Kersten Wealth Management Group - Money Sense 11-22-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to money. Since you're listening to the
advisors of Kirsten Wealth Management Group, Kevin Kirsten and Brad Kirsten.
Happy to be with you today, Brad, as the market
has had a bit of a sell off here in
the during the day here on Thursday, excuse me. And
it's a bit of a turnaround too. I mean we
started the day after the Nvidia earnings which were better

(00:21):
than expected on Nvidia and big rally in the morning
that turned around negative. And you know you're always trying
to figure out a reason why. By the way, you
don't have to, you, you don't have to. Sometimes the
market just sells off. Now there's more pain going on
in the crypto world, and that certainly is a much

(00:41):
more leveraged part of the stock of the markets. On stock,
but of the market, it's a more leverage part of
the market. So it could be some margin calling, some
forced liquidations, whatever it is, and then in turn other
investors who are in that crypto space being forced to
sell other things to create Yeah, we talked abouack on

(01:02):
October tenth when the big margin call came with crypto
and how much was lost and how levered the crypto
market has become, and we'll do a little bit of
a leverage talk, and we're going to talk to you.
And I were mentioning that we were both reading nineteen
twenty nine, the new book about the Great Depression crash,
and it was a leverage story, and this is a

(01:22):
story of leverage with the crypto market too. And if
you need to find a reason why on those days
we had a little disruption in the stock market, and
even today we have a little disruption in the stock market.
A three percent or even more almost four percent high
to turnaround two up to two down to finishing about
a percent and a half down, one and a half down. Yeah,

(01:43):
s and p. So if you have to find a
reason with all these margin calls, you're either going to
sell your crypto down fifteen percent with your margin maybe
more and get wiped out, or you're going to sell
your stocks to pay for the margin call so that
you don't get wiped out and you can hopefully ride
back up your crypto. I think that's what's happening. I mean,

(02:06):
you're not hearing a lot of talk about it, but
you look at the price of crypto and how much
more volatile it has become it has to be leverage
pushing it around. And it was the same story back
in the Great Depression, how much more lever the market was,
and leverage can wipe you out with smaller moves. And
I think that's the lesson from back then that I

(02:26):
take away from that book, and it should be the
lesson for anybody who's trying to use margin in their
stock account or hopefully not but using margin in their
crypto account, because there's just very little regulation there and
there aren't any limits, and there are trading exchanges that
are allowing people to do one hundred times leverage on

(02:48):
their crypto and therefore one hundred times leveraged. If you
were doing that, a one percent move has you losing
all of your money. So even if you were fifty
times leveraged, you put in and you put in one
hundred dollars and you can do what would this be
two thousand If you're fifty times leveraged, five thousand a

(03:12):
A doesn't take much to have you go to zero
and then they're gonna sell you out and your investment
went to zero. So a lot of people say this
to us over over the years, what if the stock
market goes to zero. Okay, your account invested, unless it's leveraged,
it's not going to zero. Can't go to zero. But

(03:32):
if you're leveraged, it can because a smaller move can
take you to zero. And that's the uh that should
scare everyone, especially retirement investors, from ever using leverage. And
this is what we see. You have three good years
in a row, you have six good years out of seven.
What starts to happen. People get careless, they start investing

(03:53):
individual stocks, they start using leveraged ETFs, they start using
margin and buying on margin in their stocks. They start
branching out to crypto, they start leveraging the crypto and
then pretty soon the reason that the bubbles burst in
these areas is because of leverage. And that was the
story back in nineteen twenty nine, and it's the story
this week. Well, now that you've just told that terrifying story, Okay,

(04:18):
let's back up a little bit. There isn't a lot
of leverage, widespread use of leverage in the stock market. Okay,
there isn't what you're referring to. And what I think
is happening right now is they're almost every single crypto
investment has leverage in some way, shape or form, even

(04:38):
the ETFs underlying it, because it's a derivative of a product,
it's not the product. Yeah, okay, And so there's leverage
in crypto all over the place. But what could be
happening would be someone's leverage to the hilt on their crypto,
whether they know it or not, and they either get
a force cell out of it. And there could be

(05:01):
situations when you have too much money borrowed against something
brad where not only you have a foresell, but at
the end of the force cell, you owe money. You
have a bill. You didn't just go to zero, you
owe money. And that's where the pressure on the stock
market could come in, would be people owing money for
something else. And stocks were fine, correct, you know, take
take in VideA for instance, not a recommendation or buy

(05:22):
er sell. The earnings were fantastic. Overnight. The stock was
up I think at one point eight percent, largest stock
in the world, and it's up eight percent overnight because
the earnings were so good. Middle of the day. What
happens it goes from I think it opened up five up,
went to about six and a half percent up, and
now it's down why it's had a huge run. If
you're gonna sell something and you're getting a margin call

(05:43):
on your crypto and you own some Nvidia, you're probably
selling your thing that's up the most, and the biggest
stock in the world has has been that thing that's
up the most for your margin call. Let's just do
a little bit of math here. Okay, we're gonna talk
about the book nineteen twenty tine, but I'm gonna just
just do a little bit of this with the leverage

(06:04):
to tell the example of what could happen or what
is happening right now in nineteen twenty nine. The average
forty percent of all stock owners in nineteen twenty nine,
we're using leverage, and the average leverage was ten times.
So one hundred dollars investment would buy you one thousand
dollars worth of a stock. If the one thousand dollars

