Kersten Wealth Management Group - Money Sense 7-19-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money Central, listening to the advisors
of Kristen Wealth Management Group, Kevin Kirsten and Brad Kirsten.
Happy to be with you today. Brad, the market has
continued its move higher and we continue to see new
all time highs. But I also with a bit of caution,
it's not unexpected that when June is a positive month.
We talked about this a couple shows ago. June and

(00:20):
July when coupled together, have a pretty good correlation one another.
When when June has a rough month, July is a
rough month, and when June is positive, a lot of
times July is positive, and that leads us into what
is typically the riskiest period of the year. So you've
got kind of two things going on. You look at
all the data and the stats that we threw out

(00:41):
in the last couple of months, with this huge rally
off the bottom fastest, one of the fastest twenty percent
rallies from a twenty percent loss, one of the fastest
rallies to recover, similar to the COVID nineteen time period.
And if you look at other periods of time where
we had a near twenty percent sell off or more
like this it rodes pretty well for the next twelve months. However,

(01:04):
if you look at those numbers, once we've gotten to
where we are right now, you typically have a little
bit of a soft month or two. Uh, So that
doesn't mean it's guaranteed. Last year, September, for example, which
is the worst month of the year, was a great month.
So people got out last year in September. It's not perfect.

Speaker 2 (01:24):
Well, it's only really was coming off of another kind
of v shape recovery because late July and August was weak.

Speaker 1 (01:30):
So you just have to look at where you are.
And even when people ask us what we think this
we're when we're making recommendations, it's probabilities, non certainty. So
what you say is, when the market's down twenty percent,
where do you think it's going to be. Well, I
think you have a higher probability that you're going to
make money in the next twelve months now than you
did a month ago. Yeah, and we were saying the

(01:52):
same thing about the election, or I might say the
same thing about an upcoming midterm election.

Speaker 2 (01:56):
Right, somebody were to say, what do you think is
going to happen? You have to tell me what happened
in the three, six, and twelve months prior to that,
and then I'll tell you what the probabilities are now.
For quite a few shows, I've been saying it's time
to be patient, because the market, when it gets to
all time highs, continues to make all time highs. And
that is exactly what happened this entire week, and we're

(02:17):
kind of going out on a little bit of a
high note. Even with some CPI numbers that finally were
meeting expectations or even a little hotter, you still had
the market shrugging it off and saying, Okay, if we
look at the whole six months of this year, CPI
is actually below two. It's one point eight if we
look at the first six months and annualize it. PPI

(02:39):
is two point one if we look at the first
six months Producer price Index. So if you're looking at
a twelve month that includes a couple of big numbers
from last year, you're really probably looking too far out.
Because things started to really look pretty good starting in January,
and once April hit with all the tariff talk, it
it never got hotter. And so no matter what anyone's saying,

(03:02):
it didn't get any hotter. The FED can cut. They
probably can't because Trump is playing this game of chicken
with them, and if they cut now, it'll look like
Trump bullied them into it. But there's no reason they
can't cut, and they probably should now because FED funds
is at four and a quarter to four and a
half and the three month average on CPI is one

(03:22):
point seven, the six months average is one point seven
to one point eight. There's no reason to be as
tight as they are. So I think we still have
a little bit of patience that needs to come with
the next couple two or three weeks, but we're going
to start to change our tone on rebalancing and getting back.
If you make a move into the market like we
did in mid and also late March, and you got

(03:46):
yourselves to the top end of say your range, now
the market's moved up as much as it is now,
you're beyond. So the first move back will just be
where were we when we made an adjustment back in March,
Where were we when we were started the year, And
you start to just pull that back a little bit
in increments, you get conservative more conservative slowly, you get
aggressive quickly because the market only gives you so many

(04:07):
days that it's down, you have to move pretty quickly
to get aggressive, but now is still I think a
little bit of a patience mode.

Speaker 1 (04:14):
Well, and if you're going to target some levels, you know,
once once you see the market do what it's done
and hitting a new fifty two week high today, I'm
the S and P five hundred. The pullbacks typically stop
at those big levels, like we often talk about the
fifty or the two hundred day moving average, and so
when you look at it right now, and I'll bring

(04:34):
it up there, we look two weeks ago and those
levels kind of coincided with the prior high that's kind
of cleanor the prior high that that was mid February
that we went down and back up was right at
some of those those those fifty to two hundred day
moving average levels. But now we've kind of moved even higher,
and I think we're probably that prior high.

Speaker 2 (04:55):
It's probably not going to be a level. Maybe it's
a fifty day moving average level, but the two hundred
day is going to be off from that certainly.

Speaker 1 (05:03):
Yeah, the two hundred day at the moment, Brad is yeah,
we're significantly above that. That two hundred day is fifty
eight sixty eight on the S and P is the
two hundred day. So at this point that would be
a four hundred and fifty point drop just to get
to the two hundred day moving average. Now that sounds

(05:24):
like a lot, but at the same time.

Speaker 2 (05:25):
Yeah, it's what is an eight percent move down? Seven
is a seven percent move Yeah. And by the way
that you know, that's a moving average, it's a moving
target that's going up a little bit. So if that
eventual sell off doesn't happen till September or October, it
may only be a five or six percent, or it
takes a month. If it takes a month, if that
average is moving up and you're going to bump into

(05:46):
it at a five percent sell off anyway, So.

Speaker 1 (05:48):
Yeah, so the two hundred day would be the big
one because I know, you look at what we've done.
We've had this sell off, we've recovered, we eclipse the
two hundred day. If we're in a new period where
we're gonna be hit new fifty two weeks highs for
the next twelve months, that's going to be your support
consistently throughout. And so if people are looking at entry points,

(06:10):
and certainly we know that many investors look at that
as an entry point, and that's why it typically provides support,
because there's a lot of people out there that are
on the sidelines and say, I guess that two hundred
day I'm in. Yeah, And so that's that's certainly one
to look at the fifty day moving average. Brad. Let's
see I don't have that right here, it's cut off them. Oh,

(06:30):
here we go, it's cut off of my screen. It's
got to be right, right about that old that old
high right right, it's too small on the phone. I
gotta do it on the computer. But in any event,
those levels, it would not be shocking to see, you know,
four to six percent something like that in the fall.
But here's another caveat that people don't talk about. Oh,
kirsten'sill look for a four to six percent sell off.

