
about that when we get back from the break. You're
listening to Money Sense. Kevin and Brad Kurston will be
right back. Welcome back to the show. You're listening to
the advisors of Kirsten Wealth.

Speaker 1 (37:55):
Manage your group.

Speaker 2 (37:56):
Kevin Kirsten and Brad Kirsten happy to be with you today.
We're talking the Department of Government Efficiency and waste, fraud
and abuse. Next up is Medicare and Medicaid. Representatives from
Elon Musk Department of Government Efficiency have been working at
the centers for Medicare and Medicaid where they've gotten access
to some key payment systems, so they're looking into that.

(38:16):
Brad CMS, which runs Medicare and Medicaid, is highly political
and economically sensitive agency. It is the nerve center of
much of the nation's complex healthcare economy with outlays of
one point five trillion last year. So the bigger the outlay,
the more dollars you can find from waste inside of that.

(38:37):
That is twenty two percent of the federal total six
seven hundred employees overseeing Medicare, and CMS official said in
a statement. Two senior agency veterans who are leading the
coordination with DOGE and the CMS leaders taking a thoughtful
approach to see where there may be opportunities for more
efficient spending to meet the goals of Donald Trump. So

(38:59):
it seems like a actually that the people in CMS
are open to sitting down and talking about this. So,
you know, looking at waste, fraud and abuse. I mentioned
just the the Department of Defense and how people can
take advantage of payments. Okay, Well the same thing in Medicare.
Doctors and taking advantage of the coding from Medicare. We'll

(39:22):
get more money if we do this particular code. Okay,
then Medicare writes the chat.

Speaker 1 (39:28):
Yeah.

Speaker 2 (39:29):
And even though for this particular illness or ailment, if
I did the proper code, I might get X dollars.
But if I do this little bit different code, and
I could, you know, wiggle my way into this different code.
I get that much more money and the government just
cuts the check. It's happening. Don't tell me it's not happening.
I mean, we spend more money on healthcare than anybody else.

(39:51):
I'm not saying it's always fraud and abuse. I mean,
part of it is what RFK is going for with
making America healthy again. Part of why we spend more
money is because of our diet and exercise and all
that stuff.

Speaker 1 (40:03):
But I think another part of it, Brad, is the
fact that we just waste the money. Yeah.

Speaker 2 (40:07):
Well, and that's one of the reasons not to shift gears.
But it goes to the same point, which is a
big bureaucracy of the federal government might not be the
most efficient way to disperse these payments. And so Ron
Reagan wanted to get rid of the Department of Education
right away and was never able to get it done.
Trump is going to be doing away with it. And

(40:28):
what it does is it takes one more layer of
government bureaucracy out of it, which will save money. Take
the money that the government was going to spend anyway,
and get it a little closer to the source by
giving it directly to the states to spend instead of
having the bureaucracy of the federal government dole out the money.
And that's just savings for cutting the employees, cutting the departments,

(40:52):
and cutting potential waste, fraud, and abuse out of the
system by not having that layer. I think the one
thing you're missing though, the lawsuits are coming. The lawsuits
are to slow things down. Well, when you take money
away from people, they're gonna go hire a lawyer. Yeah, okay,
and we'll see. I mean, I think it's gonna slow
everything down because the moment a lawsuit gets filed, everything

(41:15):
gets frozen and all these you know agencies and they're
gonna they're gonna lawyer up and they're gonna start suing.
And it's unfortunate because that's just going to be more
money that gets wasted. It gets wasted. But I think
it's gonna start happening because you're you're taking away their
livelihood that they've become addicted to over the last ten
twenty thirty years. I don't know how in the USAID

(41:37):
program that you could get sued. Who are you gonna
get sued by if we cut off payments to you know, Pakistan?
But the US, But a lot of the usai D
money is going to American citizens who are running organizations
who claim to be helping foreign people.

Speaker 1 (41:55):
That's right, that's true. That's true. You know, it's it.

Speaker 2 (41:57):
Maybe it's maybe a religious organization that's going there and
doing humanitarian that's fine, but it at least deserves an audit.
And that's one of the things Pete headsegd All said
he was going to do on the Pentagon was audit
the Pentagon. And so all that audit will do is
figure out where we can make some cost savings, figure
out where the waste and the fraud is and eliminate it.

(42:19):
I it's beyond me why we do so much for
an aid for countries to hate US. I saw these
four on a list. Egypt we give one point five
billion a year or two sixteen percent of their population
has a positive view in the US. Palestinians five hundred
million annually, sixteen percent have a favorable view, Jordan six

(42:40):
hundred million a year, fourteen percent have a positive view
in the US. And Pakistan one billion a year eleven
percent had nice things to say about US. So what
are we paying for if they hate us?

Speaker 1 (42:50):
Anyway?

Speaker 2 (42:51):
Why don't we just cut it all off. And because
they're not going to hate us anymore. I mean, in Pakistan,
ninety percent of the people hate us and we're giving
them a bit. Are they gonna sue us? I don't
think so. I mean, and there's ways to provide support
without just writing checks every single year.

Speaker 1 (43:07):
Yeah.