(06:25):
stock one thousand dollars worth of stock went down by
ten percent, you were at zero. If it went down
by fifteen percent, you owed money. Okay, that's nineteen twenty nine.
Now that same example, you could just say, is what's
happening right now in crypto? Because a lot of people
are at least ten times levered in crypto. They could
be one hundred times levered in crypto, so a small

(06:45):
move could have them at zero or having a margin
call where they actually owe money just to get the
account closed out. Today, in stocks, the max that you
can be levered is two times, so you could do
a five hundred dollars investment and that's and that's the mac,
that's the law. Yeah, that's not like you don't have
a choice. Yeah. Yeah. And with some stocks, if they're

(07:07):
folid all, you'll see that a lot of broker dealers
and trading platforms will will not even allow you to
do that. They might allow you to do, you know,
six or seven hundred dollars for one thousand dollars investment
and not even do the max. The max is typically
reserved for call at the blue chip stocks, and a
five hundred dollars investment when you're two times leveraged, can
buy you one thousand dollars worth of stock. The stock

(07:28):
would have to go down fifty percent for you to
be at zero or more than that for you to
owe using leverage. But here's the point. Only ten percent
of stock investors today use leverage. Ten percent, and back
in nineteen twenty nine it was forty. And I don't
know what it is in the crypto world. It's it's
a little bit of a black box, but I know
it's probably higher than ten and probably approaching what it

(07:52):
was for stocks in nineteen twenty nine forty percent for
stocks back then. But it is not a big problem.
You'll see all these people talking about stock leverage and
talking about the dollar amount of stock leverage, and of
course our market is bigger, the dollar amount of everything
is higher, the market cap of the stock market is higher,
and therefore, even if it were level at ten percent

(08:14):
of investors using leverage and buying on margin, that dollar
amount is going to go up. It's a foolish thing
to be looking at the percentage of people using it
or the percentage of the overall market cap is the
only thing that would matter. And it's relatively low and
has stayed low really since two thousand and seven, and
it really went down after nineteen ninety nine and stayed down,

(08:35):
little blip up for a briefly and then right back down.
It's almost as low as it's ever been as far
as a percentage of users, and also a percentage of
the overall market cap, so it's relatively low and it's
not a problem like it was back in nineteen twenty nine,
and that's what caused the crash of nineteen twenty nine.
And the reason we're bringing it up is we think
it's what's causing a little bit of this crash from

(08:57):
October tenth crash and today's crash in the crypto world. Yeah,
the S and P five hundred, I was just looking
at it down almost exactly five. Yeah, it's from high
close to today at the close, it'd be a little
bit more than five percent. Yeah, three hundred fifty two
points on sixty eight ninety at the close today, So

(09:20):
I don't know, it's me it's five and a half percent. Yeah,
so it's a little bit more than five percent. It's
the first five percent sell off since April, and we
talked a lot on this show about how we haven't
had much of any selloffs. Four point one I think
was the max prior to today. We did close below
the fifty day moving average for the first time since
April as well, and that was a little bit of
a record, and so I have some information on that too.

(09:42):
So how long we had gone and stayed above the
fifty days, so it was well overdue. It was certainly
well overdue. Every pullback we've had has been bought, and
it has been pretty shallow in nature since little two
and three percent pullbacks all getting bought, just people missing
out on that on that a pril dip and then
chasing the market all along the way, I will point out,

(10:05):
not uncommon. It's what we've had. Is this five percent
pullback corresponds just exactly what the last five pullbacks, which
is the thing that was up the most tech stocks
going down the most a little bit more than five
and a half. They're down about actually, and it was
six point two because it start today and I think
they're down two today, so they're down eight point two

(10:28):
with the market down five and a half. That's what
that's the reason to lighten up on your best performers,
if you're gonna do it. It's what we did on July
twenty third. And incidentally, those most aggressive pieces of the
growth market, what we were selling on July twenty third
in our models, down a lot more than that from
that peak. So let's take stock of this sell off
right now, Brad. It's a four day losing streak. The

(10:49):
SMP is now down a little more than five percent.
It's the first time it's more than three percent away
from the all time I since June fifth, so that
is more the five months in a row of closing
right near an all time high, one of the longest
streaks ever. Ever, only seven other times in history has
the SMP gone five months or more within three percent

(11:10):
of an all time high. The record was nearly fifteen months,
which started right after the election of November sixteen. Fifteen
months nothing more than a three percent sell off, pretty
impressive after Trump was elected. The first time streak, like
any is always going to end. And if you look
at other periods of time where it was a pretty
long streak within three percent of an all time high,

(11:33):
other than the twenty sixteen period, which was fifteen months, Brad,
you'd have to go all the way back to nineteen
right before the nineteen ninety eight sell off that was
eleven and a half months. Nineteen ninety five had a
eight month period, nineteen eighty three had a five month period,
so it's pretty rare for it to go past that
five month period without having as much of a three

(11:56):
percent sell off. If you look at the fifty day
move moving average, that was also a little bit of
a record along those same lines closed below the fifty
day rolling average, which is just an average of the
last fifty days added up divided by fifty For the
first time in one hundred and thirty eight trading days
or more than six months, book broke that level the
last two Fridays, So it's it happened a little bit

