Kersten Wealth Management Group - Money Sense 3-01-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to the show. You're listening to the
advisors of Kirsten Wealth Management Group, Brad Kurston and Kevin
Kirsten here with you today. Kevin, it was a big
week and a big week of news and kind of
volatility for the market, all of which is kind of
healthy and good and kind of shows you what maybe
is a little overvalued and a little undervalued in the market.

(00:21):
And even intra day, we've had a couple of political
news stories that are moving the markets instantly and then
are racing in an hour later. And so I think
it's important to kind of talk about these things because
I think it's a lot of things that people are
worried about and they're kind of coming and going, and
people don't even know that they're coming and going unless
you're watching minute to minute on these news stories for

(00:43):
the market. So let's start off with the first one,
which was early this week. It was on Monday. It
is this Monday, right, Yeah, it was on Monday. The biggest,
biggest news story the last two years has been this
move in a stock that has now grown grew at
one point to be the largest stock in our market,
in Vidia, the chip maker and not a recommendation or

(01:03):
buy or sell Nvidia, but there's this pilon of people thinking, oh,
I need to have more and more in Vidia. If
you just own a diversified portfolio of indexes and mutual funds,
you own it. It's probably your top holding. It's hard
not to have it be one of the top three
holdings and not have it be. If you're in an
all stock portfolio, north of five percent of your portfolio,

(01:25):
you already own a lot of it, and yet it
is the number one stock that we have been asked
about over the last year for somebody to say, I
think I need to own more. In fact, before before
the news on Monday, I guess it was just ear
late last week. I had just had a young person say,
I think we just need to buy in Vidia stock.
I don't see anything that's going to take it down.

(01:47):
There's the statement. I said, what's going to take it
down is something you don't even know about. And one
day later, when after I told him, no, we're just
going to buy a portfolio that probably will likely have
it as its top holding or its top two or
three reholdings. Uh, he calls worried that I didn't listen
that I didn't follow through with that, and I just
bought in Video itself because new story comes out on Monday.

(02:10):
A company that nobody even knew existed in China has
an AI program that runs better than any of the
AI programs running in the United States. Well, isn't it
that not using Nvidia chips isn't the same story with
technology since the beginning of time? Something somebody who don't
know about somebody can do it better, faster, cheaper. Yes,
that's what it was. Well, that's what you said. The

(02:30):
greatest risk to in Vidia was that it's so profitable,
everybody is going to come out and figure out how
to do it better or cheaper. Right, You're you're making
so much money. I want to make that though. We're
not just going to step beside that in Video is
the best. We'll just we'll just let them, We'll just
let roll over everyone. Yeah. Yeah, so they're all going
to try to do it so well. The big news
with deep Seek, which was the story on Monday, was

(02:52):
the fact that bred not only are they doing it better, faster,
and cheaper in terms of the AI, they're doing it
without a chip. Yeah. So Nvidia supplies the chip so
the ai'll just kind of go back a little bit here,
the alternative intelligence, and you'll see it when you do
a Google search. Now, okay, Google will put there what
is theirs called Gemini Gemini. Uh, you have chat Gee.

(03:15):
You don't have to go into a website. It'll just
take all the websites and give you an answer chat, GPT,
whatever it might be. And so the AI is in
there even when you're using Google. But in order for
Google to create that AI within their search tool, they
had needed to use an Nvidia chip, which was the
most powerful AI chip that they could provide. Great, probably

(03:37):
still we'll need that. That's not the point. But the
point is this company out of China, Deep Seek, who
may or may not be even approved to be used
in the United States, figured out a way to do
it without the fancy chip. Uh oh, we don't need
you anymore. Yeah, okay, And this is the point, right,

(03:59):
I need film to take a picture. Well, you're always
gonna need film because that's the only way to take
a picture. Okay. Well, if I'm always gonna need film
to take a picture always, yes, what else would there be?
What you're telling me, I'm not gonna take pictures in
the future. No, no, you're gonna take pictures. You're just

(04:20):
not gonna need film. Oh what are you talking about? Yeah,
and we invented the digital photo and now people don't
need film. But when that argument was being made, it
was laughed at. No one could comprehend how you could
take a picture without film. Well, I could tell the
story with every company. I'm not saying to selling video,

(04:42):
I'm not saying to buy in video, but I'm saying,
is the thing that could take that company down? Okay,
And we talk about it a lot on this show.
The top ten in the SMP changes dramatically each decade,
and that let's let's do this slowly here with deep
seek and this whole news psych of this week because
it didn't end with Monday. Okay, it really went three

(05:03):
days in a row. But let's first talk about Monday.
This comes out and everyone says, wow, I didn't see
that coming. Really, because it has happened since nineteen sixty.
In nineteen sixty, the nifty to fifty was valued at
somewhere between Every one of the fifty stocks were valued
somewhere between sixty and ninety times earnings, and the whole
argument was the same as in Video's argument, which is,

(05:25):
not only are these going to be remain the dominant companies,
but they will persist decade after decade. And that's why
sixty times seventy times earning is appropriate, because not only
they're going to earn what they're earning, they're going to
earn it for the next twenty years. They're going to
remain there. But what happened with the nifty fifty. You
have companies like Xerox and Kodak and Polaroid and Avon

(05:49):
and Burrows and Digital Equipment. I don't even know what
they are. How about this one? Simplicity Patterns was one
of the nifty fifty. You know what they did? That
was for people who want to make their clothes at home.
You get a pattern from them to make your clothes
at home. Why wouldn't I want to make my clothes
at home? In nineteen sixty nine you were saying that,
And in nineteen ninety nine, obviously the company doesn't even
exist anymore. And the same in two thousands. Of the

