Episode Transcript
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Speaker 1 (00:01):
Well, good morning, and welcome to another edition of Let's
Talk Money on eight ten WGY. I'm your host, John Malay,
and I'm going to be with you on this early
September Sunday morning. Looking out the window, a little cloudy,
but I think it's going to become a nice sunny day.
I'm a certified public accountant and the chief operating officer,
(00:23):
chief financial officer, and a wealth advisor at Bouchet Financial Group. Again,
I want to thank you for taking time out of
your Sunday. I know you've got a lot of options
with your time and we appreciate you tuning in being
a part of our show this morning. I have the
pleasure of having a co host, and that is Edward Wilhelm.
Ed is a portfolio strategist at the firm and a
(00:45):
key member of our investment committee. That means Ed's behind
the scenes and in front of the scenes deciding the
investments we make some of the directions we're going works
very closely with Ryan Bouchet and the rest of the
investment committee. Ed, I want to thank you for joining
me this morning.
Speaker 2 (01:01):
Thanks for having me John, so honestly, always a pleasure
of being able to come on the radio and have
a quick conversation.
Speaker 1 (01:06):
And I will tell you Ed is a little bit
younger than me, so I'm not sure eight am on
a Sunday is a normal time for Ed to be
up An Adams.
Speaker 3 (01:15):
So I appreciate, appreciate you doing that.
Speaker 1 (01:18):
And we've got a lot to talk about today. You know,
a lot of you know, some ups and downs in
the markets. This week we'll talk about that, and you know,
obviously a lot of conversation about the FED and what's
going to happen with interest rates, as well as a
bunch of other things. We'll cover those as well as
some financial planning topics. But remember we're here for you,
so we encourage listeners to call in with questions. You
(01:41):
can reach us at eight hundred talk WGY. That's eight
hundred eight two five five nine four nine. So Ed
and I have the pleasure of really being the first
to broadcast from our new podcast studio here in downtown Saratoga.
So Ed appreciate you join it in on this first,
(02:02):
first real radio show from the podcast room.
Speaker 2 (02:05):
No, it's honestly exciting. It's definitely got a different feel
us being face to face for the first time. You know,
being younger and a little bit newer to the radio
makes it a little bit easier on me, be able
to look at you absolutely.
Speaker 1 (02:15):
Because there was a time, you know, one would connect
through phone another way. So we're excited to have this
up and running. You know, as a firm, we market
a lot of different ways. Obviously radio is a big
part of it. But we're you know, starting to you know,
put our toe into the podcast world. We'll be starting
that sometime, you know, maybe twenty twenty six, but we've
got the equipment and we're putting it all together, doing
(02:37):
some test runs. But so we're excited to be here.
Speaker 3 (02:41):
You know.
Speaker 1 (02:41):
It's it's amazing, you know, we're Summer's over and I
know technically it's not over, but boy, you got this change.
Ed and I both they're sitting here, you know, coughing
and sneezing and you know, so it's that time of
year with these you know, changes in the weather pad
patterns affect some of your health as well.
Speaker 3 (02:58):
But happy to be here. You know, it was a
great summer.
Speaker 1 (03:01):
You know, hopefully everybody got a chance to you know,
get to the Saratoga Raceway, get Lake George back, all
that this region has to offer, plus hiking and a
lot more. So I hope everybody had a great summer.
And I'll say as we head into fall, it's a
spectacular time of year here in the Northeast.
Speaker 3 (03:19):
Actually one of my favorite.
Speaker 1 (03:21):
Now one of the things that you know, Ed and
I and the rest of the firm, you know, we
hit a big firm milestone and so you know we're
gonna be planning a little retreat to to Vermont, Manchester,
Vermont a little over week.
Speaker 3 (03:34):
So that should be a good time.
Speaker 4 (03:35):
Ed, Yeah, now looking forward to it.
Speaker 2 (03:37):
Steve certainly loves to celebrate, so he put that together
pretty quickly and putting together an itinerary, So it should
be a good weekend or week looking forward to it.
Speaker 1 (03:46):
Yeah, and absolutely, And Steve does you know, I will
say he does believe in celebrating. You know, we we
work hard, and you know, we take this work very
serious and and uh, you know that's a culture Steve built.
But we like to play hard too. You know, we
have a great team, great group of colleagues. You know
all I'm gonna just say a players like Ed and uh,
(04:08):
you know we've achieved a lot and you know, Steve
likes to celebrate our victories and uh, you know, celebrate
each other because it really is all about the team.
So we appreciate that you also fall we head into
charity golf outings, and you know, one of the things
we do as a firm is, you know, we get
back to the community in number of ways. And you know,
(04:29):
nonprofits have a tendency to have charity golf events in
the spring and then in the fall.
Speaker 3 (04:35):
So and I know you're playing in.
Speaker 2 (04:37):
One coming up, Yeah, coming up this Friday. It's the
Bob Best Memorial. So it's put on through the YMCA,
and it helps support the youth. And I also it's
like to touch on you know, the YMCA is really
such a great organization. I've been volunteering volunteering there on
the Impact Committe a little over a year now. But
it's it's really so much more than a gym and swim.
(04:57):
You know, they have programs for cancer survivors, you know,
whether that's just getting them in some fitness classes or
you know, supporting the youth, supporting the elderly. So really,
you know, if if you're if you're not thinking about
your your local YMCA, it i'd encourage you to go
check it out and either get a membership or see
if you can spend some time volunteering over there.
Speaker 3 (05:16):
That's that's a great message.
Speaker 1 (05:17):
And again the firm, you know, we highly encourage our
colleagues to get get involved, get involved in the community.
You know, we think is a good corporate citizen. That's important,
you know, not only to give back financially, but our people.
You know, and I will say, just the nature of
the caring, compassionate people we have on our team, they
(05:38):
want to give back, and so we do a number
of things. Uh and so Ed has mentioned that I'm
also playing the week after in a charity outing in Troy,
New York for Joseph Souso, another not for profits. So
you know, great great, I will say, our area is
blessed with a number of great nonprofits doing amazing work,
and you know, it just feels good to support them,
(06:01):
whether again again it's financially or you know, volunteerism or
other ways.
Speaker 3 (06:06):
So that should be a good time.
Speaker 1 (06:09):
You know, I have to say, you know, in our
beginning intro we talk about sudden money, and you know,
I'll say, the typical ways we really see sudden money
is somebody might sell a business and now they've got
some large proceeds that they you know, need to manage
taxes on an invest Uh. It could be you know,
somebody retiring and even though taking their four one k
(06:30):
isn't truly sudden money, they now suddenly have to may
have to manage it on their own right, and so
they need help from us to help do that. So
but obviously Powerball last night, I mean that's some sudden
money right there.
Speaker 2 (06:42):
Ed, Yeah, we might have to track them down and
see if we can get them in for an initial meeting.
Speaker 1 (06:45):
I understand two winners too, That's what I think I saw.
I think so okay, so Ed will be hunting those
two down and we'll help them put that sudden money
to to work.
Speaker 3 (06:57):
I mean, was it at one point eight billion? That's it?
You know, he gets into that territory.
Speaker 1 (07:01):
You know, even though the chances are winning are ridiculously low.
It's you know, it's one of those things you's going
to play around with. So and one thing before we
kick off the show, you know Ed Ed the earlier
this year pasted is CFA level one. So I want
to congratulate Ed on that, you know, And he's on
the pathway to earning the prestigious Chartered Financial Analyst designation.
(07:25):
Really tough designation, so at congratulations on that.
Speaker 2 (07:29):
Yeah, no, I appreciate that. So getting ready to gear
up for level two here. I'll probably plan to sit
in the spring in May.
Speaker 3 (07:35):
Awesome great work there. So again, Ed and I are
here for you.
Speaker 1 (07:40):
And if you have questions, you know, obviously you got
Ed here with me, So any good investment question or
anything at any topic we're here to handle. You can
reach us at eight hundred talk WGY. That's eight hundred
eight two five five nine four nine. So this morning
we're going to talk about markets, investing, financial planning, and
we will start off by you know, jumping rate into
(08:01):
the you know, kind of a market overview. And you know,
so this week, you know, we certainly saw some ups
and downs in the market. You know, we had a short,
shortened trading week, you know, with the Labor.
Speaker 3 (08:11):
Day holiday on Monday.
Speaker 1 (08:13):
Yeah, we had a strong start and you know, really
solid gains on Thursday, as you know, expectations were that
the Fed is going to be cutting rates, so we
saw that exuberance in the markets. S and P hit
a new record high new record close of sixty five
oh two.
Speaker 3 (08:30):
You know, really as markets were.
Speaker 1 (08:32):
Digesting uh, you know, the the weekend labor data and uh,
you know, really cementing the bets that the FED is
likely going to reduce rates in uh in September. So
we also saw small caps and uh you know tech
contributor as well. So that was Thursday, right, and then
you know, Friday we turned into one of those you know,
(08:52):
be careful what you wish for, right, because we had
jobs report at and jobs.