(12:19):
earlier than today, but we are now comfortably below that
fifty day moving average. But if you look at the
fifty day moving average streak and it kind of times
up with within three percent of the all time high
streak as well. But let's look at some data on
the fifty day moving average streak. And the last time
that we had four months or more, okay, four months
or more on the fifty day moving average streak, the

(12:42):
count on one month later about seventy one percent, so
the same as what the market would normally do. Actually,
that's a that's a little bit better if you're looking
at a month, yeah, because the one year numbers are
seventy two percent. That's actually a little bit better. A
little bitter average turn one month later one point one
notable times where we had a long streak where the

(13:05):
market was up and we closed below and it got
a lot worse well COVID. So right before COVID we
had a really long streak of all time highs, and
of course one month later it was pretty pretty dramatic.
Other periods of time where it was not even starkly
negative one month later nineteen eighty three two percent down,

(13:27):
one month later, nineteen seventy nine, six percent down one
month later, but the average is a positive one. One.
Let's look a little farther out. Six months later, six
months later, seventy eight percent of the time up with
a seven point six percent return. So that's pretty good
for a six month return, and one year later ten
percent higher on average with a seventy four percent positive

(13:48):
clip call it exactly average, right, And so so what
stands out here really is actually the next six months
is key. Is significantly better than average, Yeah, significantly better
than average. Seven point six six percent for a six
month return is better than average. Seventy eight percent positive
is better than average. So the sixth month is a

(14:08):
much better number to look at. When we looked at
this long streak that came to it. Yeah, not to
mention if you got if you got that return in
the next six months, then it would be if you
were just the averages, you'd be much less than that,
uh for the next six months. And so yeah, I
think that next six months are going to tell you
a lot. If you get a lot of return here,
you've kind of probably you know, front and loaded a

(14:30):
lot of that return and the midterm election year is
right upon you, and so there wouldn't be a lot
of reason to hang around and see what the market's
going to do next summer if that's where you're going
to get How about November itself as a month, it's
a good month. But actually early to mid November has
some precedent. We talked on last week's show. Early to
mid November has some precedent for some volatility. And if

(14:51):
you plot every November on a chart going back to
nineteen fifty, the volatility typically starts in November right around
the fifteenth of the month, and here we are at
the twent Strangely enough, the low day if you plot
every November on a chart is November twenty first. That
is the low day historically, the back half of November.
We talked about this last week. The Thanksgiving week is

(15:11):
historically good for stocks, So the back half of November,
in fact, the back quarter of November historically is pretty good.
Last week, the final week, final week. Sorry, I couldn't
get it out. I couldn't get it out, but so
we'll see. I think this is kind of in line
with what we talked about last week. A little bit

(15:31):
of volatility is not a bad thing to set yourself
up for a year and rally after going such a
long time with any kind of correction that was even
higher than three percent. One of the reasons we're talking
we talk with such a long road map on these
sell offs is when they occur, you do have to
have a planned to be ready for it. If you
were sitting on dollars and waiting, you have to to

(15:55):
know what it was going to feel like and know
that all of these other reasons to be invested here
for the end of the year are right now. I mean,
the time is right now for it. So you can't
be scared if you're a long term investor to finally
dial up risk if that was the plan, or to
get some dollars invested if that was the plan. So
this is kind of what you had been waiting for.

(16:17):
And if you had gotten a little bit more conservative
at the end of the summer like we did, you know,
I would say we're pretty close to if it got
any worse, wanting to just retrace all of that and
not have it just be the first of three steps
to get more conservative next year, but actually dial up
for a little bit. Let's take our first pause. We'll
come back and touch on maybe that nineteen twenty nine

(16:38):
book and a few other things that have come up
in meetings that I think I want to share with people.
Stuff that we've touched on in the past, the Secure
the I'm sorry, the Fairness Act from earlier in the year.
We're going to revisit that a little bit. You're listening
to the advisors of Kurston Wealth Management Group. We'll be
right back. Welcome back to the show. You're listening to
the advisors of Kirsten Wealth Management Group. Kevin Kirsten and

(16:59):
Brad Kurston. Happy to be with you today. As a reminder,
we are professional financial advisors and our offices are in Perrysburg.
Give us a call throughout the week if you will
have any questions on anything we talked about during the show,
or you want to set up a consultation to review
your financial plan four one nine eight seven to two
zero zero sixty seven, or check us out online at
kirstenwealth dot com. Speaking of Curse of Wealth dot com,

(17:20):
brad Our weekly market commentary kind of goes to what
I've been talking about in a lot of meetings with clients,
and it is the keys to twenty twenty six, and
in particular the early keys to twenty twenty six and
looking at that roadmap. Before we get into that, I
want to kind of start with where we are with
some of the news headlines of the last twenty four hours.