(06:53):
I don't know if that four to six percent starts
today or when the s and P goes another four
to six percent, that's right, then correct, that's right.

Speaker 2 (06:59):
So yeah, I don't think I think there's a lot
of people that are out that think this is excessive.
I don't think it's successive yet, but I think we'll
get there, and I think if the FED cut at
the end of July, I think we were gonna have
some volatility.

Speaker 1 (07:12):
I just can't do fifty days at six thousand even by.

Speaker 2 (07:15):
The okay, if the FED cut, I don't know if
the market would interpreted it as panic or I don't
know if the market would say, oh, smooth Salem for
the rest of the year. Look at this sort of
stimulus we're getting. I don't know how it'll interpret It
doesn't really matter. We're entering earning season, and I think
there was a lot of people that thought during this
earning season, if if companies don't raise their prices, they're

(07:36):
going to hurt their earnings.

Speaker 1 (07:38):
We're not seeing any of that.

Speaker 2 (07:39):
We didn't see the raising prices, and maybe they tighten
profit margins a little bit because they didn't raise prices.
The tariffs have been a non event across the board.
And if you get online and you see somebody say, oh,
my small business had to pay this fee, I'm calling
bs in the whole thing because I don't see it anywhere.

Speaker 1 (07:58):
I don't hear any real stories.

Speaker 2 (08:00):
I think everything you read online about individual businesses doing
it and it is so it's all anecdotal.

Speaker 1 (08:07):
The numbers aren't baring it out. And it's just like
when they do the presidential State of the Union, and
every president does it. They find a bunch of anecdotal
things and then they bring those people in and they
talk about it in the State of the Union. And
so you know, Trump would probably would probably do that

(08:28):
in terms of trying to point out somebody who because
he thinks interest rate should be lower, somebody who couldn't
buy a house or something. Oh, I brought in so
and so and they were trying to buy a house
and they couldn't because of Jerome Powell drome Pole cut
by one.

Speaker 2 (08:41):
This rate would be mean, it costs these people a
thousand less a month.

Speaker 1 (08:45):
And Drome Pouse doing that right or something with the
legal immigrants, and he did that. He did a bunch
of that. They all do that. The news does it
with anecdotal stories, but the actual numbers don't bear it out.
On inflation. But I think really the thing that people
should talk about on the Fed funds rate, Brad is
the fact that there's no question it should be lower.

(09:06):
It's tight right now. The two year treasury is a
perfect example. At three point nine. The Fed funds rate
would need three cuts to match the two year treasury. Okay.
I think what what the market is telling the FED though,
is that you should cut now, but you probably should
not cut next year. Yeah. Now, it's one of the
others gonna happen. If he stalls it out, he's gonna

(09:27):
have to cut next year. But I think the FED
should probably do two, probably three cuts, and then stop
and then stop. Yeah.

Speaker 2 (09:34):
And it's what they did in the late nineties when
they were were trying to kind of go back and forth.
It was a little bit of a cut, a little
bit of a raise, but mostly it was staying in
a range. And they're just a little hot right now
on that range.

Speaker 1 (09:45):
But people like to talk about the expectations of September's cut,
and who knows if Paul's gonna do it because he
doesn't like Trump or whatever, and he doesn't want to
be seen as bowing down to Trump. But I think
the riskier cuts that are on the board, if you
look at what's out on FED fun futures, is the
cuts next year. I don't think you're gonna get him
if he starts cutting in September, and he does, I

(10:07):
don't know when the meetings are exactly but he would
be doing at least two for the end of the
year and one early. That's where the risk will be
I think is that investors are expecting that these cuts
are gonna go all the way back down to zero.
It's not gonna happen.

Speaker 2 (10:20):
There's all this talk now this week of him firing.
There's even a press conference where he basically said he
was gonna fire him and we have a handpicked person.
And then by the end of the conference he said, well,
we haven't really planned it out and probably not doing it.
So it moved the market a little bit. The market
is not The market's not moving on that. It might
move in a day or an hour based on that headline,

(10:41):
but we don't even need as many. Part of the
negative news out there with the FED is that the
FED is literally redoing a building in Washington, d c.
For three and a half billion dollars. When you see
how many people work at the FED now, it is ridiculous.
We don't need any of this. We need a few.
It used to be a few people make a decision,

(11:03):
and now we have we have. I thought AI was
going to replace its people like this is the exact
type of job that should be recolaced. Plug it all
in and say, if this happens, we need we need
a raise or a cut, or we need a little
more stimulus and flow the system a little bit, or
pull some back and buying and selling. All of it
could be replaced by AI. But how many people are
working in a building that needs a three and a

(11:25):
half billion dollar renovation? It we can look it up.
Does a FED have what twenty five thousand employees?

Speaker 1 (11:32):
What did the Dallas Cowboys Stadium costs?

Speaker 2 (11:34):
Because I remember when that was I think it was
a one billion number, and everybody it was the first
billion dollar stadium.

Speaker 1 (11:40):
They build that stadium. I mean, every time I see
that thing on TV, it's the most ridiculous spectacle I've
ever seen. Except I don't know if you noticed they
have a glare coming in the end zone. Oh really,
And all the quarterbacks complain about it because and they
want Jerry Jones to put blinds in and he's like,
I'm not ding blinds in my stadium.

Speaker 2 (12:01):
But anyway, one point one five billion, so it's the
first stadium built for over a billion.

Speaker 1 (12:05):
The FED is building.

Speaker 2 (12:06):
Three Cowboys stadiums for their employees, and I'm gonna look
on that. Man.

