Let's Talk Money

August 10th, 2025.

Episode Transcript

Speaker 1 (00:00):
And how to think about savings approach, whether you're you know,
high W two earners, whether you are approach. Have a
lot that we can talk about. Have a great show today,
really excited. Uh, you know, we can get into the markets.
A lot of headlines over the last few weeks that
I think are important. You know, sometimes headlines can be

(00:23):
a little bit of noise, but I do think we've
had some important data and information that has come out
in the last few weeks that have been driving the headline.
So we'll talk all about that. We'll talk about the markets,
what the you know, what we're thinking about, and how
we're discussing the you know, common themes or current themes
and trends communication to clients, what that looks like. And again,

(00:47):
phone lines are open if you want to get in
and talk about any of this, give me a call
one eight hundred talk w g Y one eight hundred,
eight two, five, five, nine, four nine on this beautiful
Sunday morning. So we'll talk about the stock market, We'll
talk a little bit about what's going on in the economy. Uh.
You know, I think one of the big themes and

(01:08):
we sent out a newsletter to our clients, Uh, Friday,
Friday afternoon, and you know, just talking about what we're
seeing right now. And I think one of the big
themes of the last few weeks in particular, is this
narrowing of the gap between soft data and hard data,

(01:30):
and uh, that difference we've talked a lot about since
Liberation Day, going back uh to April, and you know,
sentiment was pretty bad for a while, but you know
that hard data, the real, you know, reality of what's
going on in our economy had been quite strong, and
as of last week's updated jobs report, you know, I

(01:51):
think that that gap has been narrowed a little bit.
And so we'll talk a little bit about what that
means for the stock market moving forward and and how
we're thinking about things you know, doesn't have any impact
on portfolios or strategy, and will uh, you know, certainly
dive into that, and in terms of what's just driving
this market forward. Obviously there's a lot going on right

(02:13):
whether it's the economy or of our clients on and
you know, the conversations, discussions, and you know, the decisions
that are being made through these times. And lastly, we revisit, uh.
We gave a presentation a couple of weeks ago and
we'll probably be looking to do And we talk often
with our clients about you're controlling what we can control,

(02:37):
and you know some of the strategies that we implement
and put into place, right, you know, you can have
a sound investment strategy, sound allocation within your portfolio, and
and that helps tremendously. That is that is huge in
what we do and in managing our clients' assets and wealth.
But there's some things in that approach that again are

(02:58):
outside of our control, name namely being the markets. Right,
we talk about risk within the markets and use the
data that on a day to day base that the
market's almost a coin flip of whether or not it's
going to be up. It's a little bit more positive
on a day to day basis, it's up about fifty
three fifty four percent of the time, but it's close, right,

(03:20):
And the longer you go out the markets are up more,
so you get a little bit more certainty there the
further you go out. But truly from a short term perspective,
you know, there's always a lot of uncertainty in the
markets in the economy. But I think what we talk
often in what we do through our planning approach is
controlling the things that we can control, and there's a

(03:40):
lot of things that are within our grass and within
our control to you know, again, help make the best
decisions and to you know, put yourself on a positive
path forward when it comes to your financial well being
and your financial life, to you know, give that peace
of mind that we're all looking for, especially again in

(04:02):
our financial lives. So we'll touch upon all of that today.
So a lot to discuss. Again. If you have any
questions or if you know that resonates with you, give
me a call one eight hundred talk WGY. That's one
eight hundred eight two five five nine four nine. And
so we'll talk about, like I said, the stock market.

(04:23):
Why don't we jump in there stocks? You know, the
market had one of their best weeks since June, believe
it or not. I think I don't know if that
was the expectations heading into this week, you know, back
on a week from Friday, So back on I think
that was August. First, we had the labor report come

(04:45):
out for July, and July's number wasn't great, a little
under expectations. I think expectations were for around one hundred
thousand jobs being created. It was closer to seventy three
seventy five thousand, so missed there. But the biggest news
right of of that Friday was three visions to the

(05:05):
two previous months, and that was that was a big
uh you know, that had an impact on the market
to close out that one week. That was the worst
week that we had in a few months. I think
that was like the worst week going back to May
if you think back, you know, outside of the first
quarter and the impact, especially when we saw Liberation Day.

