Let's Talk Money

July 29th, 2023

Episode Transcript

(00:00):
Good morning and welcome. I thankyou for taking time out of your day
to tune in. Folks. Itlooks to be a beautiful day and Upstate
New York. Well that's before therain comes. And I'm actually doing the
show from Saratoga Springs. And youheard on the news the Jim Dandy today
at the track, you know,for those of you, My wife Soon

(00:20):
I were just talking about this becausewe had friends that have never been to
a horse race in town last weekand we said, how you can really
go to the track, talk abouthours and hours and hours of entertainment and
other than the cost of getting intothe track, which isn't all that expensive,

(00:40):
you could really have a good time. There's picnic tables for those families
that may not want to spend moneyon food and bring their own and then
there's you know, clubhouse boxes andeverything in between. But it's really not
a bad day of entertainment. Andyou know, you know, horse racing
and Upstate New York, it's prettyspectacular all around the world. So many

(01:03):
people look to Saratoga and that's whySaratoga is a summer place to be.
So I'm sitting on in my deskat the Saratoga office looking outside and Broadway
is pretty robust with people. It'sgood to see, especially after COVID whin
nobody could go anywhere, folks.I'd love to talk to you about your
financial future. Any questions you have, give me a call. The phone

(01:26):
lines are open. I'm here withmy long time producer, Zach Harris,
and between both of us, wewould love to get you up on the
airways. There's no silly question.If you have a question, please feel
free to reach out. I canassure you there's another listener that will thank
you for asking it. One eighthundred talk w g y one eight hundred

(01:49):
eight two five five nine four nineone eight hundred eight two five fifty nine
forty nine. Any questions whatsoever aswe approach, I can't. I don't
even I'm not even sure how tosay this. I mean Tuesday, August
first, August first, on Tuesday, Wow, the time flies by one

(02:12):
eight hundred eight two five five ninefour nine. So for the week,
you know, we had, youknow, a lot of going on in
the markets, and what a weekit was again in the markets. Consumer
confidence, you know, we wewe we were doing good. Their home
prices rose ups appeared to dodge astrike. You had. Expectations were high

(02:34):
that the Federal Reserve would raise interestrates again, which it did a quarter
point no surprise, ninety eight percentchance that it would. I personally was
hoping they won it, but theydid. Um. FED chair Jerome Powell
said that the Fed staff was nolonger forecasting a recession. Gee, no
way, no way, no way. Do you think he's been listening to

(02:55):
this show where I've been saying thatover and over and over again, that
maybe we don't need to have arecession. If we do, it'll be
so shallow. You heard it fromthe Fed. His staff is no longer
forecasting a recession. The dial wehad thirteen straight days, almost a record

(03:19):
that would have gone back to theeighteen hundreds if it made it a fourteenth
day. Second quarter GDP rose thetwo point four percent. That kind of
rattled investors a little bit, andthat kind of killed the dial, making
a two century old record for theweek. The dial was up point six
six percent, SMP one percent,and as that two percent, not bad,

(03:44):
folks, not bad at all.One eight hundred eight two five five
nine four nine. Let's go tothe phone lines. We have Jim and
Hadley. Hello Jim. All right, Steve, good to talk to you
again. Yeah, it's always goodto talk to you. How are you
doing. I'm doing pretty well.Nice day. It's sorry to be a
nice day up here. Yeah,you know, I don't think it's gonna

(04:05):
last too long. But we didhave a nice little stretch of good weather,
something we haven't had since Memorial Day. I would say, so listen,
enjoy the sunshine while you can.It looks like we're going to get
some storms blown through this afternoon,but I'm thinking tomorrow may be nice too.
Yes, Mars will see nice,but it might be a tornado tonight.

(04:25):
So well. Mother Nature she's prettycruel around the country. You know,
we for the most part, whenyou look at so many places around
the country, we're kind of insulatedfrom Mother Nature and all that she brings.
But boy, she has been justdevastating what she's doing to some communities

(04:46):
that people that have lost their livesor injured or lost their homes and everything.
I mean, it's just it's justterrible. Anyway, Jim, what
can I help you with today?Well, I'd like to do is get
your take on separate managed accounts.SMA. Yep. The reason I ask
that is on Tuesday, I gotan email from a friend of mine down

(05:09):
in Florida and he had been approachedby email from a large mutual fund brokerage
company about an SMA, and Isaid, well, by coincidence, this
morning, I had been approached byanother large mutual fund brokerage company about an
SMA, and the pitch that theyhave is the tax management feature, the

