Kersten Wealth Management Group - Money Sense 12-06-25

Episode Transcript

Speaker 1 (00:00):
Hello one, Welcome to Money Cent. You're listening to the
advisors of Kirsten Wealth Management Group, Kevin Kirsten and Brad Kurston.
Happy to be with you today, Brad, as we work
our way through the first week here of December. The
market certainly found its footing in the last week of November,
exactly when you said it would. By the way, yeah, actually,
if you look at the seasonality of the month of November,

(00:21):
the market really did exactly what the historical precedent would
have said. And so why not look at December and
look where we are in terms of this current month
and look at look at some technical analysis as well
to see where we are. If you look at the
technicals going into December, and by the way, the S
and P five hundred now up seventeen and a half

(00:42):
percent on the year, and that really over the course
of the last week improved by more than a percent.
I have to see what we are off those lows
in November even greater than that. I just have the
last week numbers here right now, but certainly one an
above average year without question. And what does December look

(01:03):
like when we have this kind of year. One of
the things we look at is the seasonality, and we
talked about November. Looking at the seasonality and the price
progression for the month of December, it's tracking just like
November did. It's hard to say anything else the first
two days of the trading month for December. In fact,

(01:25):
I saw this the other day. Typically that first day
has a very very poor track record of being a
positive day, and that's exactly what we had here recently.
The market typically rallies through about the eighth trading day
of the month, has a little bit of a lull
in the middle part of the month from the eighth
day for about a week, so that's the historically, that's

(01:46):
the bad week, and then the Santa Claus rally kicks
in when you get to roughly well the official Santa
Claus Rally, if you look at the Stock Trader Almanac,
I think starts on Christmas Eve, if I'm not mistaken,
I think so, and then runs through I think it's
into January. Actually I think it's through the New Year.
But if you look at the seasonality of the month

(02:09):
of December, the market really historically has kicked off a
positive period of time on or about the thirteenth trading
day of the month. So right, well, a little past
halfway through the months, on average about twenty trading days
per month, so this is on the thirteenth trading day
of the month is when the market will find its

(02:31):
footing and take off through the end of the year.
And so certainly November followed the blueprint and we'll see
if December we'll do the same. Well, if it's a
positive year, eighty six percent of the time, you're the
high point of the year is sometime in December, so
you have the wind that you're back with those type
of statistics as well. And it's just one of those

(02:52):
things where we're looking at at the seasonality and part
of it. I mean, you're talking about the thirteenth of
the month. You really could think about the trading third thing,
trading day, but you can really think about why. If
you're the type of person that thinks the stock market
is a rig game, you're right, but you're probably wrong
about what you think. It's actually rigged to the upside.

(03:13):
And part of that is the advent of the retirement
plan and all these flows going in, and those flows
don't typically change very often unless you have a really
really long like two thousand through two thousand and two
downturn where maybe some people change what they're investing into,
but every two weeks you just have this constant flow
into the stock market that helps support the market. And

(03:35):
so you do have a little bit of that even
on a month to month basis. And so that's a
little bit of kind of what you're talking about for
the month of December. And the other thing that we
are going to have here coming up around that period
of time is it looks more and more likely that
the Fed's going to cut. What would be holding them
back is if we had strong job numbers, and each

(03:56):
time that we're getting them, they're getting a little weaker.
So the Fed is likely going to come in and
do a little bit of support on the seventeenth of December.
That's right, and I think that is in stark contrast
to what we saw in twenty eighteen, the last time
Trump was in office, and we were debating FED cuts

(04:16):
or not FED cuts, and in fact, Jerome Pole came
in in December of twenty eighteen and actually raise rates.
So hopefully it doesn't make that same mistake again. I
don't think raising rates is in the cards, but certainly
it would be a shock to the overall market if
they did not cut rates. I certainly believe that they're
going to brad. There's nothing that these Federal Reserve what

(04:41):
are they call governors, that's what they call them. I
don't know, right, governors. I guess Fed Reserve governors who vote.
There's nothing that they do that's not pre pre planned.
And a couple of weeks ago, they sent somebody out
I'm not sure which FED governor it was, to talk
about the fact that they were leaning towards a cut
and the probability of getting a cut went from I

(05:02):
think it was down almost down to thirty percent to
ninety four percent where it sits today. So they just
want to Yeah, they don't want a surprise up or
down cut or no cut. They want to kind of
telegraph what they're doing, right, And so that that FED
governor that wasn't just off the cuff, right, Okay, that
was something that they've talked about and they said, let's
get out in front of this. And the current FED

(05:25):
does not typically disappoint what the market is pricing in
I have to go back how far before probably the
last time. Yeah, So they typically don't disappoint what the
market is pricing. In that being said, we'll have to
wait and see on January and beyond. I'm not so
sure if Pole's going to do anything beyond this discentier.
I think the market probably expects and everyone else should,

(05:46):
that this is the last one for Powell. Yeah, back
to the market's really quick. You know, we we we've
been training in a channel for the S and P
five hundred. You saw that initial thrust off the April lows, okay,
and this channel we've been trading in from those April lows.
We're sitting right at the bottom of it at the moment.
So even though it was encouraging to see the last

(06:08):
week of November rally back from that corrective phase, we
still need need to see the market break out a
little bit because it has been making a series of
lower lows and lower highs. I mean, we got two
lower lows on the chart, we have two lower highs
on the chart. We would really need to see and
so where where is it? Pretty much have to see