Speaker 4 (08:57):
Report was weak, very weak, yeah, very weak.
Speaker 3 (08:59):
Yeah.
Speaker 1 (09:00):
And and markets, you know, once they the exuberance of Thursday,
you know, hoping for FED cuts on labor week labor,
all of a sudden looked at that report said wow,
that's some weak labor numbers there. So added just twenty
two thousand jobs in August, well below the expectation. And
(09:21):
you know, so all of a sudden markets reacted negative.
You know that that optimism we saw on Thursday start,
you know, turned into cautious and so you know, we
we saw the Dow drop half a percent, smp go
down point three percent, NASDAC, you know, just slight and
believe or not to Russell two thousand. You know, as
(09:42):
you expect, the small caps actually bucked the trend in
rows by half a percent. And remembering you know, small
cap likely would benefit the most from some interest rate
easing there.
Speaker 3 (09:52):
So, so saw some.
Speaker 1 (09:53):
You know up and down right, and you know, I
think that's going to be a sign of what we're
going to be seeing for a little while. You know,
in in the midst of all the labor data, we
did see some you know, Broadcom had some really strong
AI news, so we saw a strong pop in their stock.
Tesla also announcing you know, a massive pay plan and
(10:15):
you know, overall investors like that, and you know, so
certainly some some positives there in the market.
Speaker 3 (10:22):
Ed, do you want to give just.
Speaker 1 (10:23):
Maybe a little bit color on some of the sector
performance in you know, what we saw out of last week.
Speaker 2 (10:28):
Yeah, so let's start on a positive note looking at
the communications sector up almost three percent, and again, you know,
we saw some volatility early in the week, you know,
on Labor Day while markets were closed, and then you know,
on Tuesday, Google came out and they had beat the
antitrust case from dg DJ which would ask them to
(10:50):
divest their Chrome, which is you know, their search engine.
They ended up beating that case and rallying you know
over eleven percent, i think almost twelve So that was
a huge boost the communications sector.
Speaker 4 (11:02):
And then on top of that, we saw healthcare.
Speaker 2 (11:05):
And staples up, you know, both roughly about one percent,
and a lot of that is just going to be
with that volatility we saw on Friday, you know, some
concerns over the labor market, those more defensive sectors like
healthcare and staples are going to be able to hang
on a little bit better.
Speaker 1 (11:21):
Yeah, excellent, And you know, certainly financials, you know, interest
rates sensitive sectors are certainly you know, going to be impacted.
Is figuring out what the Fed is going to do.
So you know, overall, for you know, the week not
a bad you know, we SMP you know, up point
three percent for the week, but you know, up over
ten percent year to day.
Speaker 3 (11:41):
You know, it's hard hard to argue with that kind
of you know return.
Speaker 1 (11:44):
You know, the Dow was down about zero point three
percent for the week, up almost seven percent year to date.
Speaker 3 (11:52):
Nasdaq was actually up a little over.
Speaker 1 (11:54):
One percent for the week, and you know, up over
twelve percent year to date, so you know, good, good
returns there and then Russell two thousand, as you talked
about you know small cap really uh, you know, benefiting
from the prospect of some rate cuts. The Russell two
thousand was up one percent for the week and you know,
up over seven percent you know year to date. So
(12:15):
you know, it's great to see you know, not just
a concentration in tech, right. You know, I see you
routing out for some you know, broader participation there and
so you know, overall, you know, good week in the
market and you know, I will say, you know, that
kind of volatility as we as we look through.
Speaker 3 (12:32):
The rest of the year.
Speaker 1 (12:34):
You know, investors, you know, investors should be prepared and
part of that preparation is, hey, we're at still at
you know market highs, right, and so you know, it's
a great time to look at your portfolio, right, make
sure if you need to rebalance, you know, might be
a good time also if you have you know, cash needs.
(12:54):
You know, if you you know, one of the things
that we do and is built into our kind of
financial planning process. And I know you've heard if you're
a longtime listener, you hear us talk about it all
the time. It's part of the financial planning process is
really you know, trying to identify what clients might need
to take out of the portfolio in the next twelve
to eighteen twenty, you know, twenty four months. We put
(13:15):
that into you know, more conservative investments. Sometimes we use
a vehicle called swvxx, you know, as a way to
park that we call a cash management strategy. So if
you're you know, managing your own portfolios, you've you know,
enjoyed a nice run up right again rate off market highs,
(13:35):
it's a good time to look at the portfolio, maybe rebalance,
but also more importantly, look, hey, are you if you
have needs to be taking cash out of your portfolio
in the near term, so which could be the next
one to two years, you know, it could be a
good time to de risk some of that money, set
it aside. And you know, that gets to a question
you know we get all the time. Man, it's like rebalance,
(13:56):
Like how often should an investor do that?
Speaker 3 (13:58):
What should that entail? A little there if you don't.
Speaker 4 (14:00):
Mind, Yeah, it's actually interesting.
Speaker 2 (14:03):
You know, rebalancing is probably one of the less talked
about aspects of being an investor. But you know, I
spend a lot of my day running back tests. You know,
with different holdings in our portfolio, how would they have
done historically? When you're changing your rebalancing frequency, that can
greatly adjust what kind of returns you're seeing as an
(14:23):
end result. So you know, historically, if we're just thinking
about a sixty forty portfolio, the more often you have rebalanced,
the worst performing your portfolio would have done. And a
big component of that is when you're not rebalancing, you're letting.
Speaker 4 (14:37):
Your winners win, you're letting your losers lose.
Speaker 2 (14:40):
So you know, if you started with the sixty forty portfolio,
after a few years in a bull market, that could
turn into a seventy thirty or an eighty twenty. So
now your overweight equities. As we know, equities historically have
always outperformed bonds over a long term time horizon. So
letting your equities run and become a larger part of
your portfolios increased returns. Now there's a flip side to that,
(15:02):
and that's going to be when we see volatility. Right,
if your target, your risk tolerance, the risk you're comfortable
taking is at a sixty to forty portfolio, and you're
letting that run up to an eighty twenty. When we
do see volatility, your draw down is going to be
larger than anticipated. And that's really important if you're you know,
in retirement and you have cash needs. And this just
(15:22):
goes back to what John was saying on why it's
so important to put aside you know, a couple of
years of cash or you know, whatever is right for
you is because you do not want to be selling
your equities in a down market. You ideally want to
be buying them. So ideally, you know, the correct rebalancing
frequency is going to be different for everyone, kind of
depending on your risk tolerance. I would definitely encourage listeners
(15:43):
to not be too frequent with it though, you know,
semi annually, annually or even less frequent than that. If
it's really long term money, you want to let those
winners win, those losers lose, and kind of lean into
the momentum of markets.
Speaker 3 (15:55):
Great. There's some great, great information there.
Speaker 1 (15:57):
And it is interesting, you know, because when we talk
about investors and and you know what, you know, sometimes
I'll just say, friends ask, hey, what what should I
be investing in? And you know, part of it is like,
you know, you know, what are you investing for? Right
is this, you know, retirement, what you know, so what's
your what's the desired outcome? Is this a long term
are you investing for child's education? You know, knowing your
(16:19):
time horizon because you know, listen, if one thing, you know,
ZED talks about frequency, we're not day traders, right, So
we're not in making you know, daily weekly changes to
our portfolio, right. We're we're very strategic and tactical right
based on what we're seeing in the economy. And you
should be as well, right because if if you're trading
too too frequently, right, you're just you're really losing focus.
(16:42):
So you know, definitely some some good direction there. You know,
as we a lot of talk, you know obviously about
the jobs report and UH and the markets reacted, but
you know, is it a sign that the labor's falling apart?
Speaker 3 (16:56):
Are we in panic mode? And you know the answers know,
you know, what we're doing is we're.
Speaker 1 (17:00):
Seeing weakening, right, And you know, we'll touch a little
bit about the upcoming FED meeting because that's a lot
of eyes are on that what what direction is FED
going to take? And you know, obviously President Trump has
you know, been very vocal about what he wants to
see and you know how he thinks that's going to
help the economy. And so the job report, you know,
it was weak, right, and so lower job creation in August,
(17:24):
some minor revisions to prior months, but important though, is
the revisions to June actually turned June from a positive
job creation month to a negative and and really, you know,
that's the first time, you know, we've seen that since
twenty twenty, and you know, that's pandemic really, so even
before that if you have factor out, you know, if
(17:45):
you remove the pandemic factor, so so lower than expectations,
you know, negative in there back in June, but they're
you know, the earnings average hour in the earnings row
is a month over month and is up you know,
three point eight percent year over year. So it's a
positive news there. And so you know, the gains that
(18:08):
we saw were really in healthcare and then you know
manufacturing and government.
Speaker 3 (18:14):
Really represented the decline.