(05:36):
tax loss harvesting, and I justlike to get your thoughts on the whole
thing. Yeah, you know,there's so basically, and we have a
couple of clients that have SMA accounts, separately managed accounts, which means we're
not managing that portfolio. We hirea separately account you know, money manager

(05:59):
to manage, and some managers specializedin different things. For instance, we
have a client that wanted something thatwas really very heavy and energy and it
was recommended to her by CEOV,a really well known company in Canada,
great brilliant man. I know him. I've had lunch with them, and

(06:23):
you know, we kind of stuckwith it. It wouldn't be my first
choice because energy is just you knowthat this one SMA did not do good
We have another client with another SMAthat was similar to what we do.
As you know, we manage almosta billion dollars and predominantly most of our
assets are in exchange trade of fundsETFs. We only have two individual stocks,

(06:46):
Amazon and Apple. Thank god wehave Amazon and Apple because you know,
Apple up fifty percent, Amazon upfifty seven percent year to date.
That's that's pretty good. But hehad a separate account manager that had a
manager that was managing ETFs like wedo, sectors and everything. But the

(07:08):
returns just lagged our returns. Sowe finally told them he was loyal to
this because he had it a longtime before he joined us, and we
finally showed them, listen, wecan do the same thing and our returns
have consistently been better. So wesold out of that. So for the
most part, that's what an SIMA. Now, going to your specific question,

(07:30):
we are. So we have whatwe call direct investing, and that's
where we can have an SMP lookalike individual stocks and we're actually able to
sell the losers to do the taxlost harvesting and get For instance, if
we have healthcare, maybe we sellFiser and buy Mark. We're still in

(07:53):
healthcare. We take the laws onFiser and we were not getting out of
healthcare, and we kind of errorimage the SMP for the most part.
And if you have enough assets whereyou can get in the front door,
and it's becoming more popular, it'sreally not a bad way to go.
We plan on introducing it to ourclients soon. Jim Ryan Ryan Bouche my

(08:16):
son who kind of heads up ourinvestment team along with Paulo La Pietro and
Ed Wilhelm. They've been researching thisfor quite some time and there's a lot
of different firms out there, andeach one does it a little differently,
and we have it narrowed down totwo firms right now. We're looking to
pick one and we feel that forthose those right situations, it could work.

(08:37):
And I think that's what you're talkingabout. I think it's called direct
investing, or at least that soundslike what you're talking about. Yes,
it seems that for example, Icould rather than having a pooled investment like
an ETF or mutual fund. Yea, I would own all I have five

(09:00):
hundred separate stocks in the SMP fivehundred. Well, you might not own
all five hundred you might own let'ssay two hundred, because what once again,
what they want to do is ifthey want to get out of healthcare
fives or they want to buy merks, if they own both, it's hard
to do that, right, Andso you have you have the equivalent of

(09:22):
an SMP five hundred, correct.And it's just maximizing individuals exactly, and
it's maximizing the losses. And it'samazing if investors did this, the added
alpha basically returns that they can getby maximizing that. No, you know,
as I said, Jim, it'ssomething that we're looking at. Make

(09:43):
sure you do your homework, makesure it's right for you. And obviously
it's for a taxable account, nota qualified account like an IRA or a
pension account. Jim, listen,stay well, be well. I was
up in your neck of the woodslast week. I took a short boat
ride with these friends from Florida,and I just love that Lake George.
I can't get enough of Lake George. It's the eighth wonder of the world.

(10:05):
Jim, you'd be well. Thanksfor calling, Thanks for being a
loyal listener. One eight hundred eighttwo five, five, nine four nine.
Let's go back to the phone lineswe have Ron and Bethlehem. Hello,
Ron, very Steve, how areyou doing. I'm doing wonderful.
But you know, Ron, atmy age, every day I get out
of bed, I feel like amillion dollars. Well so do I.

(10:26):
I'm about your age and I havethe same feeling. Oh you're twenty nine,
two thirty nine and just as goodlooking as you too. Oh yeah,
you know I'm irresistible. I don'tknow about you, Ron, but
I am irresistible, or at leastthat's what I tell my wife. No,

(10:48):
well, mine loves me regardless,so it's all good for me.
As as Sue says, I loveyou like unconditionally. There's just times when
I don't like you so well,Listen, in my bartending days, you
and I could talk about all thesemarital um things. I used to be
quite the therapist when I when Iwas bartending, and you know, oh

(11:13):
yeah, after a couple of drinks, people would share everything with me.
I was just a kid back then. Anyway, what can I help you
with today? Well, I wantto discuss a couple of things about getting
money out of your qualified accounts,like your four oh one k and Ira
ain doing a conversion to a nonqualified because eventually, all this money we