(06:30):
the S and P five hundred close above sixty nine
hundred to really technically say what happened in November and
that corrective phase that started in November is behind us.
So we'll have to wait and see. I don't know where.
I didn't even check before. Pretty flat today, but we're
a little bit more than one percent, call it one
and a half percent away from the all time high
close When do we get sixty eight fifty on the

(06:52):
SMP Okay, okay, So technically we're we're right at that
resistance level where we made that previous lower high. So
we really need to go up probably another percent to
really say that we put that sell off in November
behind us. Yeah, it it is. When you hear that
the market's at an all time high, it's definitely getting
there with with different different stocks and different movement earlier

(07:15):
in the year. You know, it got it got there
with with Tech and then and then on the way
back up, it got there with Tech, but not now.
When you look that sell off that occurred, that was
a five percent sell off. The Nasdaq was off almost
double that, but individually there were stocks that were off
much more than that. A bubble really burst in a
couple of the high flying names and even some that

(07:38):
would just be considered those blue chip tech if you will,
And we're talking about it a little bit in the
next segment, But I think that when you hear that
the markets at an all time high, you think everything
is at an all time high, and it's not before
that that sell off. We were talking about how almost
almost a little over fifty percent of stocks were negative

(08:00):
on the S and P five hundred at that point
in the year with the market up about fifteen, and
you had hardly half of the market that was even positive.
The returns were coming from only half of the S
and P five hundred, And the same goes for today,
where we're up a little bit more than that period
of time when we were talking about it, with the
market of fifteen, but you have a different set of

(08:21):
stocks that are getting you there, and it's healthy for
the market to give you a little bit of that
bubble bursting. It gets rid of that euphoria behavior that
we see in a late cycle, and it's really what
we're really kind of in right now. You kind of
have to be aware of what this late cycle behavior is.
And you and I were talking before the show about

(08:41):
how the most susceptible to making bad decisions in the
late cycle where you're reaching for return are newer investors
with smaller accounts because you hear that the market isign
at all time high and you say to yourself, well,
I'm only up ten thousand dollars this year. You don't
say to yourself, Oh, I'm up eighteen and the market's

(09:02):
up seventeen. I'm doing great. Or I'm up twenty and
the market's up fifteen, I'm doing great. No, they start
if you started the year with fifty or sixty thousand
dollars and you're up ten thousand dollars, that's great. Yeah,
you're up twenty percent, okay. And what happens is you
start thinking in what, I'm not up as much as
I thought I would be up if the market was

(09:24):
in an all time high. I'm I'm fully in stocks
and I'm up twenty, but I'm only up ten thousand.
I thought it would be more. I thought i'd have
a million dollars, or I thought i'd have one hundred thousand,
and I started with fifty. Well, that's when you start
to reach and really have get overly concentrated, start to

(09:45):
chase the high flyers, and and that's where you see
the bubble burst a little bit. In some of these areas,
investors like that need to go out and read the
Morgan Houso books talking about talking about the psychology money yeah,
and deciding Okay, I need to have a little bit
more patience here, because when you look at the way

(10:06):
the percentages work, and we had this discussion before who
went on the air, I find that the impatience might
be an age thing. With the younger generation. It's typical
that they want to you know, I want to be
rich now, right, And Denny always says I'm an overnight
success after fifty years. That's the point. You have to

(10:29):
give it time. The whole point of compounding is that
you let it compound. But the younger generation or the
people just getting started, tend to be impatient. And what's
interesting is the people who have committed to it, number one,
they've been doing it longer, so they understand how the
markets work. But if they build up enough of a
critical mass, I think those people obviously tend to be

(10:50):
a little bit older, so they're a little bit more
satisfied with a more modest rate of return. They don't
want to see as big a drop, So we allocate
those clients more conservatively. But also, when you have more
money and you have a five percent return instead of
a ten percent return. Well, you're still happy with that
because if you have three million dollars, a five percent

(11:12):
returns one hundred and fifty thousand dollars. And so you know,
we were trying to have the discussion about anecdotally in
our firm where we see the people who are most
impatient or just satisfied to sit and watch. And it
tends to be an age thing to start, because the
younger generation wants everything now, and also the impatience of

(11:36):
not understanding what a twenty percent return would be on
a smaller amount of money. If you look at the
time component to rates of return, Brad, if you invest
the same way, it will take you the same amount
of time to go from ten thousand dollars to one
hundred thousand dollars if you don't add any funds, as
it does to go from one hundred to a million,
the same amount of time. If you make the same

(11:57):
rate of return, pick whatever rate of return you want
will take you the same amount of time. It doesn't
mean that the person who went from ten to one
hundred did worse than the person that went to one
hundred to a million, and it's weird that you have
to say that out loud. You're just moving one decimal
point as it is irrelevant. Yeah, but that person made
nine hundred thousand dollars and I only made ninety. And
there are people who are listening or say nobody would

(12:20):
have that discussion with you. We have it all the
time where I have somebody that says to me, in
a year like this, I thought i'd be up more.
The first thing I do is go look at their
actual return and tell them how they've done. And that's
not what they're referring to. They're only referring to the
dollar amount, and I think they're surprised at what the
percentage is, but it's really not what they're talking about. So,

(12:42):
but I think it's are of the other These are
the people that kind of fall into this category though.
They are people that at the beginning of twenty twenty
three we were having to convince when they were saying
to us, I can lock in five percent risk free
just by buying a two year treasury. Why would not?
And the reason is because we're at a stage where

(13:03):
that ten percent over the last two years is fine.
But we're at a stage where the market had already
sold off and you could have done fifty over the
last two years and you'll never make up for that.
So if you could get it today after entering the
fourth year of a bull market, maybe we'll talk about it.
But the same person I'm convincing that five percent in