Speaker 1 (18:15):
So I think the big picture, you know, we also
some other labor data outside of the jobs report, was
a Jolty report, and you know what we're seeing there
is again for the first time in a while, right,
we're seeing an equalization between those looking for a job,
the unemployed, and then the number of jobs that are open.
You know, we're uh, there was a time you know,
(18:36):
you know, twelve eighteen months ago where it was a
two for one, there were two jobs for everyone looking
looking for a job it you know, unemployed, and so
now we're getting more equalization where there's you know, technically
I think there's fewer jobs than there are job seekers.
And you know what we're seeing too is you know,
reduction of the available labor force, right, so we're seeing
(19:00):
and tightening there. So interesting, you know, dynamics in the
labor markets certainly, uh it's become a bigger concern for
the FED, and and FED chair Powell has you know,
made those comments you know recently that really you know,
they've got their dual mandate of inflation and uh and
max employment and you know they're seeing the shift of
(19:22):
the balance, right Inflation isn't where they want, but but
they're really focusing more on labor. So uh So, definitely
showing some weakening. But what we're not seeing, uh, I
think is a positive. We're not seeing you know, massive
layoff right, which really would be you know, signs of
some major cracks and so certainly.
Speaker 3 (19:41):
Number of signs out there.
Speaker 1 (19:43):
Showing labor is UH is weakening, but not to the
point where we're in panic mode, right, And you know,
unemployment rate did tick up slightly, but ticked up from
four point two to four point three, so again still
in good territory, but definitely showing.
Speaker 3 (19:58):
A weakening a weakening there.
Speaker 1 (20:00):
And anything else with the jobs report that you know
you wanted to add in or just any color.
Speaker 2 (20:05):
No, I mean, I think directly on the job support,
you know you need a great job highlighting all the
key points. I guess I would just add, you know,
any listeners, if you've got some you know, younger friends
or relatives maybe just graduating college, definitely wouldn't hurt to
maybe reach out and give them a hand or see
if you've got any connections, because I do know, you know,
looking at the demographic that the younger portion, you know,
(20:26):
eighteen to twenty four, they are struggling the most too.
Speaker 4 (20:29):
Fine jobs.
Speaker 2 (20:32):
Now, as John mentioned, you know, a big you know,
kind of follow through from a job's report like that
is going to be where does the FED sit looking
at rate cuts? So we've got a meeting in just
a little over ten days and looking at the probabilities.
Right now, markets are pricing in a one chance for
(20:52):
a cut in September, which has changed pretty drastically from
you know, looking at just a week ago, it's up
to was just at eighty five percent, So you know,
you think eighty five to one hundred maybe not that
much of a change, but I'll tell you what, fifteen
percent in a week, you know, certainly means something. So
we are looking at a cut in September. I don't
(21:13):
know how much more commentary JPOWE is going to give
us on how we're looking into the rest of the year.
As we sit right now, markets are looking at you know,
slightly above fifty percent chance of a subsequent cut in
both October and December, so another two all planning to
be twenty five basis points. Now, that's what the markets
(21:33):
have priced in right now. Again, we get CPIPPI next week.
Depending on how those look, those probabilities could change drastically.
So it just really goes through to reiterate, you know,
same thing we've been saying here, same thing Jerome Powell,
our FED chair, has been saying, is just how data
dependent the economy is right now When you think about
just how much uncertainty there is geopolitically and even domestically
(21:55):
with the tariffs. It's certainly made a lot of jobs
tough across the financial world. So you know, just like Japowell,
we are you know, definitely data focused right now here.
Speaker 1 (22:06):
So a lot of a lot of thought there's gonna
be a twenty five basis point, you know, even fifty
basis point. It kind of a mega cut is creeping in.
I don't know, you know, it's still a low percentage
thinking that, but it's not out of the realm of possibility.
Speaker 3 (22:21):
You know.
Speaker 1 (22:21):
You listen to you know, some of the speak of
some of the coming out of the FED and you know,
summer talking.
Speaker 3 (22:28):
You know, maybe we need more. So certainly, you.
Speaker 1 (22:33):
Know, the idea is we're going to see at least
a twenty five basis point and it'd be interesting there
as you know, you mentioned that there is some inflation
data coming out. Expectations are you know, it's uh, you know,
we're going to see you know, maybe a slight uptick CPI.
I think I think expected down tick in PPI. We
(22:54):
had a big pop last month. But the question is
going to be is that you know, even if we
do see a slight uptick is uh is that going
to be you know, enough to change the Fed's direction.
So you know, we're we're almost halfway through today's show. Again,
a lot of remind callers you can reach us at
eight hundred talk WGY. That's eight hundred eight two five
(23:17):
five nine four nine.
Speaker 3 (23:19):
We hope you're enjoying the show.
Speaker 1 (23:21):
We're going to hope that you rejoined us after the break,
and again as we get come back from the break,
you know, we'll talk a little bit more about the
FED meeting and uh, you know, expectations and how that's
going to impact you. We're also going to get into
you know, been a lot of talk recently and some
of it coming out of the White House about alternative investments. Right,
(23:43):
we talk a lot about stocks and bonds, little discussion
now of alternatives, so we'll touch on that a little bit.
Speaker 3 (23:49):
So, well, you've been listening.
Speaker 1 (23:51):
To Let's Talk Money, brought to you by Bouchet Financial Group,
where we prioritize their clients' health while we manage their
wealth for life. We tune in and we'll hope you
stay with us through the break. Well, good morning, and
thank you for staying with us through that commercial break.
You don't have just one expert colleague today, you actually
(24:12):
have two here.
Speaker 3 (24:13):
So you've got John Malay.
Speaker 1 (24:15):
I am the firm's chief operating officer, chief financial officer,
and a wealth advisor, and I'm joined by my colleague
Ed Wilhelm.
Speaker 3 (24:24):
Ed, thank you for joining me.
Speaker 1 (24:25):
Hope you're doing, Hope you're enjoying the show, and hope
getting up this early it isn't too much of a
disruption to your weekend here.
Speaker 2 (24:32):
No, no, not at all, although I will I will say,
after that quick little commercial break here and how we
were coughing and sneezing in here, we may have to
let my other trader, Casey Bird, who's doing a fantastic job.
He's going with the firm a little over a year now,
but he may have to work from home on Monday.
Speaker 4 (24:47):
This room, I'm thinking maybe contaminated.
Speaker 1 (24:50):
I think we definitely have to get the lysol wipes
out before we leave. So he's okay there, So Sunday,
I hope everybody is enjoying the weekend. Hoping he has
some good plants to enjoy the day. Yesterday was a
bit of a washout. Actually had some family visiting so
I'm up here in Saratoga. So what we did is actually,
(25:11):
uh we went to the Saratoga Battlefield and uh, you know,
went to the inside museum part and they have a
nice you know film talking about the history of the
Battle of Saratoga and what leading.
Speaker 3 (25:25):
Up to it.
Speaker 1 (25:25):
And then we didn't do the walking tour because at
that point the rain picked up again, but we we
got the car drove around. I would just highly recommend
if you if you like history or if you just
love beautiful surroundings. Really the the it's laid out so
nicely and you've got some gorgeous views of the areas,
some gorgeous views of the Hudson River.
Speaker 3 (25:46):
So highly highly recommend that.
Speaker 1 (25:49):
You know, we were covering a lot about markets, the
latest jobs report, and you know, right before the break,
you know, wrapping up a session talk about the upcoming
FED meeting. So you know, as Ed mentioned, September sixteenth
and seventeenth, the next FOMC meeting will be held and
they'll be making a decision on rates. You know, this
(26:12):
would be the first if they do cut, the first
cut of this year. You know, you might recall last
year we saw three rate cuts after eleven back to
back rate increases.
Speaker 3 (26:23):
So you know, certainly, you know, if.
Speaker 1 (26:28):
You're a borrower, you're looking forward to potential rate cut.
Speaker 3 (26:32):
That's e some borrowing costs.
Speaker 1 (26:34):
So certainly if that does happen, that will help some
individual borrows as well as corporations. So you know, as
we mentioned some week labor data, I think that's going.
Speaker 3 (26:43):
To tip the scale again.
Speaker 1 (26:47):
Most of the expectation is for a twenty five basis
point cut, and you know, I think that's what we
expect to be seeing. And as Ed mentioned, you know,
we could see another cut this year. And you know,
I think as one of the beauties of these FED meetings,
in the openness of seeing the minutes from the meeting,
you know, we'll get a much I think, a clear
(27:08):
direction of what's gonna happen.
Speaker 3 (27:09):
In twenty twenty six for sure.