(17:41):
Certainly in Vidia had a good earnings report. People worry
about is is it too expensive? Well, it's thirty times earnings,
which is expensive. The overall market's twenty two. But it's
not like it's growing at a faster pace than that.
The earnings growth is greater than the pe and I had.
This is kind of of, in my opinion, a on

(18:02):
the other hand type stock market, and I think twenty
twenty six is going to be a lot of on
the other hands, because in Vidia's earnings were great. There's
no question about it. They're they're the leader in the
AI race. But then I see, on the other hand,
I see Nvidia is now four point nine six percent

(18:23):
of the entire world stock market four point nine six percent.
Put that in context, the entire Japanese stock market is
four point sixty three percent. Germany and France combined is
four point seven six percent. So one company is bigger
than Japan and Germany and France combined. On the other hand, okay,

(18:47):
you have all this talk about the US being top heavy.
So I see the Nvidio waiting in the world stock market.
I see the Nvidio waiting in the US stock market.
Get a little bit nervous. Well, should you be nervous?
If you look at all the major stock markets in
the world, and you look at the top ten companies
in those stock markets, the US ranks third out of

(19:07):
the third lowest, third lowest, lowest. Yeah, So you take
a look at the concentration. We're at the bottom of
that concentration. There are some markets that it's astonishing. The
Singapore stock market ninety percent is the top ten, So
ten stocks make up ninety percent of the total. The
average of these are the top twenty five and where

(19:29):
do we sit today for the top ten, We're thirty
eight percent, so thirty eight percent of our The top
ten make up thirty eight percent of our market. India
is thirty eight percent, Japan is thirty percent. That's their
top ten. Everything else is more. But the average of
the twenty five largest stock markets in the world is
the top ten make up sixty seven percent is the
average of those stock markets. China almost fifty percent, forty

(19:53):
nine point two their top ten, the UK forty nine
point seven percent, that's their top ten, France fifty seven
point nine percent. Their top ten makes up fifty seven
point nine percent of their stock market. Other larger stock
markets Germany sixty one point nine percent is their top ten,
Hong Kong seventy two point seven percent, Taiwan seventy five

(20:17):
point nine percent, the Netherlands eighty percent. Eighty percent. Mean, ASML,
it's not a new story, a new story, and I
think the reason to keep bringing it up is because
you're going to keep hearing about it, and it's something
that is going to get worse, not better. These largest
companies are going to continue to buy other companies and grow,

(20:38):
and I think you got to be ready for them
at some point to be more than fifty percent. Doesn't matter.
The point is doesn't matter. The point is it's it's
it's a useless thing too. If that's going to be
a reason to be out, you're just looking for a
reason to be out. So when you look at the
on the other hand, economy, and this can be found
on our website Kristenwealth dot com Early Keys to twenty
twenty six, let's start with earnings, Brad. The US obviously

(21:01):
is going to benefit from the big AI spend that's
going on to help corporate profits. But don't forget about
fiscal policy from the One Big Beautiful Bill Act that
really has not worked its way into the economy yet,
and that's one of the things we talked about in
our Early Keys to twenty twenty six. However, we are
expecting fourteen percent year on year increase to earnings. So

(21:22):
that's a pretty high bar in terms of what's expected
going into twenty twenty six on earnings. So that's that's
a little bit of a of a yes we have
good AI spend, Yes we have good earnings, but it's
a pretty high bardae. Yeah. I think the only thing
that really has started right away. Is all that spending.
The corporate spending picked up right away. The individual will

(21:44):
probably feel it next year. There are there are going
to be some larger refunds because of the standard deduction
going up and then going up a lot for anyone
over to the age of sixty five. Will it move
the needle, maybe, but it'll be a second quarter story
if it's going to move the needle on consumer spending.
But business spending is not going to slow down. It's
not going to slow down next year too, because you
have just this four year period where they can depreciate

(22:06):
all those expenses in the year that they have them.
Back to the AI discussion and a couple of things
that I read, and this is part of one of
our themes going into twenty twenty six and looking at
the amount of spend that's going on in AI. And
it's great, it's stimulative, all good, but will it turn
into profits? That's the big question. Will this spend turn

(22:30):
into profits? Because eventually the spend is done and it
needs to turn in, it needs to deliver on the
other side, and one thing that I think is an
on the other hand, that makes me a little bit
worried is right. Now, some of the biggest companies that
are spending on AA, like open Ai, the chat GPT company,
they're private. Okay, it's losing money hand over fist because

(22:51):
it is buying all these chips from Nvidia. Well, so
those profits are being realized in the stock market and
the losses are not being realized the stock market. Yeah. Yeah,
So if those losses don't turn into profits for an
open Ai longer term, that will be a problem and
that will filter through. So, uh, what about rate cuts?

(23:14):
I think it's the maybe the biggest story, might even
be the biggest story for the next three months more importantly,
and the stocks stock market historically loves rate cuts like
the ones we're gonna have. And here's what I mean
by that, emergency rate cuts, because the economy is in crisis. Historically,
if you look at the numbers on the stock market,

(23:34):
not very good. No, it's it's okay, it's bailout time,
and it's not over yees. Yeah, it's it's it's not
a good track record. And we point that out when
when they're they're making the point that oh, look when
when leading into those cuts or leading into all cuts,
the percentage is pretty bad for the stock market. Well,
you do have to take out the emergency cuts because
you you had a drop before that. Here we've had

(23:56):
an increase going into it, just like we did the
last one, So they are there are two different types
of cuts, and I think the ones that we're getting
now and hopefully we'll get next year more resemble the
rate cuts that we saw in the early part of
twenty nineteen, where the economy was pretty solid and we
were just getting to know more of a level of neutral.