(06:12):
twenty stocks that were the top twenty companies in two thousand,
only six of them were there in the top twenty
and twenty twenty four and only Microsoft was in the
top ten. So there are companies even in two thousand
that either cease to not exist or be much much smaller.
We mentioned Intel last week, smaller than it was twenty

(06:34):
four years ago, that was in the top twenty. City
Group was in the top twenty. AIG was in the
top twenty. A bunch of companies like Pfizer and Bristol,
Wiers Squib that are tinier than they were then, companies
like AT and T and Verizon that are smaller, and
it's just the growth rates don't continue. But at the
time you think, why wouldn't they, Well, competition does it.
And that's what happened with Nvidia this week. But they

(06:56):
lost six hundred billion of market cap in that two
day selloff. Yeah, and so what happened the next day.
They added two hundred and eighty billion of market cap
the next day because after the news story came out,
everyone started to test deep Seep. It was the number
one app downloaded on the next day, and people started

(07:17):
to test it and realized that the way to really
check to see if it was original and they were
not using chips and doing it different than chat GPT
was to ask chat GPT and deep Seek the same questions,
especially once where chat gpt gets it wrong. And then
you know, if you're a teacher and you see that,

(07:38):
do you think somebody is cheating? The way to look
and see if they're cheating is not to look at
the correct answers, is to look at the wrong answers,
and if the wrong answers are exactly the same, well
then you know that they're cheating. And that's what happened
with deep Seek. Very specific wrong answers were the same
on chat gpt is that were on deep Seek, and
so they knew they were reverse engineering chat GPT, likely

(07:59):
using chips that they either stole or because they weren't
allowed to buy Nvidia chips. Probably we're buying on some
sort of back channel and doing it but saying they
were doing it without the chips. So that's the Tuesday story,
and that's why Nvidio goes back up on Tuesday. So
why do we not want to own the individual stocks?
Because we don't want to have a stock go down
fifteen percent and then up seven percent, and then down

(08:20):
ten percent and then up five percent. It's not worth it.
We don't need it in the portfolio for a bunch
of things that you don't know. If you're going to
own them, you better own them in the right percentage,
and you better be doing it with a plan of
just looking like the index and not doing it because
you think you have a great idea but you don't
know how to implement it. There's not one single company

(08:41):
in the current top ten of the S and P
five hundred that was in the top ten in nineteen ninety.
Not one. The only persistent company for the last forty
years has been IBM, and the last thirty years has
been Microsoft. That's it. But they've all shifted. If I
have to look at this going back to nineteen sixty,
Exon Mobiles pretty consistent. It's not currently in the top ten,

(09:05):
but it's been pretty consistently in the top twenty. Johnson
and Johnson it's been around. It's there, it's there, there
a couple of times. Bristol Myers squib got a pretty
big market cap. Today it's not in the top ten,
but it's up there. JP Morgan is pretty consistent. Berkshire
half theway is pretty consistent in terms of being in
that top ten. So you know, if I'm looking back

(09:28):
thirty four years ago, and there's not one company in
the top ten. You tell me this, out of this
current top ten, let's say, I mean, let's go back.
Let's say half of them are not going to be
in the Well you're saying top ten, I would say
seven of them are not going to be in the
top ten. Well, even if you go back your twenty
years ago you have Microsoft, Apple, Ge No, I'm saying,

(09:52):
who's still still currently is still there? Still there? So
they're still there. I have the list. It's it's Microsoft, Walmart,
ex On Mobile, Johnson and Johnson, Procter and Game and
Home Depot. You're talking about just around period, the top twenty, well,
top twenty, so the top twenty from twenty two thousand
that are still in the top twenty and twenty twenty
four and six companies, And I'll do the top ten.

(10:14):
It's just Microsoft and Apple from twenty years ago. Just Microsoft. Yeah,
and I'm going back twenty four years ago. I'm going
to two thousand. So let's round it off. Let's say
I'm gonna be generous, Brad, five of the ten are
gonna be gone out of the top ten. Okay, So
they're gonna That means their investment will underperform the market,
will underperform the overall market. It's gonna be five of

(10:36):
these names, Apple and Nvidia, Microsoft, Amazon, Google, Facebook, Tesla, Broadcom, Berkshire,
Hathaway and JP Morgan. You tell me the five, You
tell me the five. It's impossible, right, it's impossible, and
so cause you don't know what you don't know. And
I was struck by that, And you don't know the
things that are impossible to know. We didn't even know
this deep seat company existed until MONDAYE. You didn't know

(10:57):
that the concept of the Internet was going to dethrone
seers because you didn't know what the internet was, right right, Okay,
you didn't know about digital cameras. So you didn't know
that Kodak was going to go under because you didn't
know that. You couldn't even comprehend what a digital camera was. Yeah,
so let me flash forward. You couldn't get You can't
comprehend the fact that you're ever going to want to
get in a car without a driver, Okay. And if

(11:19):
you can get into a car without a driver, you
can't comprehend the fact that you may not in the future.
Even want to own a car. Yeah, oh no, I'll
always want to own a car. Really, have you seen
car insurance lately? Yeah? Right, Oh, I'll always want to
own a car. Have you seen the prices of new
and used cars in the last ten years? Yeah? Okay.