(13:26):
two year treasury is not a good idea two years
ago are the people that are now shifting and saying,
I think I need to be more aggressive. Well, anecdotally,
that's when we say we're in a little bit of
that euphoria stage coming up. We just don't know if
it's going to be nineteen ninety seven euphoria where at
last three and a half years, or the end of
twenty one euphoria where people are getting a little stretch

(13:49):
and the bubble bursts a little quicker. Here's what's exciting
for the young people who are just getting started with
their portfolios, Brad. When you're younger and you see the
market correct like it did just seven months ago, okay
in March and April twenty percent correction on the SMP
five hundred, here's what's exciting when you're just getting started.
When you add money and you're just getting started and

(14:11):
maybe you only have twenty five thousand, fifty thousand, one
hundred thousand. When the market corrects like it did in
March in April twenty percent and you add money, it
is more meaningful to you, yeah, than the person who
has two, three, five million dollars. Now, don't get me wrong,
I want the people who are contributing five million dollars.
You stay on your program, you stay on your path

(14:31):
to retirement. You keep contributing to your four oh one K,
and you keep adding money on dips if you have
money invested outside of your four oh one K. But
I will say, if you have fifty thousand dollars and
the market dips twenty percent and you add fifty thousand dollars,
it's much more meaningful rate of return wise than it

(14:53):
is to the person who has five million dollars in
ADS fifty or five million dollars and we're taking five
percent a year out. They're both making the same amount
of you don't get me wrong, but you're doubling what
you've invested, and the person with five million dollars is
only adding one percent. If I have someone that's missed out,
and say it's a new person and they're saying to me,
I haven't I didn't make any money in these last

(15:13):
three years, and or I have somebody that you know
is in the bankers account or wanted to be more
conservative and now they're kind of changing their toomb. We're
always having this conversation. Says, that's great if that's how
you feel. The next time the market gives us a crection,
we're going to take some opportunities. And for some people
that we for newer clients throughout the summer, that opportunity

(15:35):
was here recently where Tech sold off this double maybe
triple in some cases from what the overall market did.
Let's just take a few stocks just to give an example,
and this is the reason you don't. We're not chasing,
but you're just patient on when you're going to add risk.
Not a recommendation to buy or sell any of these three.
Oracle went from three hundred and forty six dollars to
one hundred and ninety seven and it is low. It's

(15:56):
just over two hundred now. That's negative forty three percent.
It happened in three months, so while everyone was happy,
Oracle had already started to sell off. And then when
the market sold off, five, Oracle had sold off from
top to bottom forty three percent. Uh Robinhood was a
number one performing stock at one point this year in
the S and P five hundred. It was at one

(16:18):
hundred and fifty four. At one point, the low point
was one oh six negative thirty one. In fact, I
think the one oh six is here today, so I
think it's still at its low point negative thirty one
on the year. Same thing with Netflix down thirty percent.
If you go down thirty percent, you have to go
up forty three just to get back to where you start.
How about the Bitcoin Darling micro strategy. Yeah, yeah, a

(16:39):
big round trip there, sure, Yeah, over four hundred a year.
I think it's at one sixty or seventy at the moment.
So yeah, so more than a fifty percent decline, it'll
take over one hundred percent to get back to where
it was. So you do when you're entering the fourth
year of a bull market. If you want to add risk,
you have to be patient. The market will give you opportunities.
It gave us two this year the April sell off,

(17:01):
tech stocks sold off double what the market sold off,
and the same with this most recent one, market only
sold off five. But you have all these opportunities in
individual technology stocks and portfolios that are concentrated there. You
could have seen a whole portfolio off twenty to thirty
percent that you could have added to the days before

(17:22):
Thanksgiving and had a real opportunity where right now off
that bottom some of those portfolios. Even the Nasdaq up
six to eight percent off of their ultimate bottom just
in the last three weeks two weeks. So, yeah, you
have to be patient if you want to add risk,
and right now, if you're already aggressive, we're saying now

(17:42):
is the time to be somewhat patient. Let the market
do what it's going to do for the end of
the year. Let's take our first pause, can continue this
discussion and talk about a few other things that are
going on in the news. You're listening to the advisors
of Kirsten Wealth Management Group. We'll be right back. Welcome
back to the show. You're listening to the advisors of
Kirsten Wealth Manager Group. Kevin Kristen and Brad Kirsten. Happy
to be with you today. As a reminder, we are

(18:03):
professional financial advisors and our offices are in Perrysburg. Give
us a call throughout the week if you want to
set up a consultation to review your financial plan, whether
you're just getting started, well on your way to retirement,
or already in retirement, we'd be happy to sit down
with you four one nine eight seven to two zero
zero sixty seven. Or check us out online at Kirstenwealth
dot com kirstenwalth dot com. You can find a lot

(18:24):
of good information about our firm, as well as our
weekly market commentary, which focuses this week on a little
sneak peek for our market outlook. In twenty twenty six,
Brad Trump rolled out with Michael Dell this week a
little bit more information on the Trump Kids newborn baby
accounts that he's opening. Ye, fully funded by Michael Dell. No, actually,

(18:47):
the government's doing a thousand bucks. And this Michael Dell
is a brand new thing, and I think he's trying
to get other billionaires committed to it. Okay, So he's
doing because the estimate from the government is fifteen billion dollars,
So Michael Dell's doing six and a quarter billion. Is
this per year? No? One time? One time? Okay? So,
but the the kids accounts, well, I guess it would

(19:08):
be per year. But you don't. If you have a
newborn baby, you get once and then next year it's
a whole new route. Whoever's a new boy. Yeah, yeh yah,
yeah yeah yeah. So so Michael Dell's I believe, is
gonna do Michael Dell is going to do it every year.
And I think the Trump accounts sunset in ten years,
I believe. But either way, it's it's interesting because they're okay.

