Kersten Wealth Management Group - Money Sense 3-15-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money Cent. You're listening to the
advisors of Kirsten Wealth Manager Group, Kevin Kirsten and Brad Kurston.
Happy to be with you today, Brad, as we are
smack dab into what is officially a correction in the market,
the overall market being down the s and P five
hundred being down ten percent or more is defined as
a correction. We talked at the beginning of the year

(00:21):
to expect some more volatility. I don't think that we
expected it to happen over a What are we here,
March thirteenth, and the peak of the market was February nineteenth,
three weeks in a day. Three weeks to get to
a ten percent correction, in my opinion, is a little extreme,
But nonetheless, we certainly expected more volatility after historically low

(00:41):
volatility in twenty twenty four. It's interesting twenty twenty three
actually had a ten point three percent correction in September
and October, so twenty twenty three, so we're gonna put
the hard hats on and we're going to go through
to calm individuals. It's amazing to me that when we
finally get to a corrective period, all the things that

(01:02):
people talk about before the correction get completely blown out
the window. We set a couple of weeks ago, at
no point would you ever be in a correction and
the narrative on TV or the narrative anywhere. And I
think the narrative is a little bit more extreme right
now because most of your not only your business media,

(01:23):
but most of your media in general is anti Trump.
So I think it's a little the negativity is a
little bit higher than it would be in almost any
other circumstance. But when you get to a ten percent
correction and you get to that buying opportunity. And by
the way, so we started nibbling today for a few portfolios. Yeah, yeah,
few portfolios just started nibbling on stocks because we do

(01:47):
think this is a great opportunity. This is an opportunity
that we expected. And so when you look at it, said,
I think you said a couple of weeks ago, when
it happens, it's going to be the sky is fault.

Speaker 2 (01:59):
Yeah, Okay, the negative narrative, one's gonnage. This is always
the same. It's always the it's always to say everyone
on TV who's even bullish says just not yet, just
not yet, just not yet, and then the second you
get a recovery, they'll come on TV and say what
they bought yesterday? Right, So, and that's what you're hearing today.
On on Thursday, you get, you get, you close at
ten point one percent from high to low. Not a

(02:21):
single person on TV was saying they were buying now tomorrow.
If we have a huge upday, they will all say
that they were buying yesterday. That is not picking off
one scenario and saying this is what happened this time.
Every single correction has it. I don't care if it's
a five percent or a ten percent correction. But let's
go through some of the history of the corrections so
we know what to expect before.

Speaker 1 (02:43):
We do it. Before we do the historical, let's do
the current first. Okay, nothing has changed from last week
when we talk large cap Foreign is up nine percent,
Europe is up fifteen Okay. We often talk on this
show how investors get the uh, the idea right and
the investment wrong. No one would have said that we're
going to have a full blown tariff war with Europe

(03:04):
and other countries and Europe would be up fifteen percent. Okay,
No one would have said China would be up over
fifteen percent, which it is as well. Emerging markets up
four percent, SMP down four point six This is year
to date down another percent and a half today. Large
cap value flat on the year. Okay, people would have

(03:25):
said large cap value. Those are your industrial and manufacturing stocks.
Automobile companies are in large cap value. How is this possible?
I thought that was supposed to be negative because they're
importing parts. I saw the statistics on companies with the
biggest exposure to tariffs. Number one was consumer staples. This
company's like Procter and it can't be doing It's gotta

(03:47):
be doing terrible. Right, Consumer staples is the number two
sector on the year, up two point three percent, with
the SMP down over five.

Speaker 2 (03:57):
And probably the least affected by Tariffs's technology. You have
some like Apple that imports some parts, but in general
these are service companies.

Speaker 1 (04:04):
Right. You can't take a company like Netflix. We're not shipping.
Netflix does not ship anything on a boat over to Europe.

Speaker 2 (04:12):
Right, there's no yet. So does does PayPal have a
tariff on it?

Speaker 1 (04:17):
No? Does does Netflix? No? Does eBay? No?

Speaker 2 (04:19):
So? Microsoft not a recommendation of by your selling these
all of those, all of those, how's tech doing. It's
the worst, it's the worst sector to date, and it's
the worst sector.

Speaker 1 (04:31):
Uh, it's the worst.

Speaker 2 (04:33):
It's the worst sector here to date, and it's the
worst sector from the high Yeah. So we're saying it's tariffs. Yes,
are the terrafts surprising?

Speaker 1 (04:40):
Yes? But did it coincide with the time when we
were a little overdue for a correction? Yes? How about
materials companies, Brad materials companies. This is like Dow Chemical and.

Speaker 2 (04:50):
These are the second most affected by tariffs, second most
affected by tariffs, up one percent on the year.

Speaker 1 (04:55):
And I thought it was terrorists as the reason. We're
selling down four percent from the highs while the S
and P down ten. Okay, Healthcare makes a little bit
of sense. Healthcare is flat from the high point, okay,
and up five point two. It's the best sector year
to date. Some of it's just simply you know, everyone
wants to put a meaning behind it.

Speaker 2 (05:13):
Yeah, why is healthcare up most the most year this year?
GP ones because it didn't do well last year?

Speaker 1 (05:18):
No? No, sorry, the second the last side. Okay, Yeah,
it is great in twenty three, did terrible in twenty four.
One of the worst sectors in twenty four, Yeah, one
of the best sectors in twenty five. It has nothing
to and I would argue there it is quite possible
that everyone on TV has it wrong. Yeah, because investors

(05:40):
are selling fine. But the sectors that are being sold
off the most are the ones that have the least
effect from tariffs. And the sectors that are holding up
the most are the ones that will have the most
effect from tariffs.