Speaker 1 (27:11):
So you know, I think major things expect a rate
cut and and it's certainly a twenty five basis point
is being being priced in. You know, before the break,
Ed was also talking about you know, portfolio construction, you know,
and there was a time where it was you know,
stocks bonds and that was really it. And you know,
(27:32):
now we've seen a growth in alternative investments. And you
know that term gets thrown around a lot and means
different things to different people, and so I thought ed
would give us a little bit of a color of
what are alternative investments, how you might use them in
a portfolio. We've actually, you know, when we saw the
direction that bonds were going to be going, when when
(27:54):
the Fed started increasing rates, we made a move of
getting out of bonds and we placed them with some
alternatives that you know really functioned like fixed income. So
alter we have some alternatives in our portfolio. Very conservative also,
I would say, because the alts do, it's a wide range, right,
and that's where I think, you know, the term gets
(28:16):
thrown around and it means it can mean a lot
of things depending on how you take it. So and
if you don't mind just kind of walking through what
are alts and how how they might be using a portfolio.
Speaker 2 (28:27):
Yeah, no, awesome, thanks John. I would say alts are
it really is a broad world, but alters anything that's
not historically contained under an equity or a bond, you know, tag,
which does make it tough. You know, when you think
of alts, you have got private equity, private credit, you know,
(28:47):
you have commodities, you know, like a gold or a
silver or you know, even invested in something like wheat maybe.
But then you also, you know, so on the newer
side you have something like bitcoin. Now on top of that,
the you know, finance world has grown incredibly complicated with
the rise of technology. You know, you used to just
own a stock or track a basket of stocks. Now
(29:10):
with active strategies coming out in the use of derivative products,
you know, they these fun families can get really creative. So,
you know, two alternatives and we use in our portfolio
right now. You know, one is a buffered product, so
that's just going to track s and P five hundred,
but it's going to give you a cap on what
you can make on the upside. But then the flip
(29:32):
side of that is you get a buffer on the downside,
so you know, typically you might see something like ten
and ten percent, so you get ten percent upside and
then ten percent downside protection. And then the other one
we use is it's called a covered call strategy. I
don't want to get two into the weeds on it,
but essentially it's going to track a basket of stocks
and that's going to sell call options on top of
(29:54):
that basket of stocks, so while you are tracking equity,
both have fixed income like proper these you know, to
limit some of that downside. So those are a couple
of uses, and you know you're thinking, well, you know,
why would you want to do that? And the idea
is to add some sort of decorrelation benefit into your portfolio.
(30:15):
So you know, in a in a perfect world, you know,
you would have you know, essentially just two investments that
are you know, perfectly correlation of negative one right, so
and one's up the other ones down. Now if those
are both positive returning assets, uh, then you know you
basically take all of the volatility out of your portfolio.
So that that's the goal when you're adding in alts.
Speaker 1 (30:37):
Perfect and I know alts can be a lengthy discussion.
I think we're gonna pop that back into that. We
got a caller on the line, so we've got Bill
from burn Hills. Bill, we appreciate you listening this morning,
and what can we help you with? Hi?
Speaker 5 (30:52):
So, yeah, I retired a couple of years ago and
I'm still fairly aggressive with the you know, utual fund guy,
but been doing some rebalancing and I'm just wondering which
of the tour if you have another recommendation, if I
want to move like one level down in risk. So
(31:13):
if I you know, if I take some money out
of my you know, growth stocks, would like a dividend
fund or a balanced fund be a better choice.
Speaker 1 (31:23):
You know, just a little bit more color, do you know,
like in your in your allocation, you know what percentages
in equities versus fixed income?
Speaker 5 (31:35):
Oh yeah, yeah, I mean it's I'm still like ninety ten, okay.
Speaker 2 (31:39):
Okay, right, yeah, So I mean I would say right now,
with where we're at in thinking about rate cuts on
the horizon, and you know, depending on what your stance is,
you know, maybe on the general GDP growth of the future,
if we're going to see a really acceleration of inflation
forced the FED to maybe hik again next year. I mean,
depending on what your use are with that, bonds can
(32:01):
certainly look very attractive, which would maybe you'd think about
the balanced portfolio. A balanced portfolio is going to have
some stocks and some bonds, and again, you know, without tickers.
I can't say for certainty, but one thing we have
been looking at a lot and over the last you know,
a couple of months here, Bouchet, we have been leaning
into quality, you know, with evaluations so frothy. You know,
(32:21):
we're certainly bullsh but we do see some opportunity for
breath expansion markets outside and necessarily your large cap tech.
So I would say, if your if your equity allocation
is you know, completely growth, it's going to be a
lot of tech pairing back some of that and adding
you know, some quality uh, you know, good companies, the
dividend payers uh can can complement your existing portfolio really well.
Speaker 4 (32:43):
So I'd probably lean more in that direction.
Speaker 5 (32:46):
Okay, all right, Super, I appreciate you.
Speaker 1 (32:49):
Yeah, I appreciate that call, Bill, And I would say
from our portfolio, ed, you know, part of the moves
you know made was add some high quality dividend payers
and some ETFs around that. And again, I know, you
know Bill mentioned he's a mutual fund investor, you know,
still would say, hey, take a.
Speaker 3 (33:06):
Look at ETF.
Speaker 1 (33:07):
So we certainly still believe ETF's lower cost and just
more tax efficient. So but appreciate that call, Bill, and
appreciate you tuning in and encourage other listeners. Hey, give
us a call. We're here to help you out. Answer
any question you have, you can reach us at eight
hundred talk w G Y. That's eight hundred eight two five.
Speaker 3 (33:27):
Five ninety four nine. So I interrupted Ed Raymond.
Speaker 1 (33:30):
He was in the middle of his role on on alternatives.
So Ed, if you don't mind picking up where I
where I broke it into you on.
Speaker 4 (33:39):
Yeah, perfect.
Speaker 2 (33:40):
I hate to jump around, but I with him talking
about mutual funds real quickly.
Speaker 4 (33:44):
Did want to just touch on that?
Speaker 2 (33:46):
So, oh, you're going off the script ed, I am
going off the scar right, forgive me John, you got
to go with it. So a bigfore, big proponent of
ETF's here at Bouchet. You know, they're more modern vehicle
now typically one of the historic benefits to ETFs with
a more modern structure it allows the fun families to
roll them out at a lower cost, you know, being
(34:07):
here now for a few years and getting to see,
you know, really the industry in practice for clients what works.
I would say the hardest part about owning mutual funds,
especially in a taxable account is the capital gain distributions.
Speaker 3 (34:20):
Right.
Speaker 2 (34:21):
What it does is it forces you to take capital gains,
you know, in any given year depending on how well
the fund did and how it's constructed, but it gives
you less control over your taxes, and in an ideal world,
you want to be able to be very nimble around
your taxes and where those gains are coming and when
they're coming. So I'd say that's that's the biggest proponent
of ETFs, and.
Speaker 1 (34:43):
That's that's a great point to make because you know,
I will tell you and again, if you listen to
this show, you hear let's talk about a lot. You know,
one of the areas that we've really beefed up is
our tax area. And you know, tax planning is becomes
such an integral part of really financial planning and helping uh,
you know, help helping individuals not only manage their money,
(35:06):
but then manage distributions in the most tax efficient way possible.
So all starts with holding holding the instruments that right
are the most tax efficient, and certainly is you know,
Ed pointed out ETFs very tax efficient, so great, great,
great information.
Speaker 2 (35:21):
There, Ed and then certainly happy to jump back into
the exciting world of alternative investments. So I was just
talking about why you'd want to own alts, and really
that just comes down to adding some decorrelation benefits in there,
you know, that's the whole point of why you would
own bonds in a portfolio. Yes, equities return more, but
(35:41):
sometimes you hit some roadbumps and if you need money,
you got to pull from somewhere, and in a down market,
you definitely don't want to be selling your equity, so
that that gives you the opportunity to pull from bonds.
When equities rebound, you rebalance. That's just essentially modern portfolio theory.
Now you add in alts, so it's kind of a
third bucket, adding in something that again is decorrelated from
(36:03):
both equities and bonds, you know, and certainly depending on
what all, you'll have periods where it may be correlated
with an equity or correlated with a fixed income. But
the idea is to just take some of that overlap
out and kind of use it as a third bucket
for rebalancing. So that's really where we see the most
use case out of it. It's not necessarily adding to
total return, while it certainly can if you think about
(36:25):
something like gold this year or you know bitcoin over
the you know, since its existence, but yeah, no, just
going back to alts, and it's really that decorrelation benefit
using it as a third bucket for rebalancing. And you know,
it's a it's a it's a deep world. You know,
a lot of alts you know, maybe previously have not
been accessible to retail investors, but as the world's grown,
(36:46):
they are becoming more and more accessible, even through ETFs
or mutual funds. So that's definitely exciting to see.