Speaker 1 (12:10):
We don't need talk about dose. That one was a
little bit old. What did the Las Vegas raiders? That's
that's that's one of the newer ones. Fairly new. I
bet you Sofi is the most expensive. That thing's very elaborate,
but all the Sofi and Las Vegas. But you're talking about,
I mean the technology that goes in these stadium.

Speaker 2 (12:27):
You can house one hundred thousand people in these stateius
the screens and that.

Speaker 1 (12:31):
And the FED is going higher than that. You've got
to be you know, I was hearing them talk about
it on CBC this morning. You have to put it
in context. One nine Las Vegas is one nine was one.

Speaker 2 (12:43):
Point nine billion, so still was built like four years ago.
So we're still we're not close to the FED.

Speaker 1 (12:48):
We're not even close to the FED.

Speaker 2 (12:49):
There better be a stadium inside this thing, right right,
we go inside, you find out there's a football stadium.

Speaker 1 (12:55):
How many square feet could it even be? I don't
even they showed the building.

Speaker 2 (12:59):
I think it's right in the middle of the mall,
and it's just it looks like one of the other
buildings that looks like, you know, the Natural History Museum
or the Smithsonian buildings that are all around there.

Speaker 1 (13:08):
It doesn't look like much. Hey, Brad, let's close out
this segment. Take our first pause, but I want to
close it out with this stat and this will be interesting. Now.
I know this is something everybody talks about it every
time around, but it is a staggering number. Seven point
three trillion dollars are currently in money markets, so that
doesn't mean anything to people. How about this pre COVID

(13:30):
It was three trillion, three trillion. During the two thousand
and eight financial crisis, it spiked to four trillion, then
it went back down to three trillion and stayed at
three trillion for almost a decade. Stayed right at three trillion,
So that's kind of a smoothing mechanism there. It was
at three trillion. After the financial crisis. People panicked, they

(13:50):
got out of the market. They shouldn't have, but they did.
So it went to four trillion in money markets, back
to three trillion. It's at seven point five trillion, excuse me,
seven point three trillion, seven point three trillion in money mark.

Speaker 2 (14:03):
And people feel pretty good about it because you're earning,
you're earning something. Well, what are what are those they've
been coming down? I come down, but it starts cutting,
It's gonna get even worse. Yeah, every time the Fed cuts,
people wake up a little bit. And if you're asking
yourself what what would be the dry powder that would
keep this thing going? I feel like everybody would have
already bought by now.

Speaker 1 (14:21):
You're wrong.

Speaker 2 (14:21):
Most people did panic. If you're if you're listening, you
said who I wasn't paying attention. And by the time
the market sold off, it had already recovered. And that's
the way COVID was for a lot of people too.
And I didn't panic, But I'm telling you a lot
of people panic. They're on TV right now telling you
the market's moved too far. Those are the people that
got their clients out and and and haven't got back
in yet. But the other, the other dry powder is

(14:43):
all this money, money market dollars that should have been
slowly investing into the stock market, but weren't.

Speaker 1 (14:49):
That The entire value of the United States stock market
is fifty trillion, So even if it went back to
the three four trillion going into stocks is meaningful. That's
a meaningful amount of money going into stocks. I think
probably the breaking point. I see a lot of money
markets they're coming down what three and a quarter? Three
and a half? Do you get it? Maybe a little

(15:11):
bit higher in some cases right now, you definitely can,
but the bank's not showing it to you.

Speaker 2 (15:17):
The bank knows that rates are gonna get cut, so
that they're squeezing it already because they don't want to.
They don't want to just rug pull everybody.

Speaker 1 (15:23):
When it cracks three. When it cracks three, when it
cracks people are, people are gonna start looking for alternatives.
And that's that's a lot of money sitting on the sidelines.
Or take our first pause. You're listening to money since
Kevin and Brad Kursten will be right back. Welcome back.

Speaker 2 (15:35):
You're listening to the advisor of the Christon Wealth Management Group,
Brad and Vin here with you this morning. Kevin talking
a little bit in that prior segment about the market
and the levels, and you know where somebody should be concerned.
I don't think there's should be much concern. We've were
pasted a lot of the concern. The tax bill got done,
the tariff in the trade talk is is smoothing out
and getting better every day and every news story that's

(15:57):
coming out.

Speaker 1 (15:57):
There might be a little bit.

Speaker 2 (15:58):
Of Trump talking a mean game but quickly making a deal.
He's just doing that at the end to make sure
the deal gets done or he gets a little better
deal at the end. The market is not reacting to that.
We're to remind everybody that the last time that we
had a tax bill get done, and this one's a
little better than the first one under Trump in twenty seventeen,

(16:18):
we went fifteen straight months of going positive, fifteen straight
positive months. So when we're talking about maybe a little
rebalancing is appropriate, it's think looking under the hood at
things that maybe I've gotten a little ahead of themselves,
and it's on the margins. It's small, and if market
keeps moving, maybe another small adjustment. We are never talking
about all out. There is never a time where it

(16:42):
is a significant move all out unless you said I
need this chunk of money or I need that whole
account in the next now three to six months. If
you told me you need something in six months and
we're up this much, we were up, you know, twenty
percent last year and you're up seven and a half
eight percent this shear year. We don't need to wait
till the end of the year.

Speaker 1 (17:02):
This is fine.

Speaker 2 (17:03):
You can put it over in a money market, earn
a little bit of interest, and you've done well. If
somebody wants to go all in after a selloff, by
all means, but never for your retirement dollars. Are we
ever talking about it all out? It's just these five
to seven percent increments where we're starting to refill the
bucket four your withdrawals, refill the bucket that's dry powder

(17:24):
to buy a dip later.

Speaker 1 (17:25):
And that's it.