(05:27):
For a while, markets had a pretty tremendous sell off
early on first quarter was pretty weak. Uh, then we
had a pretty nice recovery, uh quickly as we saw
some of the pull back from some of the tariffs
and what expectations were around there. I think you know,
the market eventually sort of shrugged off that news and
realized that, Okay, maybe this isn't as bad as it

(05:49):
could be, and if things are looking bad, uh, the
administration may pull back on some of their initial you know,
numbers and target It's when it came to tariff, So
you know, the market buying large kind of shrugged that
off and then for a while, you know, May June
July especially, we were kind of in this holding pattern

(06:10):
with the market nothing, no big swings. Early July, we
kind of got a little bit of a boost when
the big beautiful bill got passed, that went through. That
was a positive momentum for the markets, but you know,
buy and large, we were kind of in this little
bit of a holding pattern for a while and so

(06:32):
not not a ton of volatility, and then, like you said,
all of a sudden with regard to that labor report
and seeing some of the revisions to the previous few months,
markets had a pretty volatile day a week ago from Friday,
and so had a pretty bad week for that week.
And then you know, heading into this latest week, you know,

(06:52):
Monday was a little bit of a sell off kind
of in the continuation of what we saw the previous week.
But you know, Tuesday on, we had a pretty strong
week in the market. The S and P finished the
week up about two and a half percent, the Nasdaq
was up almost four percent, had a huge, huge boost
both you know, the overall market as well, especially Nasdaq

(07:13):
with regard to the technology weight and technology kind of
sectors of what the nabsack really is, you know, up
almost four percent, up three point nine percent. That that
was up a little bit over one percent one point
three percent, so by and large, again a really strong week. Obviously,

(07:33):
Apple had its best week in about five plus years,
which given the size that market make or Apple makes
up within the indices both the S and P and Nasdaq,
had a huge, huge driving force there. Uh and you know,
Tim Cook had his meetings with the President, and you know,

(07:54):
this is where this market gets a little bit tricky
in terms of you know, some of these headlines or
some of what the President may come out and say
and do has an impact strong impacts on either individual
companies or you know, maybe certain sectors. And so some
of the announcement was added tar us on semiconductors and

(08:17):
some of the technology around there. But given Apple's drive
to maybe bring some US manufacturing and who knows what
that ends up looking like, but they were you know,
left off of some of those tariffs that that may
be implemented. So that was a strong positive for a
stock that was, you know, lagging behind the overall market

(08:39):
for a while this year, had a huge boost to
end the week, and like I said, that was a
pretty strong driver to close us out and it goes
along with some of these these themes that we've been
talking about and I shared earlier. We put out a
newsletter to our clients on Friday afternoon and you know,

(09:00):
just talking about you know a few different things, right.
We talk about try to give a market update, talking
a little bit about what's happening in the markets and
the economy, how that all plays together. And then you know,
we were so fortunate that we have a tremendous group
of colleagues that are constantly updating our blogs, putting together webinars.
If you go to our website Bouche dot com, that's

(09:22):
www dot buch dot com, you can check out in
our insights tab where you know we have a you know,
latest blog on and this was the newsletter that went
out narrowing the gap between sentiment reality and talking about
the markets, but also latest blogs on Big Beautiful Bill
and and what's in there. We actually, my colleagues Vinnie

(09:44):
and Scott Strohecker Vinnie Testa just did a webinar this
week on the Big Beautiful Bill. So if there's anything
there that you find, you know, could pertain to your
situation or want to learn more about that, you can
check that out under our insight and our webinars tab
so a lot of good information from our team and

(10:04):
a lot of things to be talking about. So we
you know, we shared all that, and when we think
about this current market environment, right, I think there's a
few themes that are that are at play, and you know,
I think these themes of you know, how we think
about the portfolio where we see kind of this current

(10:25):
market environment, you know, really kind of nails down just
what's really driving this market. And I think, you know,
kind of where the you know, either the tailwinds are
going to come from, where some of the positive momentum
from this current market, or maybe where some of the
pain points may be things we need to really be

(10:45):
aware of and look out for as we move forward
to the second half of twenty twenty five and you know,
almost halfway through August now, which is hard to think
about as we're approaching back to school season. But you know,
we'll we'll talk a lot about kind of what these
these factors are and I'll share them in just a moment. Again,

(11:06):
if any of the listeners out there, UH want to participate,
want to give me a call and jump in and
add to our discussion. Phone lines are open one eight
hundred talk w g Y. That's one eight hundred, eight
two five, five, nine, four nine. And so we will
look at the investment landscape today. You know, I think
there's a few themes that are really playing out, right,