(11:37):
have in four oh one ks andours, we can't use it unless we
do a conversion or take it outand pay the taxes and that kind of
thing. But the more I lookinto it, the more complicated and complex
these conversions look to me. AndI don't know why that is, but
it's the federal government, so Iguess it doesn't surprise anybody. But if

(11:58):
we do a conversion version from aqualified or from an ira into a roth
ira, we have the age offifty nine and a half. That's critical
and also the five year rule.Now, if we're over fifty nine and
a half and we do a conversion, which is appropriate for the next couple
of years because you know tach ratesare going up in about three years,

(12:22):
can we touch that money within fiveyears? If we're over fiftynine and a
half, can we take the contributionportion out and the games that had made
within the five years or just aconversion or nothing at all. Yeah,
So you know you have to youhave to remember the five year rule comes
to when you're putting money in aroth ira, if you leave it in

(12:43):
for at least five years, youcan get it out with different tax advantages
and when it makes sense and whatyou want what I think what you're asking
is moving money from a traditional IRAto a roth ira. When does that
make sense? So basically, ifyou're if you're in a lower tax bracket,
and you have to be careful.This is where we always recommend sitting

(13:07):
down with your tax advisor ron becauseif you convert too much and it pushes
you into a higher tax bracket,what will those higher taxes mean to your
income? So you want to makesure that you take that into consideration.
Obviously, you know it makes senseif you're doing it before taking require minimum
distributions, which right now is atthe age of seventy two. You know,

(13:31):
from an estate planning standpoint, ifif you plan and leave your IRA
to your error as a roth IRAcan be beneficial because you know they can
take their distributions tax free. Soif by chance you do this, not
only if you live a nice longlife, And it makes sense from a
tax standpoint because as you say,that money can continue to grow tax deferred

(13:54):
and it'll be tax free when youtake it out, So you take that
tax it now, and if you'reyoung enough where that money can grow.
That that that works, and thegovernment loves it when you convert because they
get their tax money now instead ofwaiting. So your your beneficiaries could could
benefit because you know when they getthat money, it's it's tax free.

(14:16):
So not only are you helping yourself, you're helping your beneficiaries. Um.
You know, the big thing ronthat we say is if you can afford,
if you have this gretionary income topay the tax bill now, not
from your retirement savings but from outsidesources, then it makes sense. But

(14:37):
there's a lot of factors that gointo doing this. You know a lot
of people they just want to convertone hundred percent of everything and then when
we show them their tax bill whatthey have net and you know, it
sounds good, but you really haveto be careful. The big thing is
that lower tax bracket. Um.And you know, do you think you're

(15:01):
you're going to as long as youdon't be nervous and put that money under
a mattress. If you have adiversified portfolio stocks and bonds where you're letting
that money grow, that's really whereyou're going to benefit. Yeah, I
understand all of that. The partthat I'm a little still confused on is

(15:22):
I've talked to people that every timeyou do a conversion every year, you
should open up a separate account becauseregardless of your age, you still have
five years till you can withdraw anygains from it. But you pay their
tanks when you do the conversion.So I'm not sure if that's correct or
not. But I know people whohave like seven different roth accounts because they've

(15:43):
done the conversion seven different years.You know, I think that seems kind
of complicated. Yeah, it's sure, sure, sure is. So basically,
you know, with that roth contribution, and I think your friends probably
have more accounts than than they need. The withdrawal is made at least five

(16:07):
years after the first contribution to anyroth Ira. This is you know,
the five year rule. This rule. You know, you got that five
year clock starting. So let's makebelieve you decide to do this and you
want to do it over the nextfive years. Let's make believe, and

(16:29):
I'm just making these numbers up.Let's make believe we convert one hundred thousand
dollars this year. Well, thatstarts the five year rule, so that
roth Ira, you're already qualified onthat and you know when that's why I
don't think you need to open upa new roth Ira account next year and
the year after and the year after. You know this, the rule says,

(16:53):
you know the withdrawal has made atleast five years after the first contribution
to any roth igh arry you own. You know, when you're obviously over
fifty nine and a half, youdon't have that ten percent penalty. Obviously,
there's a lot of rules that goin it, and that's why I

(17:15):
say you really should sit down withyour tax planner. When we do this
for clients, we take a lotof a lot of these questions that you
have into consideration. It's not juststraight and simple. Unfortunately a lot of
people do it without sitting down withtheir tax advisor, and sometimes they're they're
sorry that they did. Anyway,Ron, I hope that helps get get