(24:16):
So that's I think that's a big story for twenty
twenty six and how will it look. We're gonna get
the cuts, okay, but sometimes the market is impatient, market
wants everything now. And I will say this volatility that
we're having right now in the markets starts to remind
me of the end of twenty eighteen. In the end

(24:39):
of twenty eighteen, the market had some volatility and Jerome
Pole was stubbornly raising rates, true, and when the market
was selling off, he raised the Fed funds rate in
the middle part of December, and we had a ten
percent sell off that turned into a twenty percent sell
off very very quickly. Now we're nowhere near raising rates,
So that's a good thing. We're no whe near raising

(25:00):
rates at this point, But what will they do in December.
Right now in the market's pricing in about a coin
flip for a cut for a cut, so I don't
know that it'll be the end of the world. But
as I've said previously in the show, Jerome Poll does
not like Donald Trump. He knows Donald Trump's nominee coming
in in May is gonna slash rates aggressively. He may
not want to do further cuts during his tenure. This

(25:23):
is it. I think if he doesn't cut in December,
I don't think he's cutting at all next year, and
I think we're good. Get a little bit nervous about
going eight months without a cut, thinking that the market
feels like it needs it. The job market's kind of
helping the cut situation. We had a few weak ones
that came right when the government opened back up. They
weren't that week. People were trying to say, oh it

(25:44):
was it was horrible. I think I saw a weekly
number where three thousand more people were on unemployment. I
mean three thousand in the whole country, three thousand more
than expected. There's over three thousand counties in the US.
That's one person per county. We're gonna worry about that.
And then you wait two more days, we get an
ADP number that blows it blows it out and is

(26:04):
over one hundred thousand. They were expecting I think fifty five.
So it's back and forth on the jobs numbers, but
it's not so strong that Pole could lean on that
and say we don't need to do it. The AI story,
and that is one another theme that we list in
our market commentary this week at kirstenwealth dot com. Is
the AI adoption rates and how that affects the labor market.
It's an unknown, but I personally believe AI is going

(26:28):
to enhance productivity, make people have better use of their time.
And I don't think there's going to be mass layoffs
as a result of AI, but we'll see, I mean,
we'll see. The other thing is you look at the
fixed income markets, and this kind of goes back to
the Fed funds rate Brad. Right now the market is
suggesting and I don't agree with what the market is
suggesting here. I don't know why they would even be

(26:49):
pricing this in, but it's interesting to see what the
market is pricing in. Current market pricing suggests that the
rate cutting cycle is done by mid twenty six at
near three percent. Now, I don't here's the thing. We
will be done more than likely at three percent or
a little bit lower. But we're not getting there by
mid twenty six. No, no, no, no, So the market is

(27:11):
pricing in Jerome pile the cut rates what three times
before he's done? No way that's happening. No, no, no. Now,
if the market we're saying we're done at three percent,
I would agree, But it's gonna be with zero or
one from Powell and the rest of them from Trump's
new nomine eight and based on the way Trump and
Scott the Treasury Secretary of Scott Bessett have talked, I

(27:32):
don't put out of the realm of possibility that whatever
that neutral rate might be between two and a half
and three percent that they decide on. I don't put
out of the realm of possibility, Brad that the very
first meeting Trump's new nominee does he puts the rate there?
Even if it's a one percent, How why wouldn't you
if that's where it's supposed to be, that'sort's supposed to be.

(27:54):
Why do we need to wait for the meeting? Why?
I mean, we didn't used to do that. Greenspan used
to do it whenever he wanted. Why do we have
to have a meeting? How about the day that they
put him in. Just take it right down to three percent.
I mean that would actually, that would actually, if Trump
wants to do a little slap in the face to Pole,
this is what you should have done anyway, that would
be the best way to do it. So that would

(28:14):
be interesting. Yeah, absolutely so. I And I think I'm
not sure who I heard suggesting that. I thought it
might have been one of the people that were potentially
Kevin Warrish or Kevin Hasset. Yeah. You know, all these
guys are trying to get on Trump's good side with
a little bit because the temporary the temporary nominee he
put in place, I forget the gentleman's name, but the
temporary nominee that he put in place in the September cut,

(28:38):
he favored half a point two cuts. Right. There were
two people that dissented, and one of them was because
they wanted more. You want that, Mirham? Is it? Stephen Myram? Yeah, yeah, yeah, yron. Okay,
So finally, technically on the overall market, I think we're
at a little bit of where you would logically see
the buyers start to step in. We're at those you

(28:59):
mentioned that crypto currency scare in October. We're at those lows,
so a little bit of a double buyattle the stock
market was on those days. On those days in October,
we're slightly below the fifty day moving average, so we
go much lower than this, we start to bring in
possibly the two hunder day moving average, which is more
in the low six thousands, and that is certainly a
much more extreme type sell off that would take longer

(29:21):
to recover. But that'd be the other area to look at.
We'll see if in the next couple of days, timing
up with the historically strong part of November bring some
buyers in and put a floor in the on the
on the current market. So we'll have to wait and see,
So check it out on our website Kirstenwealth dot com.
We're to take our next pause. You're listening to money Cents,
Kevin and Brad Kirsten. We'll be right back and welcome back.