(11:28):
we'll touch upon, uh, that latest labor report. So I
think the US, you know, we continue and this is
something we've we've talked about. You know, we're we're in
a growing economy. The economy remains resilient. We've seen that
through the last few years. But I think that growth
is slowing a little bit, right, and so you know,

(11:50):
how does that impact the overall market? You know, and
even going back to that, like I said, that July
labor report and jobs number, Uh, that's showing some more
signs of a little bit of a slowing economy, one
that you know, frankly we knew was slowing but still growing.
But again, since since the early spring, a lot of

(12:11):
the hard data has been coming back, you know, whether
it's consumer spending, retail spending. For the most part, most
of the jobs reports and jobs numbers have been quite strong. Frankly,
we really haven't seen much of a slow down there
until this latest one, so we're kind of seeing a
little bit of a narrowing of you know, where that
sentiment was that was really negative and maybe a little

(12:32):
bit weaker economic reports that have come out. So we're
seeing that to a certain extent. However, you know, we've
we've gone through a bulk of second quarter earnings and
earnings have been pretty strong, right. We've talked about strength
and the financial sector. You know, their their shares haven't

(12:53):
necessarily popped as much from it, but their earnings were
really strong. The big banks, you know, whether it's well
as far Ago, JP Morgan, they had a strong earning
season for the most part. Again, technology companies have had
a really strong earning season. We've seen a lot of
strength there. We've seen their reports and their bottom lines
really driving this market, right, And I think that's where

(13:18):
in terms of when you look at the momentum moving
forward and in what this market could do. You know,
AI plays a big role in that in the investment there,
and that's one of the key charts that I shared
in our write up on Friday was this intersection of
AI spending and consumer spending and how that drives our
economy forward. And you know, from an economic standpoint, you know,

(13:42):
consumer spending is slowing down a little bit. There, we're
at a cross section here. But corporate spending in corporate
investment within AI, AI, infrastructure, hardware, software, whatever it may be,
is really really elevated right now, and that is a
real opportunity within the market. And again what could drive

(14:03):
this market moving forward? And so we're seeing strength there
and again these companies have been rewarded with their bottom
line and what we're seeing in earnings and in forward guidance.
But if we are seeing a somewhat slowing down in
the economy, how does that intersection, you know, come together
do what do we see moving forward? Can those earnings

(14:26):
continue to be strong if we do see a little
bit of a slow down in the economy. So thinking
about the portfolio from that perspective, and again, I think
those are some of the major themes that we're seeing
in the market. So we're gonna again, our phone lines
are open. Can give me a call one eight hundred
talk WGY. That's one eight hundred eight two five five, nine,

(14:47):
four nine. We are going to take a quick commercial
break and when we come back again, we can drive
a little bit. We can dive a little bit more
into what we're seeing from that economic standpoint you where
we're seeing some opportunities within the market. But then you know,
I think in the in the second half of the show,
we'd love to get into some of the planning opportunities

(15:08):
that we're discussing with our clients. Like I said, you know,
some of the big conversations we're having clients right now
is what to do with cash. How do we think
about certain client cash situations, especially with markets at all
time highs and where we're at in this economic and
market cycle. And we'll talk a little bit about some
other areas where we're helping with clients and taking control

(15:30):
of their wealth again, whether it's high earners, whether it's retirees.
A lot of different planning opportunities that we can take
advantage of, like I said earlier, controlling what we can
control and doing the proper planning around that. So with that,
let's go to a quick commercial break. You're talking you're
listening to Let's Talk Money here on eight ten in

(15:51):
one O three one w g Y And welcome back
to Let's Talk Money here on eight ten and one
of three one WGHY. I'm Ryan Bousche, and I'm your
host today, Happy to be here with all of you
and appreciate all the loyal listeners or maybe you know,
first time or newer listeners that are out there. Always

(16:15):
great to have you as part of the show. And
like I said, we always appreciate any any calls, questions
that you may have to add to our conversation. So
if you do have questions, whether maybe you're approaching retirement,
maybe you just have a you know, one off planning
topic that you've been thinking about, give me a call
one eight hundred talk WGY. That's one eight hundred eight

(16:38):
two five five nine four nine, And I forgot to
mention earlier. We also have the ability to send in
an email question, so maybe if a call isn't what
you're you're most comfortable with, if you do want to
send us an email with a question, we'll try to
get to that. You can send us an email at
at Askbouchet dot com, so you can give us an

