Episode Transcript
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Speaker 1 (00:07):
Good morning, folks. My name is Martin Shields. I'm the
chief Wealth Advisor at Bouchet Financial Group. Now I'm going
to be your host today for Let's Talk Money. As always,
it's great to be here with you on this rather
chilly spring morning, although we've got some green out there,
right and that certainly helps to see some green. Know
(00:30):
that we're moving into spring, and I hope that you're
doing well this morning. As always, if you have any questions,
I encourage you to call in with those questions. You
can reach me at eight hundred Talk WI. That's eight
hundred eight two five five nine four nine once again
eight hundred eight two five five nine four nine, or
(00:51):
you can email me at ask Bouchet at Bouchet dot
com and I just ask Bouche at Bouche and Wisha
is spelled b O U c h e y. So
you want to email me, you want to give me
a call, whatever your question is. As we always say,
there's no dumber still the question, except for the one
(01:13):
you don't ask, and you may be doing your fellow
listener a favor by asking that question that they have
as well anything finance related. As we say to our clients,
were our client's personal CFO. So whatever it is that's
on your mind, give me a call and we can
chat a lot to discuss. Today certainly a good week
(01:33):
in the markets, relatively speaking. And this is what we've
talked about all along, which is you really to be
careful about making any major changes in your portfolio based
on what you think is going to happen, because just
as quickly things can change. And we saw this right.
So you know, throughout the week, President Trump was having
(01:55):
a bit of a online argument, a Twitter argument with
Jpoul who's a Federal Reserve chair, and the market doesn't
like that that. Uh, there's concern that maybe he was
going to fire J. Paul. And we have to appreciate
is J. Paul is the head of the Fed Reserve.
He basically is the head banker for the US. Well,
(02:16):
I've been doing the radio now for thirteen years. I
will say that you know, technology is your friend until
it's not. And so I apologize about that, but I
am back and ready to go. So again, folks, if
you have any questions, you can email me at ask
Bouchet at Bouchet dot com, or you can text me
(02:37):
at Sorry, you can call me at eight hundred eighty
two five five nine four nine. Again, that's eight hundred
eight two five five nine four nine. As I was saying,
you know, the market, you got to be very careful
if you're going to try to make changes. Things can
change very quickly. And the other thing that happened was
(03:00):
with the trade negotiations with China with the tariffs very quickly. Uh,
you know, Trump is saying that the tariff's going to
be in place, they're going to be at a very
high level for a very long time. And then, uh,
you know, some discussions from the administration that that may
(03:20):
not be the case. Uh, that things I think you
use the term that we're going to be very nice
with each other, and that negotiations were going on. So
now the Chinese did not agree with that statement. They
said that no negotiations were going on. But the basic
idea is that you know, in when you're being an
(03:40):
investor and when you have situations like tariffs or other
situations in particular where there are these issues are basically
being handled by Trump and the administration, if they changed
course real quickly, the market can change course. And that's
exactly what happened this week. The sp five hundred is
up almost five percent. The Nasdaq was up six percent,
(04:03):
and you know we're still in correction territory, which is
down ten percent, but it is much different than what
we had started with. You know this this week, and
you know where we go from here. That's the big unknown,
of course. You know, all I would tell you is this,
when you're looking at making changes to your portfolio, think
(04:24):
about it in let's say three different blocks, right, So
if you're within ten percent of a market high then
in the market we hit the high in February eighteenth
of this year. If you're within ten percent of that
market high and you want to make a portfolio adjustment,
the first question afterbody I asked yourself, is what is
(04:46):
that adjustment and why am I making it? So when
we did our state of the economy presentations, this is
what we have either at dinner or lunch, where we
get together with our clients and we outline our thoughts
for the upcoming year, we said to them, you know,
at at that point the market was only down two
percent from its high. It still was you know, it
(05:07):
was negative for the year and negative and off it's high.
But at the same time, you know, we said, hey,
if you're going to be going into retirement, and let's
say you've been in a growth allocation all along and
you want to become more conservative, that's still a good
time to make that adjustment, right. And you know, let's
say you need cash from your portfolio for buying a
(05:30):
new car or home renovation. If you're within ten percent
of a market high, that's a very reasonable level to
go ahead and make it a portfolio adjustment, meaning become
more conservative or to raise cash if you need it.
As you start to get into correction territory, which is
when you're greater than ten percent down, you really want
(05:51):
to be much more conscious about doing that because if
you were to sell equities when they're down more than
ten percent, that's when you really start to damage your
overall portfolio long term performance. And you know, if it's
down eleven percent from tigh, okay, that might be okay
if depending on how urgent this needs to be done,
(06:11):
if you're not able to be patient, but if you're
down more in the seventeen eighteen nineteen percent, oh boy,
I would really caution you from doing that now. If
you're down greater than twenty percent, if the market's down,
and that's what's called bear market territory. In that environment,
you absolutely do not want to be changing your portfolio
(06:33):
to become more conservative at that point. To give you
an example, I was having a conversation with one of
our clients. He's a pilot, and we were talking about
this and he was asking, Hey, is this situation, Where
is there any situation now that we've become more conservative?
And we were pretty close to a bear market in
the bear market territory at that point, and I said
(06:54):
to I said, listen, think about situations in as a
pilot that you would never do. Right, You're like, you
just do not do that. That's the same idea if
you're in bear market territory about becoming more conservative. And
it's been a very rare situation in my twenty plus
(07:15):
year career in wealth management where I've seen a client
sell equities when the marks down by more than twenty percent.
But I have seen it happen even against our best guidance.
They did it. And I will tell you when you
look at that portfolio performance versus all of our other
client portfolio performance, it's dramatic. It is really very dramatic
(07:38):
as to how it can change the long term performance
of a portfolio. So again, think about it in those
three categories blow ten percent adjustment from a high, between
ten to twenty percent adjustment from a high, and then
greater than twenty percent down. Those are the three categories
that think about if you're going to be making changes
(08:00):
if you're down by more than twenty percent, really the
only thing you want to be doing is becoming more aggressive,
right if you can do that, Now, that's where it
gets really problematic, very troublesome, because it's not easy to do,
you know, because at that point, part of the problem
is that people think that the market's going to keep
(08:23):
going down, right, so that they don't want to Even
if they have this mindset that they want to go
ahead and buy when the market's down, when it's down
twenty five percent, there's gonna be many many indications that
it's going to say, hey, this could market go down
thirty percent, And people tend to get greedy, frankly, and
they if they're going to be buying when the market's down,
(08:43):
and they're like, you know what, I'm going to hold
because I think it's gonna go down to thirty percent
down and quite off in a dozen and so you
just have to make sure that if you're going to
become more aggressive if we're in a bear market, you've
got to do it in a way that you know,
have certain points and you know, like if the market
(09:04):
is down twenty five percent, you are buying period. And
it is just it is what is going to happen
when the marks down twenty five percent? You have to
have rules in place that you're going to take advantage
of that market ball at soly because otherwise I can
almost guarantee you I see this all the time where
you know, maybe client gets a rite, they raise a
little cash, and then when the market's up and then
(09:28):
the market goes down, the market's down, you know, bear
market range, and I'm calling them up, hey, I said, hey,
remember we said you're going to buy when the market's down,
And they said, no, Marty, I want to wait. I
think it's going to go down. More like, well it's
a great spot right now, we can we can wait.
But you know, you win that game if you buy
when the market's down. And sure enough, in most cases
(09:51):
they hold, they hold, and then the market relies back
up and they don't invest. So That's why when if
you're going to go that route, you've got to have
it's set to go ahead and get that money invested
at certain points. But now the bigger question I get
is are we heading into a recession? Right? This is
like the favorite question to ask a financial advisor. I
(10:12):
feel like I could be out anywhere and somebody's asking me, Marty,
we're going to go into a recession. Well, like most people,
the answer is I don't know. But I think what's
important to appreciate is a couple of things. One is,
you know, recessions are part and parcel with economic cycles.
(10:33):
And you know, we had the recession with COVID, but
that was a very quick recession. In general, labor numbers
will cover very quickly. It was a very unusual one.
So in many ways, I don't feel like we've had
a real recession since two thousand and eight on two
(10:54):
thousand and nine, So in that respect, we're somewhat overdue
for a recession. And you know, I think the thing
that is important remember as well, just because you have
a recession, that basically means you have economic indicators that
are in a decline. You know, there's the kind of
classic view that says, if you have the economy's shrink
for two quarters in a row, but if you have
(11:18):
a recession, it doesn't have to be as dramatic as
eight or nine or even you know, the two thousand
recession into two thousand and one with nine to eleven.
You can have a recession. You can have a market
correction that is much more mild. I mean, that's what
happened in nineteen ninety one. I remember that I was
graduating from college and it was it was a much
(11:40):
more mild recession, and that is something that you can have.