(19:31):
I think there's better ways to do it. They're a
little bit weird in terms of how they've been set up.
Should anybody turn down a thousand bucks when they have
a baby next year? No, don't turn down a thousand bucks.
Do whatever you have. Even if the account has to
say Trump account, I'll bet it. I'll bet it's really corny.
I bet I'll bet it has a picture of Trump
with his thumb. I bet there are people that gonna
opt out of this account just because it says that,

(19:52):
and you don't, well that's the other don't let him
do it, don't. Yeah, don't don't turn a liberal and
you don't like Trump and it's got his name on it,
so yeah, take the free money, yeah right, just don't don't.
That's that's a weird thing to do. So Michael doll
the estimate is I think two hundred and fifty dollars.
So it's twelve hundred and fifty dollars, and I think
he's trying to get other billionaires committed to doing it now.

(20:14):
I mean you can run the numbers here. I mean
it can how many times you're gonna double if you average,
say nine percent a year, did twelve hundred and fifty dollars,
I mean when you're twenty one, it'll double about three times. Yeah,
So you start with twelve fifty two hundred and sixteen months,
and you can add to these accounts as well with

(20:36):
your own money. So you're twelve fifty, it'll turn into
sixty three hundred. Okay, that's fine, and then you can
add to these accounts too. But the reason I wanted
to bring it up is, first of all, if you
have a newborn or if you're having a grandchild next year,
remind them of this. Get signed up, you know, get
signed up for it. Take the free money. It does
have some rules and restrictions, pretty much, can't touch it

(20:58):
until you're eighteen. For the most part, there's there's a
couple of wrinkles in there where you would be allowed to.
But even after eighteen, it basically becomes a traditional IRA
after eighteen, so it's not like a college five twenty
nine plan or an HSA. It pretty much becomes a
traditional IRA after that. On the money that Trump and

(21:19):
in this case Mike tax deferred and then taxable on
the way out. That's right. So, and there would be
a penalty if you took it out before fifty nine
and a half unless it's used for first time home purchase.
And let's see one other thing. Oh okay, yeah, first,
so you could use that money for a first time
home purchase. And parents or anybody else can put in

(21:41):
up to five thousand dollars a year into these Trump accounts,
So you can't put up to five thousand dollars a year,
and an employer can put twenty five hundred dollars a
year in ease Trump account. That's a little different if
it's meant to be there until you're sixty. Let's do
the math on that. Have you done that math? So
twelve hundred and fifty dollars at nine percent from zero
to sixty is two hundred and seventy one thousand yeap. Okay, yeah,

(22:04):
what if you what if you the family or you
or anyone adds just five hundred dollars a month to that,
or sorry, five hundred dollars a year to that, forty
two dollars call it per year. Now that account becomes
a million five Okay, that's a big difference. If you
think this account is just for you at age twenty

(22:25):
one and it's going to be or age eighteen and
it's going to be six thousand dollars, Come on, that's
not the way to think of it. If you want
to just let it sit there until you're sixty and
add a little bit to it and turn it into
over a million, I mean, I don't. I don't know
that's that bad up a deal because there's so many
people that have no investment. Oh, I agree, And it's
free money. You should never walk away for free money,

(22:45):
just like in your four oh one K. You should
never walk away from the four to one K match
where you so. By the way, the two ways you
can take the money out without penalty is education expenses
and also a first time home purchase. Where you lose
me is getting the parents or grandparents to add to
the account. And this is why the money doesn't go

(23:06):
in pretax, so the parents' grandparents or whoever don't get
any right, like do it a non deductible IRA contribution, right,
So you're gonna have to separate the contributions for one,
because if you're not putting it in pre tax, then
those contributions will have to be able to come out
tax free. Of course, the growth will have to be taxed,
so they have to separate that somehow on the plan

(23:29):
number two. Honestly, there's no matching here to put the
money into the Trump accounts, so I I think there's
better ways to do it. Because if you put money
as a parent or grandparent into the Trump accounts, it's
coming out as ordinary income. Whereas if you do a
UTMAH account a custodial account for a child or a grandchild,

(23:51):
and invest it the same way, it's capital. It's long
term capital gains yea. And if a kid is doing
it when they're eighteen or twenty one, they're probably in
a low enough task brack that they're not gonna pay
anything on those Laundron account okay, Whereas on the growth
of these Trump accounts, regardless of your tax bracket, you're
going to pay tax on those withdrawals. So yes, should
you walk away from the free twelve hundred and fifty dollars, No,

(24:13):
But as you said, that's going to be two hundred
thousand dollars at age sixty if you just forget about it. Yeah,
And if you added five hundred a year at nine percent,
it turns into a million five. Incidentally, it's a million more.
It's two point four million if you just average ten percent.
So the market's long term return gets you two and
a half million for the base of the account to

(24:33):
start plus five hundred eight years. So this isn't being
rolled out, it's next year, but you're not gonna be
able to open the accounts till July of next year.
So just if you have anybody who's having a kid,
having a baby, grandchild, or if you are in your
family or having a baby, take advantage of that. Now
people do ask us how do we invest money for
our kids and grandkids? And I think that there's better

(24:55):
ways to do it than adding money to this Trump account. Okay,
first of all, if you feel like your child's going
to go to college, the college five twenty nine plan
is a great investment you don't get any it's after
tax contributions. You get a little right off on the state,
but not much, but nothing on federal. And it comes
out tax free like a raw ira when you use
it for a college So that's that's a great option.