(17:38):
get that information from your tax prepareyou'd be well, stay healthy. One
eight hundred eight two five five ninefour nine. Any questions you have,
folks, give me a call.One eight hundred eight two five fifty nine
forty nine any questions whatsoever. Iwould love would love to talk yet,
big week coming up, folks atleast, you know, on the earnings

(18:00):
front, you got two of thebiggias, and we own both of these
biggas, Amazon and Apple. Therethey're going to announce their earnings. We're
hopeful that they're they're good. Apple'sa great company. I have a permanent
do not sell on Apple unless wereally need to for specific reasons, and

(18:22):
Apple, I think is one ofthose great companies. And sometimes we see
Apple get volatile during earning season.Hopefully that won't be the case next week.
I think they come out on Thursday, both them and Amazon. So
Thursday's going to be a big day. And then Friday we had the jobs
report, another big report that theFed will be looking at. And they

(18:44):
don't meet now again till September,so we have a little break in the
action. August. It's going tobe a quiet month from the Fed the
side of things. And as asyou know, on Wednesday they completed their
two day meeting and the Fed,you know, they they resume lifting interest
rates on Wednesday with a quarter pointincrease that will bring them to basically right

(19:07):
now, we're at a twenty twoyear high. It's been twenty two years
since the FED funds rate has beenthis high, and Fed Reserve chair Jerome
Powell said it was too soon totell whether the hike would you conclude a
series of increases aimed at cooling theeconomy and bringing down inflation, which is
really what they're looking to do.They basically they'll decide whether to keep lifting

(19:32):
rates based on how the economy fairs. They're looking at the data, folks,
It's all about the data. Whois a Megan Trainer with that song?
It's all about the base. It'sall about the data that they're looking
at. It was a unanimous decision, all of the governors decided to raise
it from five point between a rangeof five point two five and five point

(19:56):
five. That's after it paused lastmonth, the first pause. So they
had ten interest rate hikes going backto March of twenty twenty two, and
last month they paused. And thisis the eleventh rate hike since March of
twenty twenty two, and back thenit was near zero. So they've they've

(20:18):
raised rates five hundred and twenty fiveBIPs. The technical term is BIPs.
The layman's term is five point twofive percent. When you hear people talk
BIPs, there's one hundred BIPs ineight percent. So they've raised rates from
near zero back in March twenty twentytwo to five point two five. That's

(20:38):
a lot, folks, that's alot. Now what that means for you
if you're you know, a saver, you know you can get a three
month or a four month treasury rightnow yielding almost five and a half percent
a one year five point four percent. That's that's pretty good. One eight

(20:59):
hundred eight two five five nine fournine. Let's go back to the pull
mines. We have Patrick and SaratogaSprings. Hello Patrick, Hello Steve.
How are you doing today? I'mdoing great? Thank you? How are
you? Just wonderful and just wonderful? I have a question about insurance.
Do you see insurance life insurance asan investment vehicle? If I came into

(21:26):
some money recently, would I wantto buy life insurance? I'm seventy two
years old and I'm getting my stufftogether for a trust fund? Yep?
What do you think? I amnot a fan of life insurance as an
investment vehicle. Now, with thatbeing said, I talk a lot about

(21:49):
life insurance on the program and thenuities and why you know you have to
be careful how you buy them.So for my so I do this for
a living. The only insurance Ihave is term insurance because I needed insurance
early on and I wanted to makesure I had I could afford term insurance.

(22:10):
It's cheap bees just paying the costof insurance. But way back when
I actually took out a variable lifepolicy, and that is a policy that
is investment oriented because when your moneygoes in, you're actually able to choose
different mutual funds. Now, there'sa lot of fees built into this BECAA,
the life insurance fees, the mutualfund fees, and there's so many

(22:33):
fees and products like this. Butit's funny. I put five hundred dollars
a month away, and I've beendoing this for over thirty years, and
it's amazing. Every month in awhile I look at it. Sometimes I
forget I even have it. Themoney that I've accumulated in cash value,
but that was a minimal part ofmy overall insurance needs back then. The

(22:55):
only thing, the only whole lifepolicy that I've ever ever recommended a client
cat is we did the Doughty farmestate planning way back in the early nineties
when Doughty Farms was a great farmstand and we needed to sell it for
state reasons. Hey, Patrick,I'm going to ask you to hold on
because I have to take a newsbreak or at the bottom of the hour

(23:19):
you're listening to Let's Talk Money,brought to you by Finance Bouchef and Andrew,
where we help our clients prioritize theirhealth while we manage their wealth for
life. If you have any questions, folks, the phone lines are open
one eight hundred eight two five fivenine four nine, one eight hundred eight
two five fifty nine forty nine,and I'll come back to Patrick's question on

(23:41):
the other side of the news.Hello, folks, and thank you for
hanging in through the news. Thankyou for tuning in today. Our phone
lines are open one eight hundred eighttwo five five nine four nine one eight
hundred eight two five ninety nine.Let's go back to Patrick in Saratoga Springs.