(17:00):
or shoot us an email at again Askbouchet at Bouchet
dot com and we'll try to answer that for you.
So with that, like I said, we were talking a
lot about just what we're seeing in the economy. What
we're seeing in markets right, markets are at all time highs.
Markets are you know, relatively expensive, I would say from

(17:24):
a historical basis. You know, his history shows over you know,
thirty thirty five year period, markets typically trading at about
seventeen eight eighteen times forward earning. Especially you know, during
the course of this really you know, you take a
step back, extended bull market coming out of the global

(17:44):
financial crisis. Now with that, we've had three or four
you know, short lived bear markets, whether it was the
end of twenty eighteen in rates were first starting to rise,
COVID in twenty twenty twenty two is a little bit
of an extended bear market, you know. And even at
the beginning of this year we may have gotten an

(18:06):
intra day bear market of a twenty percent sell off.
Markets were down at one point, you know, close to
nineteen and a half percent, I think from a closing
standpoint again right in the height of tariff conversations, liberation day,
you name it. So we've had volatility, but you know,

(18:26):
when you step back and look at the trend over
the last fifteen sixteen years, obviously we've had a pretty
good market environment and we're back to all time highs,
and like I said, with that, you know, valuations are higher,
and so I do think in some conversations some investors
may be a little bit more hesitant or a little
bit more nervous about, you know, putting money to work

(18:50):
or what to do. We often say that, you know,
when you do look at the statistics around it, investing
at all time highs can actually be a good thing,
right where you know, a lot of you know sess
in the market comes with momentum, right, It's not always
driven by fundamentals. We say there's kind of three core

(19:10):
tenants when we're thinking about investment decisions. Right, fundamentals come
into play, you know, valuations right where stocks are trading,
and like I said, stocks are trading at a little
bit of a higher valuation today, especially on a historical basis.
And now there's reasons around that. We've talked about those reasons.
The market is a lot more technology based, right. I

(19:31):
think even the technology sector today is about thirty five
thirty six percent of the market, which is similar to
where it was in the late nineties early two thousands
with the tech bubble. But that doesn't even factor in
some of the you know what, you would probably consider
technology companies that have moved to different sectors, right. You
think about Meta, which is now communications company, Amazon which

(19:52):
is now a consumer discretionary sector company. So you know,
you add those companies in and you're actually probably to
you know, forty five percent. And so you know with
that these companies require higher valuations. They are built on

(20:12):
higher valuations because of future earnings growth. And when you
look at those types of companies, they you know, most
of their current prices is predicated on future growth and
that's where this AI revolution, I think can really help
move this market forward. So we're approaching our midway point

(20:33):
in a break for the news. When we when we
come back, we'll we will finish up conversation around evaluations
in the market, but then we'll get into some planning conversations.
So again, opportunity to jump in if you want to
give us a call during the break one eight hundred
talk WGY. That's one eight hundred, eight two, five, five, nine,

(20:54):
four nine. We'll have a great second half of the show. So,
like I said, stick with us through the new you're
listening to Let's Talk money here on eight ten in
one O three one WGY and welcome back to Let's
Talk Money here on eight ten one O three one WGY.

(21:14):
I'm Ryan Bouchet, and I am here with you all
this morning. So glad to be here, so happy to
have you listening. Uh. And we are now in the
second half of the show. So again, if you have
any questions, want to be part of the show, give
me a call. One eight hundred talk WGY. That's one
eight hundred eight two five five nine four nine. If
you have any retirement planning and investment planning, you know,

(21:40):
investment allocation questions, give me a call. We've we've touched
a lot about, you know, just kind of where we're
seeing the economy, where we're seeing the markets. You know.
I do think given some of the headlines over the
last few weeks, good time to kind of take a
step back, right. We talked a little bit about the
US in our Investment quarterly webinar we put out a

(22:05):
couple of weeks ago, maybe two or three weeks ago.
Like I said, you can find all this information at
our website Bouchet dot com. Under our insights tab you
can find our latest blogs, webinars, you name it. Great
resource for good information things that we're sharing, things that
we're talking to our clients about. So if you want
to take a look there again Bouche dot com under