Speaker 2 (17:26):
That's what we're talking about coming up in two to
four weeks. But the market, the markets, it's it's a
pretty bullish sign that you get to an all time high.
It's it's it's even more bullish that the action that
we're seeing now, which is bad news stories are shrugged
off good stories, and we're in good earnings and we're
having these these big days, and so I think we're

(17:47):
in a pretty bullish period of time for the market.
But we're just starting to caution people a little bit.
That said, we talked last week about the big, beautiful
bill that got passed. It's even better because so many
more things in it were made permanent, especially on.

Speaker 1 (18:02):
The business side.

Speaker 2 (18:03):
So if it's one thing for the individuals to get
to continue their tax cut that we got back in
twenty seventeen, but businesses have a little bit more clarity
on if I spend money, what are the taxes going
to be? And if I spend money, what am I
going to be able to deduct? And I think that's
going to be the biggest driver next year in the
year after because of this tax bill that got passed,

(18:25):
which is the one hundred percent deductibility of expenses, especially
for building new manufacturing plants, building new anything that has
to do with real estate. Prior to the twenty seventeen bill,
it was expensing things over this long depreciation period. They
accelerated that a little bit. If this didn't get added
or made permanent. In this bill, it was twenty percent

(18:47):
depreciation on those types of expenses. Next year, it was
ten per year after that, and then it was the
same old schedule after that. Now, if if somebody is
building something over the next two or three years, they
can expense at all right now. And so if something's
costing a company a billion to build, look no further

(19:09):
than all these data centers that are getting built all
over the country, but especially on the east coast around
the Northern Virginia area is the biggest cluster of Texas
is a big cluster of data centers. All of that
spend is going to accelerate because of being able to
have it only cost you seventy cents on the dollar
because you can deduct the other thirty per you can

(19:32):
deduct all of the expense for it, and it's only
costing you seventy cents on the dollar to build. It's
a pretty big excentive. If I'm going to do it anyway,
I better do it now before a new administration gets
in and tries to rewrite the rules on me.

Speaker 1 (19:45):
That the Trump years are going to be a big
spending year for expansion in this economy, for data centers
or even old school manufacturing plants or anybody looking to
an expansion of their utility capacity or capacity or building
out solar and anything that was on the margins of

(20:05):
should we spend this money? If you're thinking about it
at all, you're doing it now that this bill got passed.
So if you look at the Tax Foundation put out
the good, the bad, and the ugly on the big
Beautiful Bill Act talks about the good being. One of
the things that you just mentioned, which is the expensing
for short for investments in short lived assets and domestic
research and development are permanent. Immediate deduction for capital investment

(20:27):
eliminates the tax penalty for capital investment, and permanent expensing
has the most bang for your buck when it comes
to economic growth. Those two provisions alone are projected by
the CBO, which is always light in their projections, but
still projected by the CBO to increase annual GDP zero
point seven percent by eliminating that tax penalty and giving

(20:47):
taxpayers the certainty needed to boost long run investments. It
also makes less restrictive limitation on interest deductions and Section
one seventy nine expenses, while introducing temporary expensing for some
qualified structs, which is a good addition and should should
have been made permanent. So a lot of those incentives
to invest, those incentives to spend money have been made

(21:09):
permanent and even expanded upon.

Speaker 2 (21:11):
Even some of them that will benefit inner cities, like
the opportunity zones and the expansion of opportunity zones, so
that it's just incentivizing looking at areas that have kind
of that need, that need somebody to go in with
some money and kind of redoce some of the cities
look no further than what's happening happened in Detroit when
the last bill got passed. A lot of big tax

(21:32):
incentives to kind of revitalize those those areas of the
of the country.

Speaker 1 (21:37):
Also kind of brings some stability to individual income taxes Brad.
This is a permanent extension of the tax rates from
the twenty seventeen tax cuts. This provides certainty for households
and stability to the structure of the code. They also
the law also permanently extends the larger standard deduction UH
and the modified a MT tax threshold is also permanently

(21:57):
moved higher. Keep some of the original twenty seventeen tax
code limits on itemized deductions, such as mortgage interest you
now have I think it's seven D and fifty thousand
is the max you can have on a balance to
get the mortgage right off limits the value of itemized
deductions for top earners. I thought Trump only help top earners. Yeah,

(22:20):
what's going on here? Yeah? The standard deduction and limitations
on itemized deductions have simplified the tax code by making
most people standarductors anyway, which naturally gets rid of fraud. Yeah.

Speaker 2 (22:31):
Yeah, that's the itemized deductors are where you're gonna kind
of exaggerate and fudge the numbers. You can't really fudge
the number on the standard deduction.

Speaker 1 (22:38):
The standard then basically you in a back doorway got
rid of a lot of fraud. The final law unfortunately
gives some ground to the state and local tax deduction,
but also really helping the but also capping the high
income on that where you're still down at the lower
level on state and local if you're I think it's
four hundred and fifty thousand is the level? Yeah, I

(22:59):
mean running a needle here, because you you have the
ten thousand dollars original cap. The final version raised the
cap to forty thousand adjusted one percent annually, which is
a strange when it is inflation ever been one Yeah,
adjusted one percent annually, but only for tax players earning
less than five hundred. So if you have state and
local taxes of forty thousand and you also make less

(23:22):
than five hundred, who is that? Yeah, it's it's really
specific to the states, Like you would have to make
more than five hundred to be able to afford a
House and state local taxes of forty thousand, so it's
very strange anyone over that reverts back to the ten
thousand dollars state and local cap. So if you look

(23:47):
at the final approach, which well I'm sorry I was
going back and forth there between the House and the
Senate versions, but it's still forty thousand dollars cap and
you have to earn less than five hundred. So a
state and gift taxes. The launch to permanent and inflation
adjusted exemptions of fifteen million starting next year. So fifteen
million per person was a risk. There's ways that you

(24:09):
can risk it.

Speaker 2 (24:09):
This one all the way back down to five million
on the estate tax and now we're next year will
be fifteen million and going up from there.