(11:40):
Now instead of paying whatever you pay for your car insurance,
now you're just going to pay you know, you probably
have some sort of subscription service where the car picks
you up whenever you want, and it's one hundred bucks
a month and you can get to wherever you want
to go. Yeah, right, okay, but you can't comprehend that
because the technology is beyond your thinking at the moment. Right. So,

(12:02):
but I saw this article in USA today, and people
get so ingrained in their investments, says China's Deep Seek.
May this is fear mongering. Yeah, China's Deep Seek may
erase America's lead in AI and wreck your four oh
one k? And what the what's the day of that story?
By the way, that was the twenty ninth, So it
is yesterday, okay. So the whole article is about how

(12:24):
we can't let this happen because people's four oh one
ks are too tied to Nvidia and all the AI
and it will it will wreck. What they're trying to
do is scare everyone to call their congressman and say
we can't let this happen. Okay. This is a person
who is loaded up on tech, Okay, doesn't have any
other investments. And if you look in the last week

(12:44):
while tech has been going down, Brad, if you look
at the one week performance, you would have made two
point five percent in consumer staples, one point eight percent
in financials, two point five percent return in healthcare in
the last week. You're doing another week. Let me give
you the day. Okay, Let's do just the day Monday alone. Okay.
By the way, out of the SMP five hundred on

(13:05):
this big scare on Monday, which we got, we took
a fair amount of calls on this. Three hundred and
sixty five of the five hundred s and P five
hundred stocks were up that day. And it wasn't just
it was throughout the entire day. I took a lot
of calls to say, I'm pretty sure you're going to
be up tomorrow based on the way we're invested. Here's why.
Large growth was down three percent. Small growth was down

(13:25):
two Large value was up three tenths. Small value was
up a little bit. There's your financials, your healthcare, your industrials.
Staples were up two point eight five percent on a
single day, two point eight five, while tech was down three. Okay,
real estate was up one. Healthcare was up two point two.
Financials were up one point one. Consumer discretionary a tech sector. Okay,

(13:46):
consumer discretionary. Two. Biggest hold is Amazon and Tesla up
point three, Muni bonds up point four, the agri bond
inducks up point five to four, and forum bonds up
point one. Okay, you only have one little part of
the market. Okay, technology and communication services, but even some
communication services. Facebook was up. There's a lot of things
that were up. So you have two or three stocks

(14:09):
that are down on that day and everybody is going
crazy like we need to do something. Okay it And
by the way, if a well diverse WI portfolio proved
that you don't want to be you, we have plenty
of you. We have plenty of exposure to technology as
an investment brand. I don't want to sit here in
bash technology stocks. We got plenty of it. But the

(14:29):
point is everyone got so far on one side of
the boat okay, and oh, I don't want to own
thirty percent tech, which is what the S and P
waiting is. I want eighty percent tech and oh, by
the way, half of that, I want a single stock.
These are the people that get themselves in trouble. Yeah,
so we did Monday, we did Tuesday. You know what

(14:50):
Wednesday was. Wednesday was Ali Baba coming out and saying, well,
nobody asked us, but we have. We tested our AI
next to Deep Seeks, and we outperfor it. Now we're
using Taiwan semi conductor chips. But then Ali Baba rallies
because it dethrones. After one day, it dethrones Deep Seek.
And then another article comes out on Thursday to say

(15:11):
the top AI performers based on our test were in
this order, Ali Baba ten cent by do Byte dance,
and then Deep Seek by dance TikTok TikTok. So what
are those all have in common? They're all Chinese. So
what's gonna happen? Now? Some of you gotta take it
with a grain of salt. The Chinese don't mind lying,

(15:31):
that's true, and Deep Seek was lying because they said
they were doing without chips. They clearly were right, right, right.
But the point is that's pretty precarious. Where one little
story like that can knock off twenty percent from a
company's market value, it shows two things. Number one, it
shows how precarious the position is in terms of could

(15:51):
you be dethroned by a new technology. But it also
shows how high the stocks have gone when they can
drop that quick. Yeah, can you give up six hundred billion? Yeah,
because you're up two trillion right well. And by the way, conversely,
the same can be true by looking at some of
these beaten down names. You look yesterday, not a recommendationation

(16:12):
to buy or sell, but old IBM reported sort of
an okay earnings and goes up fifteen percent. So it's
all about what's already priced in. People will look at
an individual stock and they'll often say to us, I
don't understand. They beat their earnings. They are one hundred
percent higher on their earnings than they were a year ago,

(16:34):
and the stock went down. You're not looking at it right.
What was expected? If they were expected to beat their
earnings by ten percent and they beat it by five
or twenty percent, and they beat it by ten the
stock's going down, okay. So it's about what's priced in.
And by the way, conversely, when you're a value investor, okay,
and you're looking for underappreciated names out there, the opposite

(16:56):
can happen. You can have a company that's beaten down
so much that they report less bad or just outright
bad earnings and like well, like you said, it's less
bad than was expected, and it can go higher. So
you know, you just have to be very careful in
these environments. It doesn't mean oh that's it rallies over
in the SMB because inn Video is done. No, like

(17:18):
you mentioned on Monday, a lot of areas in the
market were up. I looked at our portfolios brand on
Monday with that big and video sell off, we're basically
slightly higher to flat on that day. And you look
at it, it's because all of these other areas are higher.
And like you said, I don't think we're at the

(17:40):
nineteen ninety nine euphoria for tech, but you start to
see a few similarities more like it's ninety five or
ninety six, nineteen ninety five or ninety six, not nineteen
ninety nine. But if this does keep going, we are
on a path to that and people need to be very,
very careful. I mentioned a couple shows ago. I pointed
out to some and reminded them that the Nasdaq one

(18:01):
hundred dropped eighty five percent from two thousand to two
thousand and two, and the person didn't believe me. I mean,
these things get in the rear view mirror, These things
get in the past, and you start to believe that
they can never happen again. We had two big sell
offs last year, we had two the year before, and
everyone forgets. You know, we're not even to the two
year anniversary of the bank failures, and the bank failure
sell off was a full ten percent sell off, and

(18:24):
people just forget about it. You know. The August sell
off was eight and a half percent, and it happened
really quickly and it made people nervous, but we already
forgot about it. What was that? What was that? Even
Japanese something? The new story came and went, just like
the song Yen carry traders, yen carry trade, and here
we are. People are gonna forget Deep Seek even existed.
Six months from now, we won't even hear about it.