(25:18):
Okay to me, that's better than the Trump account. It
is tax wise. It is tax wise. It is because
it's tax free on the way out if it's used
for college education. If you're unsure whether your child or
grandchild will go to college, some people are, you know,
opting out of that route and doing something different, and
that's fine. College is really expensive, and you want to
invest money for a newborn baby, do a custodial account.

(25:41):
Do a custodial account. That way, when the money comes out,
you put it in. Of course you don't get any
tax right off, but at least when it comes out
compared to the Trump account, it's capital gains versus the
Trump account, which is ordinary in and even when they
start working, if they're in the lowest bracket, the capital
gains are going to be zero. And you really, if
they're working, could take those custodial dollars and shift it

(26:03):
over a couple times as Roth contributions and convert the
whole thing into tax deferred earnings and tax free on
the way out, and that would be much better long
term than the trumpet. Yeah. I mean, obviously you're not
gonna have a child who's working at a very very
young age, but maybe they start earning a little bit
of money, maybe whatever job they're doing. That would be

(26:25):
The third thing I would bring in is if you
want to put some money in an account for a
child or a grandchild, you can do that. It has to
be a custodial wroth ira because you have to if
you're not eighteen years old. It has to be a
custodial roth ira. But if they're making money in the summer,
and this is a great thing. I've done this for
my daughter. Whatever she makes, I put in her wroth

(26:46):
as a matching contribution up to the maximum amount she
can put in a wrath. So if she makes, what
is it this year, seven thousand dollars, I'll put seven
thousand dollars in match what she's earning while she's trying
to get on her feet and trying to get to
get started. So that to me, if I'm going to
compare the custodial contribution to the wroth contribution. If they're

(27:08):
making money, I do the wroth. I would tell someone
to open a wroth and put that money in for
your child or a grandchild. Yeah, they're still talking about
you're talking about forty years of compounding it. It's going
to be a lot more meaningful and it's going to
be tax free on the way out. When in terms
of the row. So, if I'm ranking these investment accounts
that you can do for a newborn baby, obviously free
money is first. So do the Trump account get the

(27:31):
free money? Okay, Number two additional contributions. Number two's got
to be the five twenty nine or the custodia Just
tell you what the attent is. That's right, that's right.
And obviously you don't have to worry about any income
limitations on the custodial account or the five twenty nine.
You can have any income and contribute to the five
twenty nine or the custodial account. For the wroth contribution,

(27:51):
the child has to have income. Now, this one's a
little bit tricky, and it's a little strange because if
you make under a certain amount, you don't have to
file a federal tax return. Yeah. Yeah, so it's like, well,
how do they know that I'm allowed to contribute to
the row? Yeah? What if I made just seven, I
wouldn't file a return. Yeah, but if you did get audited,
you would have to justify it. So make sure that

(28:14):
you're doing it the right way. But that is a
question that comes up because I have had people say
to me, well, how does the IRS know? And I said, well,
they could know, because in fact, you might even be
more of a red flag. And so you better be
prepared to justify that ROTH contribution. Yeah, because the contributions
do spit off a tax form that you don't see,

(28:35):
called a fifty four to ninety eight that goes out
in May. The custodian of the IRA will be sending
out to the IRS on that fifty four to ninety
eight what the contributions are that go into it. So
if you have a ten year old and you're making
a ROTH contribution, it might be a red flag to
say your ten year old really earning you know, enough
money to make a contribution. But it's exciting, Brad because

(28:56):
when you get to plug into the calculator forty fifty
sixty years of compounding. Yeah, it becomes really exciting. Now,
why don't we revisit what we started this show. Don't
get too excited when you put your first five thousand
dollars in and the market has a good year and
you only make five hundred dollars, right, exactly, that's the

(29:17):
way it's gonna go. And yeah, if you thought that
the market has a good year and you were gonna
be up five thousand and you only started with five thousand,
you're not doing the math. But Brad, you ran that
calculator and you told me that it was gonna be million.
It was gonna be millions. Yeah, in forty years. So

(29:37):
you have to be patient, especially when you're having when
you have that many years of compounding. But it can
be a huge thing. I mean, you could put money
in as a grandparent for even five years for a child,
and that compounding. You could change their life down the
road by putting that money in. So, so let me
do it for your twenty year old. I did forty

(30:01):
two years. Yeah, so forty two years of compoundings, just
doing seven thousand every year at the market's return to
ten percent, it's five million dollars. Yeah, there you go. Yeah,
almost exactly four million, nine hundred and seventy six thousand.
So so it's it's only seven thousand a year, but it's
the years that you compounded. Now, did she make a
lot of money early? No, No, it was the same.