Speaker 2 (05:52):
So if you really believe it's tariffs, you better be
rebalancing the portfolio now, because then you believe the market
has it wrong, and you should be rebalancing out of
these sectors that are about to be in the future
affected by tariffs and into the ones that are currently
sold off that are gonna have no effect on Think
about this, it's a value to tech rebalance. And again

(06:13):
that is a little bit of what we did today
kind of across the board to make sure that we
were just rebalancing into where we started the year, so
that things that are a little deeply more deeply sold
off are getting a little bit of an increase to
their allocation.

Speaker 1 (06:26):
Well, and this whole thing about tariffs, I think Trump
has handled this not the tariff part of it. I
think he's handled everything pretty poorly, just in order. There's
no doubt that there is the potential. I'm not going
to guarantee anything. There is the potential, okay, that if
we're bringing goods in from the rest of the world

(06:48):
with higher tariffs, that those costs are going to be
passed on and it will dip into the American people's pockets.
Although there's been a lot of savings lately from things
like gasoline prices that are way down as well, so
there may be some offset there. But there's no doubt
that there is that potential. So with that potential in mind,
and even Trump would have to acknowledge that there is
that potential, you should have come out and done the

(07:10):
tax cuts first. You should have not only we can't
by the way, we're at a point now where they
can't have a loss on that one. No, So you
should have come out first and not only keep the
existing tax cuts, but you have to expand upon them,
because the narrative has to be I'm going to put

(07:31):
more money in the American people's pockets in the short
run any of the one time effects we might have.
Because even Trump and Scott Bessett, the Treasury Secretary, and
Howard Lutnik have all said that this is a long
run game. Okay, short term pain, Well, one thing that
can help short term pain right out of the gate
is a tax cut. That helps short term pain right away.

(07:51):
So if you would have done that first and then
done all the tariff and then the other part about
the tariff talk that you and I were talking about
at lunch is why not instead of just slapping the
tariffs on, why not put feelers out while you're here
doing the tax cut plan and say we want to
have a conversation. Yeah, you have twenty percent tariffs on
us already we have zero. Yeah, okay, we want them

(08:12):
both to be zero, but will meet you in the middle,
and you have till January of twenty six to come
to the table. And by the way, the other thing
too is you know the reciprocal thing. He didn't use
that in his first presidency. They're using reciprocal a lot fine,
but give concrete examples. They're doing a terrible job of
just saying reciprocal. Okay, say steal an aluminum and China

(08:35):
for US as twenty percent. We're just matching them Okay,
just say that, but they're using the words reciprocal, and
people are like, I don't even know what that means,
say the actual number, because what most people in the
United States don't understand, okay, is that these countries already
have massive tariffs on US already. And then the other
part of it too, which I think is really ridiculous

(08:58):
for Canada or any of these other countries used to
puff their chest out on are the massive difference between
what we import from them versus what they import from US.
So what that means is if there's a twenty percent tariff, Okay,
Let's say you're Canada and I'm the US, okay, and
you're importing a billion from me, and I'm important doing

(09:20):
one hundred billion, okay, Well, one person's tariffs at twenty
percent is twenty billion dollars and the other's tariff at
twenty percent is twenty million dollars. So it's Canada and
the EU and China they're the ones gonna pay the billions.
Even if they put our tariffs at one hundred percent,

(09:41):
it still wouldn't be more than their tariffs at twenty percent.
And so that's the other thing is is it's much
more painful those countries. I don't understand why they're going
to try to act like tough guys when they could
just say, okay, why don't we just cut ours and
be done with it?

Speaker 2 (09:58):
Well, would it surprise you at all if we're if
we're there over the weekend, we could very well be Yeah, yeah,
it's going to happen. There's this is the start, and
it could end quicker than it than if I look
at the next three months on what's coming, that whole
story could completely go away. And really, with a ten
point one percent correction in the market, you're probably closer

(10:19):
than to the end than you are to the start.
And it just started. So that's one of the things
that that's gonna come is resolution with a lot of
those because they're not gonna let it keep going. They
want to move on to taxes and they want to
move on to these other things. The other one here
in the short term is the budget deal. The budget's
going to get passed, and it'll be a good thing
if they if they go to the weekend and shut

(10:40):
the government down briefly, it's not going to surprise the market.
We've had a lot of these but getting past that
will be a good thing.

Speaker 1 (10:46):
Don't forget. They are going to do this Trump gold
card thing, and so that'll bring in dollars. That'll be
a good thing.

Speaker 2 (10:51):
That'll be positive momentum for uh, for just a news cycle.

Speaker 1 (10:56):
But then I don't buy the Trump gold card thingry. Sorry,
nobody's gonna do it. Nobody's gonna do it.

Speaker 2 (11:02):
I think they're gonna say a million are gonna do it.
But if if ten thousand a year do it, it's
it's not a it's not a nothing.

Speaker 1 (11:08):
I don't think anybody's gonna do it. Okay, we'll see.
I don't think anyboy's gonna there's like, they're not gonna
sell one of those no bull No, if I'm really rich,
I'm gonna figure out a way to strong arm my
way out of it, out of paying that. Well.

Speaker 2 (11:20):
No, the reason they'll do it because if you have it,
they're they're saying, you don't have to pay any income
tax on anything not earned here, and so a lot
of them will come here or nothing and be here
to pay no.

Speaker 1 (11:29):
Tax if if if they can make if they can
make it back up in taxes. That's what they're doing.

Speaker 2 (11:34):
They're pre they're pre pre loading the tax So then
the other one in the short term is the tax
cut deal. We get to that point, you're gonna have
a month or two of debate on it. There's gonna
be that'll dominate the news cycle, and all of that
will be positive because there's gonna be a lowering of tax,
there's gonna be some new incentives. All of it will
be a cut probably across the board, maybe not on
the highest income UH levels, but certainly on the bottom

(11:57):
say four brackets. If there's gonna they're gonna they're gonna
give something, they're gonna do probably two of the three,
which is no tax on tip over time and social Security.
They're not gonna get all those done, but they'll get
they'll get one or two of those done.