Speaker 1 (24:17):
So and that can be if you do a couple
of things and do some careful estate planning, you could
actually preserve that fifteen million even if one spouse dies,
and get it all the way up to thirty million.
So the law establishes permanent solutions for the treatment of
international business income, removing the threat of substantially higher taxes
at the end of the year for US based multinational companies.

(24:38):
So certainly helps. There's a lot of multinational companies here
in the United States, so the House bill permanently extended
a slightly less generous version. The Senate introduced permanent reforms
that increased tax rates but reduced double taxation on multinational companies.
So the Senate version prevailed and it's now the law.
The law pulls back some of the tax codes, tax credits, deductions,

(24:59):
and other preferences. The largest area of reform is hopefully
chopping up some of the Inflation Reduction Act, so that
would be the Green Energy Tax credits. Both the House
and the Senate raise five hundred billion over a decade
by getting rid of some of the green energy tax credits,
reducing the cost of the green energy credits by itself

(25:20):
by half. Several IRA. They call it IRA credits. Could
there be a worse name than the IRA when there's
already an IRA in the tax code the Inflation Reduction
Act or is it the Individual Retirement Account? This is
silly that they named it the IRA. Several IRA credits
Inflation Reduction Act, like those for electric vehicles and residential

(25:44):
energy products, are repealed, while most others are restricted or
phased out. However, the Senate provisions which are now law,
expand carbon dioxide the carbon dioxide seequestration credit. My gosh,
that's a mouthful, and extend the Clean fuel Production tax
credit while introducing additional compliance challenges for many credits. So

(26:06):
just to hire a hurdle to get the credit. Health
insurance premiums tax credits, projected to cost one trillion, are
paired back by about twenty percent by tightening the eligibility
rules and reducing improper payments. The law also tightens some
tax exempt rules, such as for unrelated business income. So
that's what the tax Foundation has is good. Anything else

(26:27):
good you see in their brand.

Speaker 2 (26:28):
I don't think you mentioned too much on the qualified
charitable for anybody doing under two thousand very filing jointly, you.

Speaker 1 (26:37):
Don't you save yourself some work.

Speaker 2 (26:39):
You can save yourself some work you don't even you
can actually, even if you're a standard deductor, take that
charitable deduction and you don't have to have it taken
directly out of your IRA, and so you and paid directly,
so you could.

Speaker 1 (26:53):
Just take your full required distribution. And if you're if
you're going to do two thousand or less married filing
jointly one thousand versus if you're going to do two
thousand or less as you're charitable, you could just take
your rm D and then write out the checks. You
could still get the standard deduction.

Speaker 2 (27:10):
And the charitable amount, so you don't have to go
through that extra of having it paid directly. And really
this is just if you had an audit and you
had to prove they had it paid directly. But if
you're doing more than two thousand and to get the
full amount not not taxable and you're taking it out
of your IRA, you still need to have it paid
directly to your charity or paid made payable to your charity,

(27:31):
even if it's paid mailed to you and then you
deliver it so you can get the maximum amount that
you're And I know.

Speaker 1 (27:37):
Some people didn't even bother with it when they said, oh, well,
I only have like a two hundred and fifty dollars
one and another five hundred dollars one. I'm not going
to hassle with my IRA. Well, now you can do
that two fifty and that five hundred and just note
it in your tax file and you'll get the rite off. Yeah,
so I know, I know it's two full number one.
You can save yourself some time by not pulling it
out of your IRA. But also I know some people

(27:59):
who were just leaving it on the table altogether, or
maybe they didn't realize they were. They're giving all of
these charitables to their accountant because I've heard this. No,
I get my deductions and look at your return. You're
a standard deduct you're giving that that receipt to your accountant,
but he's not letting you know that you can't take
it anyway. And so, yeah, if you're not quality, if

(28:20):
you're not over seventy and a half, and you're a
standard deductor, you don't really have a lot of options.
But now you do, you can still take some of
that right. And so before you probably thought you were
getting it, you weren't. Now this will be an extra
thousand if you're single, two thousand if you're married, finally
jointly that you'll be able to deduct. It'll just be
lowering taxes. And a lot of people won't even know why. Well,

(28:41):
this is one of the reasons why. Yep, that's absolutely right.
Let's take our next pause. Let's get to the bad
and the ugly. The some of the bad things in
the One Big Beautiful Bill Act. You're listening to Money
Scents Kevin and Brad Kurston will be right back, Welcome
back to the show. You're listening to the advisors of
Kirsten Wealth Management Group, Kevin Kirsten and Brad Kirsten. As
a remind we are professional financial advisors and our offices

(29:02):
are in Perrysburg. Give us a call throughout the week
if you would like to set up a consultation to
review your plan. Whether you're just getting started, well on
your way to retirement, or already in retirement, we'd be
happy to sit down with you and review things four
one nine eight seven to zero zero sixty seven, or
check us out online at Kirstenwealth dot com. Talking about
the One Big Beautiful Bill Act, Brad, we talked about
some of the good things that are coming, some incentives

(29:25):
to invest. Some I just heard right before we started
the show, and this doesn't anything to do with One
Big Beautiful Bill, but Volvo is now going to make
their XC sixty in I think they said Charleston, South Carolina,
and it was actually a plant that had been idle.
So as a result of tariffs, they are now going

(29:46):
to make the Volvo XC sixty a foreign car inside
the United States. So, I mean, when you hear an
announcement like that, it's kind of hard to argue.

Speaker 2 (29:54):
When you can conduct the interest on your US car,
not your foreign car purchase.

Speaker 1 (30:00):
That's part of the One Big Beautiful Bill Act too.
So the bad well, obviously it's a tax foundation. They
look at our debt and not a lot, not a
huge det it's going to be made in the debt
unless we grow at more, unless we have more GDP
growth than we expect.