Speaker 2 (43:08):
I mean, we can say to any of these countries,
we're your ally. If you get invaded by a foreign nation, yeah, okay,
And then this was kind of the argument with Ukraine though,
but if you'll be we'll have your back. Okay, that's fine,
that doesn't cost anything. But why do we have to,
in addition to that, just write checks every year? Yeah? Well,

(43:29):
I don't know if you saw, but just like your kids, right,
at some point, your kids grow up and they're off
on their own, and what do you say if something
happens and you get in trouble, I'm here to help.
I'm here to help. But that doesn't mean you're writing
checks to your kids every single year. Yeah, But that's
what it is with the US government is everyone's our
kid and we're and they're they're never out of the basement.

Speaker 1 (43:50):
Trump, They're never out of the basement. Trump was asked about.

Speaker 2 (43:52):
Ukraine and he said, if we're gonna help Ukraine, we
want we want resources back, we want precious the minerals
that they have.

Speaker 1 (44:00):
We want payment back.

Speaker 2 (44:01):
And I don't know why we never did that when
we were helping Kuwait and we were helping some of
these other Middle East countries. Why we didn't just take
payment back and oil. Yeah, they'd have been happy to
do it, and we never took it. I know, let's
think our last base. Brad, you're listening to money since
Kevin and Brad Kurston will be right.

Speaker 1 (44:15):
Back and welcome back. You're listening.

Speaker 2 (44:17):
Advisor is a Kristen Wealth Management Group. Brad and Kevin
here with this morning's a couple of minutes left. Kevin,
I saw a chart of every quarter of a presidential
cycle that I thought was important to talk about. These
things actually have meaning, not because well, if you go back,
this one goes back to nineteen fifty. So there's enough
maybe of a sample size that you could kind of
follow this trend, but you have to kind of think
about what's happening in that presidential cycle that would make

(44:39):
this maybe follow this pattern. But where we are today,
first year, first quarter is actually not typically that good
of a quarter for the for the market only for
the SMB five hundred only positive fifty five percent of
the time, and the first quarter of the first year
only produces a point one percent average return. And where
do we sit today, up to two and a half

(45:01):
pretty good start to the quarter. The second quarter is
a little bit better, uh three percent on average positive
sixty one percent of the time, but both of those
figures well below the average year. Third quarters worse. It's
only barely positive, up sixty one percent of the time.
So those first three quarters for the for the presidential
cycle of the first year are not that great. It

(45:23):
does pick up a little bit in the last quarter
of that first year, up three point eight percent on average,
positive seventy eight percent of the time. And then you
get to that second year, and we talked about that
second year would have been twenty two, it would have
been eighteen, you know, it would have been fourteen, all
kind of mediocre or negative years for the market.

Speaker 1 (45:42):
Two of the last two thousand and two.

Speaker 2 (45:44):
Yeah, yeah, they're all kind of kind of bad years.
It's the mid term election year, and what you have
for those quarters are forty two percent of the time positive,
forty seven percent of the time positive, and sixty three
percent of the time positive for the first three quarters
of that second year, producing a negative return over that
period of time. I don't put a one hundred percent

(46:04):
stock into the seasonality. It's just something to keep your
eye on. But if you go into twenty twenty six
with three let's say this year is another good year. Yeah, hypothetically, yeah,
with three good years, it would almost be irresponsible to
not sell at every rally, take a little bit off
the table, and keep selling rallies until we get a
little disruption. You know, there's a lot of talk that

(46:26):
Trump's going to give us this disruption. It's not necessarily Trump.
In his four years, eighty percent of the eighty percent
of the lowest volatility days in the history of the
volatility index were during his first four years. So I
think what happens is the market gets immune to the

(46:47):
Trump shenanigans. It gets immune eventually to all the tariff talk,
it gets immune to all the bluster and all the
things he's saying. But maybe the foreign countries don't get
immune to it, and so they're willing to still fall
for the art of the deal, even though the American
people eventually will say I cannot buy and sell my
portfolio based on everything that Trump's going to say, and
they eventually start to ignore it. We're not there yet.

(47:10):
The market has been pretty vollaile this last week on
the whipsaws of the news cycle. But if this continues
for another three or four months, the market and individual
investors are going to be immune to the daily shenanigans. Yeah,
I mean, I don't understand what is going on here
in the overnight trading when it seems to be some

(47:30):
sort of pre program sell when you hear the word tariffs,
there's some pre program sell. Because this is not regular folks,
regular investors hitting the sell button on their four oh
one K at two o'clock in the morning. Now. But
then you see, the market typically finds its footing, and
even if we have a down day, it's not nearly.

Speaker 1 (47:48):
As bad as what the overnight is.

Speaker 2 (47:50):
As what the overnight is, I saw a chart mail
bring it up for the next show. This overnight trading
is ridiculous and over the last like five years, and
I'll bring up for the show. If you had sold
the closed and bought the open, your return I'll perform
the SMP by a significant amount, and I'll because of
all the panic. But hey, the point is all the
panic that happens over It's going to be a fun ride.

(48:11):
Enjoy the ride and don't panic on all these one
off news stories. What's about Yeah, especially the stuff that's
just coming out of Washington is not directly related to
the economy or the market. Thanks for listening, everybody. We'll
talk to you next week.

Speaker 1 (48:28):
You've been listening to Money since, brought to you each
week by Kristen Wealth Management Group. To contact Dennis Brad
or Kevin professionally called four one nine eight seven to
two zero zero six seven or eight hundred eight seven
five seventeen eighty six.

Speaker 2 (48:41):
Their email address is Kristenwealth at LPO dot com and
their website is Kirstenwealth dot com.

Speaker 1 (48:48):
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 FINRAP SIPC