(24:03):
So, Patrick, UM, lifeinsurance is really expensive to put money
in, and I'm not so sureit's the best place to accumulate money.
UM. I think I heard yousay for trust or something, But you
know, what would be your reasoningfor putting money into a life insurance policy

(24:25):
that you want to save. Ihad an age in contact me and he
explained certain aspects of the life insuranceand I was just wondering if it's worth
investing into. I mean, ifI had like ten thousand dollars to buy
life insurance, would it grow enoughto benefit my beneficiaries? Yeah? No,

(24:53):
absolutely not, not not at apace. Let's make believe you put
that money in the smp PI index. I can assure you there's not a
life insurance policy around that will matchthat return over time. And for such
a small amount, you're going tobe buying an even smaller amount of that

(25:17):
benefit coverage. And you have tobe careful. There's a lot of life
insurance agents out there, these biginsurance companies, you name the company,
and they're all the same. Theybasically they try to load themselves up with
agents. And these agents, youknow, some of them come right out
of school and they're basically they gotmarching orders to sell. You know,

(25:40):
make sure you dial that phone allday long, and you make sure you
call your friends, your family,anybody you know, and you try to
sell them life insurance. There's alot of commissions to be made in life
insurance. And this is why Iget so furious about people selling annuities over
having investors put money in a good, well diversified portfolio, because the fees

(26:03):
alone eat up the returns, andthe fees can mean a whole lot of
make a big difference with the endresult the value of the account growing.
I would be very careful. Itsounds as though you have a life insurance
agent that's looking to sell your lifeinsurance, Patrick, and I'm not so

(26:25):
sure that's the best place for youto put money away if you want to
save it. You know, havinga nice tax managed portfolio is more efficient,
less costly, unless you need thatlife life insurance. And if you
do, I would say look ata term insurance, which I can assure
you most life insurance agents do notlike to sell term insurance because they make

(26:45):
pennies, whereas with whole life,especially whole life or universal life, they're
making hundred dollars bills and they wouldmuch rather make hundred dollars bills than pennies
when selling life insurance. Just becareful. Okay, Well, thank you
very much for the information, andmaybe I'll be contacting you. Yeah,

(27:07):
Now give us a call. Ican assure you as a fiduciary will answer
your question and if by chance itdoesn't fit where you can become a client
of ours, will point you inthe right direction. That's the one thing
I promise they listening audience, Patrick, is We're very I'm here to help
the community and I'm glad you're called. Just without knowing all the particulars.

(27:30):
Just be very careful before you putthat money in a life insurance policy.
Thank you very much, Steve.You have a great day you as well,
Patrick, be well, stay healthy. One eight hundred eight two five
five nine four nine one eight hundredeight two five fifty nine forty nine.
Give me a call, folks,any questions you have. You know,

(27:52):
going back to Ron's question and rothira convert, and this is why we
always recommend talk to tax professional,talk to whoever does your taxes before you
do this. And you known Ron'sright. You know you got that five
year rule and each time you convertmoney from a traditional ira to a roth

(28:15):
ira, it sounds great you getto put that money in, but it
only works, folks, if youcan lead that money in there and have
it grow tax deferred. That's abeauty. If you started from day one.
You know, over time and youput money in a roth ira or
a traditional ira, they both growtax deferred. The differences right up front.

(28:40):
If you put in let's make believeyou're you put in the six thousand
dollars IRA contribution into a roth ira, Well you don't get that six thousand
dollars deduction where the IRS helps supplementthat six thousand dollars contribution because you're paying
tax on that six thousand dollars,But that money grows tax deferred and then

(29:03):
it's tax for you. When youtake it out. With a traditional LIARII,
you get a tax advantage. You'renot being taxed on it. The
money still grows tax deferred, butwhen you take it out, it's going
to be taxable to you, andover time you're going to have a whole
lot more money taxable to you puttingmoney into a traditional ira. And I've

(29:25):
said often if you qualify for aroth ira, take advantage of it.
It is the best, the bestbenefit that the IRS has ever given us.
Instead of putting money into a savingsaccount long term, if you qualify
for a roth ira, put moneyinto that roth ira, and the beauty