(30:22):
It was I did a straight line of ten percent.
But guess what the final year she made a half
a million dollars. In the first year when she did
ten percent, she only had five thousand in there, she
made five hundred dollars, same investment, same return. One year
she made five hundred, the other year she made five
hundred thousand. So you have to you have to be
patient with any account when you're thinking about compounding. But

(30:45):
you know, it is something that comes up, especially after
we've had a few good years in the market and
people have bigger investment accounts and they start thinking about
their family, and it's like, well, I build up enough,
let me help the rest of my family get started.
And there's a couple of different ways you can do it.
Let's take our next pause. You're listening to Money Cents
Kevin brad Kurston. We'll be right back and welcome back.
You're listening to the advisors of Kristen Wealth Management Group,
Brad and Kevin here with you this morning. If you're

(31:07):
listening on Ihearten didn't hear any of our ads. We
are professional financial advisors and you can find a lot
about what we're talking about and information about how and
get in touch with us on our website kirstenwealth dot com. Kevin,
I've had a couple clients in review meetings talk about
how we talk about how typical of the year it
was with a ten percent and a five percent correction

(31:28):
this year. In fact, when the market is positive, we're
about average. I mean so well, the long term average
is only nine or ten yea that includes the negative ear. Yeah,
so nineteen point six is the average positive from now
going all the way back to the great depressions to
the average positive ear we're coming right up on. So
there's a lot of things that are very typical and
if you're ready for a year like this, I have
a lot of clients that just say, yeah, this was

(31:49):
a very predictable year, or you know, I listened to
you guys on the radio and we come in for
the review meetings. Makes it look easy, right. You buy
the dips, you sell the rips, you expect a little
bit longer on the way up, a little shorter on
the way down. I mean, look at the two corrections.
The correction and that started really the end of February
and stopped on April eighth, was a typical length of

(32:12):
a correction. This most recent one was really only about
three weeks. Kind of a typical go for a correction.
But the rallies you have to be patient for. The
rally lasted from April eighth all the way until basically
November first, with just a couple little one and a
half two percent blips in the middle. It's a longer rally.
Look at what we're talking about here, the Thanksgiving through

(32:35):
maybe the good part of the first quarter is what
you should expect for a kind of consistent rally. The
market climbing the wall of worry, and then we're gonna
get a little too euphoric. We talk about these things
to kind of prepare people, and if you're prepared for it,
it does seem easy. You're prepared to buy the dip,
you're prepared to get more conservative and just be patient,

(32:55):
and it seems like an easy ongoing process, repeat, repeat,
but don't forget, you know, somebody that after the election
they didn't like the results and they said, Trump's gonna
ruin everything. And then April came and they are they're
telling you, see I told you, and that person doesn't
get in, that person's not prepared for the selloff and
buys the dip. They're still waiting and the market rallied,

(33:19):
and they said, well, it's gonna get worse. And then
in November they said, see, I knew it. Look at
these tech stocks they're selling off. It's gonna get worse,
and we're gonna Trump's gonna gonna, you know, turn this
into a full blown bear market. And we're we're off
off that bottom, and that person is still not in
and and so they they're they're convinced, whether it's politics

(33:41):
or all of the things that they're reading on the
internet or all of the bubble talk and uh, and
all of that is is you can always find a
reason to be out. And there's a lot of investors
out there that are believing all of that and using
all those reasons that they're telling you to be out
and stay out and never buy the rally. And they

(34:02):
finally give up at some point. But when do they
give up, they give up. When we were in this
late stage and at some point in this late stage,
fourth year of the of the bowl market, you have
people who get in and they do okay for a
little while, but then on the first downturn they say,
I knew it, It's rigged, and I'm going to get out.
I mentioned that, you know there are people that feel

(34:23):
like the stock market's are rigged game. Well, those are
the people that are are are not following, you know,
a set of rules for themselves. They're kind of panicking
on the way in, panicking on the way out, and
they're not giving themselves time to let the market do
what it does. It's okay to do nothing and just
stay invested, and it's okay even when it's withdrawal time,

(34:46):
just to allocate your withdrawals across the board to everything
that you have and not kind of pick and choose.
You know, were you typically doing a little bit better
than that by saying we're going to take withdrawals from
things that have done unwell and things that have gotten
a little bit of a too much growth in the
portfolio and gotten too big in the portfolio, so that

(35:07):
we're actually taking risk down for those withdrawals or the opposite.
If the market is in a downturn, we're selling the
most conservative things that helps return a little bit. But hey,
if you just want to allocate your withdrawals to everything,
that's okay too. But then you have other people that
are doing the opposite. Even on the withdrawals, they're selling
the thing that they don't want to sell, the thing
that's done well. Therefore they end up with too much

(35:29):
of it. On the way up. They don't want to
sell the stock portion of the portfolio because it's doing well,
and then they end up with too much of it
at the wrong time. On the way down. They don't
want to sell the bonds or the conservative investments that
are doing well in their mind because they're doing well
and I don't want to touch that thing that's doing well.
So they end up selling the stock the growth funds

(35:50):
that are selling off the most at exactly the wrong time,
and then when they rally, they don't own as much
of them. So I'm just kind of pointing it out
because we have a lot of clients that have a
nice relaxing retirement. They come in for the review meetings,
everything is kind of exactly what they expect, but it
is for our listeners that is not that's not everyone

(36:13):
out there. It's really just kind of the fortunate few
that are are patient with their investments, maybe are very
experienced in investing from themselves in their four to one
k's and they've seen all the ups and downs and
nothing surprises them, or ones that are working with a
good financial advisor. So kind of a little bit of
a I don't know. I was trying to find when
the tariffs hit and we had the big volatility in

(36:37):
March and April, twenty percent of all of the S
and P five hundred, every single Wall Street firm was
out adjusting their forecasts for the year end for the
S and P five hundred, and I was trying to
find a list of what they were saying in terms
of where the S and P would finish for the year.
But you know, some guided down after they were up

(36:57):
at the start of the year, guided down and now
guided back. I mean it's it's probably won't do it
this year, but for year after year we have been
ripping on the twenty twenty five, twenty twenty six outlook
because it's they don't follow it. They don't follow it. Themselves,
so why should any investors? On April seventeenth, the average
year end target for the seventeen investment banks and research

(37:21):
firms for the S and P five hundred was sixty
one hundred. I don't know if it had already, Oh,
that has to be lowered. They already had been lowered
at that point in time, But the point being or
coming up on seven thousand, the reaction among the so
called experts at that point in time was, oh, the
market's gonna do terribly this year as a result of

(37:42):
these tariffs. And my point, if you had your TV
on at that point, that's that's right, because you're thinking
of them as experts, not knowing that they're wrong more
than they're right, and therefore you're using that as the
reason to you think you're doing your due diligence and
following along with what the experts are telling you to do.
But there is reactive as a bad investor is as well.