(22:27):
our insights tab. But you know, we we take a
step back and we look at you know, right now
is probably a good time to be disciplined in your approach. Right,
There's there's a lot of momentum in certain areas of
the market. There's some you know, i would say competing
forces or maybe some uncertainty in terms of where this

(22:50):
economy is going with with some the latest data. Now,
sometimes these these data points can be a one off, right,
I mean, it wouldn't be out of the realm of
possibility that some of the slowdown that we saw there, Right,
It took a while for us to see maybe some
of the impact from the uncertainty around tariffs. But taking
a step back, this may just been you know, oftentimes

(23:11):
the jobs reports and labor data is sort of what
they call a lagging indicator, right, It's a little bit
behind us. It's not really a you know, forward indicator.
It's more of a lagging indicator. And so you know,
some of that some of that data and in some
of the slowdown and hiring, and those revisions for May
and June may have just been a sort of a

(23:35):
trailing effect of the uncertainty that we saw in the spring.
And again maybe it's more of a one off. Maybe
we get you know, robust jobs hiring and in recovery
for August once we get to that point in another month.
But so there's a lot of factors. So you know,
the key with all this, right is, you know, never

(23:56):
a good thing to panic. And that's where we try
to reiterate to our clients. Just because of you know,
one bad report or one missed report, it's not typically
time to panic, because we've seen that, especially in this
bull market, we've seen some you know a month or
even a couple of months stretch of some weaker than
expected growth in different areas of the market. And so

(24:19):
you know, with what we're seeing in the stocks, and
like I said, I mean, I think the stock market
this week proved that it's not a time to panic.
With like I said, the S and P was up
about two and a half percent, NASAC being up almost
four percent. So you know, the market certainly shrugged it
off for the time being. But you know, I do
think with some of the news there. I mean what
you saw especially over the last two weeks. You know,

(24:42):
we talked about the equity side of the market, but
the fixed income side of the market. Right if you
look at the ten year treasury, which again is a
great bell weather for consumer lending, in what those rates
look like and kind of what the anticipation moving forward is,
I mean immediate after that, those rates dropped about twenty

(25:02):
five basis points, so about a quarter of a percent.
And now as we head to the second half of
this year, expectations for FED rate cuts have jumped up.
You know. Now the market is pricing in and the
market's been wrong over the last few years in terms
of what the expectations are with the FED. So it's
by no means set in stone that this is going

(25:25):
to be what happens. But we are seeing expectations of
two rate cuts for this year, three for next year.
And again I do think that brings in A September
rate cut is definitely on the table now all of
a sudden, now that the FED is seeing some weakness
in the labor report, I think that brings things and

(25:47):
highlights that yet there may be some weakness in the economy.
I do think they probably will rather get ahead of
things than stay behind that you are also, you know,
the FED is also weighing the inflationary factor. We actually
had a pretty high service sector price index was the
highest last week since October of twenty twenty two, so

(26:10):
that number is getting higher. We are getting a CPI
report coming out this coming week, so that's going to
be important. I think that could be again a main
main focus of what the FED does. If if that
comes in at expectations or a little bit below, then
absolutely this this September FED rate cut could be on

(26:32):
the table, which really wasn't expected at the last meeting
a couple of weeks ago, but all of a sudden,
I think, you know, the market is definitely seeing an
opportunity for the FED to cut rates, and so what
does that mean for investors? So we talked about some
planning opportunities. Again, if you find yourself in a similar
position or something that you're thinking about again, give me

(26:53):
a call one eight hundred talk WGY. That's one eight
hundred eight two five five nine four nine. So there's
a few different as in terms of you know, cash
planning or cash management strategies and planning that we're having
conversations with clients on one is again sitting in you know,
short term cash needs and maybe we've been able to

(27:14):
send money market funds for the last few years before
the rate cuts of last year, money markets were yielding
over five percent. They're still at you know, over the
last twenty years, they're still at great levels right now
about four and a quarter, which is pretty pretty nice.
If if the FED cut expectations come into play, you know,

(27:35):
we could see that that FED fund lending's rate closer
to three percent next year versus a little bit over
four percent. So, you know, what are you planning around this?
Is there you know opportunities again maybe if it's not
super short term cash flow needs, you know, where there
are opportunities within the market to maybe capture some additional

(27:55):
yield or you know, lock in some yield before the
potent for fund or for rates to come down. And
that's something we've worked really closely with clients over the
last you know, in particular, you know, really I guess
over the last twelve to twenty four months, taking advantage
of some of these spikes and interest rates and seeing