Speaker 1 (12:09):
But all of these things that everyone's worried about, whether
it be tariffs, whether it be the the looming government shutdown,
I'm so tired of hearing about that. They're all short term.
They're all short term, and there's always a reason to sell,
but people can never convince themselves to buy. Yeah, okay,
and you talked about this last week. You went through
all the different things we will not remember, no won't.

Speaker 2 (12:32):
You'll look at the chart and you won't remember why.
They might write tariff war and you'll be like, do
we even do any tariffs?

Speaker 1 (12:38):
I would argue there are two points currently on the
fifty year chart. There are two points that the average
investor can remember what it was, COVID nineteen and the
eight financial crisis. Those are the only two points fifty year.
I think there's older people that are in nineteen eighty seven.

(12:59):
So if you're doing.

Speaker 2 (12:59):
Fifty, okay, maybe, But when you look at ten percent corrections,
there's a variety of reasons, and no one remembers. No
one remembers, and this is gonna be the same way.

Speaker 1 (13:09):
If you looked the Yenkerrie trade last August, that was
almost a ten that was close to a ten percent correction.
Silicon Valley Bank failed just a year ago, wasn't it now?
Two years ago?

Speaker 2 (13:21):
And it's March of twenty three. That was a ten
point two percent sell off, and so that happened relatively quickly,
and maybe we remember now, but I'm telling you five
years from now, you're gonna look at the chart and say,
what was that little one there in March? And nobody
will remember.

Speaker 1 (13:33):
Russia invaded Ukraine in early twenty two. Okay, still, even
after this correction, the overall S and P five hundred
is about twelve hundred points higher than when Russia invaded Ukraine.
You talked about the FED, the FED and QE. Remember
all the talk about QE government Shutdown's been on this
list a dozen times. So you talk about all the

(13:56):
different Fed announcements that there were hiking rates, lowering rates,
whatever it might be. The US credit rating was downgraded
at one point back in twenty eleven and eleven. Remember
all the grease talk. We had grease talk like six
or seven times, Brad. Sometimes it'll be Brexit around that time.
Sometimes it'll be some hedge fun person like Ray Dalio

(14:19):
or Stan Drunkenmeller coming out saying that they're negative on
stocks even though they've many of them are negative on
stocks all the time. So or even after COVID we
had a little bit of a pullback when it's like, oh,
we had COVID, but we're out of the woods now
because of all the stimulus. Oh what about the delta variant?
Oh the delta variant?

Speaker 2 (14:35):
What about the overcrime variant? And the market went down
as a result of that. So whatever it might be,
there's always going to be a reason to sell. These
selloffs don't come without investors and pundits on TV panicking
about something well, and I would just argue that they
don't know, they don't know, And in the moment, in
all those moments, if somebody would have called us, they

(14:57):
would have said, I think this is the big one.
I think the delta variant is the big one. I
think that young yen carry trade is the big one.
Just because right now there is a little bit of
chronological snobbery with saying no, no, no, tear us and
what Trump is doing. This is the big one. It's
just because it's happening right now.

Speaker 1 (15:17):
There is no big one.

Speaker 2 (15:18):
By the way, there is, well, there isn't, because three
weeks ago we were in an all time high.

Speaker 1 (15:21):
So all of those, even the actual big ones, weren't
big ones. If you invested at the top of the
two thousand and eight financial crisis, which was October of
two thousand and seven, okay, you would have doubled your
money in the SMP to the peak almost three times,

(15:42):
so you would have gotten your money cut in half. First,
but from the peak you invested at the worst possible time,
your money would have went fifteen hundred on the SMP
was the peak. It got to sixty one hundred here recently.
So even if it is the Big One, Okay, even
if you use that period of time, you invest in
one of the worst periods of time ever you right

(16:05):
before the O eight financial crisis. You go seventeen years
later and the SMP is at sixty one hundred from
fifteen hundred, that would mean even if today was the
Big One and sixty one hundred goes much much further
on the downside, you could still argue that fifteen sixteen,

(16:26):
seventeen years from now, Brad, the s and P five
hundred is going to be at what eighteen thousand, just
at a reasonable average an your return, and people are
going to sell that, right.

Speaker 2 (16:37):
So I just wanted to give a little history of
these ten percent sell off. So the average sell off
in any year, if we go all the way back
to nineteen fifty, is fourteen negative fourteen point three. It
takes the bad years, the good years, all those corrections.
The average correction in any given year takes four months.
So you're saying how quick this was? If this is

(16:59):
the last of the correction.

Speaker 1 (17:00):
It was quick.

Speaker 2 (17:01):
It was three weeks, and the average one takes four months.
Now take a look at twenty twenty two, that was
a ten month correction. This one was three weeks. So
you average them all out and you get that four
months of correction. The ten percent declines happened one point
every one point two years. We hadn't had one since
twenty twenty three, so we were a little overdue for one.

(17:21):
But I think, you know, I think you're right. If
it had we had a little different order of operations
here for what Trump prioritized, I think it would have
gotten pushed off even further. But because of the negative
news cycle that we're in, it maybe did get accelerated.

Speaker 1 (17:36):
A little bit.

Speaker 2 (17:38):
Let's just look at the more recent history. We only
had one in twenty three. We had four corrections in
twenty twenty two of five percent or more. Let's take
a look at more recent history on how many ten
percent corrections and so this is you rallied and then
you sold off again. You have years where you have

(17:59):
even more than more than that, And twenty twenty twenty
gave us that. The market says five corrections of ten
percent or more in.