(38:07):
JP Morgan Economists says, my base case is a recession
in twenty twenty five as a result of these tariffs.
This is back in April. JP Morgan Economists saying that's
the that's the base case. It could be worse obviously,
is what they're saying. Larry Fink told CNBC capital expenditures
are falling. Companies are spending less on property, plants, and

(38:27):
equipment because they lack visibility. That didn't happen uncertainly has
made the stock market extremely violatile. The volatility index just
recently hit over fifty. When the volatility index is over fifty,
they always reference it. Has that ever, not been a
time to buy the S and P five hundred. The
same thing with the sentiment indicators. They're all contrarian, and
yet they put it out on the news like it's not.

(38:49):
When the volatility is high, it's contrarian. It means it
is a buy for the market. When sentiment is low
and investors suspect less, it's a buy for the market.
This is also from Larry Think investors of Blackrock. Investors
can think about the volatility in two ways. On one hand,
the S and P five hundred usually rockets higher a

(39:10):
year after extremely high mixed reading like fifty two. Okay.
But on the other hand, the situation is unique because
the reciprocal tariffs outlined by President Trump would raise the
average tax on US imports by roughly twenty five percent.
So basically what he's saying without saying it is it's
different this time. Yeah, it's different this time. I know.

(39:30):
Every other time the volity index volatility index is spiked,
you're supposed to buy. But this situation's unique. And the
crazy thing about that is that in order for the
VIX to be at fifty, in order for the market
to sell off twenty, it has to be something the
market wasn't prepared for, which, by definition, is this time
it's different. Every time the market sells off by twenty,

(39:52):
it is something the market isn't prepared for. It has
to be something different, or we wouldn't be off that much.
If it was something we expected, it'd be a two
to five percent sell off. It has to, by definition,
be something that's different. So somebody who is saying this
is the reason to continue to stay out after the
market's down twenty because this time it's different is foolish. Well,

(40:13):
and I love how they use the term unique instead
of saying they're doing whatever they can to not say,
to not say it's just different, because you know that
when you use that phrase that you're gonna look stupid,
You look like a fool. Yeah, so, but it's not.
I'm not gonna say it's different this time. I'm just
gonna say this time is unique. Come on. So the
point is, after the tariffs were announced and the market

(40:35):
had its volatility, every expert and every major bank and
investment for a rushed out to lower their expectations for
the S and P five hundred for the year. Okay,
now that we've rallied back to an all time high
and then some they're all rushing out to tell me
that they don't see any risk on the horizon. The
AI spending is tremendous. This is the exact point of time,

(40:59):
and who knows, next year could be great. There's a
lot of good things going on, and we'll talk about
it when we do our outlook here in a couple
of weeks. But my point is, how on earth can
you be pessimistic when the S and P five hundred
is at five thousand, which is where it was at
the low point, and now you're optimistic when we're approaching seven.
And I'm not saying it's wrong to be optimistic, right,

(41:20):
but how can you be more optimistic, yeah, than when
the SMP is almost two thousand points lower? Right? It
makes zero sense whatsoever. Well, I feel like the bubble
talk in AI and tech is a little bit of
you don't get hit by the train you see coming.
We weren't doing bubble talk for two years in nineteen

(41:40):
ninety nine and two thousand. The only bubble we have
is in bubble talk. We are at max bubble talk.
We never had this much bubble talk. The only bubble
we have is in News of Bubbles. I disagree with that, Brad.
The bubble talk was there in the late nineties. Alan
Greenspan had the famous speech about irrational zuberns. Yeah. Me,
that was in nineteen ninety six. I agree, I agree,

(42:03):
and it went on. But the point is the probability,
which we always talk about on this show. You look
at the return from five thousand to seven thousand on
the S and P five hundred. Okay, that's in less
than a year. What is the probability that you get
another return like that in the next year? Right? It
goes So if you are allocated as aggressively as you were,

(42:27):
when your probability of an outside return is lower, that
makes zero sense. Right, Yeah, that's all. That's the only
thing you can say. Yep, And so well, we'll be
talking about this over the next couple of months. I mean,
right now we're not we're not talking about it, but
we'll be saying this on the show and this to
clients as as the reason we'll be making adjustments to
to kind of tap tap the brakes on risk. When

(42:50):
the market is at seven thousand, should we have more
or less in stocks than when the markets have five thousand?
And if you don't do anything, your stocks have risen
in your portfolio. Say you were a sixty or a
seventy thirty. If you do nothing, you're seventy thirty became
seventy five twenty five. Is it prudent to have seventy
five in stocks when the markets is at seven thousand
and only seventy percent in stocks when the market's at five. No,

(43:12):
I'm gonna call your bluff and prove that you should
be more cautious right now, because I'm just gonna throw
some numbers at you. Give me a number right now
where you think, oh my gosh, yeah, I'd want to
get cautious at that point on the S and P.
Five hundred and this is just a random thing, but
I'm gonna I'm gonna ask you, well, give me a number.
I thought just a little bit above seven thousand would
be you four yeah, okay, and we're almost there's like
two percent away. Okay, so what percent return is that