(18:46):
It will be a nothing. And yet people look at
the chart and say, why did Why did the biggest
company in the world go down by fifteen percent a
single day. We don't even remember. Look at today's news. Okay,
markets chugging along, having a great day, and then Trump
signing a couple executive orders and the reporter says, what
are you gonna do any tariffs on uh, Mexico. Yeah,

(19:07):
We're gonna do twenty five percent tariffs on Mexico and China.
The market fell two percent in two minutes and then
recovered before the end of the day, and people will
will look and see, oh, we had a positive day.
Nothing happened. The market went from the Dow's it's easy
to do the Dow. Everybody knows good, good and bad
down now days the Dow was almost up three hundred points.

(19:27):
I believe it's two seventy five. Trump makes those comments
that goes negative about one hundred and then finishes up.
What do we finished up a couple hundred? So but
you'll look and say, how that must not have there
must not have been anything. Well Trump Tariff News takes
it down and then he clarifies, Yeah, we're we're only
gonna put tariffs on until they agree to take their
their immigrants back or we get some some agreement on

(19:51):
on drug trafficking blah blah blah, and I guess and
if it does happen, it'll be so brief that it
won't even get implemented in time for us to even
collect right, right, Because so they're gonna cave, just like
Columbia was a Columbia. Yeah, Columbia. Kepping, he did that
back and forth while he was on the golf course.
I mean, I truly believe that if the countries don't cave,

(20:13):
he would do it. But they're all gonna cave. Yeah,
They're all gonna cave. So take our first pause. You're
listening to Money since Kevin and Brad Kurston. We'll be
right back. Welcome back to the show. You're listening to
the advisors of Kristen Wealth Manage Group. Kevin Kirsten and
Brad Kirsten happy to be with you today. As a reminder,
we are professional financial advisors and our offices are in Perrysburg.
Give us a call throughout the week if you have
any questions or you want to set up a consultation

(20:35):
for one nine eight seven to two zero zero six seven,
or check us out online at Kirstenwealth dot com. Brad
Trump's been busy, got a lot going on. We have
this tragic, you know, plane crash here in Washington, d C.
You real quick thought on that. We mentioned a couple
shows ago about uh, the money that we're spending in government,

(20:57):
and one of the things we talked about is actually
spending more money to maintain old tech instead of just upgrading,
having an upfront bill that saves you money long term.
Why we haven't. I mean, I'm looking at this picture
of air traffic control and the computer screen that the
air traffic control people are looking at where the plane

(21:18):
is like a dot, and then this, I mean, I
have better technology when I'm on the plane and they're
showing me where the plane is. Oh yeah, yeah yeah,
Zach three d okay. But they're showing this little dot
dot dot and the thing's going around and another dot yeah,
dot dot dot. And I'm thinking to myself, how are
we in twenty twenty five and this is what an
air traffic controller is looking at? I mean, this thing

(21:39):
should be four dimensional, four K whatever you know, it
should be all. I mean, I don't understand it. And
would there be anyone Democrat or Republican who would say,
I don't know what the number is, let's put ten
billion dollars into air traffic control technology. That that would say, no, thanks, no, no, yeah, no, ay?

(22:03):
That I mean, if you were to build a new airport,
is that the system you'd put in? No, there's a
better system. Therefore all of them should get the newer system, right. Yeah.
It's like it's like investing if somebody were to give
If somebody is holding onto a stock and I were
to say, if I were to give you a million dollars,
would you buy that same stock? And if the answer
is no, why are we still holding it? I mean,

(22:24):
I have technology in my current car where if it
feels like it's getting too close to something, it stops
the car. How is this technology not in our planes?
Right on our helicopters in this case and obviously in
the car it's pretty close. I mean it's feet, But
I mean I would feel like for planes it should

(22:46):
be like a mile or more one hundreds of yards
your plane starts turning on its own. Yes, Well, do
any self driving? Do any self driving, especially in a Tesla,
it will just turn or break. It won't let you
hit me. Yes, or the plane should pull up, whatever
it might be. But this technology in our airports has
been way too old for far too long, and I

(23:08):
just don't no one would be against it. I mean
sometimes it takes a tragedy, unfortunately for us to you know,
wake up. Yeah, but no, who's going to be against that? Right? So,
and let's talk about the the nominees here in well,
let's let's just get right into it. So on the
nominees that the Bobby Kennedy for the Health and Humans
health and I h is what he's up for. I

(23:31):
just it's so many, it's so interesting how there's just
so much talking out of both sides of their mouths.
I mean, Elizabeth Warren asked him at one point if
he would agree to not work for the pharmaceutical companies
after he for four years money me, yeah, right, yeah.
Then the next question is, would you agree to not

(23:53):
work against the pharmaceutical companies? Yeah? Would you agree not
to sue them? He's absolutely not. What are you talking?
And so this back and forth and then some of
the questions he was being asked where he has proposed
that we should study certain things, like we should study
the effects of certain things, whether it be certain chemicals