Speaker 1 (36:53):
Yeah, and you know, you know, one of the alts
that that obviously is getting a lot of conversation in play,
you know, is in the crypto world, right, and so
we do get questions from that, and you know, full disclosure,
we don't have any you know, crypto exposure currently in
our portfolios. Uh, you know, you can now hold crypto
(37:14):
exposure number of ways, including there's a number of ETFs
and so you know, like and I'll put it like
the category of international, right, Like we're not in international
right now. But we also you know, we are underweight
a number of years and we've actually been out of
it now. That doesn't mean we're out of it forever,
right because you know, Investment Committee has their eyes on
that all the time. And but you know, really the
(37:36):
thesis right now is we still feel from a long
term investment point of view, the US equity market is
where we want to be. But crypto, you know, we
do get questions from clients, and you know, there are
a number of ways, you know, you can open up
accounts where you can buy into some some you know,
bitcoin and other things. And I would just say if
somebody really wants to do because there is this fear
(37:57):
of missing out right, because you know, in vesters, you know,
hear about a friend who made a lot of money
or saw these returns and uh, you know, so if
somebody wanted some exposure to crypto, there's ways they can
get it. I would just say, you know, from our
from my perspective, I would put a very small percentage
of your portfolio there. Certainly, if this is your retirement funds,
(38:20):
I would not I would not play in that area.
Speaker 3 (38:23):
But if you had some money on the side, and.
Speaker 1 (38:25):
You were okay with some volatility, and you were okay
with it potentially going to zero, not saying it would,
but I think you you have to have potential, you know,
because let's face it, you know, you invest in an
ETF or an individual stock, right, you have a ETF,
you have a basket of stocks, you can kind of
look at something tangible and say, hey, uh, these tech companies,
(38:47):
I believe that I can see their balance sheees, I
can see you know, every quarter what their SEC filings are.
So you've got some visibility into that. You know, you
don't things like cryptos and you know it's what it's
worth because somebody is willing to pay for it. And
so again I'm not going to sit here and say,
(39:08):
you know, I think the belief is cryptocurrencies are here.
They're not going away. From an alternative investment point of view,
I you know, would just say caution right that if
you if you really want to get into it because
you fear, hey, I'm missing out and I'm seeing these returns.
To me, it's I put a very small percentage of
your portfolio in there, and in a part of your portfolio,
(39:30):
you're willing to accept a lot of volatility because you
definitely have.
Speaker 3 (39:34):
To accept that in the all world. So appreciate that.
Speaker 1 (39:38):
We are going to take a quick commercial break, So
please stay tuned and we'll be right back with Let's
Talk Money on eight to ten. WGY, Well, thank you
for giving us that quick commercial break. As Ed mentioned earlier,
we're both we're both feeling the effects of the season change.
So having a little litle bit of time to get
(40:01):
a drink of water and and cough was well needed.
So we appreciate that. And so you know, we're coming
close to the end of the show, and you know,
encourage listeners to call in with questions. It's not too
late to sneak in before the end of the show.
You encourage listeners to call with questions. You can reach
us at eight hundred talk WGY. That's eight hundred eight
(40:24):
two five five nine four nine.
Speaker 3 (40:27):
So I appreciate you.
Speaker 1 (40:29):
You know, that segment on alts and you know, again
we do get a lot of questions about portfolio construction,
and you know there's certainly you know, as you mentioned,
a home for alts in the portfolio, and as you mentioned,
we've got them in our portfolio, so you know there.
Speaker 3 (40:44):
Is a need.
Speaker 1 (40:45):
So you know, one of the things that we want
to touch on just you know, real briefly. And you know,
this is an unfortunate one. We're having more and more
of our conversations with clients and I'm just gonna you know,
really touch on it very briefly, just to really raise awareness,
right is is just fraud and cybersecurity. You know, as
a firm, we're going to be doing a cybersecurity webinar.
Speaker 3 (41:05):
In a couple of weeks.
Speaker 1 (41:07):
Uh, you know, this has just become just such a
big problem. And you know, I know, you know, as
individuals sometimes we think, well, you know, that's not gonna
happen to me. I'm too smart, I'm too alert. I'm
not going to fall into something like that. I'm just
going to tell you it can happen to anyone. We've
We've had clients, I've had friends, you know, very smart.
Speaker 3 (41:28):
Intelligent individuals.
Speaker 1 (41:29):
It's just, uh, these fraudsters are tricky, and you know
they they create this sense of urgency. And just remember
you know your phone, right that, if you have that
mobile phone, that is the primary gateway, right, So just
be be leery of anything coming through that phone. If
you get that text that says hey where are you?
(41:50):
Don't respond, don't if you don't, if you don't know
who that is, just delete it because they're just fishing
to get do I have a real person on the
other end, and your financial institution.
Speaker 3 (41:59):
If you get a.
Speaker 1 (42:00):
Text that's saying they're from Fidelity or whatever, bank, or
schwab ignore it if you if you think there's any concern,
go to to your statements, go to their website, call
at a known number. Don't exchange you know, don't engage
in any conversation through a text link or anything on
your phone. That's not how they're gonna wait, they're gonna operate.
(42:23):
So again, I'm not gonna take up a lot of
time here on that, but I just it's something we
see more and more, and it's it's you know, share
because the reality is, you know, they are you know,
they are targeting elderly with this, you know, and so
if you have a family member you're caring for, you know,
share this information because uh, you know sometimes it happens
(42:44):
if people get embarrassed and they don't talk about it.
So definitely, you know, share that information. So I'm gonna
I'm gonna get off the fraud kick there, you know.
So ed certainly with you know the interest rate movements,
you know, we saw you know, bond yields fall this week.
You know you want to kind of give it, you know,
a conversation about bonds kind of what we're seeing where
(43:05):
we think things are going.
Speaker 2 (43:08):
Yeah, No, certainly, so just you know, friendly reminder to
all of our listeners. When yields fall, the price of
existing bonds rises. So you know, if you hold just
for example, say agg it's a US aggregate bond ETF
in your portfolio, when you see yields fall this week,
that means that position is going to be up. And
(43:28):
that's just because you know, as yields come down, new
bonds being issued are going to be at a lower
coupon rate than those existing bonds, so it means the
bonds you have, they're paying more more valuable. Now, we
saw yields come down this week, rightfully, so a lot
of that is going to be because of those weak
labor numbers. Right So we see the weak labor numbers,
(43:49):
the odds of future cuts increases. You know, with FED
funds rate coming down, that means new issued bonds are
going to have those lower coupon rates.
Speaker 4 (43:57):
So that's kind of how that chain reaction works right there.
Speaker 2 (44:01):
And then I think especially what we're seeing is you know,
some of those longer term bond yields are staying a
little sticky. So when we see yields fall, you know,
like on Friday, a lot of that is happening on
the shorter end of the curve. Now, what does that
tell us? That's going to tell us that markets are
looking at a potential reacceleration of inflation on that longer
(44:24):
term time horizon, So they could see you know, maybe
in that ten to twenty to thirty year time horizon
inflation staying sticky. A lot of that is because of
uncertainty on tariffs. So you kind of see the yield
curve start to steepen with those you know, shorter term
rates coming down faster than the longer end.
Speaker 4 (44:42):
So it's something to keep an eye on.
Speaker 2 (44:43):
I mean, we like kind of the belly of the
curve right now that that five to seven year time horizon.
And then you know, certainly still with these elevated rates,
you can't go wrong still on that shorter end. I mean,
you're getting paid for really little to no risk, and.
Speaker 1 (44:57):
You know, ed we're still seeing you know what and
having new client meetings. People got a lot of people
still sitting in cash, a lot of money in cash,
and you know, they've been enjoying some decent savings rates,
right but let's face it, as a FED is going
to start cutting rates, they're going to feel that and
there's there's still opportunity to go out there and grab
(45:18):
some long term yields.
Speaker 4 (45:19):
Yes, exactly.
Speaker 2 (45:20):
I mean one of the best things I think you
can do, and we do it for a ton of
our clients, is you know, setting up you know, an
individual bond ladder, right, so you know, getting out of
those ETFs of those mutual funds and getting into the individuals.
You know, you can customize your liquidity exactly as you're
going to need it as well. So a lot of
opportunity there. But yes, certainly think about if you're sitting
in a money market vehicle. Yields are still attractive now,
(45:41):
but as they come down, you might want to think
about rotating it at least to just an ultra short
bond fund. I mean, that's essentially what a money market
fund is.
Speaker 5 (45:50):
Uh.
Speaker 4 (45:50):
But you know, switching to an ultra short bond fund.
Speaker 2 (45:52):
Will give you a little bit more yield, but even
those will continue to fall as that shorter end of
the curve does.
Speaker 3 (45:58):
Right.
Speaker 1 (45:59):
Well, we're you know, coming to the end of the show,
and you know, we appreciate you tuning in, you know,
ed and I had fun in here in our new
podcast room using some of our equipment and we'll get
better and better with it. But I want to thank
you for tuning in with today. I hope you enjoyed
the show. I know that we certainly did, and hope
you enjoy the rest of this weekend and have an
(46:21):
amazing week ahead. Also, be sure to check out our
website Bouche dot com. We got a lot of great
blogs and other great content covering a number of investment
and financial topics. You've been listening to Let's Talk Money,
brought to you by Bouchet Financial Group, where we help
our clients prioritize their health while we manage their wealth
(46:45):
for life. Again, thank you very much for tuning in.