(28:16):
where they're at now, if you can get in at
higher rates and lock those in. I mean, that is
such a good thing where even if you're giving up
maybe a little lesser of a rate to lock it
in for five, seven, ten years, that may be beneficial
versus getting a slightly higher rate. But you're only locked
in for you know, six months, three months, you know,

(28:38):
day to day if you're thinking about a money market fund,
not that it's entirely day to day, but more predicated
on what the Fed does in their interest rate approach.
So you know, how are you thinking about locking in
rates and taking an advantage of where we're at from
an interest rate environment. The other cash conversation we're having
is again some clients who are coming into HASH or

(29:00):
have cash on the sidelines, right and maybe they've been
taking advantage of these higher rates and now rates coming down.
They're like, well, you know, four and a half five
percent was great sitting in cash, but if rates do
get you know, below four and closer to three percent,
maybe that's not as attractive and what should I be
doing with that cash? And so I had a conversation

(29:23):
with some new clients a few weeks ago, and you know,
they had a decent sized cash position, and we really
were just trying to talk through what is the best
way to put this cash to work? How do we
want to be thinking about it? And I think the
conversation that we have and the approach that we have
with clients it really resonated in this situation. It was

(29:46):
really helpful to make the best decision in their circumstances, right,
And sometimes there's not you know, I think this is
the great part of our job and what makes things
so interesting in the work that we do, in the
conversation that we have with clients is that, yes, sometimes
there there may be some you know, black and white

(30:06):
answers to certain questions or certain approaches or recommendations where
it's pretty clear cut what the decision should be, or
it's pretty clear cut, clear cut what the approach to
a situation could be. But oftentimes there's this gray area, right,
And in personal finance, it's personal because it can be

(30:26):
different for each in every situation. Now, we'll always make
sure that you know, we're not putting you know, whatever
that that decision and recommendation is is never putting a
client in a position to not be successful in their
financial goals or not try to reach their financial goals.
But like I said, sometimes there can be you know,
a decision that is in that gray area that hey,

(30:49):
we really have to figure out what is you know,
one best for for financial future, but two what's best
from a you know, behavioral standpoint, and what's best for
you know, having the clients sleep well at night knowing
that they're going to reach their goals, knowing that you know,
their financial future is in good shape, but just making

(31:09):
a decision that is helpful for their circumstances, situations and
what they're you know, willing to you know, what they
can sleep well at night. Like I said, having that
financial peace of mind is so important. And so we've
gone through, you know again, coming up with a strategy
to put cash to work for some clients, and how

(31:29):
do we think about that right maybe it's you know again,
maybe they've come into cash or have just been sitting
in cash for some time, waiting for the right opportunity
to get it invested, And how do we have those conversations?
And so, like I said, I'll walk through how we're
thinking about it and how we laid this out for
clients because in the situation we had, it was it

(31:51):
was super helpful to go through that and like I said,
to make the right decision and their circumstances. And again,
if this is something you're grappling with or have a
question on, jump in, give me a call. One eight
hundred talk WGY. That's one eight hundred eight two five
five nine four nine. And So this situation where I
always like to start when it comes to getting cash

(32:14):
to work, is you know what percent cash are you
sitting in as a percentage of your overall network or
maybe overall investible assets. You can kind of you know,
depending on what the asset makeup for clients is. You know,
I think it can it can vary a little bit
when you have that conversation, but you know what percent
of that cash is part of their overall investible assets.

(32:36):
You know, if it's under five percent, under ten percent,
you know, oftentimes it's a much easier conversation, Right, that's
going to have from a long especially from a long
term perspective, a much smaller impact of what the right
decision is. I think. You know, in those cases, you know,
it's almost always better get that money to work, right,
if it's not a big, big percent of your investible assets, right,

(32:59):
it's not going to have as much of an impact,
and sometimes you can overthink trying to get that money
to work historically speaking, and in a circumstance where it's
five ten percent, you know, I think it makes a
lot of sense to get that money to work. But
maybe it's a situation where in this case it was
closer to twenty twenty five percent of investable assets. Maybe

(33:19):
it can be more in certain situations. And so you know,
when it comes to something where it's that big of
a percentage of your overall investible assets, then I do
think coming up with a plan that you know is
rooted in in evidence, right, rooted in historical returns, rooted