(24:17):
and artificial substances we put in our food and we
should study that, okay. Or he said maybe we should
study to see if some of these on the school shootings,
if some of these kids or are on antidepressants, mean antidepressants.
Have a warning right on him that it could cause
the opposite effect. Yeah, the opposite effect. And he's suggesting

(24:40):
that we study these things, just like Trump today was
suggesting on air traffic control that we need to study
why this happened. Did it happen because of technology? Did
it happen because of DEI? Did it happen because of
poor training? Did it happen because of all of the above.
He's saying that we need to look at even when
he's saying it is it happening because of DEI? His

(25:01):
thought processes. Is it happening because we're spending too much
time worrying about that and not on training. Are we
worried about us? We need to look look at you
and see, just like Bobby Kennedy with Widerrap Kennedy Jr.
Saying we need to look into some of these things
and seeing how it's affecting us every single center, whether

(25:21):
it was Kennedy or Trump talking about air traffic control,
every single one of them says, oh, so you think
you think antidepressants caused school shootings he's and he immediately says,
I don't think that. I think we should study that,
And it's like they're giving him a blank stare. Well.
The weird thing about Bobby Kennedy especially not the other here,

(25:43):
but he's a Democrat, Okay, he is right. He has
not a Democrat on like two issues, and these used
to be democratic policy. The things that he is suggesting
used to be things Democrats were for. But because he's
a Trump nominee, now they're all of a sudden against it.
Shouldn't we collec elaborate when we have certain things like
these dyes and these chemicals that we're putting in our food.

(26:06):
Shouldn't we collaborate with our allies in Europe and say
you ban that? Can you tell us what study you
already do the study? Yeah? Yeah, can you tell us
why you banned it? Oh you banned it for this?
Like why is it illegal according to these or or
why is it shouldn't say illegal? Why is it so
terrible to want to look into something? And one of

(26:27):
the things that Cash Pattel for the FBI, and then
also Kennedy is said, is we want to everything's been
in the dark. We want to shine the light on everything.
If it's if it's a study that we don't like
the result, we're not going to bury it. It's and
that's what's been happening, especially with food. With food, Yeah,
so you got a lobbyists saying we're you're going to

(26:49):
take money right out of our pocket. You need to
bury that study no longer. Why is that? Why is
that not a universal goodness? Is not a Republican or
Democrat thing to want to have complete transparency in the
FBI as it pertains to Cash Betel, or complete transparency
when it comes to our healthcare, and I think complete
transparency when it comes to transportation. In terms of why

(27:12):
did this happen? Was it poor training? Was it just
distraction in the training? Was it bad technology? Trump was
saying in all of the aboves, it's got to be something, yes,
and we're gonna figure out why. Well, with the food,
I think part of the reason he's getting pushed back
in these hearings for even getting nominated is are there

(27:33):
people that are going to be found guilty of taking
kickbacks and burying studies that we've had known things in
our food that are bad because they were taking kickbacks.
Bob Menendez is going to jail now for taking kickbacks
from foreign entities, and he's going to jail for prison
for eleven years. There's the longest prison sentence for a
senator ever. And if cash Betel gets in there, maybe

(27:57):
he's gonna uncover who's getting kickbacks and burying stuff for
decades that are in our food that we knew were
bad for us. Who knows. Yeah, let's look at some
of the other things Trump did this week. People were
panicking about the hiring freeze. It's certainly not unusual we
talked about in last week's show for Republican presidents to
institute a hiring pause as they assessed new agency priorities.

(28:22):
You know that. By the way, that was another thing
with Robert F. Kennedy said. They said, so, let me
get this straight. You're just gonna You're just gonna do
whatever Trump wants. And he's just like, well, Trump did
nominate me. I mean, I'm gonna make my suggestions, but
it's kind of my boss, you know, he's kind of
the person I worked for, and the American people put

(28:46):
him in there because they liked his policies. I think
there was something about him immediately firing three hundred people,
and he I didn't realize the number. It's something like
ninety one thousand people work there. He said, you don't
think I'm gonna fire anybody. Well, then they said, will
you commit to not fire one person? He's like, no,
I'm he's out commit to not firing anybody that's doing
their job. Okay, And it's just such a dumb question. Yeah,

(29:08):
but there was this hiring freeze. This will help reduce
those numbers, given the federal government hires a stunning two
hundred to three hundred thousand people each year. Of course,
Democrat centaters like Patty Murray's already suggested the freeze will
harm vital operations like veterans' healthcare. That has certainly spin.
The freeze laid out exemptions for personal engaged personnel engaged

(29:29):
in immigration, national security, public safety. I saw someone interviewing
the new Press secretary on CNN, it might have even
been Jake Tapper, and he said, uh, work, you're gonna
fire these people who work from home? What if it's
a doctor and she goes a doctor is working from home,
It's like really yeah, Now, I know some doctors do telehealth,

(29:53):
but there is no doctor doing one hundred percent yah
work from home. Well, they're making it easy. All you
have to do is you you email or text something.
You just text like a single word and I think
it's quit and you get eight months full pay. So
they're making it very easy for everyone to just leave,
so back to the office. They're moving swiftly to tighten

(30:14):
the COVID era remote work rules that Biden turned into
the status quo. According to the House Oversight Committee report,
half of all federal employees were either teleworking regularly or
fully remote. Half one result, the Government Accountability Office report
found than in twenty twenty three, seventeen of twenty four
agency headquarter buildings were filled twenty five percent or less.