You know, we have unemployment spike up a little bit,
you have the GDP decline a little bit, but you
still have overall, you know, from a market perspective, maybe
a decline of twenty percent of bare market, which is
what we just saw. So you know, it's not as
(12:02):
though you have to have the market drop by fifty percent,
which is what we saw in nine. The other thing
that's important to remember is that when you go into recession,
the market is looking forward as much as six months,
nine months, twelve months out. So there's a lot of
data that shows that first month or two that you're
(12:24):
in recession the market's spottomed. At that point, the market
has bottom. And here's the thing that's interesting. Quite often
you will not know that you're in a recession that
first quarter, a month or two, right, so you're in
a recession. You don't know it. All you know is
that the market's down dramatically. Well, at that point, that's
the time to buy, folks, because that's probably the low point.
(12:48):
Now have we seen the loans in the market. I
don't know with that either, But all I do know
is that if we are to go in a recession,
you know, there's a reasonably good chance it will be
a shallow recession. To the extent that you know, you
do have a lot of areas out there that could
show strength. And probably the more likely element of this
(13:10):
too is if we were to go into a recession,
I would guess that the administration is going to change
quickly on these terrorsts. Right, No president, no president is
there looking to be in a recession. It's just not
what they're looking for. And so you just got to
(13:33):
be aware of that. We're going to go to the
full lines. We have Mary from Albany. Mary there, Yes,
I am hi. How are you good? How are you
what can I help you with?
Speaker 2 (13:44):
Hi, I have a thirty four year old daughter who
is in a defined had a defined contribution plan with
her employer, and she's just wanting to begin serious retirement savings.
She's done minimal and she's thinking, you know, start off
(14:05):
with the maximumount of roth ira and then not real
interested in the fird cop because she feels like she's
going to pay higher taxes by the time she retires
if she does that.
Speaker 1 (14:18):
Johanny thoughts, Yeah, well, a great question. So a couple
of things. You know, in general, as people start off
saving for retirement, we quite often recommend either a roth iray,
which is when you're putting in post tax dollars, you've
already pay your taxes, it's going to grow tax free,
and then, like you said, when you retire, you don't
pay any taxes when it comes out. You can also
(14:40):
do that through many fallen k's. So many fallen k's
have a Wroth component to it. So in that regard
to the extent that you know she's still young, she's
in many ways someone starting out in her career, the
Wroth option is a great option to do. Now, to
do it in the roth iray versus the roths flallen
k The reason to do it in the Wroth iray
(15:02):
is if she wanted to, Now this could be a
good or bad thing. If she wanted to, she could
access that Roth principal mount. The mount she's putting in
is principle for anything. There's no restriction on her accessing that.
And does she own a house? Yes? She does, Okay,
so she already owns a house. So again that can
(15:22):
be I've just put that highlight that out there that
that could be a good thing if she needed to,
She could access the Roth principal mount with no penalties,
no taxes. But now that could be a negative to
the extent that she's going to be inclined to want
to access that. The other thing is it also depends
on you know, how is she going to get invested
the Wroth I array. Uh, you know the Roth the
(15:43):
foreman k's can be great to the extent that you know, one,
you got to make sure that she's not going to
get any match from her employer. Uh. The other element
is most these days, most most foreman k's have a
good listing of investment options, so you know, she can
get invested properly. And also it's systematic, meaning that she's
putting that money in there constantly. You know, she doesn't
(16:05):
even know it's going out when she gets used to it,
and that could be a great way. It depends on
you know, everyone's individual behavior from a financial perspective. So
if she's someone that needs discipline that then the former
K can be a good option. If if not, if
she's going to be disciplined on her own, then you know,
(16:25):
the IRA can be better because the other thing too
is informing K plans. You do have fees that exists
that you won't have in an IRA, and let's say
if you open up a Chwab or Fidelity or Vanguard.
So you know, it's a little bit Yeah, depends a
little bit on what her own kind of discipline is
going to be through this process.
Speaker 2 (16:47):
Okay, Yeah, she's quite disciplined. She's a little late in
the game, but she's quite disciplined. You know, she pays
cash for cars. She doesn't you know, her mortgage is
almost paid off already, so she's pretty good.
Speaker 1 (16:58):
Wow. Okay, so.
Speaker 2 (17:04):
I didn't know the difference in the in the roth
IRA versus what was you said for.
Speaker 1 (17:10):
One K so that's yeah, yeah, no, I think you know,
if she's that discipline, the wroth Ira is probably the
rod to deal. Yep.
Speaker 2 (17:19):
Now, do you guys require a minimum initial investment to
access the services of your group.
Speaker 1 (17:28):
We do. We have a minimum of a half million
dollars to access it, and we really have. That is
just you know, we do a lot of work with
our clients, so uh, you know, it just takes a
lot of time and effort. But you know, anytime, whether
it's on the show here or anytime we can help
anybody out in plot in the right direction, we're always
willing to do that.
Speaker 2 (17:46):
Wonderful. But that's also a nice goal too.
Speaker 1 (17:50):
Yeah, that's right. We've had many many listeners of the
show say I've been waiting for years to get all
you know, stave up and that the other command as
a client. It so absolutely right.
Speaker 2 (18:03):
I mean, it seems like a lot, but it really
isn't if you just make it a goal, you know,
kind of. So I think she has that that attitude,
So that's good.
Speaker 1 (18:12):
Okay, at some point down the road to have or
come out as a client, that would be I feel
very proud to have as a client.
Speaker 2 (18:20):
Awesome, Thank you.
Speaker 1 (18:23):
Mary, Yeah, I mean Mary's point is valid on a
couple of Adams. One is, uh, you know, having the
saving into a row, especially when you're younger, it's really
the way you want to go because we see it.
The other way around is everybody's putting dollars into a
traditional IRA traditional phlle k, which is great. You get
the tax benefit now as well. But the problem with
(18:45):
that is that you know, when you're retired, you know,
if you've got a million or two million dollars and
we see this, all those dollars are going to come
out and be taxed is ordinary income. And if at
some point you're not taking them, but you have your
requirementium Distribution your r m D when you're seventy five
or seventy three or seventy five, then that's going to
(19:05):
be a pretty big number. So if you can do
it with a raw, especially when you're younger, it's the
way to do it. The other thing too, is you
know she said that the half million dollars E isn't
so much, and listen, half million dollars is a lot
of money, but for most people, and when they're looking
at it from a retirement perspective, it isn't so much.
And I will tell you you know, you do the
(19:25):
math on it. If you start in your twenties and
you save, you know, around three hundred dollars a month,
and you're invested aggressively, you will have a million dollars
by the time you retire. It's the power of compounding.
And you know, for if you have a million dollars
when you're sixty five and you look at what does
that mean from an income perspective, that will be about
(19:47):
forty to fifty thousand dollars of income. So it's not
that much an income something to be aware of by
all means, and you know, you've got to make sure
that you're allocated properly, that you're saving properly. But at
age thirty four, that is, that's not too young, too
old to be starting. It's you know, there's never is
(20:09):
always a good time to start saving. Now, the older
you wait, you're going to have to be a little
more aggressive in your savings. But it is, it is,
it is by far a very reasonable thing to be doing,
and start it now. So you're ready to go, Well, folks,
we're gonna go to a commercial break. Well, come back
and join us as we take your questions. You'll listen
to Let's Talk Money, brought to you by the Bouchet
(20:31):
Finance Group. Well, we help our clients prioritize their health
while we manage their wealth for life. Folks, get your
questions ready, come back and we'll take them in the
second half of the show. Welcome back, folks. For those
of you who are just joining us, my name is
(20:51):
Martin Shields. I'm the chief Wealth Advisor at Bruchet Finance
Group and as always, it's great to be here with
you on this Sunday morning. To answer any questions you have.
You can reach me at eight hundred eight two five
five nine four nine. That's eight hundred eight two five
five nine four nine, or if you're too shy to
be on the radio, you can get you can email
(21:14):
me at ask Bouche at Bruche dot com. That's ask
Bouche at Bruche dot com and Bouche spelled b o
U d h e y. So, whether you want to
email me or you want to call in, whatever you
have that's on your mind, give me a call before
we jump back into our discussion on some funished planning
(21:38):
and the market topics. Want to highlight a few things. One,
congratulations to the Saratoga girls track team. Uh, they were
down at ten Relays this past couple of days on
Friday and Saturday, and they did a great job competing.
I went down there and watched. My daughter was running
in the four by four hundred, and if you're not
(21:58):
familiar with the ten Relays, it's really an amazing thing.