(29:44):
You're listening to the advices of Kirsten Wealth Manager Group,
Brad and Kevin here this morning. Kevin, I really liked
the nineteen twenty nine book, but the whole time I
was listening and reading it, I thought to myself, well,
that can't happen anymore, or wow, I can't believe that's
the way it used to work. They almost feel better, Yeah,
because I certainly did. And I think there's a lot
of people that are trying to promo the book, to say,

(30:07):
even even the author, I've heard him say, well, there's
a lot of similarities to nineteen twenty nine, and boy,
there's a lot of things happening that would worry me,
not even close in my opinion. So I just want
to touch on a little bit of without giving too
much away if somebody were going to read or listen
to it. The early part of the story to me

(30:27):
was the story of all this stock promotion and how
ridiculous it was that you mainly at the bank level,
you had everyone who was a depositor or a bank
getting a sales pitch from tellers to buy the stock
of those banks or buy other stocks. But mostly and oh,
you were putting some money in you know, it would

(30:48):
be a great place for it buy shares of this bank.
And so you have people with hardly any money putting
all of their money in shares in the bank because
it's secure, instead of just putting it into a deposit
in the bank by share of the bank. And they
don't know what they're doing and what they're buying. And
so people were just getting wrapped up in this and
they had no they had no education or training or licensing. Right,

(31:09):
so they're telling them anything too, Yeah, you're right. So
so these tellers are telling them anything, telling them you
have to have a Series seven license to sell a stock.
And then when they were trying to sell teller right,
you're right. I didn't even think about that part of
it that they aren't they aren't trained to say act
like they were just saying, and oh, by the way,
do you want to you know, do you want to
free OVENMT with it? No, it wasn't that you're actually

(31:32):
selling stock to them with no license, you're right. And
there was no regulatory agency back then, No, not at all.
And so that's that's the third part of this that
I'll get to, is how how much it's different with regulation.
But the other part was that even when they wanted
to sell. There was a saint on the on the
back end, there were tellers and salespeoples in the banks

(31:52):
or any of these these companies that were selling shares
talking them out of it because they didn't want the
price to go down, because they were had skin of
the game too, because they were shareholders. I don't want
you to sell because I don't want my share price
to go down. So you have all these competing things
people suck sucking you in and trying not to get
you to sell, either so they can sell, or so
that the price just doesn't go down. And you saw

(32:15):
the same thing. And they tell the stories in the
book of people going on cruise ships and buying stock
and going to the car dealership and buying stock. It
just it was the wild wild West of stock buying,
just because it was in such an its infancy, and
even people with frauds selling fraudulent certificates for fraudulent companies,

(32:36):
and just none of that stuff can happen because of
regulation anymore. Well, not even that, Brad, but purchasing the
stock back in nineteen twenty nine and then turning around
and trying to figure out what it was actually valued
at Yeah, was a difficult prospect. Well, they were literally
going around ticker tapes and people sitting in hotel lobbies

(32:56):
to have a drink while they watched the ticker tape
and watch the board boy put the prices up and
that's their TV. So that was interesting. But it just
makes you think, how it's one hundred years later, we're nowhere,
We're nothing like it. The middle of it was really
the crash itself, and we talked about leverage being the
reason for the crash. If it wasn't for leverage, it
wouldn't have happened at all. But it was leverage. It

(33:18):
took it all down. And so that's really the crux
of the story. And the other part of the why
it can't happen now is because the leverage is nothing
like what it was back then. And then the aftermath
was all of the just basically Congress figuring out what happened,
Let's figure out how to not have it happen again,
regulate things, create the SEC and the FED learning about

(33:41):
it at what they could have done and should do.
And you do hear a lot of students of the
Great Depression. Bernacki always talked about it about what could
have been done and why he didn't allow two thousand
and eight to turn into that getting aggressive with coming
in and backstop against really what we did during COVID
as well. So there are a lot of measures and

(34:03):
we've learned from history both with regulation and how to
change money supply and allow the Fed to do what
it does and the government to do what it does
to stabilize markets. And it's what we've learned from it
that I think should get people comfort to be an
investor in this market. Yeah, I think. I mean, one
of the stories that you hear is there was all

(34:24):
this concern about inflation, and I think when you're in
a panic, what they've realized is you don't worry about inflation. No, right, No, So,
I mean, I think the big difference between the eight
stimulus that came in versus the COVID stimulus is the
fact that eight was a naturally borne bubble. Yeah, in

(34:48):
leverage in housing, in housing leverage again it's leverage, it's
housing leverage this time, and also the products that came
from it, and COVID was Okay, we're going to do
this and the economy was fine, and we're going to
shut it down, and then we're going to put stimulus in. Well,
when you put stimulus in when the economy's melting down,

(35:10):
as we saw in two thousand and eight, it doesn't
create inflation. But I think the lesson to be learned
from COVID is when you put stimulus in on an
economy that isn't hurting, like after we opened back up, right,
because they did two more after that they didn't need
to do, especially the third one. You know, you're doing
it because you want your You're you're an administration that

(35:33):
selfishly wants the economy to go up so that you
look good. Well, you went too far, and uh and
I think that I and you want to talk about
You mentioned the tellers in nineteen twenty nine having a
conflict of interest. Okay, well, I'd argue that the biggest
conflicts of interest now is the people who work in
our government. Because you mentioned that the tellers don't sell

(35:56):
because I get hurt. Yeah, Well, the people work on
our governm love an opportunity like COVID to spend a
bunch of money. Yeah, because it's in their best interest
to spend a bunch of money. Yeah. It's so hard
to cut back on spending because it might slow down
the economy or hurt your going consituent. So there's just
and you might get voted out. And so it's not

(36:19):
it's not politically. Uh, you're not motivated politically to do it.
When you spend money. As a government official, you get
to go out when you want to get re elected
and tell everyone, look at this project, idea, all these
things I did. Yeah. But if you're the cut person, yeah,
it's hard. How does how does your local economy feel

(36:40):
the balanced budget? It doesn't. Yeah, and then you're going
to go out and be like I cut this and
I cut that, and I got I took this away
that it's a conflict of interest and but the reality
is just like with uh, one parent who is maybe
a little bit more strict and one parent who's the
pushover parent. Okay, the child should not be the one
in charge. Yeah, and the child would say, child, who

(37:02):
do you like better? I like the pushover I like
the pushover parents. I don't like the stern one. Right,
And that's our government. That's our government. So you know,
getting back to the nineteen twenty nine discussion, I think
we when you look at nineteen twenty nine and probably
the closest parallel is two thousand and eight. And then
you see what we did with stimulus and then COVID.