(30:39):
OPM is giving agencies thirty days to terminate most teleworking
and remote arrangements. The rules won't apply to everyone. Some
thirty percent of federal employees belong to a union, many
of which have signed contracts on the telework side. On
the upside, a side benefit of the order will be
more efficient office use and vibrancy in the ghost town
that is Washington. Certainly, I mean thing on what eight

(31:00):
months or nine months of pay? And Trump did say
they're actually going to investigate people. And I'm not sure
every contracts different, but he said, if we find that
you were working a different job, were actually he said,
they're going to prosecute people. Okay, which part part of
the contract? It was part of the contract, right right? Gotcha? Yeah.
Federal employees put on paid leave as part of Trump's
order to shut shutter federal DEI offices. There's I didn't

(31:24):
even know how many of these DEI offices there were,
but it's all been created in the last four years.
It's unbelievable. It's unbelievable. So we talked about the buyouts.
More notable a Trump's moved to a certain control over
the bureaucracy, shaking up a structure in which very senior
career employees with political gen does wield more muscle and
authority than the appointees who are supposed to be above them.

(31:45):
Trump transferred at least fifteen senior career DOJ attorneys away
from their long shime positions of power to new position.
So I mean he's going in there and cleaning house
on just about everything so that I know it's about
safe in billions, but he's also saving millions by cutting
everybody's security detail. It's crazy. There had a couple of
videos of Fauci showing up to places and he had

(32:07):
like two SUV's and all these people following him, and like,
come on, I know, I mean, here we are in
a situation where I mean the one that all the
stuff we were sending to Gaza and Hamas, Trump shut
that all down. And then you sit here and we
have this tragedy with air traffic control and who because

(32:27):
we're not spending enough, Because we're not spending enough, and
we're spending money. We're spending eighty billion dollars in Ukraine
and we're not fixing our own air traffic control system.
It's unbelievable that that money could have went there. Okay,
And so you know, Trump's busy doing all of it.
And now a lot of the people are saying, well,
you know, you just took office and this tragedy happened.

(32:50):
I mean, that was the question this afternoon. They're doing
that with eggs because I didn't even realize this, but
Biden had to I don't know, not Biden, but Biden's
people had to do something with killing like one hundred
thousand chickens. I don't know what kind of outbreak we had.
So it was handwriting was on the wall that there's
gonna be and I guess our area is one of them. Well,
we're gonna have egg shortages. And you go this last
week to the grocery store there's like what used to

(33:12):
be eight rows of eggs and there's one and everything
else is empty. It has to do with this outbreak
that we had to kill. So now they're blaming Trump.
They're like, well, you've only been in office for a
week and look how crazy these egg prices are. What
are you gonna do about it? Like like, well, even
the Transportation secretary started the job, Sean Duffy, like three
days ago, and they're gonna blame him. They're gonna blame him.
I mean, some of these things they like to pull out,

(33:33):
it's just I know the American people are smarter than this,
and it's gonna backfire. It's going to backfire. Even Robert F. Kennedy,
they didn't bring it up, but did you see that
his get this right. Carolyn Kennedy, who was JFK's daughter. Okay,
she put out a statement on him. Yeah, well, I
know she's spent a guest with Every time he brings
out a book, they ask her her opinion, and so

(33:54):
her big thing against him was he he had at
one point he had all these like pet hawks. He
liked to raise birds of prey, okay, and she said
it was so mortifying because he would put chickens in
like this blender to feed the hawks, okay, and they
would eat all these chicken parts or whatever. And it

(34:14):
was so mortifying that he would put these chickens in
this blender. I was like, Carolyn Kennedy, do you know
what's in a chicken nugget? I hate to break the
news to you. They put the chicken, they don't wait
for to old age, and when it goes in a
chicken nugget that everybody in this country eats and they
compress it, it's basically the whole chicken. Yeah, put in

(34:35):
a blender. Okay, it's not great, it's not a great visual,
but you're acting like it's some terrible thing that he
would feed a predator like a hawk. Just an excuse,
just an excuse because you don't agree with some other
political stance. But how was that like the I mean
I had a friend in college who had a pet
snake and he would feed it nice. Yeah, Like is
that a reason to be like that guy's a bad person?

(34:57):
Like that's what snakes eat like that, whether you see
it or not, whether you see it or not, I mean,
if it happens in the wild and a hawk kills
an animal, is that bad? Yeah? It just was the
strangest thing to go after him on. And so when
they're grasping at straws like that, you know they you
know they've lost. You know they've lost the argument when
you look at the on Robert F. Kennedy in particular,

(35:22):
the farther west you go, because in terms of health
and all this bad stuff that's in our food, the
farther west you go in this country, the more they
like him. So you want to go after him, you're
gonna end up turning states like or areas like Las
Vegas and areas like in certain parts of California, you're
gonna end up turning those people Republican. It may already

(35:43):
be happening after these wildfires too, and may be the
perfect storm of some of these people quietly saying, you
know what, I'm done. I'm done with this. I'm gonna
vote Republican for now. Now that that outrage was happening
this week as well, Trump tweeted that he the ri
Corp of Engineers turned the water on, and everybody was saying,

(36:04):
Trump is such an idiot, he doesn't know what he's
talking about. So then that Steve Hilton who's on Fox,
went out to show that there is a federal basically
water faucet that comes down from the north, and then
there's one that is a state one that goes down
into this Pacific Palisades area and the last time that
Trump was in office, he had turned it on and

(36:25):
Newsom shut it off so that it wouldn't enter his
area to protect the smelt, and so he ordered all
of them to be turned on. And so all these
people who are against Trump are saying there's no such
thing as a spigot. There literally was. There literally is
an on and off that runs down this canal. And
Steve Hilton was out showing how it all worked and
how it was empty a week before and now it's

(36:47):
full and they're pulling it. Oh shocking. They're pulling it
from melted snow in the mountains. That's a novel idea.
We're gonna pull it from melted stone in the mountains.
That's kind of smart. Right, Yeah, all right, let's take
our next pause. You're listening to Money Cents Kevin and Bread.
Kirston will be right back and welcome back. You're listening
to the advisors of Kriston Wealth Management Group. Brad and
Kevin here with you this morning. If you didn't hear
any of our ads we are professional financial advisors in Perrysburg, Ohio.