Speaker 1 (18:09):
That period.

Speaker 2 (18:10):
Some of that came back to back days where you
rallied ten percent and then sold off another ten percent
in twenty twenty, but most most times it's one, and
that's what we got in twenty ten, twenty eleven, twenty fifteen,
twenty sixteen, in twenty twenty three. All of those had
one ten percent corrections. Five percent corrections a little more common.
Five percent declines happened about four times a year, and

(18:31):
in recent history we had two. Last year we had three.
The year before that, we had twelve in twenty twenty two.
I think about how many times you had to rally
and then sell off again, and then rally and then
sell again to get twelve twenty twelve five percent corrections
in twenty twenty two. The year before that, in twenty
twenty one, we only had one five percent correction. So

(18:53):
what would be more common is that this probably isn't
the last five percent correction, but it would be more
common that it's the last ten percent correction. I think
that's what most people are worried about, is am I
going to get in and then it's just going to
correct again. That wouldn't be normal. What would be normal
is you don't see another one for one point two
years on average, and the deeper they go, the longer

(19:14):
you go. And that's part of the reason why we
came off that deep cell off in twenty two and
you started to have less frequent ten percent corrections and
a normal amount of five percent corrections as there was
a little disbelief off the bottom. So here we are
now with a ten percent correction in the market. A
lot of them stop right around this level. A lot
of them stop right before. Actually a lot of times
you get nine point nine, you get eight point nine

(19:35):
and then but this one has kind of breached that level.
The Nastak is a little over fourteen and the dows
about nine percent correction at this level.

Speaker 1 (19:44):
So well, it's interesting you're talking about what is common, right,
what is common? And I think you know, I had
a thought while you were talking there that many investors
could benefit from switching their mindset psychologically, and investing is
a psychological game when you think about it, that's the
most important part of it. But many investors would benefit

(20:06):
from changing their mindset on things that they think are
uncommon are pretty common, and things that they think are
common are pretty uncommon. And here's the two examples I'll give.
First of all, on the uncommon, people think right now,
what we're going through is uncommon, very unique. I can't
believe what we're going through. This never happens. And if

(20:27):
you look at the numbers that you just went through,
I'll put a different perspective on it too. If you
go back since nineteen forty two, the five percent corrections
happen three times.

Speaker 2 (20:40):
A year on average on the SMP. My chart was
a little more recent, so I said four. But yeah, yeah,
and you already did this one. The ten percent corrections
were almost exactly. In terms of the number of months
we're almost what was the last ten percent correction, we said,
October of twenty three, Yeah, that we had. We had

(21:01):
two that year we had ten point two and ten
point eight.

Speaker 1 (21:03):
But in terms of the last one, yeah, this says
here the average is sixteen months apart.

Speaker 2 (21:07):
Okay, my chart said one point two, So I just
stay three month. Let's think about when the last one was. Yeah, right,
almost right on, almost right on, yeah, almost right on.

Speaker 1 (21:16):
You're you're fifteen percent or more. Uh, well, that's every
three years. We haven't had one of those because the
last one we had was more than twenty percent, and
that's every five and a half years. I saw another
stat on the twenty percent solves, which many people are
predicting right now that we're going to get to. If
we get to a twenty percent sell off, it will
be the first time since the nineteen sixties that we

(21:40):
had three twenty percent or more sell offs in a decade.
No other decades since nineteen sixty had had more than three.
So that's one of those where people think we're gonna
get it. They think it's common, and it would be
very uncommon to get it. What's more common is that
you get what we just got, and the uncommon is
the twenty percent or more. The five to ten is
very very common. But also people feel like, oh, I

(22:03):
feel like we're never going anywhere. Well, that's that's just
the loss of version that is that is playing into that.
We Like I said, the averages that you go down
for four months on a ten percent correction, that it
doesn't even happen once a year, and the other times
you're going up. Even if you got one a year,
that would mean four months down, eight months up, but
it isn't once a year. It's a little more than

(22:24):
once a year. So what it's more like is four.

Speaker 2 (22:25):
Months down, nine ten eleven months up, four months down,
nine ten eleven months up. That's what's That's what the
normal cycle is. So you do go up more than
you go down. And that's why the chart is is
left to right, lower, left to upper right. Well why
the chart does that.

Speaker 1 (22:43):
We're not gonna talk about it much today because we're
in the in correction mode. But the other thing I
get frustrated that people think is common when the market's
going up is, oh, well, you know, everybody's just making
millions and millions of dollars buying in Nvidia, and and
they're turning, you know, ten thousand dollars into a million.
Everybody's doing. Yeah, just give me a little bit of that.

(23:04):
That is so uncommon, and people think that is common.
So on the upside, people have unrealistic expectations. But then
also on the downside, investors have unrealistic expectations. As we're
seeing yeah, they think I should have been able to
see that coming, I should have gotten out, and what
that signs were there? It was so oddoll that leads.

Speaker 2 (23:21):
To his people getting out and not getting back in
until they're all clear signs. Well, the all clear signs
are usually what it sounds like and feels like. At
the very top we come back from our break. I
want to talk about the difference between corrections and recessions,
and a lot of times those twenty percent corrections take
a recession. So let's look at some of the recession indicators.
Let's see if anything is pointing to a recession. And

(23:42):
I think that's just looking around should give you a
little bit of comfort that this is just a market
correction and that a longer term recession is not what
we're in the not the current environment. You're listening to
Money Sens Brad and Kevin Kirsten. We'll be right back.