I know ed and I really appreciate you taking time
out of your Sunday spending with us. And we had
some fun here using our podcast equipment. So appreciate, appreciate
you listening, and have a great rest of your week.
Speaker 3 (47:00):
One
Well, good morning, and welcome to another edition of Let's
Talk Money on eight ten WGY. I'm your host, John Malay,
and I'm going to be with you on this early
September Sunday morning. Looking out the window, a little cloudy,
but I think it's going to become a nice sunny day.
I'm a certified public accountant and the chief operating officer,
(00:23):
chief financial officer, and a wealth advisor at Bouchet Financial Group. Again,
I want to thank you for taking time out of
your Sunday. I know you've got a lot of options
with your time and we appreciate you tuning in being
a part of our show this morning. I have the
pleasure of having a co host, and that is Edward Wilhelm.
Ed is a portfolio strategist at the firm and a
(00:45):
key member of our investment committee. That means Ed's behind
the scenes and in front of the scenes deciding the
investments we make some of the directions we're going works
very closely with Ryan Bouchet and the rest of the
investment committee. Ed, I want to thank you for joining
me this morning.
Speaker 2 (01:01):
Thanks for having me John, so honestly, always a pleasure
of being able to come on the radio and have
a quick conversation.
Speaker 1 (01:06):
And I will tell you Ed is a little bit
younger than me, so I'm not sure eight am on
a Sunday is a normal time for Ed to be
up An Adams.
Speaker 3 (01:15):
So I appreciate, appreciate you doing that.
Speaker 1 (01:18):
And we've got a lot to talk about today. You know,
a lot of you know, some ups and downs in
the markets. This week we'll talk about that, and you know,
obviously a lot of conversation about the FED and what's
going to happen with interest rates, as well as a
bunch of other things. We'll cover those as well as
some financial planning topics. But remember we're here for you,
so we encourage listeners to call in with questions. You
(01:41):
can reach us at eight hundred talk WGY. That's eight
hundred eight two five five nine four nine. So Ed
and I have the pleasure of really being the first
to broadcast from our new podcast studio here in downtown Saratoga.
So Ed appreciate you join it in on this first,
(02:02):
first real radio show from the podcast room.
Speaker 2 (02:05):
No, it's honestly exciting. It's definitely got a different feel
us being face to face for the first time. You know,
being younger and a little bit newer to the radio
makes it a little bit easier on me, be able
to look at you absolutely.
Speaker 1 (02:15):
Because there was a time, you know, one would connect
through phone another way. So we're excited to have this
up and running. You know, as a firm, we market
a lot of different ways. Obviously radio is a big
part of it. But we're you know, starting to you know,
put our toe into the podcast world. We'll be starting
that sometime, you know, maybe twenty twenty six, but we've
got the equipment and we're putting it all together, doing
(02:37):
some test runs. But so we're excited to be here.
Speaker 3 (02:41):
You know.
Speaker 1 (02:41):
It's it's amazing, you know, we're Summer's over and I
know technically it's not over, but boy, you got this change.
Ed and I both they're sitting here, you know, coughing
and sneezing and you know, so it's that time of
year with these you know, changes in the weather pad
patterns affect some of your health as well.
Speaker 3 (02:58):
But happy to be here. You know, it was a
great summer.
Speaker 1 (03:01):
You know, hopefully everybody got a chance to you know,
get to the Saratoga Raceway, get Lake George back, all
that this region has to offer, plus hiking and a
lot more. So I hope everybody had a great summer.
And I'll say as we head into fall, it's a
spectacular time of year here in the Northeast.
Speaker 3 (03:19):
Actually one of my favorite.
Speaker 1 (03:21):
Now one of the things that you know, Ed and
I and the rest of the firm, you know, we
hit a big firm milestone and so you know we're
gonna be planning a little retreat to to Vermont, Manchester,
Vermont a little over week.
Speaker 3 (03:34):
So that should be a good time.
Speaker 4 (03:35):
Ed, Yeah, now looking forward to it.
Speaker 2 (03:37):
Steve certainly loves to celebrate, so he put that together
pretty quickly and putting together an itinerary, So it should
be a good weekend or week looking forward to it.
Speaker 1 (03:46):
Yeah, and absolutely, And Steve does you know, I will
say he does believe in celebrating. You know, we we
work hard, and you know, we take this work very
serious and and uh, you know that's a culture Steve built.
But we like to play hard too. You know, we
have a great team, great group of colleagues. You know
all I'm gonna just say a players like Ed and uh,
(04:08):
you know we've achieved a lot and you know, Steve
likes to celebrate our victories and uh, you know, celebrate
each other because it really is all about the team.
So we appreciate that you also fall we head into
charity golf outings, and you know, one of the things
we do as a firm is, you know, we get
back to the community in number of ways. And you know,
(04:29):
nonprofits have a tendency to have charity golf events in
the spring and then in the fall.
Speaker 3 (04:35):
So and I know you're playing in.
Speaker 2 (04:37):
One coming up, Yeah, coming up this Friday. It's the
Bob Best Memorial. So it's put on through the YMCA,
and it helps support the youth. And I also it's
like to touch on you know, the YMCA is really
such a great organization. I've been volunteering volunteering there on
the Impact Committe a little over a year now. But
it's it's really so much more than a gym and swim.
(04:57):
You know, they have programs for cancer survivors, you know,
whether that's just getting them in some fitness classes or
you know, supporting the youth, supporting the elderly. So really,
you know, if if you're if you're not thinking about
your your local YMCA, it i'd encourage you to go
check it out and either get a membership or see
if you can spend some time volunteering over there.
Speaker 3 (05:16):
That's that's a great message.
Speaker 1 (05:17):
And again the firm, you know, we highly encourage our
colleagues to get get involved, get involved in the community.
You know, we think is a good corporate citizen. That's important,
you know, not only to give back financially, but our people.
You know, and I will say, just the nature of
the caring, compassionate people we have on our team, they
(05:38):
want to give back, and so we do a number
of things. Uh and so Ed has mentioned that I'm
also playing the week after in a charity outing in Troy,
New York for Joseph Souso, another not for profits. So
you know, great great, I will say, our area is
blessed with a number of great nonprofits doing amazing work,
and you know, it just feels good to support them,
(06:01):
whether again again it's financially or you know, volunteerism or
other ways.
Speaker 3 (06:06):
So that should be a good time.
Speaker 1 (06:09):
You know, I have to say, you know, in our
beginning intro we talk about sudden money, and you know,
I'll say, the typical ways we really see sudden money
is somebody might sell a business and now they've got
some large proceeds that they you know, need to manage
taxes on an invest Uh. It could be you know,
somebody retiring and even though taking their four one k
(06:30):
isn't truly sudden money, they now suddenly have to may
have to manage it on their own right, and so
they need help from us to help do that. So
but obviously Powerball last night, I mean that's some sudden
money right there.
Speaker 2 (06:42):
Ed, Yeah, we might have to track them down and
see if we can get them in for an initial meeting.
Speaker 1 (06:45):
I understand two winners too, That's what I think I saw.
I think so okay, so Ed will be hunting those
two down and we'll help them put that sudden money
to to work.
Speaker 3 (06:57):
I mean, was it at one point eight billion? That's it?
You know, he gets into that territory.
Speaker 1 (07:01):
You know, even though the chances are winning are ridiculously low.
It's you know, it's one of those things you's going
to play around with. So and one thing before we
kick off the show, you know Ed Ed the earlier
this year pasted is CFA level one. So I want
to congratulate Ed on that, you know, And he's on
the pathway to earning the prestigious Chartered Financial Analyst designation.
(07:25):
Really tough designation, so at congratulations on that.
Speaker 2 (07:29):
Yeah, no, I appreciate that. So getting ready to gear
up for level two here. I'll probably plan to sit
in the spring in May.
Speaker 3 (07:35):
Awesome great work there. So again, Ed and I are
here for you.
Speaker 1 (07:40):
And if you have questions, you know, obviously you got
Ed here with me, So any good investment question or
anything at any topic we're here to handle. You can
reach us at eight hundred talk WGY. That's eight hundred
eight two five five nine four nine. So this morning
we're going to talk about markets, investing, financial planning, and
we will start off by you know, jumping rate into
(08:01):
the you know, kind of a market overview. And you know,
so this week, you know, we certainly saw some ups
and downs in the market. You know, we had a short,
shortened trading week, you know, with the Labor.
Speaker 3 (08:11):
Day holiday on Monday.
Speaker 1 (08:13):
Yeah, we had a strong start and you know, really
solid gains on Thursday, as you know, expectations were that
the Fed is going to be cutting rates, so we
saw that exuberance in the markets. S and P hit
a new record high new record close of sixty five
oh two.
Speaker 3 (08:30):
You know, really as markets were.