(37:22):
There's no parallel. No, there's no parallel. We all lost
our minds. Yes, as a collective, everyone lost their minds,
and not just with the shutting down and the stimulus,
but then after losing your mind with oh we can
keep doing stimulus, why not, let's send everybody checks. But
even the people who were right about COVID and write

(37:43):
about the fact that we shouldn't have done all the stimulus,
everyone was losing their mind. Because even those people who
were saying we shouldn't be doing this, we're also losing
their minds. Yes, as a collective, we all lost our minds.
So when you're thinking about going back to nineteen twenty nine,
and that's the one that scares everyone that everybody brings
out charts in parallels, you just can't do it. There's

(38:03):
no And this is why a lot of charts that
we see started nineteen fifty because it's just that period
of time is just so much different looking at any
other you know, comparison to right now is just not fair.
The other one that worries people is nineteen eighty seven's crash,
which was significant, but once again we put rules and

(38:24):
regulations in place with stops on the market to prevent
that sort of electronic cascade from happening. I summarize it
with this. People are constantly worried about something like nineteen
twenty nine because they're worried about the top and the crash. Okay,
there's a lot of tops, but it's not the top.

(38:45):
It might be a top, but it's not the top.
And even if it's October tenth, it was a top,
and then we went down and we went right back up.
Nobody even felt it, even what we're going through right now.
It's a little top from a week ago. We'll go down,
we'll go right back up. You're worried about it being
the top, and it's not the top. It's a top,
and we'll recover and we'll move on and you won't

(39:08):
even remember that the top. Would argue Brad that no
matter what the top quote unquote is, it's just a
matter of severity in terms of the correction. Is it five, ten,
twent thirty? Who cares? Because and I think investors have
gotten better. I mean, if you look at what individuals
investors were doing in April. In April, they were buying more,

(39:30):
more behaved than the so called professionals who were moving
more money around. They were panicking. So we get back
from the break, Brad, I want to talk about maybe
in a little bit of an old fashioned way of investing,
and it's not perfect, but I do think when I
look at this type of investing and the way Peter

(39:51):
Lynch is we're going to discuss, because he managed the
Fidelity Magellan Fund for many many years and ed great
track record, the way he in part decided on the
stocks that he put in his portfolio, I think was
quite interesting and I think it's a better use to
give you some comfort when the market is volatile. Break
open the hood of what you own, Okay, look under

(40:13):
the surface and see what you own, and I think
that that can give investors comfort to stay the course
and maybe even buy those dips. You're listening to money Sins,
Kevin and Brad. Kirsten will be right back and welcome back.
You're listening to the advisors of Kristen Wealth Management, Brad
and Kevin here this morning. Kevin, you're going to touch
on a little bit of the Peter Lynch method of investing.
But I want to go back to two thousand and

(40:34):
eight late it was probably early two thousand and nine.
I was driving with my wife into Chicago and I
said to her, driving into Chicago, the bear market is over.
And she said why, And because I pointed out to
her it was the first time in two years you
looked up at a skyline and you saw cranes, and
it was cranes everywhere in the summer of two thousand

(40:56):
and nine. And that's a little bit of just the
anecdotal that you can do to make you feel better
almost about the stock market. And it's what Peter Lynch
was doing back in the eighties when he was observing
where people were spending money and where crowds were. It
was a little bit easier then because a lot of times,
even in his book he talked about going to a mall.
And it's a little different now, but you do have

(41:18):
to be observant of what's going on in the world. Yeah,
I think two things. Certainly, people can use it as
an investing strategy, which Peter Lynch famously did with Fidelity Magellan,
and just observe the world to see where he might
want to invest. In fact, there's a popular anecdote from
his book that says he invested in Haines Brands because
his wife raved about the new product called legs. Remember

(41:38):
that thing. It would come in like a egg. It
came in like a shape of an egg, just department
store quality pantehose in a distinctive plastic egg shaped egg
shaped container at it. But you would buy it at
a grocery shore, at a drug store instead of a
department store. And you know, he obviously did his due
diligence and bought Haynes and made a good amount of money.
So you could poke hold in that strategy too, because

(42:01):
I think that there's a little bit of an over
reliance on things that can be observed are mostly consumer companies,
and so you're in the consumer discretionary space. I mean
in video is a perfect example, not a recommendation to
buy or sell and video, but we're going to see
that where you're going to see in video and if
you just go out. But what I think it does
not only as an investing philosophy, which it can be.