It's an international event. Teams from around the world come
in to compete in track and field events and it's
been going on for one hundred and twenty five years,
one hundred and twenty five years down in Philadelphia University
of Pennsylvania, and really it's an amazing event. I mean thousands,
(22:19):
tens of thousands of people at these events, and they
have you know, kind of pro amateur college and they
also have high school events. And the four by four
hundred is a really amazing event. That's where you have
four individuals they're each running one lap around the track,
so in total they run one mile and just phenomenal
(22:42):
events to watch, and the Saratoga team did a great job.
So I just want to congratulate the Saratoga Girls track
on that also want to highlight this. We talk about this.
You know, our tagline is Health, Wealth for Life, and
we talk about the importance of health. You know, it's
if you don't have your health, it doesn't matter how
(23:02):
much wealth you have. And one of the things that
I'm gonna be doing today in about two hours it
starts to do this in the last couple of years,
is go to a yoga class. And I will tell
you I'm fifty five. As you get older, this is
built for men and women, but I going to say
the men really need to kind of put this as
(23:22):
a priority, which is when you do yoga, it's about
things about an hour, it's a hot yoga. Some boy,
you're sweating a lot, and which is a really good thing.
In general. It's about flexibility, it is about balance, it's
about strength, and it's about mentally clearing yourself out. And
(23:45):
it has been something I appreciate tremendously. And if you
had said to me five or ten years ago, Marty,
would you want to do yoga? I probably look at
it is that there's no way I'm going to do
yoga for many different reasons. But I'm telling you get
out of your comfort zone and try it now. When
you first do it, you may look not that coordinated
and it may be feel a little bit uncomfortable, but
(24:08):
over time, it's something that you become more comfortable with
as anything, as you start it new and then you
get more familiar with it, and the added value from
that practice is tremendous. So I would really encourage anyone
out there who's maybe even thought about it, or maybe
you haven't thought about it, to get out there and
do it. Doesn't matter what age you are. You know,
(24:31):
in the class that I'll be going to, it's here
in Saratoga. You know, there's individuals there in their sixties
and individuals in their twenties, and it's a mixture of
men and women. So highly pushing to do that. Then
one last final item. I'm LinkedIn. I'm not really on
social media Facebook or Instagram, but I am on LinkedIn.
(24:52):
I think it's a great way to connect with the
individuals in the community, and I have a blog out
there it's called a Life Worth Remembering and just want
to highlight it. With Pope France's passing, my colleague Steve
Bouchet was over there. He was actually supposed to meet
with the Pope, but he obviously unfortunately passed away, and
(25:15):
but he said it was a pretty moving experience to
be over there. Uh while this was going on, Actually
my daughter was over there too. She was studying abroad
in Barcelona. She happened to be in Rome as well.
And you know, I'm telling you in the blog I
talk about what made him such a great individual. To me,
(25:36):
it was his way that he lived life very simply. Uh,
you know, certain elements like a sense of humor and caring,
concern for the miss those who are half less fortunate
in life. And you know, I think in the US,
even globally, we tend to be a little bit more
focused on ourselves, and we tend to kind of idolize
(25:59):
those people who are successful, and quite often that means
financially successful. But I think it's important that even though
we make ourselves a priority, our health a priority, that
we really try to make other people a priority as well.
And Pope Francis lived that. I think. You know, it
doesn't matter if you're a Catholic or Muslim or Jewish
(26:22):
or whatever. You could see that. I think, to me,
that's the amazing thing about the Pope, which is the goal,
is that he's kind of a leader from an ethics
and morality perspective for the world, and I think Pope
Francis did that to a team. Now, there may be
some things about it about him that you didn't like,
but I think no one could argue against the fact that,
you know, he just lived this amazing life and this
(26:44):
idea of simplicity in your life, and I think that's
also a great thing. You know. I'd say that I'm
a capitalist. I believe in the markets, but I do
think as a society we tend to be too consumeristic
and that tends to skew us into making bad decisions.
You know. I always talk about the value of budgeting
and making sure that you live within your means, and
(27:06):
you know, if you kind of simplify your life, you're
more inclined to be able to do that. And one
of the things I heard that he did for about
a year plus, there was a church, a Catholic church
in Gaza that was being used basically as a refuge
for about three to four hundred people with the war
in Gaza, and he called them every night at seven
(27:30):
pm his time. He called them just for five minutes
to check in on them, to see how he's doing,
how they were doing, and making sure that they were
safe and that they needed food. And you think about,
here's the guy who's the pope. He's got so many
things going on, but he took the time for a
five minute phone call. It just shows you how focused
(27:50):
he was on taking care of people. And I would
encourage you to do that in your life. How can
you really reach out to one person or just you
know a group of individuals and try to take care
of them and show them support. So again, you can
read my blog on LinkedIn just you know, you can
just search for Martin Shields and you come up. But
(28:12):
just something to kind of keep in mind as we
go through the week, and you know that we kind
of think about ways that we can live a better life,
and there's always there's always room for improvement, right, It's
never never that we're fully there and always something to consider.
All right, let's jump back into the finance. So you know,
one of the other questions I get is why is
(28:34):
the dollar declining? And why is that important? So you know,
what we have to appreciate is that the US dollar
is the default currency in the world, right, and all
that means is most trade. When it's done between other countries,
it's done in dollars, oiled. When it's traded around the world,
it's traded in dollars, And that gives us a lot
(28:57):
of benefits. We don't necessarily appreciate that what that means,
but that gives us a lot of benefits. And relatively speaking,
there's been a lot of capital around from around the
world that's flowing, that's come into the US, and what
that means is our companies have access to all these dollars,
not just investors from the US, but investors from around
(29:18):
the world. Well, you know, with some of the tariff issues,
you know, those dollars have been leaving the US. There's
concerns over the US economy and even you know in
some regards are you know, our approach to dealing with
other countries and so, Uh, the dollar is declined. Now.
The issue with the declient is not you know, where
(29:41):
it stands relative to other currencies, because it's actually it's
still very strong relative to other currencies. Uh, it's and
I mean that from a historical perspective. But the problem
that does exist is the rate of change. So it
has dropped dramatically in the last month, and the rate
of change is where the problem is. When something changes
(30:03):
that quickly, it really throws things off from an economic
perspective and from a certainty perspective. Right, this is what
we've talked about, you know, with the current tariff environment.
It's the problem is the tariffs, but it's also the
uncertainty that exists with the tariffs. So I've made this
example as a consumer, if I'm going to go buy
(30:26):
a car and you know there could potentially be a
tariff on that car, do I want to buy that
car potentially pay you know, eight thousand dollars more for
that car, or do I want to wait and see
if potentially the tariffs go away, right, Because you imagine
if you buy a car today and then tomorrow you
see that there's been negotiations and those tariffs go away,
(30:48):
and you just pay eight thousand dollars that basically it's
going to the federal government, or you could have waited
a day and not pay that tariff. So that level
of uncertainty, the whole back consumers from spending, also holds
back companies from spending. Right, So you think about it.
If you're a company, you know, how do you make
(31:08):
a decision to build a new factory here, Well, what
if the tariff policy changes in six months or frankly,
what if it changes with the next administration. Because you
think about it, if you're going to build a factory
that's tens or not hundreds, if not billions of dollars,
it's years than the making. By the time you get
a big factory in place, there could be a new
administration that removes all those arrffs. So again, the important
(31:33):
thing is when you're looking at this, it's the level
of uncertainty to exist, and that's why the dollar has
been declining. Now, the important thing with a week dollar,
there are some advantages and what that means is now companies,
you think about this. If the dollar is weaker relative
to other currencies, now when you sell into those foreign markets, well,
(31:56):
your goods are cheaper, right because you're selling at US dollars,
which is less than the other foreign currency, and that
actually makes our goods more affordable. So that's that's a
good thing for corporation selling into those countries. Who doesn't
win is the consumer because now if we are bringing
things back from overseas to buy those goods, well, guess
(32:17):
what they get converted, and the conversion is less there,
it's actually more, so you know you're going to pay
more for those goods. So the consumer is going to
pay more, and not only because the dollar is weaker,
but now potentially because of the terriffs. And that leads
me into the next question, is I get a lot?
(32:38):
Is who pays for the terriffs? Right? All right, So
think about it this way. What happens is you have
another country that's producing that good it gets shipped into
the US. When it gets shifted to the US, it's
right there on the port of entry where the company
in the US is taking hold of that good pays
(32:59):
the tariff. Right, so they're the ones that actually pay
the tariff, that company right there. Now there's three there's
four things that can happen. Right. One is they can
take that good, those goods, and the tariff that is
on top of that, they can pass it directly on
to the consumer. But you can imagine if you're going
to raise a price by ten percent, by twenty five percent,
(33:21):
by one hundred and thirty percent, well guess what those
consumers are going to be buying that goods for very long?