Speaker 2 (30:18):
Well, and their expectations are very low. It's amazing to
me that they even scored. If we didn't pass the bill,
what would happen And they're scoring in negative GDP and
a recession, Well, then that would mean cutting rates or
keeping rates the same would be the opposite. And they
still don't have us even growing at a at anything
better than a below average clip.

Speaker 1 (30:40):
They talk about the new law spending too much money
on gimmicks and carve outs. Some of this stuff is
gimmicky in in my opinion, When you're doing stuff for
two or three years just because you said you were
going to do it, what's the point tax exemptions for
overtime pay and tips, a deduction for auto loan interest
on cars that are made in the United States, and
an additional standard deduction for some seniors. That was sort

(31:02):
of Trump's way of he was trying to get solid security,
not tax yes, and instead he's giving people more of
a standard deduction if they're over the age of sixty five.
The four provisions when you look at the auto loane interest,
over time and tips, the additional standard deduction costs three
hundred and fifty billion dollars, but they're only in effect
for four years. But it's three hundred and fifty billion

(31:24):
dollars over four years. If they're made permanent, the cost
would double. I don't know what that means over what
period of time, but complicated eligibility restrictions for some new
deductions reduced the cost some up. But it would be
better to not introduce bad ideas in the first place,
is what the tex Staff Foundation says. I mean, I
do think that I understand that you had a campaign promise,
but the tips thing, let's just start with that. Very

(31:48):
few people unless I mean, I guess they get credit
card tips, so that's going to be part of their
W two. Yeah, but now you're going to make it
more complicated for the employer. Yeah, it's like, okay, this
part of no tax that they can have another line
on it, or is it for a couple of years
or is it just gonna Yeah, there's gonna be a
separate line on the W two for this. I don't know.

Speaker 2 (32:07):
Yeah, so screen, Yeah, anything that's two or three years
is to me. Yeah, I understand why he felt like
they felt like they had to do it because of
the campaign promises. But it does seem silly. But I
don't agree with anyone saying that it's gonna cost the government.

Speaker 1 (32:24):
This.

Speaker 2 (32:24):
Okay, that money is going somewhere, right, and that money
costs that there's a zero cost to the government the government.
We give the money to the government and it gets
swashed around the It doesn't it doesn't create anything. I
get mad when they call it revenue. Revenue is something
that you make. Yeah, the government doesn't make that dollar
back in that person's pocket. Spent in the economy produces

(32:46):
something for other tax, tax receipts and other just growth
in the economy that will be in somebody else's pocket
causing taxes. They should ban the use of the term
tax revenue. They should call it. What is It's just confiscation. Yeah,
and the other way. Stop telling me that if the
government cuts this it costs them money.

Speaker 1 (33:07):
It doesn't. It's coming somewhere else.

Speaker 2 (33:10):
If the government doesn't take it from that person, that
person has it to go spend. They're not taking it
out in cash and putting it under the mattress where
it's not getting used. They're spending it, and that spending
has tax on it.

Speaker 1 (33:22):
Well, even even I'm not even gonna say I won't
say this, it's in this article. I'm not even gonna
say the word revenue. How much different would you feel
about it? Because the government does this on purpose and
politicians do this, We're going to reduce tax revenue. What
if I call it confiscation. So even in this article,
the new law reduces confiscation by five trillion on a

(33:42):
conventional basis, saying that if the law had expired, tax
confiscation would have gone up by five trillion. Yeah, what
if they were required to call it tax confiscation.

Speaker 2 (33:52):
Yeah, we're going to confiscate less. But then where does
it go? It goes out into the real world instead
of the government world, gets spent, gets taxed, produces more.
One plus one equals four when you're doing that, and
when it's the government, one plus one equals less than two. Yeah,
so uh, the ugly the law further complicates the code

(34:14):
in several ways, sending tax players to a maze of
new rules and compliance costs. I mean, I agree with
this to a certain extent.

Speaker 1 (34:19):
I mean, one of the things that was great that
Trump did in twenty seventeen was the bigger standard deduction.
I mean it made it took what do we go
up to seventy five or eighty percent standard deductors. So
it just made every tax return less complicated without the uh,
without as many itemized deductions. So, but the tips, the overtime,
the car loan interest, and the other thing with the

(34:40):
car loan interest. It's it's nice because he wants to say, oh,
look at this, you're gonna get this right off you
go out. What do you get? I mean, I just
saw a Hyundai zero percent financing, So my Hyundai's made
in America. Oh, I'm not paying any interests, so no
write off or one point nine percent financing. And so
if you buy a forty thousand dollars car and it's

(35:03):
two percent financing? Is it only on new that I
don't know that. I don't know. If it's unused most
used a little higher, that might be meaningful. But is
it a thousand bucks?

Speaker 2 (35:13):
I mean, where do people feel it? Though they just
get a tax return that they get a little bit
more back. They don't even know why. It's not like
there's a line item on your on your auto loan
that says here's your effective rate.

Speaker 1 (35:24):
Well, the other thing is so the tics that the
tax on tips the overtime in the car loans. Like
the car loans for example, you have to prove that
it was an American made car. Are you going to
put that on your ten forty somewhere? Yeah? I don't
give me the receipt that it was American made. What
I've had auto loans? Do you get a tax form?
I don't. I would have to know.

Speaker 2 (35:44):
No.

Speaker 1 (35:44):
No, they're going to have to create it. They're gonna
have to do like a ten.

Speaker 2 (35:47):
Or you as the taxpayer will have to go find
it and figure out what your interest was to the
You will.

Speaker 1 (35:51):
Also have to prove that it was made in America.
So anyway, we don't need more pages to the tax boats.
So when they're talking about the ugly, it's making it
even more complicated. I mean, we've often talked on this show,
how you look every year and there's ten or fifteen
more pages to your tax return. We don't need that.
When you look at the Inflation Reduction X credits, they're

(36:13):
obviously trying to get rid of a lot of those,
but they kept some and so that means more complicated
ways to go in there and be like, oh, here's
all the paperwork that determines that I'm eligible for this
tax credit, and making it even more complicated. So the
law provides new incentives for saving money. The accounts are redundant.