Speaker 1 (23:55):
Welcome back to the show. You're listening to the advisors
of Kirsten Wealth Management Group, Kevin Kirsten and Brad Kirston.
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 sit down and have 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 you four one nine eight seven to two zero

(24:17):
zero sixty seven or check us out online at Kirstenwealth
dot com BRAD. Before you get into the recession indicators,
just want to touch on, you know, two different things.
One of the things that we talked about early in
the show is diversifications working this year on the stock side,
International value in particularities, large cap value, even a little

(24:38):
bit of commodity is working. But don't forget about bonds.
The six forty portfolios doing what it should be doing.
The aggregate bond index BRAD is up two percent on
the year. So if you're sixty forty or fifty to fifty,
your bonds are performing. And if you're in one of
those balanced retiree type portfolios like we have for a

(24:59):
lot of clients, the bond part's doing doing its part.
Where we're having these conversations with clients mostly now in
an environment like this, we're just talking about the stock
portion of the portfolio. But I will talk about long
term investors and I will often get a little bit
of pushback from from retired people to say, well, I'm retired,
I don't have that kind of time frame well, what

(25:20):
kind of time frame do you really need? The SMP
five hundred since nineteen fifty over a three year period.
Over a one year period is up seventy four percent
of the time, but over a three year period is
up eighty seven percent of the time. Over a three
year period, when you buy in after a ten percent correction,
the number goes to ninety three percent. Of three year periods,

(25:42):
the SMP is up. So when you talk about well,
I don't know. I don't have the time horizon I
did when I was younger, three years, right, three years?
If you're what, where do you have to be in
life where you don't you're not looking at a three
year time horizon.

Speaker 2 (25:57):
Yeah, I mean if you knew that it was in
a market peak, Yeah, maybe it goes out to seven
eight years. But if any kind of any kind of
any kind of dip, five percent dip, ten percent dip,
it doesn't matter. You have improved your odds on a
three year greatly. You know what's crazy? Think about this.
We're roughly three years from the twenty twenty one market peak,

(26:17):
little more than three years, roughly three years, okay. Had
an investor bought that peak, they lost twenty seven percent
from high to low. The S and P peaked at
four thy seven hundred and ninety six. Okay, today after
after a ten percent correction, the sm P the number
is not great, but it is still positive. Excluding dividends,

(26:40):
the SMPS at fifty five a little over fifty five hundred,
So that's a seven hundred and fifty point increase.

Speaker 1 (26:48):
So yeah, roughly what is twelve percent twelve thirteen percent
in three years? And you bought peak and your the
other pinpoint is after a ten percent correction, so peak
to after ten percent correction three years you went through
and you bought the worst time you went. Mind about
what you went through minus twenty seven yep. Then the
next year you had minus ten point two and minus

(27:09):
ten point eight, and then this next then the next
year you had minus five point two at minus eight
point five, and this year you had minus ten point
one and still and that a three year period. Yeah,
So when people say, oh, yeah, but this three year
period is gonna be different, I don't know. Can it
be much worse than a three year period that had
minus twenty seven three minus tens, a minus five and
a minus eight? Yeah?

Speaker 2 (27:29):
What would have been better? At that time, you could
have bought a three year treasury for probably one and
a half. Guess what, even with that whole ride of
all those corrections, three three ten percent corrections, two five
percent corrections, and at twenty six percent correction, you're still
better off than buying the guaranteed treasury.

Speaker 1 (27:49):
On that day, I had somebody say to me, you know, wow,
the Dow's down to forty one thousand. It was at
forty five thousand, and I said, well, let's look three
years ago.

Speaker 2 (27:57):
But it actually wasn't. It didn't get there. We always
round up right the way up, and yeah, and now
we're forty one thousand. Okay, what you and I have
sat on the show and talked about it. There's gonna
come a day where you're at forty thousand. I remember
when we got to forty thousand, and we said we're
gonna correct back to forty. Right when we got to

(28:17):
forty thousand, every investor was like, oh my god, I
can't believe the Dow got to forty thousand. And we said,
there's gonna be a day where we said I can't
believe the dows at forty thousand.

Speaker 1 (28:27):
Exactly here we are here we are here, we are
and the way up.

Speaker 2 (28:32):
You know, we didn't quite get to forty five, but
forty five we're gonna blow through at some point, and
forty five will be a line we come back to,
maybe even at the end of this year, and people
will be saying, should have sold later. The dows at
forty five thousand, and that is ten percent away from
where we are right now, and yet it will be
the low point that makes some people mad. The COVID

(28:55):
low was around twenty or twenty one thousand on the
double here. It was just five years ago. Yeah, and
people were, you know, panicking then. And by the way,
the COVID, the pre COVID high was like twenty seven thousand. Yeah,
that was the high.

Speaker 1 (29:09):
Yeah.

Speaker 2 (29:10):
And if you just said to somebody five years ago,
there's gonna be a day where when the Dow gets
to forty, you're gonna be mad.

Speaker 1 (29:16):
And that's right where. Yes, we're not even by the way,
we're not even at forty. Yeah, we're not even at forty.
But you mentioned before the break.

Speaker 2 (29:24):
There's so much recession talk. It's why I'm gonna bring
it up that I'm concerned about a recession, but I
keep having people say I keep hearing recession well, and
it does. It is important, Brad because downturns that include
recessions obviously have much worse stock market numbers than corrections
and downturns without recessions. Twenty twenty two was one of

(29:45):
the worst years ever that did not have a recession.
We had some recessionary indicators. But here's what a lot
of people.

Speaker 1 (29:52):
But we're far enough in the rear view mirror Brad
on twenty twenty two.

Speaker 2 (29:55):
No, they're not gonna they don't call it risk. So
here's here's why it doesn't matter if they call a recession.
They most people don't realize this. They call it after sure,
So if probably sometime in early twenty four, if twenty
twenty two was a recession, they would have come out
and said we believe the recession started in January of
twenty two and ended in October of twenty two. But

(30:15):
they haven't done that. But that's when they do it.
The way I'm looking at I'm looking at the numbers
right now. It is confirmed twenty twenty two is the
worst year ever out that didn't have a recession, and
the calendar year was a little over eighteen percent down,
but hi to low was twenty seven.