So you know that In that case, if they do
pass that on and the consumer does buy it, well,
now the consumer has paid that tariff. Now the other
option is that middleman who brings that goods those goods
in that they could eat it, right, they could. It
(33:43):
could impact that company could take it and just eat it,
and now their profits will be impacted by the tariff,
so in fact, they would have pay the tariff. The
third option is is that middle man company can say
to the foreign country, hey, we want you to reduce
your price by x by the amount of the tariff.
(34:07):
So in that case, it would be the foreign country
and that company in that foreign country that is paying
the tariff because they're going to reduce their price by
the amount of the tariff. And then the fourth option,
which probably is the most common option, is all three
of those groups will pay for it in some combination. Right,
consumer consumers will probably see prices go up, the middleman
(34:31):
will probably reduce their profits from bringing that in, and
they're probably going to negotiate with their supplier in the
foreign country. So in each one of those cases, they're
going to take a hit and they're going to be
paying for part of the tariff. And that's the important
thing to remember, which is, you know, if you look
(34:51):
back over the last thirty or forty years, you know
they're when they talk about what had happened to the
US and the economy, who's the winners and the losers? Right?
So the one winner through the last forty years, you
may not realize this or not, but has been a
US consumer. Right. In many cases, the price of goods
(35:13):
has declined quite dramatically. And you know, I always make
the Walmart analogy and description. I mean, Walmart has gone
out there and just really hammered all their suppliers, which
may be all US companies, and said, hey, listen, get
us lower prices. We want lower prices. How do you
do it. We don't care, just get us lower prices.
(35:36):
And so they have, and what they do they basically
ship their manufacturing overseas. So you know, by doing that,
Walmart has sold more goods and services. The consumers buy
cheaper goods, and those companies that are supplying those goods
to Walmart and other stores as well, they're making a
(35:57):
lot of money. So all those people are winning with
the Walmart stores, the consumer and the suppliers. The people
who are losing are the small towns across the US
where all the Mall and Paul shops can't compete at
those lower costs, so they are the ones who are
(36:18):
going out of business. Right that. You can see that
in any small upstate New York town, those smaller stores,
I don't care what area that you're in, if you're
in appliant sales or whatever it is, many of those
small family businesses went out of business because they can't
compete with these big box stores or Amazon online. The
(36:39):
other group that was heard was manufacturing. So you know,
all those manufacturing jobs went overseas and they're probably not
coming back. And that's the thing you have to appreciate,
right which is, you know, bringing manufacturing back to the US.
It's a great idea. I love it, but you have
to appreciate that unless it's a high end manufacturing, the
(37:02):
ability to bring that back in most cases it's really
difficult because can you know, you think about it, you
can either get something made in Bangladesh where making fifty
cents an hour is good, or a dollar an hour
or three dollars an hour, whatever that amount is, that's good,
that's a lot of money for them, or bring it
back to the States where you know, let's say that
(37:22):
you want a good manufacturing job, you want to be
making forty dollars an hour, we'll never compete against those
countries where you can get something made and pay somebody
five dollars an hour. Now, the only way you potentially
do that is through complete automation. Right, you have to
automate almost everything, and with AI that may be possible.
(37:43):
You might be able to automate many and most things,
but in a lot of ways you're not going to
be able to do so that's going to limit what
you can bring back to the States as far as manufacturing.
So you know, this is where we'll have to see
how this plays out. If you're going to bring back
things like the manufacturing of chips and certain things that
are extremely important. We talked about steel industry and having
(38:06):
that here and certainly Boeing and having that company here.
You want certain things manufactured in the US, just even
for our national security, So that is important to happen.
But the other thing you look at too, which is
you know, over the last thirty years, those same individuals
that lost their jobs to manufacturing probably don't have They
(38:30):
may be renting their houses right now, they don't own
a house, and they may have no money in the
stock market as well, whereas individuals that you know are
more a white collar, they probably own their house. The
value of their house has increased dramatically over the last
thirty years, especially if you're in some of the big
metropolitan areas, and then they're probably also investing into the
(38:52):
stock market, and over the last thirty years, the stock
market has done incredibly well. So when you look at
the wealth that's been created in the over the last
thirty or forty years since global trade has existed, it
is insane. It's something in the neighborhood of one hundred
and sixty trillion dollars. That's a t, that's not a B.
(39:12):
One hundred and sixty trillion dollars that has been created
in wealth through both the stock market, through the value
of private companies, and through the value of real estate.
So we've been become an incredibly wealthy comp company, I'm
sorry country over the last thirty or forty years. But
with that said, there is definitely a segment in the
(39:34):
population that has not been able to benefit from that,
and that's where the problem lies. So hopefully this helps
clear five things I know there's always a lot of
questions with folks. One of the last things I wanted
to highlight before we end the show here is just
with individuals that are getting stock compensation as part of
(39:56):
their benefits. We work with a lot of executives and
senior managers and they get a lot of stock compensation
through the work. It's a very important part of their compensation,
and it can come in a lot of different ways.
You can have what's called restrictive stock options, you can
have stock options, you can have employee stock purchase plan.
The big element I just really want to communicate this
(40:18):
is as you're accumulating stock in your company, you know
you really have to have a plan to be able
to diversify out of it. And I just say this
because so often we see new clients coming on they
don't have a plan in place, and then you know
what can happen is, you know, you have so much
tied up in that company. You have, you know, your
own income tied up, and you know, with those options,
(40:41):
if it's doing well, you have a lot of wealth
tied up in that and they don't have a plan
in place how to really kind of diversify out of that,
and what I would tell you is got to be
looking at a number of factors, one of which is
the company itself. Right, if you're working for an Apple,
or you're working or you're working for a Google or Alphabet, yeah,
(41:02):
you're going to have a market volatility in your stock.
But really in general, you have much more security in
the type of company. But you know, here we do
have some of those individuals, but we have others that
they work at Plug Power or they work at Regeneron,
both great companies, but much more volatile stock. And you know,
(41:22):
long term, I think you know, certainly Regeneron has got
a great long term opportunity, and I think even Plug
but you see that with those companies, their stock can
be very volatile. So you know, you have to appreciate
where you stand with your life as well, because you
may want to leave that company because you've got a
better offer, you may get a promotion outside that company. Well,
(41:44):
you know you don't want to be doing that if
the stock in your company is down and you have
to you know, sell those positions before you leave. If
you're leaving a company, you usually have if something's vested,
you usually have ninety days to make that go ahead
and make that change, meaning sell that position. So it's
(42:05):
not a lot of time, So you have to appreciate that, right,
which is, if you're working at a company and the
stock is very high and your overall investible assets and
what you have in that company is greater than ten
percent of your investiable assets, you probably want to take
that opportunity to really start putting a plan to diversify
(42:26):
out of that position, because when it's greater than ten percent,
you really have too much of your wealth tied up
in that. And I always tell clients if you have
stock options and you're in the money, meaning that you've
actually had gains in it, that's a great thing. Be
happy that you have that. Don't get too greedy, and
make sure you have a plan in place that also
(42:46):
minimizes the taxes. And this is where we work a
lot with our clients, is to both put that plan
in place, but also make sure that we're minimizing taxes. Right,
none of us want to pay more in taxes that
we have to. And if you have a plan in place,
if you're disciplined with it, then you can achieve that
and you differcify out of it. So that you still
(43:07):
could see holding those positions. And this is why I
always tell individuals, which is you're not selling out of
it completely. In many cases, you're still my own eight
or nine percent. So if the company you think it's
going to do well then and the stock price goes up, well,
guess what you're going to benefit from that. And that's
a great thing. And oh, by the way, if you're
there and you're doing well, you may get promoted and
(43:29):
get more stock options, get more restricted stock, So that's
even a better thing. But what you don't want to
have happen is let's say it goes the other way
and the market, the stock prist declines. Well, and now
you let's say you're going to lead to go to
another opportunity, maybe it's a better opportunity for you. Well,
now you're in a tough spot, right because you've got
(43:52):
to make a decision what to do with those options,
and you may only have ninety days to do that.
So again, just really want to put that out there
because we see that happen so often with individuals. They
don't have a plan in place, they're kind of winging it,
and it's just not a great thing to do. To
wing them. You want to make sure you have a
plan in place that considers both the concentration element of
(44:16):
that stock and also considers tax impact from selling that
stock as well. Well, folks, we've spent the whole hour
together as always has been great to be here with
you to answer any questions you may have and give
you a guidance. I hope that you have a great
Sunday and you get out there and enjoy it. You
(44:37):
spend time with family and friends. You've been listening to
Let's Talk Money, brought to you by Bruchet Financial Group. Well,
we help our clients prioritize their health while we manage
their wealth to life. Folks, as I always say, take
care of yourself and follow put France's lead and take
care of each other.