(36:33):
We talked to he did the Trump account for newborns.
I guess here's a Trump account for newborns or Trump
account for anybody. Why don't we carve out ten percent
of Social Security and put it in the S and
P five hundred. That'd be a you could call it
the Trump account if you wanted to. So a lot
more confusion, a lot more instead of just getting rid

(36:56):
of something like a lot of the Inflation Reduction X stuff.
Instead of the instead of getting rid of it, they
just added provisions to make it more difficult to qualify. Well,
you're just complicating the tax code. And that's where the
Tax Foundation says, you know, comes in here and says
that's the ugly part of it. So rather than simplify
simplifying the rules to allow saving for any purpose without penalty,

(37:19):
both bills expand savings accounts for five to twenty nine plans.
So now you can you know, I think there's more
more ways to pull it out tax free out of
the five twenty nine accounts. So that's certainly I think
overall is a good thing. But once again, how is
the government going to monitor all of that to make
sure that you had a qualified expense. It makes it

(37:40):
even more difficult. The Trump accounts, a new incentive account
includes one thousand dollars government baby bonus for children born
in the next four years. So it's only the next
four years, right, so it's not like hitting the lottery
or anything. It's only one thousand dollars. But the accounts
allow tax payer contributions on top of that of five
thousand dollars a year that can grow tax free until
the benefits beneficiary turns eighteen. So similar to a roth Ira.

(38:04):
He just likes his names on it. I guess, yeah,
the Trump account, right, right, right, So a lot of
similar things from the twenty seventeen It had to be done,
we had to extend it. The market would would not
have reacted positively. I'm surprised how quickly got done. I
thought they would be fighting this out for three more months.
I think the market sort of did not expect that

(38:26):
the July fourth deadline would be met. So not surprisingly
in the market liked it. The like that it got
it done, like that we got extended. The business incentives
are going to be long lasting impact to the next
two or three years, and I think we'll be on
into the next presidential cycle. Kind of everyone being a
little bit surprised at how impactful that will be, and

(38:50):
the incentives of these trade deals in tariff deals to
bring so much back to the United States. I did
not see the corporate tax rate didn't change, right, did not? No,
it did not, but it was already permanent. They would
have had to go and actually change it. Okay. I
certainly would have liked to see more on that side
of things, but certainly we saw the boost to corporate profits.

(39:10):
So oh, that's terrible. Well, we're all invested, folks, everyone's
invested out there. So you want to see a boost
to corporate profits, that's a good thing. That's that helps you.
You benefit from that. But the rates, if the rates
had gone up, it would have been a complete disaster
for the economy. So that was the biggest thing, is
the individual rates. And then obviously Trump putting in a
couple of his pet projects that he talked about on

(39:31):
the campaign trails. So let's say our last pause.

Speaker 2 (39:33):
As we come back, I'm gonna give you a controversial
take on do a little history of something, and then
tell you something I think is very similar to today
and the next couple of years, and just do a
little look back. We were talking earlier about how people
forget history of the market so quickly, and this one,
this one's gonna go back to nineteen ninety nine and
two thousand, so a lot of people have also forgot

(39:54):
about this period and some of the boom that we
saw then. So let's talk about that when we come back.
You're listening, advisors of Christal Waldt Management. We'll be right
back and welcome back. You're listening advisors of Christen Wealth
manager Group R and Kevin here with you a few
minutes left.

Speaker 1 (40:06):
Kevin, I want to do a little bit.

Speaker 2 (40:07):
Of a look back, and I think our listeners will
know where we're going here, but a little bit of
a look back to another similar period where there was
expansive build out, and that is the late nineties period.
Everyone knows it as kind of the Internet boom and bust,
but under the hood, it was not just the Internet companies.
Google didn't even exist. I think Google's IPO was like

(40:29):
two thousand and six. Apple was around, Microsoft was around.
But the real Internet companies were built on the back
of a of infrastructure that was built in that period
of time, and they were built on the back of
fiber optic networks and all the fiber optic companies. So
a lot of people might know a few of these names.
But Corning is still around and was a fiber company

(40:52):
that had unbelievable performance. At the end of this period,
it had two hundred percent positive performance. In nineteen ninety nine.
Lucent Technologies UH was spun off of Bell Labs and
was the number two player for optic networks. Nortel was
number one. Global Crossing was a company that was laying
fiber all over the country and had a couple of
years with one hundred percent back to back performance, and

(41:14):
JDS UNI phase was building all of the was providing
all of the material for all of these fiber optic networks. Now,
JDS uniphase its performance in nineteen ninety eight was one
hundred percent. In nineteen ninety nine, in the in the
in the final in the final six months of the year,
actually the final every every ninety days. In nineteen ninety

(41:38):
nine it did two for one stocksplit every ninety days
for the whole year eight hundred and fourteen percent performance,
and then for the first three months of two thousand
it was up seventy seven percent. So one hundred percent,
eight hundred and fourteen percent and seventy seven percent. Why
was providing the fiber for the fiber optic networks that
everyone else was laying down? Okay, now some of these

(42:01):
companies are still around, some cease to exist, some of
them spun into other companies or combined and merge with
other companies. But at the time, everyone said the Internet's
going to be around forever. Why would you not just
own these companies forever? Jdsunitfas as symbol is JDSU. Kramer
used to get on TV and say, JDSU standswer, just
don't sell us. You would never sell this company. That's

(42:22):
what they were saying in nineteen ninety ninety two thousand.
You would never sell this stock. Why would you? The
Internet's always going to be here, And they didn't think
about the fact that maybe we'll have a new technology.
Maybe once everything gets built, we won't need as much
and even if we need more, we won't need as much.
And does that remind you at all of all of
the data center build out to today? Everybody has heard

(42:42):
the word AI, but all that's happening with AI right
now is we're building everything, just like fiber optic networds
of the Internet era. We're building everything. At some point
we'll still need more, but the buildout will have happened.
And will there be new chips, sure, But are we
going to just replace everything that's getting built now with
new chips? Probably not. The other thing that these companies

(43:03):
didn't have is they didn't have a lot of recurring revenue.
They were building the networks and that was it. And
in videos, the same way they're building chips they're selling chips,
and they have currently two percent is kind of some
servicing reoccurring revenue. Two percent of all the revenue is
just reoccurring on services. So you tell me you think

(43:27):
that's a buy it forever.