(29:48):
and Patrick brought this up. Youknow, if you take money out in
the first five years, there's goingto be tax consequences to that. You
know, I've told this story.As soon as my son Ryan graduated from
college, Angel in my office sentiman application and a form for him to
have the first back then I thinkit was four hundred and some odd dollars
in order to max out before hegot used to spending that paycheck and that

(30:14):
money. Because when you think aboutit, you go to college, you've
never made big money. Let's makebelieve your first job pays you fifty thousand
dollars. That's a lot of money. So is forty four thousand dollars.
So if you take the first sixand you put it into a roth Ira,
forty four thousand is a lot ofmoney as well. And that's what
we did. And Ryan actually,you know, he worked for Ernst and

(30:38):
Young in Boston for almost seven years, so it was in there for five
years. We were able to usesome of that rough money that he put
away and is a down payment ona home. So he was able to
leverage his savings with minimal tax consequences. So you know, just remember,
if you put money into a row. If you convert money from a traditional

(31:00):
ira to a roth ira, yougot that five year rule, and that
applies every time you put money in. Every time you put money in,
it starts a new five year rule. Even if you do it multiple times
in the same year, you gota new five year rule. And this
is where it gets messy. Andyou know, Patrick said his friends have

(31:22):
seven different roth Ira accounts. Patrick'sright. You know, that's an easy
way for them to you know,you got roth ira, you know two
and eighteen, roth Ira two andnineteen, and it's an easy way of
converting waiting for the five year ruleto pass before you can get at that
money with no tax consequences. Andif you're under fifty nine and a half,

(31:47):
obviously you're going to have the irspenalties as well. So it's confusing,
really confusing. Hopefully I was ableto explain it a little bit more
and as I said, it wasa great question. Actually, all the
questions today are great questions. There'sno silly question. If you have a
question, give me a call.One eight hundred eight two five five nine

(32:07):
four nine one eight hundred eight twofive fifty ninety nine. So you know,
as I said, the Fed metthis week, and no surprise,
they hiked interest rates by twenty fiveBIPs a quarter of a percent. And
you know, at their meeting inJune they held rate steady. They said

(32:30):
back then that there would be twomore increases this year. So they've already
fulfilled their promise by hiking it onWednesday, So now we got one to
go. Supposedly, he doesn't J. Powell doesn't rule out another rise at
the September meeting. He emphasized howmuch the Central Bank had already done,

(32:51):
along with the amount of time itcan take for monetary policy to cool inflation.
And that's what I've been saying fora long time. They've hiked interest
rates so now eleven times since Marchof twenty twenty two, and a lot
of those hikes haven't played out yet. And when they do play out,
you know, God, we knowthat it's working. Right. Inflation has

(33:12):
gone from nine point one to threepercent as we sit here at the CPI
rate last month was three percent.That's pretty good. And J. Powell
also said the Fed's influential staff,that's what he called them, influential staff,
no longer was forecasting a recession.Oh, my god, do you

(33:32):
think he listens to this show?They're no longer forecasting a recession. I
said, folks, they hadn't thinkoutside of the box, just because their
textbook tells them that history shows theyhad to force us deep into a recession
to bring inflation down. I thoughtthis time it could be a little bit
different. The economy is pretty resilient. People are getting jobs, they're keeping

(33:57):
their jobs. Layoffs aren't as asyou would expect. And at the beginning
of the year, everybody was running, you know, for the fire escape
because you know, they said wewere we're in for some bad times.
Well listen, if this is whatbad times is all about. With the
SMP up twenty percent, na STACKup thirty seven percent, QQQ up forty

(34:20):
four percent, if that's bad times, give me bad times all day long.
The beauty is people aren't losing theirjobs. And I've been saying that
consistently. I know I sound likea broken record, and I don't have
a crystal ball, folks. I'mjust looking at this logically. I nailed
this right on the head. Inailed the inflation report. I nailed the

(34:42):
fact that inflation doesn't need to driveus into a deep recession, that this
economy seems to be different than othereconomies during recessions. And the Fed came
out this week and said no longerforecasting a recession as they had in March
and May. In June, theywere forecasting a recession. What happened in

(35:06):
a few short months probably the samething. These people that make up the
Open Market Committee for the Federal Reserve, you know, two years ago,
they missed it completely. And Isaid, back then, what's wrong with
these people? They don't think inflationis around. Inflation went all the way
up to nine percent, over ninepercent. Gas was five dollars a gallon.