Good morning, folks. My name is Martin Shields. I'm the
chief Wealth Advisor at Bouchet Financial Group. Now I'm going
to be your host today for Let's Talk Money. As always,
it's great to be here with you on this rather
chilly spring morning, although we've got some green out there,
right and that certainly helps to see some green. Know
(00:30):
that we're moving into spring, and I hope that you're
doing well this morning. As always, if you have any questions,
I encourage you to call in with those questions. You
can reach me at eight hundred Talk WI. That's eight
hundred eight two five five nine four nine once again
eight hundred eight two five five nine four nine, or
(00:51):
you can email me at ask Bouchet at Bouchet dot
com and I just ask Bouche at Bouche and Wisha
is spelled b O U c h e y. So
you want to email me, you want to give me
a call, whatever your question is. As we always say,
there's no dumber still the question, except for the one
(01:13):
you don't ask, and you may be doing your fellow
listener a favor by asking that question that they have
as well anything finance related. As we say to our clients,
were our client's personal CFO. So whatever it is that's
on your mind, give me a call and we can
chat a lot to discuss. Today certainly a good week
(01:33):
in the markets, relatively speaking. And this is what we've
talked about all along, which is you really to be
careful about making any major changes in your portfolio based
on what you think is going to happen, because just
as quickly things can change. And we saw this right.
So you know, throughout the week, President Trump was having
(01:55):
a bit of a online argument, a Twitter argument with
Jpoul who's a Federal Reserve chair, and the market doesn't
like that that. Uh, there's concern that maybe he was
going to fire J. Paul. And we have to appreciate
is J. Paul is the head of the Fed Reserve.
He basically is the head banker for the US. Well,
(02:16):
I've been doing the radio now for thirteen years. I
will say that you know, technology is your friend until
it's not. And so I apologize about that, but I
am back and ready to go. So again, folks, if
you have any questions, you can email me at ask
Bouchet at Bouchet dot com, or you can text me
(02:37):
at Sorry, you can call me at eight hundred eighty
two five five nine four nine. Again, that's eight hundred
eight two five five nine four nine. As I was saying,
you know, the market, you got to be very careful
if you're going to try to make changes. Things can
change very quickly. And the other thing that happened was
(03:00):
with the trade negotiations with China with the tariffs very quickly. Uh,
you know, Trump is saying that the tariff's going to
be in place, they're going to be at a very
high level for a very long time. And then, uh,
you know, some discussions from the administration that that may
(03:20):
not be the case. Uh, that things I think you
use the term that we're going to be very nice
with each other, and that negotiations were going on. So
now the Chinese did not agree with that statement. They
said that no negotiations were going on. But the basic
idea is that you know, in when you're being an
(03:40):
investor and when you have situations like tariffs or other
situations in particular where there are these issues are basically
being handled by Trump and the administration, if they changed
course real quickly, the market can change course. And that's
exactly what happened this week. The sp five hundred is
up almost five percent. The Nasdaq was up six percent,
(04:03):
and you know we're still in correction territory, which is
down ten percent, but it is much different than what
we had started with. You know this this week, and
you know where we go from here. That's the big unknown,
of course. You know, all I would tell you is this,
when you're looking at making changes to your portfolio, think
(04:24):
about it in let's say three different blocks, right, So
if you're within ten percent of a market high then
in the market we hit the high in February eighteenth
of this year. If you're within ten percent of that
market high and you want to make a portfolio adjustment,
the first question afterbody I asked yourself, is what is
(04:46):
that adjustment and why am I making it? So when
we did our state of the economy presentations, this is
what we have either at dinner or lunch, where we
get together with our clients and we outline our thoughts
for the upcoming year, we said to them, you know,
at at that point the market was only down two
percent from its high. It still was you know, it
(05:07):
was negative for the year and negative and off it's high.
But at the same time, you know, we said, hey,
if you're going to be going into retirement, and let's
say you've been in a growth allocation all along and
you want to become more conservative, that's still a good
time to make that adjustment, right. And you know, let's
say you need cash from your portfolio for buying a
(05:30):
new car or home renovation. If you're within ten percent
of a market high, that's a very reasonable level to
go ahead and make it a portfolio adjustment, meaning become
more conservative or to raise cash if you need it.
As you start to get into correction territory, which is
when you're greater than ten percent down, you really want
(05:51):
to be much more conscious about doing that because if
you were to sell equities when they're down more than
ten percent, that's when you really start to damage your
overall portfolio long term performance. And you know, if it's
down eleven percent from tigh, okay, that might be okay
if depending on how urgent this needs to be done,
(06:11):
if you're not able to be patient, but if you're
down more in the seventeen eighteen nineteen percent, oh boy,
I would really caution you from doing that now. If
you're down greater than twenty percent, if the market's down,
and that's what's called bear market territory. In that environment,
you absolutely do not want to be changing your portfolio
(06:33):
to become more conservative at that point. To give you
an example, I was having a conversation with one of
our clients. He's a pilot, and we were talking about
this and he was asking, Hey, is this situation, Where
is there any situation now that we've become more conservative?
And we were pretty close to a bear market in
the bear market territory at that point, and I said
(06:54):
to I said, listen, think about situations in as a
pilot that you would never do. Right, You're like, you
just do not do that. That's the same idea if
you're in bear market territory about becoming more conservative. And
it's been a very rare situation in my twenty plus
(07:15):
year career in wealth management where I've seen a client
sell equities when the marks down by more than twenty percent.
But I have seen it happen even against our best guidance.
They did it. And I will tell you when you
look at that portfolio performance versus all of our other
client portfolio performance, it's dramatic. It is really very dramatic
(07:38):
as to how it can change the long term performance
of a portfolio. So again, think about it in those
three categories blow ten percent adjustment from a high, between
ten to twenty percent adjustment from a high, and then
greater than twenty percent down. Those are the three categories
that think about if you're going to be making changes
(08:00):
if you're down by more than twenty percent, really the
only thing you want to be doing is becoming more aggressive,
right if you can do that, Now, that's where it
gets really problematic, very troublesome, because it's not easy to do,
you know, because at that point, part of the problem
is that people think that the market's going to keep
(08:23):
going down, right, so that they don't want to Even
if they have this mindset that they want to go
ahead and buy when the market's down, when it's down
twenty five percent, there's gonna be many many indications that
it's going to say, hey, this could market go down
thirty percent, And people tend to get greedy, frankly, and
they if they're going to be buying when the market's down,
(08:43):
and they're like, you know what, I'm going to hold
because I think it's gonna go down to thirty percent
down and quite off in a dozen and so you
just have to make sure that if you're going to
become more aggressive if we're in a bear market, you've
got to do it in a way that you know,
have certain points and you know, like if the market
(09:04):
is down twenty five percent, you are buying period. And
it is just it is what is going to happen
when the marks down twenty five percent? You have to
have rules in place that you're going to take advantage
of that market ball at soly because otherwise I can
almost guarantee you I see this all the time where
you know, maybe client gets a rite, they raise a
little cash, and then when the market's up and then
(09:28):
the market goes down, the market's down, you know, bear
market range, and I'm calling them up, hey, I said, hey,
remember we said you're going to buy when the market's down,
And they said, no, Marty, I want to wait. I
think it's going to go down. More like, well it's
a great spot right now, we can we can wait.
But you know, you win that game if you buy
when the market's down. And sure enough, in most cases
(09:51):
they hold, they hold, and then the market relies back
up and they don't invest. So That's why when if
you're going to go that route, you've got to have
it's set to go ahead and get that money invested
at certain points. But now the bigger question I get
is are we heading into a recession? Right? This is
like the favorite question to ask a financial advisor. I
(10:12):
feel like I could be out anywhere and somebody's asking me, Marty,
we're going to go into a recession. Well, like most people,
the answer is I don't know. But I think what's
important to appreciate is a couple of things. One is,
you know, recessions are part and parcel with economic cycles.
(10:33):
And you know, we had the recession with COVID, but
that was a very quick recession. In general, labor numbers
will cover very quickly. It was a very unusual one.
So in many ways, I don't feel like we've had
a real recession since two thousand and eight on two
(10:54):
thousand and nine, So in that respect, we're somewhat overdue
for a recession. And you know, I think the thing
that is important remember as well, just because you have
a recession, that basically means you have economic indicators that
are in a decline. You know, there's the kind of
classic view that says, if you have the economy's shrink
for two quarters in a row, but if you have
(11:18):
a recession, it doesn't have to be as dramatic as
eight or nine or even you know, the two thousand
recession into two thousand and one with nine to eleven.
You can have a recession. You can have a market
correction that is much more mild. I mean, that's what
happened in nineteen ninety one. I remember that I was
graduating from college and it was it was a much
(11:40):
more mild recession, and that is something that you can have.