Speaker 1 (30:32):
So every year worse than that. You think about what
was going on in recent memory, the dot com bubble
bursting in two thousand and two. Two thousand and two
I definitely fell a lot worse because the economy was
in a lot worse position. Plus it was the third
of the third of three consecutive down years, but it
was I say, only only twenty two percent down. Eight

(30:53):
was thirty seven. And we know that had a recession,
And certainly there's a lot of years in here that
had receive sessions that didn't even have the type of
downturn that we had in twenty twenty two. So it's
interesting to look at twenty twenty two because that's the
mindset investors are in today, always going to that recession work.
So there's a cop session reason that all the talk
is out there. One of those is one of the

(31:15):
biggest indicators for a recession that it's going to happen
is two negative quarters of GDP. Now in twenty twenty two,
if first and second quarter were actually negative GDP quarters, however,
they coincided with so much in job gains that they
did not call it a recession because the job's numbers
were so good. And the talk has started because some

(31:37):
of the.

Speaker 2 (31:37):
Leading indicators for GDP in particular have kind of fallen recently,
a dramatic spike down on the estimate, So we might
get one quarter of negative GDP, and the talk is, oh,
if Trump digs in on the tariffs, we could have
two negative quarters of GDP. Well, it could be just
like twenty two where it's not an actual full blown
recession because we don't slow down other parts of the market.

(32:00):
So you have to look at some other leading indicators.
So I have a list of those leading indicators that
we would look at. Ones, housing permits, those are all up.
The last three months. Job sentiment's been pretty negative. However,
the job ads are not negative. And also jobless claims
are another leading indicator and they continue to be at
a very low level. And actually that's one of the

(32:22):
things that posted this week that was lower than expected,
which is jobless claims. A lot of people thought, oh,
the jobless claims just came out on Thursday, it's going
to show negative because government cut another sixty five thousand jobs,
and the week before that they cut one hundred thousand jobs,
and so let's look at the Virginia and DC area
for jobless games. Guess what didn't happen. We didn't have

(32:43):
any jobless claims that exceeded expectations overall, and that area
didn't have it. So it was, oh, it's just not yet.
They're gonna do it later. They're gonna keep pushing it off.
Retail sales all up the last three months, wage growth
all up the last three months. Commodities are all in
the positive. This is the first one that's kind of
vacillated back and forth, and that's ism new orders that

(33:04):
was neutral, then positive, that now back to neutral. Profit
margins up up, up. Trucking shipment's pretty neutral on that
they've stayed roughly the same. Credit speds look better, money
supply looks a little bit better. Overall signals all three
months better, better, better now. Most people can say, if
there's a recession, what would happen? First thing that drops

(33:26):
for most people is their discretionary spending. Okay, look around, okay,
spring breaks coming up? Okay, do you'd be your own
Peter Lynch indicator? Okay, what are some of the discretionary spending?
Your own entertainment okay. Ticket sales for sports up eight
point six percent on average the last five years and
last year and currently this year trending to be higher.

(33:48):
Concerts eleven points six percent last five years and trending higher.
Travel up ten percent. That's on number of people that
go through TSA and also ten percent higher on the
last year on the cost of a flight. Even look
at travel with something like Disney. Fifty eight million people

(34:09):
went to Disney World last year. That's higher than the
pre COVID level. And also the ticket price is fifty
percent higher than the pre COVID level. And if we
look back ten years, the Disney ticket price is one
hundred percent higher. So that's not showing me a recession.
Restaurants higher than last year, higher quarter over quarter over quarter,
every single quarter, including the current quarter. How about gym memberships,

(34:32):
remember the COVID period right after that, everybody's going back
to the gym, No little blip, but higher every single
quarter for the last ten years, never having a.

Speaker 1 (34:42):
Deal some of it too. We often complain about inflation
in this country, but a lot of the inflation's our
own fault. Yeah, there's too much demand for everything. We're
spending too much money.

Speaker 2 (34:53):
Yeah, right, you and I were just talking about what
were we talking about for, oh, golf course prices. We
were talking about some of the top fifty courses in
the country that are public, and they just keep increasing
their prices. And we were saying, well, probably never play
any of those because they're thousand dollars around. But guess
what if they can get it, how can I blame them?
There's only so many tea times in a day. If

(35:13):
they keep going up and consumers keep spending it, then
how are why would things slow down? Last one I
have it on the list?

Speaker 1 (35:21):
Is streaming?

Speaker 2 (35:21):
Okay, easiest thing for somebody to cut, right, Oh wow,
I think we're going in a recession or I lost
my job. Maybe I should just cut something easy. Let
me cut all my streaming bills. Nope, every month, every quarter,
more more more. Even when Netflix or Hulu or any
of them increase their price. Guess what happens is do
people cut? Nope, they keep it, So we are probably

(35:44):
you know, this is a not just a demographic thing,
but we're in a demographic here where the larger generation
is in peak spending time and they're spending more than ever.
Talk to anyone with kids that have just gotten not
just their first job, but their first real job where
they're make in real mind, and ask them, do you
think your kids are spending too much? And nine out
of ten are going to say yes. And what does

(36:05):
that mean? It means the economy is going to keep humming.
It means that companies are going to make a lot
of money, and ultimately those fundamentals are what drives the
stock market. So this blip on the radar is looking
very narrow at what's happening in the market. You have
profit margins for all companies that are going to go
up because of tech spending, and tech touches every sector

(36:26):
of the economy, and so it's going to continue to
be the key driver in this market. As profit margins
companies try to figure out how to make profit margins
go up, they're going to spend money on tech, and
so it's going to continue to be the leader when
you have a market that's moving up.