(33:41):
in what we all experience and what we all feel
as investors, and you know, made with decision framework that
again you can make that best decision because we don't
know what's going to happen tomorrow or the next week,
and I think that's where some of the uncertainty comes from.
But coming up with a strategy that really fits your
situation and it is well thought through and well thought

(34:06):
out to make the best decision for you, your family
in your situation. So you know, where we start, we
kind of have like a three pronged approach, right, And
I always start with here's what history says, right, and
I said it earlier. On a day to day basis,
the market's up more than it's down, but it's it's
almost a coin flip. It's only fifty three to fifty

(34:27):
four percent of the time on a day to day
basis that the market is up. But the longer you
go out, the higher that percentage of updays are, or
the higher the percentage of positive market environment is with stocks.
If you go out a year, the market is up
about seventy five percent of the time. When you go
out five years, the market's up over ninety percent of

(34:49):
the time. And when you get to hit you know,
ten twelve year timeframes, historically speaking, the market has almost
never been down over that type of timeframe. So on
a historical basis, you know, getting cash to work, the
sooner the better. Right, we see the market up more
than it's down, but again, we don't always know what's
going to happen tomorrow. We don't always know what's going

(35:10):
to happen next month. And you know, when you factor
in where the market is from a you know, fundamental
and just a market cycle, perspective. Sometimes that decision can
be a little bit harder when we as we discussed earlier,
fundamentals are high, market valuations are a little bit high,
and we have some of this uncertainty surrounding the economy.

(35:31):
So that's step one, right, is just understanding what the
history of the market is and knowing that, you know,
the more time you are invested, you know, has been
the better for investors over the history of the market.
But the second factor that comes into play, and I
think it was a helpful discussion to just understand, is

(35:51):
this principle of loss aversion and you know how our
brains are wired when it comes to our feelings and
emotions around money, and you know, the principle of loss
of version gets into more of a behavioral study. Right.
The first element of this framework was really about the
history of the market and more data dependent. The second

(36:14):
stage is more about what our behavior around money is,
what our feelings our emotions are about money, and the
principle of loss of version says, you know, we need
twice the amount of gains to make up for half
of those losses. We're predisposed to feel losses much more
strongly than we do feeling gains, we just don't. We

(36:37):
don't like losses. We don't like to lose money. And so,
like I said, you almost need double the return versus
the loss that you're willing to take. And so again
that just makes the decision process. It's it's a good
element to be thinking about of what's important to us,
how we're wired. And like I said, this is not

(37:00):
what everyone's maybe wired that way, but for the most part,
humans are wired in that loss of version sort of principle.
And so, like I said, we don't like to lose money.
We don't always know. We can see, you know, we
can factor in what's going on in the markets and
the economy, but there can always be a one off
headline or you know, one of these black Swan events

(37:20):
where we just don't know what's going to happen next.
So understanding that as humans, understanding that from a behavioral standpoint,
I think is really an important discussion point and really
good to have that understanding. And then the last element
of this and one that I think is kind of
ties everything together, and this is really where we went

(37:43):
into some depth with this client situation to help make
the best decision, is this concept of regret minimization and
the regret minimization framework, and so we look at it
in two categories. Right, if you were to put all
that cash to work right away and the market were

(38:04):
to all of a sudden decline in the next month
or two, right, whether it's ten percent, fifteen, twenty percent,
Like I said, sometimes we just don't know when these
things are going to happen. You know, how much regret
are you going to have by putting it all to
work and seeing that market decline? Now, you know long
term that market more likely than not, is going to recover,
and it's probably going to recover quite quickly. So it's

(38:27):
not like, you know, long term you're you're actually losing out,
But are you going to have those feelings of regret
early on? And you can flip it on the other end,
if you decide to kind of take a more longer
approach of getting money to work, you know what we
would call a dollar cost average approach DCA approach, And
you were kind of sitting on cash and you know,
putting it to work over three months, four months, six months,

(38:49):
whatever that timeframe is. Well, if the market started to
go up and you were missing out on some of
those gains. Do you have more regret on that side
of the table. Are you going to feel worse about
not participating in some of those gains? And so that's
that last element, right, is that regret minimization framework and
what scenario are you going to feel worse about? And

(39:09):
I think by taking into account what the market has
done from a historical basis, what those expectations can be.
Knowing your own self as an investor and understanding the
behavior and the emotions that coming to investing and our
feelings around losses versus gains, I think is really important.
And then, like I said, lastly, tying it all together