You know, we have unemployment spike up a little bit,
you have the GDP decline a little bit, but you
still have overall, you know, from a market perspective, maybe
a decline of twenty percent of bare market, which is
what we just saw. So you know, it's not as
(12:02):
though you have to have the market drop by fifty percent,
which is what we saw in nine. The other thing
that's important to remember is that when you go into recession,
the market is looking forward as much as six months,
nine months, twelve months out. So there's a lot of
data that shows that first month or two that you're
(12:24):
in recession the market's spottomed. At that point, the market
has bottom. And here's the thing that's interesting. Quite often
you will not know that you're in a recession that
first quarter, a month or two, right, so you're in
a recession. You don't know it. All you know is
that the market's down dramatically. Well, at that point, that's
the time to buy, folks, because that's probably the low point.
(12:48):
Now have we seen the loans in the market. I
don't know with that either, But all I do know
is that if we are to go in a recession,
you know, there's a reasonably good chance it will be
a shallow recession. To the extent that you know, you
do have a lot of areas out there that could
show strength. And probably the more likely element of this
(13:10):
too is if we were to go into a recession,
I would guess that the administration is going to change
quickly on these terrorsts. Right, No president, no president is
there looking to be in a recession. It's just not
what they're looking for. And so you just got to
(13:33):
be aware of that. We're going to go to the
full lines. We have Mary from Albany. Mary there, Yes,
I am hi. How are you good? How are you
what can I help you with?
Speaker 2 (13:44):
Hi, I have a thirty four year old daughter who
is in a defined had a defined contribution plan with
her employer, and she's just wanting to begin serious retirement savings.
She's done minimal and she's thinking, you know, start off
(14:05):
with the maximumount of roth ira and then not real
interested in the fird cop because she feels like she's
going to pay higher taxes by the time she retires
if she does that.
Speaker 1 (14:18):
Johanny thoughts, Yeah, well, a great question. So a couple
of things. You know, in general, as people start off
saving for retirement, we quite often recommend either a roth iray,
which is when you're putting in post tax dollars, you've
already pay your taxes, it's going to grow tax free,
and then, like you said, when you retire, you don't
pay any taxes when it comes out. You can also
(14:40):
do that through many fallen k's. So many fallen k's
have a Wroth component to it. So in that regard
to the extent that you know she's still young, she's
in many ways someone starting out in her career, the
Wroth option is a great option to do. Now, to
do it in the roth iray versus the roths flallen
k The reason to do it in the Wroth iray
(15:02):
is if she wanted to, Now this could be a
good or bad thing. If she wanted to, she could
access that Roth principal mount. The mount she's putting in
is principle for anything. There's no restriction on her accessing that.
And does she own a house? Yes? She does, Okay,
so she already owns a house. So again that can
(15:22):
be I've just put that highlight that out there that
that could be a good thing if she needed to,
She could access the Roth principal mount with no penalties,
no taxes. But now that could be a negative to
the extent that she's going to be inclined to want
to access that. The other thing is it also depends
on you know, how is she going to get invested
the Wroth I array. Uh, you know the Roth the
(15:43):
foreman k's can be great to the extent that you know, one,
you got to make sure that she's not going to
get any match from her employer. Uh. The other element
is most these days, most most foreman k's have a
good listing of investment options, so you know, she can
get invested properly. And also it's systematic, meaning that she's
putting that money in there constantly. You know, she doesn't
(16:05):
even know it's going out when she gets used to it,
and that could be a great way. It depends on
you know, everyone's individual behavior from a financial perspective. So
if she's someone that needs discipline that then the former
K can be a good option. If if not, if
she's going to be disciplined on her own, then you know,
(16:25):
the IRA can be better because the other thing too
is informing K plans. You do have fees that exists
that you won't have in an IRA, and let's say
if you open up a Chwab or Fidelity or Vanguard.
So you know, it's a little bit Yeah, depends a
little bit on what her own kind of discipline is
going to be through this process.
Speaker 2 (16:47):
Okay, Yeah, she's quite disciplined. She's a little late in
the game, but she's quite disciplined. You know, she pays
cash for cars. She doesn't you know, her mortgage is
almost paid off already, so she's pretty good.
Speaker 1 (16:58):
Wow. Okay, so.
Speaker 2 (17:04):
I didn't know the difference in the in the roth
IRA versus what was you said for.
Speaker 1 (17:10):
One K so that's yeah, yeah, no, I think you know,
if she's that discipline, the wroth Ira is probably the
rod to deal. Yep.
Speaker 2 (17:19):
Now, do you guys require a minimum initial investment to
access the services of your group.
Speaker 1 (17:28):
We do. We have a minimum of a half million
dollars to access it, and we really have. That is
just you know, we do a lot of work with
our clients, so uh, you know, it just takes a
lot of time and effort. But you know, anytime, whether
it's on the show here or anytime we can help
anybody out in plot in the right direction, we're always
willing to do that.
Speaker 2 (17:46):
Wonderful. But that's also a nice goal too.
Speaker 1 (17:50):
Yeah, that's right. We've had many many listeners of the
show say I've been waiting for years to get all
you know, stave up and that the other command as
a client. It so absolutely right.
Speaker 2 (18:03):
I mean, it seems like a lot, but it really
isn't if you just make it a goal, you know,
kind of. So I think she has that that attitude,
So that's good.
Speaker 1 (18:12):
Okay, at some point down the road to have or
come out as a client, that would be I feel
very proud to have as a client.
Speaker 2 (18:20):
Awesome, Thank you.
Speaker 1 (18:23):
Mary, Yeah, I mean Mary's point is valid on a
couple of Adams. One is, uh, you know, having the
saving into a row, especially when you're younger, it's really
the way you want to go because we see it.
The other way around is everybody's putting dollars into a
traditional IRA traditional phlle k, which is great. You get
the tax benefit now as well. But the problem with
(18:45):
that is that you know, when you're retired, you know,
if you've got a million or two million dollars and
we see this, all those dollars are going to come
out and be taxed is ordinary income. And if at
some point you're not taking them, but you have your
requirementium Distribution your r m D when you're seventy five
or seventy three or seventy five, then that's going to
(19:05):
be a pretty big number. So if you can do
it with a raw, especially when you're younger, it's the
way to do it. The other thing too, is you
know she said that the half million dollars E isn't
so much, and listen, half million dollars is a lot
of money, but for most people, and when they're looking
at it from a retirement perspective, it isn't so much.
And I will tell you you know, you do the
(19:25):
math on it. If you start in your twenties and
you save, you know, around three hundred dollars a month,
and you're invested aggressively, you will have a million dollars
by the time you retire. It's the power of compounding.
And you know, for if you have a million dollars
when you're sixty five and you look at what does
that mean from an income perspective, that will be about
(19:47):
forty to fifty thousand dollars of income. So it's not
that much an income something to be aware of by
all means, and you know, you've got to make sure
that you're allocated properly, that you're saving properly. But at
age thirty four, that is, that's not too young, too
old to be starting. It's you know, there's never is
(20:09):
always a good time to start saving. Now, the older
you wait, you're going to have to be a little
more aggressive in your savings. But it is, it is,
it is by far a very reasonable thing to be doing,
and start it now. So you're ready to go, Well, folks,
we're gonna go to a commercial break. Well, come back
and join us as we take your questions. You'll listen
to Let's Talk Money, brought to you by the Bouchet
(20:31):
Finance Group. Well, we help our clients prioritize their health
while we manage their wealth for life. Folks, get your
questions ready, come back and we'll take them in the
second half of the show. Welcome back, folks. For those
of you who are just joining us, my name is
(20:51):
Martin Shields. I'm the chief Wealth Advisor at Bruchet Finance
Group and as always, it's great to be here with
you on this Sunday morning. To answer any questions you have.
You can reach me at eight hundred eight two five
five nine four nine. That's eight hundred eight two five
five nine four nine, or if you're too shy to
be on the radio, you can get you can email
(21:14):
me at ask Bouche at Bruche dot com. That's ask
Bouche at Bruche dot com and Bouche spelled b o
U d h e y. So, whether you want to
email me or you want to call in, whatever you
have that's on your mind, give me a call before
we jump back into our discussion on some funished planning
(21:38):
and the market topics. Want to highlight a few things. One,
congratulations to the Saratoga girls track team. Uh, they were
down at ten Relays this past couple of days on
Friday and Saturday, and they did a great job competing.
I went down there and watched. My daughter was running
in the four by four hundred, and if you're not
(21:58):
familiar with the ten Relays, it's really an amazing thing.