(37:09):
Give us a call in our Perrysburg office four one
nine eight seven to two zero zero six seven or
eight hundred one eight hundred eight seven five one seven
eight six Kevin, We uh, where are we going next time?
I'm sorry, I'm blanking here. Well, I was saying that
I know ran across something that was talking about taxes
for twenty five Well. Yeah, The point I was gonna

(37:30):
make when starting this segment is, we know we're getting
the tax extensions, but we've had these tax cuts since
twenty seventeen, and for most people who are listening, your
income doesn't change a lot in retirement, and if your
income doesn't change a lot, or even if it goes
up a little bit, you have had a tax decrease
every year since two thousand and seven. Well, there's certain

(37:51):
things that aren't index for inflation, like the state and
local tax right off, but for most people, when you're
in retirement, taking the standard especially if you're over sixty five,
in the standard deduction. And not only has the standard
deduction gone up significantly since twenty seventeen, even after the
rays the doubling of it from sixteen to seventeen, but
you have every tax bracket going up to the tax

(38:12):
brackets are all saying the same, but the income you
can make and be in that tax bracket has gone
up as well. So we've had higher inflation. So it's
index for a much higher inflation for three of the
last four years. But even this year, even if they
don't retroactively make a change for twenty twenty five, you're
gonna have a tax decrease if your income is the

(38:34):
same or relatively the same from last year to this year.
So let's take a look at some of these for
twenty twenty five and what you can make and still
be in these bottom, say three brackets. Well, I mean
the big thing to me, I mean up to ten percent.
The rate up to ten percent is eleven thousand, six
hundred single, twenty three thy two hundred joint, but the

(38:55):
next one only jumps to twelve. So I'm gonna talk
about the ones that have the big leap. Okay. So
a single person including the standard deduction, the standard deduction
for single filers is fifteen thousand, okay, And so you're
in the twelve percent bracket up to forty seven thousand
on single, so you're in the twelve percent bractive effectively

(39:17):
up to about sixty two thousand of income because the
standard deduction is fifteen thousand. So if you can structure
your income if you're single, to stay under that, you know,
that's pretty important. Now, married filing jointly thirty thousand dollars
standard deduction, twelve percent bracket up to ninety four thousand, okay.
So now you're one hundred and twenty four thousand, one

(39:39):
hundred and twenty four twelve and under bracket. And if
you're over sixty five you get an extra about three thousand,
is it, let's see sixteen hundred? Yeah, A piece a piece,
so thirty two hundred, so you could be making one
hundred and twenty seven thousand and not a dollar of
your income is taxed over twelve percent. And we've talked
about it in the show. This is the this, this

(40:00):
is the most useful Wroth conversion strategy for people under
age seventy three is use up all of that twelve
percent bracket. Yeah, because the next one's twelve twenty two,
there's a jump. So now there's a jump to twenty two,
but then the next bracket's only twenty four. So to me,
there's not a lot of planning to be done to
say I really want to maximize twenty two because I
don't want to be in the twenty four. Right, that's

(40:21):
not useful. But after twenty four it does jump to
thirty two. So if you're somewhere around one hundred and
twenty five thousand, you want to stay there. If you're
around ninety thousand or one hundred thousand, you probably can
do some roth conversion twenty five thirty thousand a year.
And if you're if you're a ways away from the
age seventy three where you have to take money out
of your require for your required distribution and you're not

(40:44):
currently taking money out of your IRA, then that's the
thought is, let's let's get five to ten years of
wroth conversions to reduce the amount of required distributions you
might have when you're seventy three. The next big leap
happens from twenty four to thirty two percent federal tax
on a single person. That happens at one hundred and
ninety one thousand, So that would be two six including

(41:05):
the standard deduction, and three hundred and eighty four thousand,
which would be you know, four ten four to ten
or so on someone four hundred and fourteen excuse me,
on someone who mary filing jointly. So that would be
the one you don't want to go above. If you're
you're well above the twelve percent bracket. If you're somewhere

(41:27):
in the middle, don't worry about it. But if you
want to do roth conversions, or you want to if
you can structure your income in a way, whether it's
contributing more to your four oh one k or whatever
it might be. Some people it's just contributing more to
their four oh one K to get under that limit.
The next big one is jumping from twenty four to
thirty two, where you want to stander about two hundred
and six thousand of income for a single and you

(41:47):
want to stand here about four hundred and fifteen thousand
for married filing jointly. But those have moved up. Yeah,
that was moved up. That's that was kind of the
eye opener for me. And if you're over the age
of sixty five, it's really that twelve percent bracket only
because you get up to that twenty four racket topping
that out and you're gonna have some issues with your
Medicare premiums and so you have added taxes one way
or another, or added costs to do more. That's going

(42:11):
to push you up to the top of that bracket.
So's it's probably for anyone over the age of sixty
five only the Roth conversion strategy up to that twelve bract. Right,
This is some bad news. Numbers are going up sometimes,
things like the brackets. When the income levels are going up,
it's good news. The bad news is maximum wages for
self employment tax subject to Social Security is now up