(42:23):
I mean I see a lot of kids start this
way too, Brad when when parents want to get kids
involved in investing. The first thing it does well, buy
a few things that you know so you can follow it.
And that's that's a viable strategy. But you do have
to be careful about the over reliance on the consumer.
But I think the other thing that I use when
i'm especially when markets are volatile, for client meetings is
I will break out a client's top ten holdings and say,

(42:48):
because if you own an index, what do you really own?
It doesn't make you feel good, right right. And one
of the companies that puts out some fact sheets on
this on their various portfolio strategies, which I really like,
and they do it as on their fact sheet for
the underlying holdings of the index. They they do it
as a day in the life. So I'm not going

(43:10):
to say the company or what it is, but you
know one of them is a day in the life.
So you you wake up in the morning and you
use you brush your teeth and use Listerine mouthwash that's
Johnson and Johnson. You shave using your Gillette razor that's
Procter and Gamble. You go pick up groceries at Walmart
or Target. You have a Coca Cola with lunch, and
they go right through the entire day. And then these

(43:33):
are the holdings of this portfolio. This portfolio or many
of these would be in the S and P five
hundred index. It even goes as far as some of
the names you might not be one hundred familiar one
hundred percent familiar with. But the last thing late evening,
well you wash your dishes, you have warm, soapy water.
Well Aosmith would be another publicly traded company that makes
water heaters. There's another one that I was looking at.

(43:56):
They were doing the day in the life. You know,
whether it's breakfast at McDonald's or uh oh, I'm a
little bit sick. I take a Haul's Throat Lodge and
that's made by Mandalze. Okay, going up, somebody picks up
your trash. My trash day was just yesterday. Republic Services
or waste management, you ship something with ups. Okay, you
might mow your lawn with your John dere mower. And

(44:18):
so when you look under the hood and you see
these names that you use every single day, I think
it's uh, you know, it's important you stream a stream
a movie on Netflix. Yeah, we were saying the same
thing during covid. Are you gonna cancel your Netflix just
because this is all stopped? So no. So there's there's
things that that have steady revenue that never goes away.
And part of it is that the US consumer is

(44:39):
a spending consumer. Unlike in Japan, where everybody saves and
doesn't spend, the US consumer spends. And I think that
when you put real companies with what you own and
you realize that these are all products and services that
you're using NonStop, and you and all the other millions
of people in this country, in a around the world,

(45:01):
Yes there's going to be there's going to be peaks
and valleys, but it's not going to stop altogether. And
I think that that I think that can help investors,
like I said, whether the storm when you're in the
middle of a correction, but also give you the comfort
to know whether in you're four oh one k and
you're adding every month, I can keep adding and buying
more and more shares of these things. MM. We had

(45:22):
to have a few minutes left. I want to touch
on something. The Fairness Act from January is something that
they estimated was going to affect three point two million people.
There's still if it's three point two million people, there's
still somewhere between two hundred and nine hundred thousand people
that have not applied that should based on their estimates.
And I think where it's affecting people where I'm hearing

(45:44):
and still reminding people and finding out that people aren't
are not typically somebody on their own work record. Somebody
on their own work record, if they were denied getting
any Social Security, they know that they had some Social
Security years and that it was getting taken away or
it was getting reduced. And then automatically, if you're getting
any soci Security and it was just reduced, it was
just fixing itself. Where I'm finding it is on the government,

(46:08):
the government pension offset, where it would be off of
a spouse's record or off of a widow's benefit, that
people aren't aware that they can get it or get
it right away. And so if you are someone that
never applied for Social Security, you need to call. If
you're not getting any Social Security, but your spouse x
spouse or decease spouse was getting SOCID Security and you're

(46:31):
not getting anything, you need to call. Even if it's
an ex spouse, if you were married for ten at
least ten years and you didn't remarry before age sixty,
and you're getting some sort of from state pension and
you're not getting any Social Security even if they're still alive,
you're entitled to half of that spousal benefit. That's one
that I just discovered that somebody was not getting, which

(46:54):
is half of their spousal benefit, because they didn't think
they were entitled to get it until they knew they
were entitled to get it when that person died. They
didn't think about the fact that they could get fifty
percent of it, and so they get fifty percent now,
and if that X spouse dies, they can get all
of it. But if you're if you're not getting anything,
kind of look up the rules and know it's it's

(47:14):
really easy for they're not busy now, So anybody can
call their eight hundred number, eight hundred seven seven two
one two one three, eight hundred seven seven two one
two one three. It's a voice prompt you say Fairness
Act and they get specialists that know the Fairness Act
right on this. So here's here's the bottom line. If
you or your spouse, or your divorced spouse or your

(47:38):
deceased spouse if any of those people, okay, had state teachers,
or they were pers in Ohio persuh or sers sers
or any government employee or any teacher, and you haven't
seen an increase to your social security, you need to call.
You need to call. It's really three people. If you

(47:58):
never apply, it's a new claim. If you if there's
a spousal survivor benefit, or if you moved or changed
your banks, maybe they're trying to get you more money.
Put your grooved or change banks. Those three people need
to call. Yeah, all right, Well, 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

(48:19):
Management Group. To contact Dennis, Brad or Kevin professionally, call
four one nine eight seven to two zero zero six
seven or eight hundred eight seven five seventeen eighty six.
Their email address is Kirstenwealth at LPL dot com and
their website is Kirstenwealth dot com. Opinions voiced in this
show are for general information only and are not intended

(48:40):
to provide specific advice or recommendations for any individual. To
determine which investments may be appropriate for you, consult with
your financial advisor prior to investing. Securities are offered through
LPL Financial member FINRA SIPC