Speaker 1 (36:40):
Well, the bigger question too, I think in today's environment, Brad,
everyone goes back to eight. Oh. They're worried about oh eight.
The leverage in the system still is not anywhere near
where it was in two thousand and eight. I see
some stories about credit card debt hits highest level ever.
A lot of that's revolving. It's just monthly being paid off,
and it's just function of people spend more money every month,

(37:03):
so on their revolving lines that they pay off every month,
it's more dollars because things cost me. Sure. The number
that I look at a little bit more closely is
this is the revolving debt as a percentage of income,
and since two thousand and eight, that number dropped by
about thirty percent and never recovered.

Speaker 2 (37:21):
It's just staying at that low level. Bounces within a
percent of the basement on that.

Speaker 1 (37:26):
So the other thing you mentioned, Brad is recessions, because
that spooks investors a little bit more when it comes
to the market. But when you look at it, and
I mentioned the two thousand and eight recession because there
was so much leverage and so much debt which we
don't have today, that was more extreme on the downside.
But look at some of these other ones, because people say, well,
if it was a recession, it's going to be a
whole lot worse. And nineteen ninety we talked about the

(37:51):
tech bubble recession. We talked about the eight recession, and
then twenty twenty two, even though it was one of
the worst years ever. I mean twenty and twenty two,
Brad going back a force ever is one of the
worst years ever. But you look at other years that
had a recession. Nineteen ninety the S and P five
hundred dropped a whopping three point one percent when we
had a recession on the calendar year. On the calendar yeah,

(38:13):
there was a twenty percent sell off midyear, but the
calendar year was minus three point seven. So investors are
sitting here today saying, what if we have a recession?
Oh my gosh, Well there's one was at the end
of the world nineteen eighty one and eighty two, Brad.
In nineteen eighty two, Oh boy, where is it here?
I know there was a down year. It might have

(38:33):
even not had had a full a full calendar year
down because nineteen eighty two did have a twenty percent
sell off. Oh there it is nineteen eighty one minus
five percent leading into that recession. That's the full calendar year.
But for Hi to Low it was over twenty percent
seventy three seventy four. That was a recession. Back to

(38:54):
back years minus fourteen minus twenty six, sort of resembling
the dot com bubble years that were three years in
a row. But you look in the sixties, nineteen sixty,
nineteen sixty two, excuse me, minus eight point seven in
a recession year. Once again not the end of the world.

(39:15):
In the nineteen fifties, we had a recession nineteen fifty
seven minus ten point eight on the s and P
five hundred for the full year. So there's this assumption
that every recession is an eight recession, and that's just
not true. I mean, eight is the exception, not the rule. Yeah, look,
I don't want to have a negative year. I don't
want to have negative periods of time. But the longer

(39:36):
you go without these corrections, the more irresponsible behavior investors happen.
So it is healthier for.

Speaker 2 (39:41):
The market absolutely to wash out irresponsible behavior and people
that are doing things with leverage that they shouldn't be doing,
and sensible investors can benefit from that by having some
slight rebalancing happen and take advantage of the inevitable rallies
that happen in the market that always have happened in
the market. Let's take our next pause. Kevin there's a

(40:03):
lot of talk of some of the things that the
government is cutting, and a lot of things that are
being exaggerated out there. I think I've had a couple
of calls with people that are hearing stories about cuts
to social Security. They have cut a couple of things
to social Security, but it's to your benefits. Let's talk
about that so that people can stop worrying about the
things that the government is cutting. You're listening to money Sense.
The advisor is a cursed in wealth management group. Will

(40:24):
be right back and welcome back. You're listening to the
advisors a Kerston Wealth Management Group. Brad and Kevin here
with you.

Speaker 1 (40:30):
Kevin.

Speaker 2 (40:30):
A lot of talk of Doz's cuts and a little
bit of the fear mongering here. But there's all these
news stories that says social security call centers are getting cut.
Dose is cutting one thing, and so you can plug
this exact thing into any of chat, GGBD, chat GPT
or to gronk or to any of them to fact

(40:54):
check this. The only thing they are cutting off is
forty percent of all So security fraud is direct deposit
fraud where somebody calls a call center acting like there's
someone else changes the bank account and then it takes
the real person multiple multiple steps to get this corrected.
So people are stealing Social Security money by changing your

(41:16):
bank account. This is for your benefit. No bank, no
institution would ever do that without a signed form or
for you to do it online and then to do
multiple checks and two factor identification checks and all sorts
of stuff. But what SO Security do they do the
same thing they were doing in nineteen eighty two. They
let you call and then talk to somebody and just

(41:39):
change it over the phone. And that's where forty percent
of also Security fraud is. So they are changing that
to be more in twenty twenty five, so that they
are protecting you from getting your Social Security stolen. That's
all they're cutting off. Are they cutting off the call center? No,
they're cutting off the ability of a fraudster to change
your payment. I'm not sure why anybody's said about that.

(42:00):
So that is the current Social Security change that does
have to do with dose. Dose was making that change,
But it has nothing to do with cutting off your
ability to call SO Security. They are not doing that.
You can still call SoC Security. They haven't cut any
of that off. But if you want to call those
security to change your bank. I don't think you're gonna
have to. How many times to people have to change
their bank? Not very often. And I suppose if you

(42:21):
had fraud on your actual bank, you might have to
change your account number. But guess what, it's just like
any other system. If you had to change a bank
with US, you wouldn't be able to just call and say, hey,
let me give you the new number.