(43:33):
from here? Let's says seventy two hundred. Okay, so seventy
two hundred. You're gonna add another two and a half
percent to that, so it's four and a half percent
from here, four and a half percent. And you're like, okay,
now we're getting into a little bit of crazy top. Okay, Fine, Now,
when the SMP was at five thousand and it got
to fifty five hundred, would you have been like, whoa, whoa, oh,
pump the brakes too much rally and that's ten Yeah,

(43:55):
that's a ten percent richt. Yeah, so that's the whole point. Yeah, yeah,
there's no away. When the s and P dropped to
five thousand and you went to fifty five hundred, you'd
have been you were already think you were already thinking
too much. Yeah right, No, but a mere four percent
from here and you'd be thinking this is craziness. So
that's the point. Yeah, okay, that's the point in terms
of whether or not you should be taking on extra

(44:16):
risk or not. So let's take our last pause. I
want to do a little tax planning for the end
of the year, last couple of weeks of the year.
We should get into some things that you could be
doing to improve your tax situation. Next April. You're listening
to money Sents Kevin and Brad Kurston. We'll be right
back and welcome back. You're listening to the advisors of
Christian Wealth Management Group and Kevin here with you. This
morning's a couple of minutes left. Going to talk taxes
a little bit. You know, Kevin, we used to always

(44:39):
have on the brain tax lost harvesting at the end
of the year, but especially with new with new technology,
you really need to be doing it. The ability to
tax lost harvest throughout the year and the ability to
do it especially when the market is in a downturn,
really maximizes your opportunity for the tax lost harvest and
is what we're doing now. All the time, it uhould
just be a year end thing by but this year

(45:00):
you really had two different opportunities that were better than
right now to do your tax lost harvesting. So in
the future in twenty twenty six, kind of a word
to all clients is that we're already doing it for you.
But if you're doing anything on your own in a
non retirement account, you got to look for those opportunities
to move sideways or even dial up risk and take
advantage of your tax lost opportunities when the market's volatile. Well,

(45:23):
and the tax lost harvesting concept. For one, if you're
not in individual stocks and doing a direct index, I
mean this is okay. You can be very tax efficient
in a portfolio just doing exchange traded funds, even to
a certain extent mutual funds if you tax lost harvest
throughout the year. But really in indexes and mutual funds,

(45:44):
your tax loss harvesting opportunities are typically in the volatile periods, okay,
in that moment is when you get the opportunity to
tax lost harvest. Once the market rallies, there's nothing to harvest,
and so the only other thing would be your bonds.
And if it's a non retirement out, your muni bonds
would be something we would look at the end of
the year, and you should too. Do I have anything

(46:04):
left or do I need it? Do I have I
already kind of harvested enough, and I'm sitting on some
tax losses. Even in a year where you have big gains,
you could definitely have that this year, but the beauty
bonds will be the only thing at the end of
the year. Unless you're in a direct index. Yeah, I mean,
we have direct index portfolios where people are up all
year long, and if you have individual stocks, you can
harvest out of anything that's been doing poorly in the

(46:26):
last month or week. So if you're in a direct index,
the fact that the market is at or near an
all time high is irrelevant to your tax lost harvest stretch. Well,
it goes to that discussion we've had about the S
and P five hundred and how many stocks are still
negative this year? You know, I think at this point
we're still It's just it's right around fifty percent are
negative on the year. So that's all the opportunities you get. Now,

(46:49):
when you do a direct index, you don't do five
hundred stocks on purpose. You want to have something to
harvest into. It could be a fifty or one hundred
stock would be most common. A direct index port four
olio where you're capturing the return of the benchmark by
only having fifty or one hundred, but you're waiting to
each sector is exactly the same. A couple other things
you can look to double check before the end of

(47:10):
the year. We mentioned the tax loss harvesting. Very important
to take a look at that, especially if you have
quite a few individual stocksure you're you're likely to find
something you could you could tax loss harvest. Make sure
you're matching maxing out your four oh one K plans
if you have a couple of pay periods left in
the year twenty three to five and your four oh
one K for the employee portion. If you're over fifty,
you can make that thirty one thousand. Sometimes those don't

(47:31):
auto adjust. If you're trying to max out and you
just turn fifty, you might want to double check that
thirty one thousand is the total combined if you're sixty.
Between sixty and sixty three, there's another catchup. It's eleven thousand,
two fifty for a total deduction of thirty four thousand
and seven to fifty for the folks that are over
the age. Yeah, so sometimes that not just increasing the percentage,

(47:52):
but you have to go in and check the box
that says you want to include the catch up contribution
in order to get it over that twenty three to five.
Some other changes to chair'll write off with the one
big Beautiful Bill. Denny and I talked a little bit
about it last week, but we'll get more to that
in the future shows. Some charitable changes. There's a little
bit of a change coming to the qualified charitable as well,
which I think is going to be helpful to folks,

(48:14):
so we'll talk about that in future shows. Thanks for listening.
We'll talk to you next week.

Speaker 2 (48:21):
You've been listening to Money since brought to you each
week by Kirsten 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. Their email address is Kirstenwealth at
LPO dot com and their website is Kirstenwealth dot com.

(48:42):
Opinions voiced in this show are for general information only
and are not intended to provide specific advice or recommendations
for any individual. To determine which investments may be appropriate
for you, consult with your financial advisor prior to investing.
Securities are offered through LPL Financial member Finra SIPC has

(49:04):
out