(35:30):
These people were living with their headsstuck in the sand. They may
be brilliant people, but they justlost touch with reality. So it was
nice. You know, they've beentalking tough, schoolyard talk that you would
expect from a bully, and that'swhat Jay Pal did. They don't want
to be like Arthur Burns. Herewas the Federal Reserve governor in the seventies

(35:53):
and Burns just he inflation was muchworse than it is today, and he
he you know, basically, youknow, he did not do enough,
and inflation did it come back andrear its ugly head, and Paul Boat
their head to go in and fixthings. And Jay Powell does not want

(36:15):
to be like Arthur Burns. That'sbottom line. So he's been talking tough,
but it was nice to see himadmit that maybe maybe they don't have
to forecast their recession for this year. And even though they still the FEDS
seeks to keep inflation and two percenttheir their PC personal consumption Expenditures Price Index,

(36:40):
they still are looking for two percent. It's all based on the data,
folks, and they're going to belooking at the data closely. But
we got the big jobs report thisFriday, and I can assure you that
FED will be looking at that,so we'll see what happens. One eight
hundred and eight two five five ninefour nine one eight hundred eight two five

(37:02):
fifty nine forty nine. So forthe week, you know, the SMP
was up just over and one percent, Russell two thousand was up just over
and one percent, which was nice, The NaSTA Composite Index up just over
two percent, QQQ up over twopercent. Year to date. You got
the SMP up almost twenty percent.With dividends, it's over twenty percent,

(37:24):
NaSTA Composite up thirty seven percent,QQQ up forty four percent, the Russell
two thousand, which is the SmallMidCap index year to date up about twelve
and a half percent, and theequal weighted SMP five hundred index is up
about nine percent, so a wholelot less than the SMP. That means

(37:45):
that those big tech names are stillstill driving this market. You know,
you got ni Video up two hundredand fourteen percent year year to date.
You got Facebook up one hundred fiftynine percent year to date, you got
Apple up one hundred and seven percent, you got Amazon up fifty two percent.

(38:09):
You you know, it's just amazing. QQQ is up forty four percent.
So you've got some big companies thatare that are driving this UM market
return. The other company that Idon't talk about a lot is GE and
G is performed remarkably well up GEright now year to date is up about

(38:32):
seventy five percent UM. You know, we haven't seen returns from GE in
quite sometimes, so GE is youknow, Larry Colt is really doing a
remarkable job, so much so muchbetter than the Jeffrey Mls of the world.
You know, probably the worst thingthat that um Jack Welch did was

(38:54):
put Jeffrey m Elton in charts.This guy was so pompous. You know,
they fly private, folks. Theydon't fly in the back of the
plane like you and I. Theyfly private, not even business class or
first class. They had their ownprivate plane. And Jeffrey mu was such
a dope, such a pompous youknow what. He not only flew private,

(39:17):
he had a backup jet follow himaround the world just in case his
main jet broke down, so hedidn't have to be inconvenience. If you
don't think that's a little bit arrogant, I'm not sure what is that is?
Just you know, no wonder GEjust was sucking wind for so long,

(39:43):
and they were sucking wind for solong, and there's still nowhere near
where they were at the turn ofthe century. So don't think that you
know, GE is is doing well. GE is not is not doing well
compared to the turn of the century. Um, if I look, you

(40:07):
know at GE, let's just giveyou an idea. You know, GE
is really really nowhere near what whatother great companies have done since the turn
of the century. So but he'sdoing good now, maybe this break up,
maybe breaking up the one company intothe three that they're doing, maybe

(40:31):
it's paying off. So far.We don't own ge, but it's in
the SMP, and obviously it's nolonger one of the big dogs. They
lost their their luster a long timebeing in the they got kicked out of
the dial back in two thousand andeighteen. So you know, on the

(40:53):
interest rate side, thirty year mortgageis really as high as I've seen in
a long, long, long time, seven point four two percent, fifteen
year mortgage six point seven percent.And with that being said, we're still
selling homes. Oil is up toeighty dollars a barrel, Gold is like

(41:14):
nineteen hundred and sixty dollars a barrel. And if you're wondering about the international
investments, no we still don't ownit. No, we don't have any
plans of owning any anytime soon.We've been out of all international stocks for
quite some time, a really longtime. And if you look at the
rest of the world without the UnitedStates, this great country of ours up

(41:37):
almost twelve percent compared to the SMP, up to twenty percent, Emerging markets
up nine percent compared to the SMP, up twenty percent, So if you're
holding on to international holdings, orif you're an advisor tells you, listen,
I went to school for this inmodern portfolio theory one on one says

(41:57):
we have to have an allocation tointernational stocks. Well, sorry, folks,
you're sucking wind and sucking win bigtime. I keep giving this statistic.
The If you look at the SMPfive hundred index, the average return
year in, year out over thelast fifteen years ear up almost twenty percent,

(42:21):
almost twenty percent. If you lookat the developed countries around the world,
not you know, not including theUnited States, your average return is
about three point eight percent. Andif you look at emerging markets around the
world, your average average return yearand year out over those fifteen years is

(42:46):
two percent. So you have theSMPT at twelve percent and you have developed
international companies less than four percent,emerging markets at two. Once again,
if you've been holding international investments fora long time, it's been lagging.