(39:32):
with this regret minimization framework and thinking through the scenarios
of an up market and missing out on those gains
or a down market and participating in those losses. You
know what scenario are you going to regret least? And
going through that and really talking it out and kind
of seeing that impact I think can help investors and

(39:52):
our clients in particular as we go through this with
them and have these conversations with them, I think just
really dry home you know what's important to them to
help again make the best decision for their situation, and
to me, this is again this is a little bit
of that gray area decision point where you know, not

(40:14):
fully knowing what the future holds, not fully knowing what
can happen within the stock market on a short term basis.
I think you know, going through this and making a
decision where it's not as clear cut, maybe not as
cut and dry, but making the best decision for your
own circumstances in your own situation is always critical. It's

(40:36):
always key. And again, having you know, a little bit
of a longer conversation and discussion around these points, to me,
helps get to that end goal, helps make that strong
decision of hey, we're doing what's right, we're gonna we're
gonna reach our goals. And lastly and most importantly, we

(40:58):
can sleep well at night. We had that financial peace
of mind that we're doing what's best for us and
we're taking control of the situation. Again, not knowing what
the future holds, having maybe some uncertainty, but controlling what
we can control and making those good sound decisions is
so key and so critical in the planning work we do,

(41:20):
and we've had a lot of success there. So just
an example of some of the work we've been doing
lately with clients, and you know, maybe you're in a
similar situation, or maybe you may be approaching a situation
where you have to make a decision like that. I
think that's a framework that could be helpful. So we're
coming up to the last four or five minutes of
the show again, if we we may have enough time

(41:43):
to get a quick question in. If you have any
questions surrounding that framework or anything else in your financial lives,
give me a call. One eight hundred talk WGY. That's
one eight hundred eight two five, five, nine, four nine.
Again going back to you presentation I gave a couple
of weeks ago, and and something that came up in

(42:03):
the last few weeks was, you know, planning for you
in this situation high W two earners, Right, we're always
trying to find, you know, through the tax code and
ways that we can, you know, limit what maybe we're
paying to Uncle Sam. And you know, unfortunately it's you know,
it's a good problem to have if if you're in

(42:24):
a household with maybe two high W two earners, what
becomes harder, a little bit more difficult. And again, this
is a good problem to have in this situation is
ways to minimize your your tax expense. Right, There's only
so much you can do, whether it's through a four
to one K plan for three B plan, maybe some
charitable giving ways around that if if you're so inclined.

(42:47):
But at the end of the day, there's only so
much at our disposal to limit those taxes. And it
can be a frustrating, uh situation for for most And
so one of the things that we've talked about, and
I get into this and our presentation is you know,
just thinking about more. Maybe maybe we're not able to
take full advantage of minimizing taxes, but let's think about

(43:11):
our lifetime tax expense. Maybe not in just an annual
tax expense. I think sometimes we're so so focused on
an annual tax expense and trying to get that as
low as possible that we don't fully think out what
our lifetime tax expense is. And you know, this situation
has come up a few times where you know, some
folks maybe early on or through their working years, do

(43:33):
try to maximize their annual tax savings, and so a
lot of that money goes to pre tax buckets. You know,
Like like I said, a four O one K four
three b ends up rolling into an I RA. But
what happens oftentimes with that type of scenario is again
when you think about lifetime taxes, you know, as you

(43:56):
get into retirement, maybe all of those moneies are in
a qualified account. Maybe now everything's coming out as ordinary income.
That can be a little bit not advantageous. So really
having to think about, you know, a long term strategy
and planning around again that lifetime tax expense versus maybe
just an annual tax expense. And that's something we're doing

(44:17):
a lot of work in and you know, I think
where we do some of our best work around the
tax planning phase and kind of looking at those longer
term scenarios. So you know, that's an area, an element
that is really critical to our success and our client success.
So with that we are actually believe it or not.

(44:37):
Coming up to the end of the show, that that
hour went by quickly. Again, I thank all of those
listeners that part of today's show and tuned in. It's
always appreciated. You can catch us on a weekly basis
Saturdays at ten am and Sundays at eight am. So again,

(44:57):
those longtime listeners or if you're a new listener. You
can catch us every weekend again ten am Saturdays and
eight am Sundays. Thank you so much for tuning in today.
This was Let's Talk Money on eight ten and one
O three one WGY. Have a great rest of your
weekend and take care