It's an international event. Teams from around the world come
in to compete in track and field events and it's
been going on for one hundred and twenty five years,
one hundred and twenty five years down in Philadelphia University
of Pennsylvania, and really it's an amazing event. I mean thousands,
(22:19):
tens of thousands of people at these events, and they
have you know, kind of pro amateur college and they
also have high school events. And the four by four
hundred is a really amazing event. That's where you have
four individuals they're each running one lap around the track,
so in total they run one mile and just phenomenal
(22:42):
events to watch, and the Saratoga team did a great job.
So I just want to congratulate the Saratoga Girls track
on that also want to highlight this. We talk about this.
You know, our tagline is Health, Wealth for Life, and
we talk about the importance of health. You know, it's
if you don't have your health, it doesn't matter how
(23:02):
much wealth you have. And one of the things that
I'm gonna be doing today in about two hours it
starts to do this in the last couple of years,
is go to a yoga class. And I will tell
you I'm fifty five. As you get older, this is
built for men and women, but I going to say
the men really need to kind of put this as
(23:22):
a priority, which is when you do yoga, it's about
things about an hour, it's a hot yoga. Some boy,
you're sweating a lot, and which is a really good thing.
In general. It's about flexibility, it is about balance, it's
about strength, and it's about mentally clearing yourself out. And
(23:45):
it has been something I appreciate tremendously. And if you
had said to me five or ten years ago, Marty,
would you want to do yoga? I probably look at
it is that there's no way I'm going to do
yoga for many different reasons. But I'm telling you get
out of your comfort zone and try it now. When
you first do it, you may look not that coordinated
and it may be feel a little bit uncomfortable, but
(24:08):
over time, it's something that you become more comfortable with
as anything, as you start it new and then you
get more familiar with it, and the added value from
that practice is tremendous. So I would really encourage anyone
out there who's maybe even thought about it, or maybe
you haven't thought about it, to get out there and
do it. Doesn't matter what age you are. You know,
(24:31):
in the class that I'll be going to, it's here
in Saratoga. You know, there's individuals there in their sixties
and individuals in their twenties, and it's a mixture of
men and women. So highly pushing to do that. Then
one last final item. I'm LinkedIn. I'm not really on
social media Facebook or Instagram, but I am on LinkedIn.
(24:52):
I think it's a great way to connect with the
individuals in the community, and I have a blog out
there it's called a Life Worth Remembering and just want
to highlight it. With Pope France's passing, my colleague Steve
Bouchet was over there. He was actually supposed to meet
with the Pope, but he obviously unfortunately passed away, and
(25:15):
but he said it was a pretty moving experience to
be over there. Uh while this was going on, Actually
my daughter was over there too. She was studying abroad
in Barcelona. She happened to be in Rome as well.
And you know, I'm telling you in the blog I
talk about what made him such a great individual. To me,
(25:36):
it was his way that he lived life very simply. Uh,
you know, certain elements like a sense of humor and caring,
concern for the miss those who are half less fortunate
in life. And you know, I think in the US,
even globally, we tend to be a little bit more
focused on ourselves, and we tend to kind of idolize
(25:59):
those people who are successful, and quite often that means
financially successful. But I think it's important that even though
we make ourselves a priority, our health a priority, that
we really try to make other people a priority as well.
And Pope Francis lived that. I think. You know, it
doesn't matter if you're a Catholic or Muslim or Jewish
(26:22):
or whatever. You could see that. I think, to me,
that's the amazing thing about the Pope, which is the goal,
is that he's kind of a leader from an ethics
and morality perspective for the world, and I think Pope
Francis did that to a team. Now, there may be
some things about it about him that you didn't like,
but I think no one could argue against the fact that,
you know, he just lived this amazing life and this
(26:44):
idea of simplicity in your life, and I think that's
also a great thing. You know. I'd say that I'm
a capitalist. I believe in the markets, but I do
think as a society we tend to be too consumeristic
and that tends to skew us into making bad decisions.
You know. I always talk about the value of budgeting
and making sure that you live within your means, and
(27:06):
you know, if you kind of simplify your life, you're
more inclined to be able to do that. And one
of the things I heard that he did for about
a year plus, there was a church, a Catholic church
in Gaza that was being used basically as a refuge
for about three to four hundred people with the war
in Gaza, and he called them every night at seven
(27:30):
pm his time. He called them just for five minutes
to check in on them, to see how he's doing,
how they were doing, and making sure that they were
safe and that they needed food. And you think about,
here's the guy who's the pope. He's got so many
things going on, but he took the time for a
five minute phone call. It just shows you how focused
(27:50):
he was on taking care of people. And I would
encourage you to do that in your life. How can
you really reach out to one person or just you
know a group of individuals and try to take care
of them and show them support. So again, you can
read my blog on LinkedIn just you know, you can
just search for Martin Shields and you come up. But
(28:12):
just something to kind of keep in mind as we
go through the week, and you know that we kind
of think about ways that we can live a better life,
and there's always there's always room for improvement, right, It's
never never that we're fully there and always something to consider.
All right, let's jump back into the finance. So you know,
one of the other questions I get is why is
(28:34):
the dollar declining? And why is that important? So you know,
what we have to appreciate is that the US dollar
is the default currency in the world, right, and all
that means is most trade. When it's done between other countries,
it's done in dollars, oiled. When it's traded around the world,
it's traded in dollars, And that gives us a lot
(28:57):
of benefits. We don't necessarily appreciate that what that means,
but that gives us a lot of benefits. And relatively speaking,
there's been a lot of capital around from around the
world that's flowing, that's come into the US, and what
that means is our companies have access to all these dollars,
not just investors from the US, but investors from around
(29:18):
the world. Well, you know, with some of the tariff issues,
you know, those dollars have been leaving the US. There's
concerns over the US economy and even you know in
some regards are you know, our approach to dealing with
other countries and so, Uh, the dollar is declined. Now.
The issue with the declient is not you know, where
(29:41):
it stands relative to other currencies, because it's actually it's
still very strong relative to other currencies. Uh, it's and
I mean that from a historical perspective. But the problem
that does exist is the rate of change. So it
has dropped dramatically in the last month, and the rate
of change is where the problem is. When something changes
(30:03):
that quickly, it really throws things off from an economic
perspective and from a certainty perspective. Right, this is what
we've talked about, you know, with the current tariff environment.
It's the problem is the tariffs, but it's also the
uncertainty that exists with the tariffs. So I've made this
example as a consumer, if I'm going to go buy
(30:26):
a car and you know there could potentially be a
tariff on that car, do I want to buy that
car potentially pay you know, eight thousand dollars more for
that car, or do I want to wait and see
if potentially the tariffs go away, right, Because you imagine
if you buy a car today and then tomorrow you
see that there's been negotiations and those tariffs go away,
(30:48):
and you just pay eight thousand dollars that basically it's
going to the federal government, or you could have waited
a day and not pay that tariff. So that level
of uncertainty, the whole back consumers from spending, also holds
back companies from spending. Right, So you think about it.
If you're a company, you know, how do you make
(31:08):
a decision to build a new factory here, Well, what
if the tariff policy changes in six months or frankly,
what if it changes with the next administration. Because you
think about it, if you're going to build a factory
that's tens or not hundreds, if not billions of dollars,
it's years than the making. By the time you get
a big factory in place, there could be a new
administration that removes all those arrffs. So again, the important
(31:33):
thing is when you're looking at this, it's the level
of uncertainty to exist, and that's why the dollar has
been declining. Now, the important thing with a week dollar,
there are some advantages and what that means is now companies,
you think about this. If the dollar is weaker relative
to other currencies, now when you sell into those foreign markets, well,
(31:56):
your goods are cheaper, right because you're selling at US dollars,
which is less than the other foreign currency, and that
actually makes our goods more affordable. So that's that's a
good thing for corporation selling into those countries. Who doesn't
win is the consumer because now if we are bringing
things back from overseas to buy those goods, well, guess
(32:17):
what they get converted, and the conversion is less there,
it's actually more, so you know you're going to pay
more for those goods. So the consumer is going to
pay more, and not only because the dollar is weaker,
but now potentially because of the terriffs. And that leads
me into the next question, is I get a lot?
(32:38):
Is who pays for the terriffs? Right? All right, So
think about it this way. What happens is you have
another country that's producing that good it gets shipped into
the US. When it gets shifted to the US, it's
right there on the port of entry where the company
in the US is taking hold of that good pays
(32:59):
the tariff. Right, so they're the ones that actually pay
the tariff, that company right there. Now there's three there's
four things that can happen. Right. One is they can
take that good, those goods, and the tariff that is
on top of that, they can pass it directly on
to the consumer. But you can imagine if you're going
to raise a price by ten percent, by twenty five percent,
(33:21):
by one hundred and thirty percent, well guess what those
consumers are going to be buying that goods for very long?