Speaker 1 (42:32):
There would be some steps involved. And that's all they're
doing now, Brad. The other thing that we're talking a
little bit more about this week, and depending on who's
in office, we have to remind investors that they can't
let their politics dictate their investment decisions. Okay, and I

(42:52):
am completely fifty to fifty on this one. People listen
to our show, they know we lean Republican, but I
don't care. I didn't want to sell one. By was
in office, we took just as many calls. It was
the same. It was the same. But now we're taking
all the calls from people who don't like Trump and
they're using that. And it's a mistake every single time

(43:12):
investing in any way that you think and sometimes it's
not even necessarily that people are for or against something.
They'll try to outsmart the market. It was just a
recent filing for an ETF Brad called the defiance MAGA
seven ETF. We're investing in companies the manager expects to
benefit from the Trump's policies. Okay, so when you looked

(43:34):
at that particular fund, it's now nine point five percent,
so a little bit better than the overall market from
the peak down down down nine point five percent. But wait,
this is going to benefit from the Trump policies. But
they're just trying. It's just a marketing ployt The top
holdings are just basically the S and P five hundred, ELI, Lilly, Broadcom, Berkshire,
half the way, JP, Morgan, Visa, Walmart x on a

(43:56):
little bit more of a value till really when you
look at it. But I saw that during Biden it
was all these climate change, green energy.

Speaker 2 (44:03):
Stuff, the election portfolios and the American agenda portfolios all
get rolled out. It is pure marketing. I don't blame
the companies because investors are constantly plowing money into these things,
and there's just no point.

Speaker 1 (44:17):
The ideas that seem obvious and obvious enough to occur
to you are already priced in defense and aerospace stocks
are bound to boom in this administration that was priced
in months ago. Coinbase will prosper because Trump is favorable
towards crypto that two have been priced in. Coinbase is
doing awful in the last month, much worse than the
S and P five hundred. So when you look at
investing based on either you're for something because you like Trump,

(44:41):
but you're going to tweak your portfolio in the positive sense.
But it also works on the other side with people
bailing out because they think that Trump's current policies are
the end of the world. So, you know, we say
it in every administration, Brad, you cannot invest based on politics.
Either you know, I'm going to get loaded up on
equities I really like someone, or I'm gonna sell because

(45:02):
I don't like someone that never works. Yeah, we talk
a lot about our overwetings and underways, but they are
with the S and P five hundred in mind and
slightly overweighting and underwating sectors. A lot of times it
has to do with valuations.

Speaker 2 (45:15):
Right now, talking about rebalancing a little bit back to
a marketweight for tech because there's been a selloff or
post election. I was always saying we want to be
a little underweight energy. One energy is only four percent
of the overall market. If we're two, it means we're
two percent less than the overall This is not the
type of adjustment that clients are talking about, or even

(45:37):
people on TV are talking about. They're talking about loading
up the whole portfolio with an individual stock or saying
I'm going to invest in two sectors, not eleven.

Speaker 1 (45:44):
There's an ETF called y'all, which is the God Bless
America ETF designed to benefit under Donald Trump has lagged
the S and P five hundred since the election, and
the entire four years Biden was in office, it outperformed significantly.
So it is doing the of what is intended to do.
So when you yeah, when you look at it, you
think you can outsmart things. And in the end, the

(46:08):
market doesn't care about the president. I know people don't
believe that George Bush was the worst eight years ever.
Obama was one of the best eight years ever. The
market went up under Trump's first presidency. The market went
up under Biden. You can't make any rhyme or reason
of it. Let's take our last pause. You're listening to
money since Kevin and Brad Kurston will be right back and.

Speaker 2 (46:28):
Welcome back to listening to the advisors a Christen Wealth
Management Group. Just a couple of minutes left here, Kevin,
we were talking about recession indicators, maybe some negative things
that people think out there, but sometimes the negative surveys
are actually a bullish indicator. I'm gonna give you something
here that happened this week that hasn't happened since the
October lows of twenty two, happened again in March of twenty,

(46:52):
and happened again in March of nine. The only times
that they've happened in the last twenty years are those
the low of twenty two, the low of twenty in COVID,
and the low of nine, and that is bullish bearish sentiment.
We are at three straight weeks of more bears than bulls.

(47:13):
It's only happened in the last twenty five years three
other times, and they were all at market lows this week,
the market third straight week.

Speaker 1 (47:20):
Not just more bears than bulls, it's that I believe
three straight weeks of it being over fifty percent bears.

Speaker 2 (47:26):
It gets correct, Yeah, it's over fifty percent bears. Yeah,
because there's it's bullish, bearish and neutral. We are at
three straight weeks over fifty over fifty percent bears. It
does not happen very often, and it usually well. In
the last twenty five years, it is marked the low
for the market, and we had that this week happen again.

Speaker 1 (47:43):
It's one of the reasons that we turn.

Speaker 2 (47:46):
Said this likely is going to end right here because
you have all of this negative sentiment out there that
means people have already sold and all of the negativity
is kind of washed out.

Speaker 1 (47:56):
Of the market. That's right. And we mentioned that last
week and it got It was a two weeks in
a row over sixty and now it's three weeks in
a row over fifty. So definitely a good indicator given
those previous circumstances. Thanks for listening everyone, we'll talk to
you next week. You've been listening to Money since brought
to you each week by Kirsten Wealth Management Group. To

(48:18):
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.

Speaker 2 (48:27):
Their email address is Kirstenwealth at LPL dot com and
their website is kirstenwealth dot com.

Speaker 1 (48:34):
Opinions voiced in this show are for general information only
and are not intended to provide specific advice or recommendations
for any individual.

Speaker 2 (48:41):
To determine which investments may be appropriate for you, consult
with your financial advisor prior to investing.

Speaker 1 (48:46):
Securities are offered through LPL Financial member FINRA SIPC