Speaker 1 (08:32):
Digesting uh, you know, the the weekend labor data and uh,
you know, really cementing the bets that the FED is
likely going to reduce rates in uh in September. So
we also saw small caps and uh you know tech
contributor as well. So that was Thursday, right, and then
you know, Friday we turned into one of those you know,
(08:52):
be careful what you wish for, right, because we had
jobs report at and jobs.
Speaker 4 (08:57):
Report was weak, very weak, yeah, very weak.
Speaker 3 (08:59):
Yeah.
Speaker 1 (09:00):
And and markets, you know, once they the exuberance of Thursday,
you know, hoping for FED cuts on labor week labor,
all of a sudden looked at that report said wow,
that's some weak labor numbers there. So added just twenty
two thousand jobs in August, well below the expectation. And
(09:21):
you know, so all of a sudden markets reacted negative.
You know that that optimism we saw on Thursday start,
you know, turned into cautious and so you know, we
we saw the Dow drop half a percent, smp go
down point three percent, NASDAC, you know, just slight and
believe or not to Russell two thousand. You know, as
(09:42):
you expect, the small caps actually bucked the trend in
rows by half a percent. And remembering you know, small
cap likely would benefit the most from some interest rate
easing there.
Speaker 3 (09:52):
So, so saw some.
Speaker 1 (09:53):
You know up and down right, and you know, I
think that's going to be a sign of what we're
going to be seeing for a little while. You know,
in in the midst of all the labor data, we
did see some you know, Broadcom had some really strong
AI news, so we saw a strong pop in their stock.
Tesla also announcing you know, a massive pay plan and
(10:15):
you know, overall investors like that, and you know, so
certainly some some positives there in the market.
Speaker 3 (10:22):
Ed, do you want to give just.
Speaker 1 (10:23):
Maybe a little bit color on some of the sector
performance in you know, what we saw out of last week.
Speaker 2 (10:28):
Yeah, so let's start on a positive note looking at
the communications sector up almost three percent, and again, you know,
we saw some volatility early in the week, you know,
on Labor Day while markets were closed, and then you know,
on Tuesday, Google came out and they had beat the
antitrust case from dg DJ which would ask them to
(10:50):
divest their Chrome, which is you know, their search engine.
They ended up beating that case and rallying you know
over eleven percent, i think almost twelve So that was
a huge boost the communications sector.
Speaker 4 (11:02):
And then on top of that, we saw healthcare.
Speaker 2 (11:05):
And staples up, you know, both roughly about one percent,
and a lot of that is just going to be
with that volatility we saw on Friday, you know, some
concerns over the labor market, those more defensive sectors like
healthcare and staples are going to be able to hang
on a little bit better.
Speaker 1 (11:21):
Yeah, excellent, And you know, certainly financials, you know, interest
rates sensitive sectors are certainly you know, going to be impacted.
Is figuring out what the Fed is going to do.
So you know, overall, for you know, the week not
a bad you know, we SMP you know, up point
three percent for the week, but you know, up over
ten percent year to day.
Speaker 3 (11:41):
You know, it's hard hard to argue with that kind
of you know return.
Speaker 1 (11:44):
You know, the Dow was down about zero point three
percent for the week, up almost seven percent year to date.
Speaker 3 (11:52):
Nasdaq was actually up a little over.
Speaker 1 (11:54):
One percent for the week, and you know, up over
twelve percent year to date, so you know, good, good
returns there and then Russell two thousand, as you talked
about you know small cap really uh, you know, benefiting
from the prospect of some rate cuts. The Russell two
thousand was up one percent for the week and you know,
up over seven percent you know year to date. So
(12:15):
you know, it's great to see you know, not just
a concentration in tech, right. You know, I see you
routing out for some you know, broader participation there and
so you know, overall, you know, good week in the
market and you know, I will say, you know, that
kind of volatility as we as we look through.
Speaker 3 (12:32):
The rest of the year.
Speaker 1 (12:34):
You know, investors, you know, investors should be prepared and
part of that preparation is, hey, we're at still at
you know market highs, right, and so you know, it's
a great time to look at your portfolio, right, make
sure if you need to rebalance, you know, might be
a good time also if you have you know, cash needs.
(12:54):
You know, if you you know, one of the things
that we do and is built into our kind of
financial planning process. And I know you've heard if you're
a longtime listener, you hear us talk about it all
the time. It's part of the financial planning process is
really you know, trying to identify what clients might need
to take out of the portfolio in the next twelve
to eighteen twenty, you know, twenty four months. We put
(13:15):
that into you know, more conservative investments. Sometimes we use
a vehicle called swvxx, you know, as a way to
park that we call a cash management strategy. So if
you're you know, managing your own portfolios, you've you know,
enjoyed a nice run up right again rate off market highs,
(13:35):
it's a good time to look at the portfolio, maybe rebalance,
but also more importantly, look, hey, are you if you
have needs to be taking cash out of your portfolio
in the near term, so which could be the next
one to two years, you know, it could be a
good time to de risk some of that money, set
it aside. And you know, that gets to a question
you know we get all the time. Man, it's like rebalance,
(13:56):
Like how often should an investor do that?
Speaker 3 (13:58):
What should that entail? A little there if you don't.
Speaker 4 (14:00):
Mind, Yeah, it's actually interesting.
Speaker 2 (14:03):
You know, rebalancing is probably one of the less talked
about aspects of being an investor. But you know, I
spend a lot of my day running back tests. You know,
with different holdings in our portfolio, how would they have
done historically? When you're changing your rebalancing frequency, that can
greatly adjust what kind of returns you're seeing as an
(14:23):
end result. So you know, historically, if we're just thinking
about a sixty forty portfolio, the more often you have rebalanced,
the worst performing your portfolio would have done. And a
big component of that is when you're not rebalancing, you're letting.
Speaker 4 (14:37):
Your winners win, you're letting your losers lose.
Speaker 2 (14:40):
So you know, if you started with the sixty forty portfolio,
after a few years in a bull market, that could
turn into a seventy thirty or an eighty twenty. So
now your overweight equities. As we know, equities historically have
always outperformed bonds over a long term time horizon. So
letting your equities run and become a larger part of
your portfolios increased returns. Now there's a flip side to that,
(15:02):
and that's going to be when we see volatility. Right,
if your target, your risk tolerance, the risk you're comfortable
taking is at a sixty to forty portfolio, and you're
letting that run up to an eighty twenty. When we
do see volatility, your draw down is going to be
larger than anticipated. And that's really important if you're you know,
in retirement and you have cash needs. And this just
(15:22):
goes back to what John was saying on why it's
so important to put aside you know, a couple of
years of cash or you know, whatever is right for
you is because you do not want to be selling
your equities in a down market. You ideally want to
be buying them. So ideally, you know, the correct rebalancing
frequency is going to be different for everyone, kind of
depending on your risk tolerance. I would definitely encourage listeners
(15:43):
to not be too frequent with it though, you know,
semi annually, annually or even less frequent than that. If
it's really long term money, you want to let those
winners win, those losers lose, and kind of lean into
the momentum of markets.
Speaker 3 (15:55):
Great. There's some great, great information there.
Speaker 1 (15:57):
And it is interesting, you know, because when we talk
about investors and and you know what, you know, sometimes
I'll just say, friends ask, hey, what what should I
be investing in? And you know, part of it is like,
you know, you know, what are you investing for? Right
is this, you know, retirement, what you know, so what's
your what's the desired outcome? Is this a long term
are you investing for child's education? You know, knowing your
(16:19):
time horizon because you know, listen, if one thing, you know,
ZED talks about frequency, we're not day traders, right, So
we're not in making you know, daily weekly changes to
our portfolio, right. We're we're very strategic and tactical right
based on what we're seeing in the economy. And you
should be as well, right because if if you're trading
too too frequently, right, you're just you're really losing focus.
(16:42):
So you know, definitely some some good direction there. You know,
as we a lot of talk, you know obviously about
the jobs report and UH and the markets reacted, but
you know, is it a sign that the labor's falling apart?
Speaker 3 (16:56):
Are we in panic mode? And you know the answers know,
you know, what we're doing is we're.
Speaker 1 (17:00):
Seeing weakening, right, And you know, we'll touch a little
bit about the upcoming FED meeting because that's a lot
of eyes are on that what what direction is FED
going to take? And you know, obviously President Trump has
you know, been very vocal about what he wants to
see and you know how he thinks that's going to
help the economy. And so the job report, you know,
it was weak, right, and so lower job creation in August,
(17:24):
some minor revisions to prior months, but important though, is
the revisions to June actually turned June from a positive
job creation month to a negative and and really, you know,
that's the first time, you know, we've seen that since
twenty twenty, and you know, that's pandemic really, so even
before that if you have factor out, you know, if
(17:45):
you remove the pandemic factor, so so lower than expectations,
you know, negative in there back in June, but they're
you know, the earnings average hour in the earnings row
is a month over month and is up you know,
three point eight percent year over year. So it's a
positive news there. And so you know, the gains that
(18:08):
we saw were really in healthcare and then you know
manufacturing and government.