So you know that In that case, if they do
pass that on and the consumer does buy it, well,
now the consumer has paid that tariff. Now the other
option is that middleman who brings that goods those goods
in that they could eat it, right, they could. It
(33:43):
could impact that company could take it and just eat it,
and now their profits will be impacted by the tariff,
so in fact, they would have pay the tariff. The
third option is is that middle man company can say
to the foreign country, hey, we want you to reduce
your price by x by the amount of the tariff.
(34:07):
So in that case, it would be the foreign country
and that company in that foreign country that is paying
the tariff because they're going to reduce their price by
the amount of the tariff. And then the fourth option,
which probably is the most common option, is all three
of those groups will pay for it in some combination. Right,
consumer consumers will probably see prices go up, the middleman
(34:31):
will probably reduce their profits from bringing that in, and
they're probably going to negotiate with their supplier in the
foreign country. So in each one of those cases, they're
going to take a hit and they're going to be
paying for part of the tariff. And that's the important
thing to remember, which is, you know, if you look
(34:51):
back over the last thirty or forty years, you know
they're when they talk about what had happened to the
US and the economy, who's the winners and the losers? Right?
So the one winner through the last forty years, you
may not realize this or not, but has been a
US consumer. Right. In many cases, the price of goods
(35:13):
has declined quite dramatically. And you know, I always make
the Walmart analogy and description. I mean, Walmart has gone
out there and just really hammered all their suppliers, which
may be all US companies, and said, hey, listen, get
us lower prices. We want lower prices. How do you
do it. We don't care, just get us lower prices.
(35:36):
And so they have, and what they do they basically
ship their manufacturing overseas. So you know, by doing that,
Walmart has sold more goods and services. The consumers buy
cheaper goods, and those companies that are supplying those goods
to Walmart and other stores as well, they're making a
(35:57):
lot of money. So all those people are winning with
the Walmart stores, the consumer and the suppliers. The people
who are losing are the small towns across the US
where all the Mall and Paul shops can't compete at
those lower costs, so they are the ones who are
(36:18):
going out of business. Right that. You can see that
in any small upstate New York town, those smaller stores,
I don't care what area that you're in, if you're
in appliant sales or whatever it is, many of those
small family businesses went out of business because they can't
compete with these big box stores or Amazon online. The
(36:39):
other group that was heard was manufacturing. So you know,
all those manufacturing jobs went overseas and they're probably not
coming back. And that's the thing you have to appreciate,
right which is, you know, bringing manufacturing back to the US.
It's a great idea. I love it, but you have
to appreciate that unless it's a high end manufacturing, the
(37:02):
ability to bring that back in most cases it's really
difficult because can you know, you think about it, you
can either get something made in Bangladesh where making fifty
cents an hour is good, or a dollar an hour
or three dollars an hour, whatever that amount is, that's good,
that's a lot of money for them, or bring it
back to the States where you know, let's say that
(37:22):
you want a good manufacturing job, you want to be
making forty dollars an hour, we'll never compete against those
countries where you can get something made and pay somebody
five dollars an hour. Now, the only way you potentially
do that is through complete automation. Right, you have to
automate almost everything, and with AI that may be possible.
(37:43):
You might be able to automate many and most things,
but in a lot of ways you're not going to
be able to do so that's going to limit what
you can bring back to the States as far as manufacturing.
So you know, this is where we'll have to see
how this plays out. If you're going to bring back
things like the manufacturing of chips and certain things that
are extremely important. We talked about steel industry and having
(38:06):
that here and certainly Boeing and having that company here.
You want certain things manufactured in the US, just even
for our national security, So that is important to happen.
But the other thing you look at too, which is
you know, over the last thirty years, those same individuals
that lost their jobs to manufacturing probably don't have They
(38:30):
may be renting their houses right now, they don't own
a house, and they may have no money in the
stock market as well, whereas individuals that you know are
more a white collar, they probably own their house. The
value of their house has increased dramatically over the last
thirty years, especially if you're in some of the big
metropolitan areas, and then they're probably also investing into the
(38:52):
stock market, and over the last thirty years, the stock
market has done incredibly well. So when you look at
the wealth that's been created in the over the last
thirty or forty years since global trade has existed, it
is insane. It's something in the neighborhood of one hundred
and sixty trillion dollars. That's a t, that's not a B.
(39:12):
One hundred and sixty trillion dollars that has been created
in wealth through both the stock market, through the value
of private companies, and through the value of real estate.
So we've been become an incredibly wealthy comp company, I'm
sorry country over the last thirty or forty years. But
with that said, there is definitely a segment in the
(39:34):
population that has not been able to benefit from that,
and that's where the problem lies. So hopefully this helps
clear five things I know there's always a lot of
questions with folks. One of the last things I wanted
to highlight before we end the show here is just
with individuals that are getting stock compensation as part of
(39:56):
their benefits. We work with a lot of executives and
senior managers and they get a lot of stock compensation
through the work. It's a very important part of their compensation,
and it can come in a lot of different ways.
You can have what's called restrictive stock options, you can
have stock options, you can have employee stock purchase plan.
The big element I just really want to communicate this
(40:18):
is as you're accumulating stock in your company, you know
you really have to have a plan to be able
to diversify out of it. And I just say this
because so often we see new clients coming on they
don't have a plan in place, and then you know
what can happen is, you know, you have so much
tied up in that company. You have, you know, your
own income tied up, and you know, with those options,
(40:41):
if it's doing well, you have a lot of wealth
tied up in that and they don't have a plan
in place how to really kind of diversify out of that,
and what I would tell you is got to be
looking at a number of factors, one of which is
the company itself. Right, if you're working for an Apple,
or you're working or you're working for a Google or Alphabet, yeah,
(41:02):
you're going to have a market volatility in your stock.
But really in general, you have much more security in
the type of company. But you know, here we do
have some of those individuals, but we have others that
they work at Plug Power or they work at Regeneron,
both great companies, but much more volatile stock. And you know,
(41:22):
long term, I think you know, certainly Regeneron has got
a great long term opportunity, and I think even Plug
but you see that with those companies, their stock can
be very volatile. So you know, you have to appreciate
where you stand with your life as well, because you
may want to leave that company because you've got a
better offer, you may get a promotion outside that company. Well,
(41:44):
you know you don't want to be doing that if
the stock in your company is down and you have
to you know, sell those positions before you leave. If
you're leaving a company, you usually have if something's vested,
you usually have ninety days to make that go ahead
and make that change, meaning sell that position. So it's
(42:05):
not a lot of time, So you have to appreciate that, right,
which is, if you're working at a company and the
stock is very high and your overall investible assets and
what you have in that company is greater than ten
percent of your investiable assets, you probably want to take
that opportunity to really start putting a plan to diversify
(42:26):
out of that position, because when it's greater than ten percent,
you really have too much of your wealth tied up
in that. And I always tell clients if you have
stock options and you're in the money, meaning that you've
actually had gains in it, that's a great thing. Be
happy that you have that. Don't get too greedy, and
make sure you have a plan in place that also
(42:46):
minimizes the taxes. And this is where we work a
lot with our clients, is to both put that plan
in place, but also make sure that we're minimizing taxes. Right,
none of us want to pay more in taxes that
we have to. And if you have a plan in place,
if you're disciplined with it, then you can achieve that
and you differcify out of it. So that you still
(43:07):
could see holding those positions. And this is why I
always tell individuals, which is you're not selling out of
it completely. In many cases, you're still my own eight
or nine percent. So if the company you think it's
going to do well then and the stock price goes up, well,
guess what you're going to benefit from that. And that's
a great thing. And oh, by the way, if you're
there and you're doing well, you may get promoted and
(43:29):
get more stock options, get more restricted stock, So that's
even a better thing. But what you don't want to
have happen is let's say it goes the other way
and the market, the stock prist declines. Well, and now
you let's say you're going to lead to go to
another opportunity, maybe it's a better opportunity for you. Well,
now you're in a tough spot, right because you've got
(43:52):
to make a decision what to do with those options,
and you may only have ninety days to do that.
So again, just really want to put that out there
because we see that happen so often with individuals. They
don't have a plan in place, they're kind of winging it,
and it's just not a great thing to do. To
wing them. You want to make sure you have a
plan in place that considers both the concentration element of
(44:16):
that stock and also considers tax impact from selling that
stock as well. Well, folks, we've spent the whole hour
together as always has been great to be here with
you to answer any questions you may have and give
you a guidance. I hope that you have a great
Sunday and you get out there and enjoy it. You
(44:37):
spend time with family and friends. You've been listening to
Let's Talk Money, brought to you by Bruchet Financial Group. Well,
we help our clients prioritize their health while we manage
their wealth to life. Folks, as I always say, take
care of yourself and follow put France's lead and take
care of each other.
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I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com