(43:06):
Those are year in, year outreturns and you're just not making money holding
on to that. And if youradvisor tells you you need to have that
diversity because of their schooling of modernportfolio theory one on one, well,
you may need a new advisor.We believe me know everything there is about
modern portfolio theory one on one.And we elected to not be invested in

(43:30):
international stocks for a good reason becausewe just felt that we can make more
money in this great country of ours. And we have made more money in
this great country of ours for ourclients. Our clients have done very well
with the way we've been managing theirmoney not having any international investments. And
remember, from the fall of twentytwenty one through the fall of twenty twenty

(43:53):
two, we've been sold out ofall of our bonds. We did not
own any bonds and our portfolios atall. Now that takes you got to
have foresight, but that's how wemanage money. We're always looking ahead.
We learned from the past, alwayslooking ahead. So we were out of
bonds as bonds lost as much moneyas stocks last year. And in hindsight,

(44:15):
everything's crystal clear. In hindsight,it was a good move for us
to get out of bonds. Andright now I'm pretty giddy about bonds.
I like bonds, first time ina long time that I've liked bonds.
When you're when when you're looking atyou know the six months yielding five point
five five year, four point oneeight ten year yielding almost four percent.

(44:42):
Those are good yields, folks.Investors haven't seen those yields in quite some
time. That's one of the reasonswhy mortgage rates are up. And if
you're buying a house today with themortgage rate at seven percent, you know,
I give this number every once ina while. Your mortgage payment is
at seven percent, twenty seven hundreddollars a month. If you're buying a

(45:04):
five hundred thousand dollars home with atwenty percent down payment, taking a mortgage
from four hundred thousand, your mortgagepayment is about twenty seven one hundred dollars.
And a year ago, when mortgagerates were closer to three percent,
your same same home right your mortgagepayment was one thousand dollars less at about
seventeen hundred dollars. That's the differenceof interest rates going up. That's how

(45:30):
it can affect the consumer, andit plays out with the business owner as
well. Anybody borrowing money in business, you know, the everything's relative.
They're paying a whole lot more.The cost of borrowing is a whole lot
more now because the ft has hadto raise rates in order to slow down
the economy in order to make surethey brought inflation down, which has worked.

(45:53):
Eleven interest rate hikes since March oftwenty twenty two, inflation has come
down from a forty year high atnine point one to three percent. As
we sit here today, I'm anxiousto see what July inflation will be.
If it's in the two percent range, I said, it's going to be
really, really good for investors.Let's go to the phone lines. We

(46:15):
have Beverly on hold. Hello,Beverly, Hi, how are you.
I'm doing wonderful. How are you? I'm doing wonderful, listening to you
good? How can I have bea position? I'm in a position to
give you to my four grandchildren tenthousand dollars this year. Grand I wondered

(46:39):
of the four while they're all fourunder twenty one, but I want something
for them that will grow, andI've been looking at a treasury bills.
Is that anything you would recommend meputting away for them in their name?

(47:05):
Yeah? So, Beverly, yourgrandchildren may be a little more excited if
you open up brokerage accounts for themand bought a little bit of apple stock
on their behalf instead of a Treasurybill. To be honest, one,
I think it's a beautiful thing thatyou're looking to give some money to your
grandchildren. I say it all thetime. So many people pass away and
have millions of dollars and they couldhave helped out people when they were alive

(47:30):
to see the joy that it brings. But I you know, just think
about that if you were their age, would you rather get a T bill
or a nice stock like apple Beverly. I gotta let you go, folks,
We're coming up to the end ofthe show. I can't believe it.
Go to our website bouche dot com. There's a lot of good information
there. You're listening to. Let'sstock money brought to you by bouchef and

(47:52):
inter Group where we help our clientsprioritize their health while we manage their wealth
for life. Our website bouchet dotcom, b o ucch ey dot com
a lot of good information. Ihope you come back tomorrow morning, and
in the meantime, stay well,be healthy, enjoy today, especially the
sunshine. Thanks for listening, folks,