(42:31):
to one hundred and seventy six thousand, one hundred. So
that was one hundred and sixty eight thousand, six hundred
the year before, So that's a little bit of bad news.
Home mortgage interest, if you don't take that standard deduction
and you can still write off your interest has to
still be on a debt of seven hundred and fifty
thousand for a first and second home, so that did

(42:52):
not change. Seven hund and fifty thousand for a first
and second home. For homeowners with existing mortgages can continue
deduct interest on a million a million of debts, so
if it was an existing home, it's a million. If
you're buying new, it's only seven fifty. Those limits are
not index for inflation, so that has not changed. It
won't be won't be changing. Home seller's exemption is five

(43:14):
hundred thousand of gain, meaning if you sell your house
and you have at least five hundred thousand of gain,
talk really quick about that, Brad, because people sometimes assume
that they made a nice little profit on their house,
they're going to owe tax. Probably not, but I mean
if it's probably not around here, But I mean if
you live somewhere where you have a huge gain. But
the other thing I don't think people think of is

(43:36):
if you are in a situation where your house has
a big gain. Don't forget how much money you put
into it and document that because you may have a
higher cost than you realize. If you bought a house
for three hundred thousand, and maybe you're in one of
these areas where price is skyrocketed, but you put one
hundred and fifty or two hundred thousand in upgrades, that

(43:57):
counts towards your cost. So then if you turn out
and sell it, you think, oh, I'm over the five
hundred thousand dollars limit. I'm gonna owe tax. You know.
I think for anyone around here, it's maybe people who
bought in Florida and are selling to move to something
else in Florida. But yeah, that's really these aren't issues
for the East and West coasters. In the Midwest, we

(44:18):
didn't have a big run up, we didn't have a
big drop, and now subsequently here this last three years,
we haven't had another big run up. And that does
not include if you inherit a home and sell it,
because there's a step up in basis, so you don't
have to pay tax on a home if you inherit
it either. But that five hundred thousand dollars gain. Brad
is only two fifty for a single So if someone
you could get closer to that in this area to

(44:40):
having a two hundred and fifty thousand dollars gain if
you're not married. Let's take our last pause. You're listening
to Money since Kevin and Brad Kurston will be right back.
Welcome back to the show. You're listening to the advisors
of Kirsten Wealth Manager Group, Kevin Kirsten and Brad Kirsten
wrapping up this tax discussion before we end the show. Brad,
one of the other things here capital gains on capital gains.

(45:01):
I mentioned the capital gains on a primary residence, but
there's actually a rate for capital gains where if you're
in that twelve percent bracket. Another reason to stay in
that twelve percent bracket your long term capital gains on
investments you've held for more than one year, that's long
term capital gains is zero. Okay, So big incentive there

(45:23):
if you have investments to stay in that twelve percent bracket.
Fifteen percent goes all the way up to five eighty
three for married filing jointly, over five eighty three is
twenty percent. That's the most you'll pay. Yeah, and if
you're going to have, if you're gonna have a primary
residence where where you are going to pay some gain,
make sure you don't have any investment gains to tack
on top of that. By the way, you might keep

(45:44):
yourself fifteen percent. That was twenty twenty four. Fifteen percent
twenty twenty five goes up to six hundred thousand, six
hundred thousand overs twenty percent, and the zero percent rate
is the twelve percent bracket that we talked about. Yeah, so,
but both of those just mentioning if you know you're
going to sell your house and you might have some gain,
let's make sure it's a year where you don't have
a bunch of investment gains. That's a year maybe to
hold on to everything until the following tax year, just

(46:07):
so you're not bumping yourself up and paying five or
any Maybe keep yourself in the zero bracket, but by
try to keep yourself in the fifteen and not the
twenty bracket for that year we're going to sell the house.
So charitable contributions, specifically on the qualified charitable contribution when
you're over seventy and a half, you can do up
to one hundred and eight thousand on that charitable contribution,

(46:32):
you can do. You can do more than you're required
withdrawal if you want. It's not as big of a benefit,
but it's still will reduce the size of your IRA
for future years. But if you have less than that,
if you have a forty thousand dollars require distribution and
you want to do ten to charity and take thirty
for yourself, you'll only be taxed on thirdy. Now it matters, right,

(46:54):
that's when it matters. You're not using all of it.
But if your required distribution is forty and you want
to take that full already and spend it, and then
you want to do another qualified charitable for the extra ten,
it's somewhat irrelevant. You know, you took an extra ten
out that you weren't taxed on. You didn't need to
do it out of the IRA. You could have done
out of any account and it would have been the same.

(47:15):
This is something that's probably going to go away under
Trump rad The electrical electric Vehicle tax credit still seventy
five hundred dollars if you buy an electric vehicle. Credit
is not available to married joint filers with income over
three hundred thousand or single fires over one fifty. But
I think in terms of making the numbers work better,
Trump would be maybe likely to get rid of that.

(47:36):
Elon's all for it. He thinks that the other automakers
needed a lot more than him. The earnings came out
for Tussla this week, and they had a lot of
sources of revenue that were very profitable that didn't have
anything to do with selling cars. A couple more items
on here, but we're coming to the end of the show,
so we'll we'll wrap the rest of this up next week.
Thanks for listening everyone. We'll talk to you next week

(48:00):
and listening to Money Sense brought to you each week
by Kirsten Wealth Management Group. To contact Dennis Brad or
Kevin professionally, call four one nine eight seven 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. Opinions voiced

(48:21):
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
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