Speaker 1 (43:28):
Now.

Speaker 2 (43:29):
They're not done, they're just starting to build these networks.
But it is the stock that if somebody says to me,
do we have this, and we do because it's in
your portfolio if you own anything that even looks like
the market, and it's probably your number one holding, but
most people want more. Most people want it as an
individual line item, and if left on their own, and

(43:50):
a lot of people do invest on their own, it's
probably their number one stock times ten, it's probably their
their biggest holding, and it's too much and they're never
even thinking about selling it. Just like the fiber optic
network companies that went up two thousand percent and then
went down ninety eight percent. And that's what happened with
a lot of these is two years later they were

(44:12):
not just cut in half, they were cut by ninety percent.
And the reason that the Nasdaq went down as much
is because the big ones at the top went down
the most, and so there is so much similarity with
the AI build out and the internet build out that
you have to look beyond it and say, okay AI
is going to be here, But what else will benefit?
Will it be all the other sectors of the economy

(44:34):
who benefit from more efficiencies and profit margins? Yes, how
do the data centers run? Electric utilities? Fuel cells, solar,
all of these ways that we power them because they
run hot and you got to run water through them,
and they take a lot off the electrical grid, and
the electric utility companies haven't built up enough yet, so
they're gonna have a little pricing powder. And who's going
to pay for it? You and I with higher bills

(44:55):
if we live near a data center. And some people
are experiencing that where they lived near data centers, where
their electric bill has gone up because they're already drawing
on the grid that hasn't been expanded on yet.

Speaker 1 (45:07):
So there it is.

Speaker 2 (45:09):
You don't have to be overly concentrated to take advantage
of AI. You could just have the overall market and you're.

Speaker 1 (45:15):
Going to have it. Well, you didn't say it, did
you mention it? What happened to JDSU and Global Crossing
after the you talked about the upperformance. Yeah, but what
about the day. The only one of these that is
kind of still around in its own form is Corning.
Corning is still around.

Speaker 2 (45:30):
It had a series of sharply negative performing years, but
it's had some good performing years recently, had some good
performing years in the early we're talking about these other
ones that they went to zero, they went to zero,
they went to zero, they merged with other companies, and
we're going to go to zero anyway. And Global Crossing
was a zero and they were about These companies were
in the top fifty size wise of the S and

(45:52):
P five hundred.

Speaker 1 (45:53):
Yeah, and this is where we've talked on previous shows.
You can get the idea right in the investment wrong.
The idea was the Internet, and you're still around. It's
still around. It's been one of the biggest technological advancements
in the last seventy years. And AI will be the
next one, and AI will be the next one. Yet
the Internet as an idea as an investment lost more

(46:14):
people money than you can possibly imagine. And it was
these build out companies. And there's so much talk of
chips now, well, look at Cisco Systems, which is actually
still around, not a recommendation to buy or sell, but
it still has not eclipsed. It's two thousand high and
they were making the routers and switches and investors bid
up the price. Doesn't mean it's not a good company.

Speaker 2 (46:34):
Yeah, you look at the twenty year performance, that's great,
But look at it since two thousand.

Speaker 1 (46:38):
If you bought it, it's underwater. Yeah, it's underwater. So
I don't know what's gonna happen with any of these.
But would I be surprised if anything that's run up
hundreds of percent? If? Would I be surprised if they're
the same place twenty five years from now or gone
all together. No, I would not be surprised at all. Yeah,
and even if it was Nvidia, I would not be components.

(47:00):
You look at the thirty Dow components, and one of
those ten years later will cease to exist. And you
could say the same with the top ten. If I'm
going to look at the top ten of the S
and P five hundred and pick one that is not
literally not going to exist in twenty or thirty years,
It's not going to be some of the well established companies.
It's going to be the ones that have run up

(47:22):
the most because competition's coming in or something will change,
and the need for what we have we're selling now
if you don't pivot, will not be there. At the
height of the Internet euphoria, Okay, And you were saying,
I gotta find a stock, I gotta find a stock,
and then the bubble burst in nineteen In two thousand,
the best stock in the Dow Jones over the next
three years was Philip Morris. Philip Morris. So that's at

(47:44):
the height of the Internet euphoria.

Speaker 2 (47:46):
And someone comes to you and says, hey, buy this
old uh legacy dividend. Yeah, so be careful, be careful
getting too excited about any idea. I don't care if
it's Nvidia or bitcoin or anything these things. Even if
something like cryptocurrency changes the way we bank accout use money,
you'll own it. You'll own the market that owns coinbase

(48:10):
and other stocks that are tracking stocks of bitcoin, your
od audio. But even if that changes everything, there's still
a lot of money that you could lose by just
making one wrong decision in that area. And like you said,
if you're just exposed to the broad market, you're gonna
benefit from it. And that's all you need to know.
Thanks for listening everyone, We'll talk to you next week.

Speaker 1 (48:34):
You've been listening to Money since brought to you each
week by Kristen Wealth Management Group. To contact Dennis Brad
or Kevin professionally called four one nine eight seven to
two zero zero six seven or eight hundred eight seven
five seventeen eighty six.

Speaker 2 (48:47):
Their email address is Kirstenwealth at LPO dot com and
their website is Kristenwealth dot com.

Speaker 1 (48:54):
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 (49:01):
To determine which investments may be appropriate for you, consult
with your financial advisor prior to investing. Securities are offered
through LPL Financial member Fenra SIPC