Speaker 3 (18:14):
Really represented the decline.
Speaker 1 (18:15):
So I think the big picture, you know, we also
some other labor data outside of the jobs report, was
a Jolty report, and you know what we're seeing there
is again for the first time in a while, right,
we're seeing an equalization between those looking for a job,
the unemployed, and then the number of jobs that are open.
You know, we're uh, there was a time you know,
(18:36):
you know, twelve eighteen months ago where it was a
two for one, there were two jobs for everyone looking
looking for a job it you know, unemployed, and so
now we're getting more equalization where there's you know, technically
I think there's fewer jobs than there are job seekers.
And you know what we're seeing too is you know,
reduction of the available labor force, right, so we're seeing
(19:00):
and tightening there. So interesting, you know, dynamics in the
labor markets certainly, uh it's become a bigger concern for
the FED, and and FED chair Powell has you know,
made those comments you know recently that really you know,
they've got their dual mandate of inflation and uh and
max employment and you know they're seeing the shift of
(19:22):
the balance, right Inflation isn't where they want, but but
they're really focusing more on labor. So uh So, definitely
showing some weakening. But what we're not seeing, uh, I
think is a positive. We're not seeing you know, massive
layoff right, which really would be you know, signs of
some major cracks and so certainly.
Speaker 3 (19:41):
Number of signs out there.
Speaker 1 (19:43):
Showing labor is UH is weakening, but not to the
point where we're in panic mode, right, And you know,
unemployment rate did tick up slightly, but ticked up from
four point two to four point three, so again still
in good territory, but definitely showing.
Speaker 3 (19:58):
A weakening a weakening there.
Speaker 1 (20:00):
And anything else with the jobs report that you know
you wanted to add in or just any color.
Speaker 2 (20:05):
No, I mean, I think directly on the job support,
you know you need a great job highlighting all the
key points. I guess I would just add, you know,
any listeners, if you've got some you know, younger friends
or relatives maybe just graduating college, definitely wouldn't hurt to
maybe reach out and give them a hand or see
if you've got any connections, because I do know, you know,
looking at the demographic that the younger portion, you know,
(20:26):
eighteen to twenty four, they are struggling the most too.
Speaker 4 (20:29):
Fine jobs.
Speaker 2 (20:32):
Now, as John mentioned, you know, a big you know,
kind of follow through from a job's report like that
is going to be where does the FED sit looking
at rate cuts? So we've got a meeting in just
a little over ten days and looking at the probabilities.
Right now, markets are pricing in a one chance for
(20:52):
a cut in September, which has changed pretty drastically from
you know, looking at just a week ago, it's up
to was just at eighty five percent, So you know,
you think eighty five to one hundred maybe not that
much of a change, but I'll tell you what, fifteen
percent in a week, you know, certainly means something. So
we are looking at a cut in September. I don't
(21:13):
know how much more commentary JPOWE is going to give
us on how we're looking into the rest of the year.
As we sit right now, markets are looking at you know,
slightly above fifty percent chance of a subsequent cut in
both October and December, so another two all planning to
be twenty five basis points. Now, that's what the markets
(21:33):
have priced in right now. Again, we get CPIPPI next week.
Depending on how those look, those probabilities could change drastically.
So it just really goes through to reiterate, you know,
same thing we've been saying here, same thing Jerome Powell,
our FED chair, has been saying, is just how data
dependent the economy is right now When you think about
just how much uncertainty there is geopolitically and even domestically
(21:55):
with the tariffs. It's certainly made a lot of jobs
tough across the financial world. So you know, just like Japowell,
we are you know, definitely data focused right now here.
Speaker 1 (22:06):
So a lot of a lot of thought there's gonna
be a twenty five basis point, you know, even fifty
basis point. It kind of a mega cut is creeping in.
I don't know, you know, it's still a low percentage
thinking that, but it's not out of the realm of possibility.
Speaker 3 (22:21):
You know.
Speaker 1 (22:21):
You listen to you know, some of the speak of
some of the coming out of the FED and you know,
summer talking.
Speaker 3 (22:28):
You know, maybe we need more. So certainly, you.
Speaker 1 (22:33):
Know, the idea is we're going to see at least
a twenty five basis point and it'd be interesting there
as you know, you mentioned that there is some inflation
data coming out. Expectations are you know, it's uh, you know,
we're going to see you know, maybe a slight uptick CPI.
I think I think expected down tick in PPI. We
(22:54):
had a big pop last month. But the question is
going to be is that you know, even if we
do see a slight uptick is uh is that going
to be you know, enough to change the Fed's direction.
So you know, we're we're almost halfway through today's show. Again,
a lot of remind callers you can reach us at
eight hundred talk WGY. That's eight hundred eight two five
(23:17):
five nine four nine.
Speaker 3 (23:19):
We hope you're enjoying the show.
Speaker 1 (23:21):
We're going to hope that you rejoined us after the break,
and again as we get come back from the break,
you know, we'll talk a little bit more about the
FED meeting and uh, you know, expectations and how that's
going to impact you. We're also going to get into
you know, been a lot of talk recently and some
of it coming out of the White House about alternative investments. Right,
(23:43):
we talk a lot about stocks and bonds, little discussion
now of alternatives, so we'll touch on that a little bit.
Speaker 3 (23:49):
So, well, you've been listening.
Speaker 1 (23:51):
To Let's Talk Money, brought to you by Bouchet Financial Group,
where we prioritize their clients' health while we manage their
wealth for life. We tune in and we'll hope you
stay with us through the break. Well, good morning, and
thank you for staying with us through that commercial break.
You don't have just one expert colleague today, you actually
(24:12):
have two here.
Speaker 3 (24:13):
So you've got John Malay.
Speaker 1 (24:15):
I am the firm's chief operating officer, chief financial officer,
and a wealth advisor, and I'm joined by my colleague
Ed Wilhelm.
Speaker 3 (24:24):
Ed, thank you for joining me.
Speaker 1 (24:25):
Hope you're doing, Hope you're enjoying the show, and hope
getting up this early it isn't too much of a
disruption to your weekend here.
Speaker 2 (24:32):
No, no, not at all, although I will I will say,
after that quick little commercial break here and how we
were coughing and sneezing in here, we may have to
let my other trader, Casey Bird, who's doing a fantastic job.
He's going with the firm a little over a year now,
but he may have to work from home on Monday.
Speaker 4 (24:47):
This room, I'm thinking maybe contaminated.
Speaker 1 (24:50):
I think we definitely have to get the lysol wipes
out before we leave. So he's okay there, So Sunday,
I hope everybody is enjoying the weekend. Hoping he has
some good plants to enjoy the day. Yesterday was a
bit of a washout. Actually had some family visiting so
I'm up here in Saratoga. So what we did is actually,
(25:11):
uh we went to the Saratoga Battlefield and uh, you know,
went to the inside museum part and they have a
nice you know film talking about the history of the
Battle of Saratoga and what leading.
Speaker 3 (25:25):
Up to it.
Speaker 1 (25:25):
And then we didn't do the walking tour because at
that point the rain picked up again, but we we
got the car drove around. I would just highly recommend
if you if you like history or if you just
love beautiful surroundings. Really the the it's laid out so
nicely and you've got some gorgeous views of the areas,
some gorgeous views of the Hudson River.
Speaker 3 (25:46):
So highly highly recommend that.
Speaker 1 (25:49):
You know, we were covering a lot about markets, the
latest jobs report, and you know, right before the break,
you know, wrapping up a session talk about the upcoming
FED meeting. So you know, as Ed mentioned, September sixteenth
and seventeenth, the next FOMC meeting will be held and
they'll be making a decision on rates. You know, this
(26:12):
would be the first if they do cut, the first
cut of this year. You know, you might recall last
year we saw three rate cuts after eleven back to
back rate increases.
Speaker 3 (26:23):
So you know, certainly, you know, if.
Speaker 1 (26:28):
You're a borrower, you're looking forward to potential rate cut.
Speaker 3 (26:32):
That's e some borrowing costs.
Speaker 1 (26:34):
So certainly if that does happen, that will help some
individual borrows as well as corporations. So you know, as
we mentioned some week labor data, I think that's going.
Speaker 3 (26:43):
To tip the scale again.
Speaker 1 (26:47):
Most of the expectation is for a twenty five basis
point cut, and you know, I think that's what we
expect to be seeing. And as Ed mentioned, you know,
we could see another cut this year. And you know,
I think as one of the beauties of these FED meetings,
in the openness of seeing the minutes from the meeting,
you know, we'll get a much I think, a clear
(27:08):
direction of what's gonna happen.
Speaker 3 (27:09):
In twenty twenty six for sure.
Speaker 1 (27:11):
So you know, I think major things expect a rate
cut and and it's certainly a twenty five basis point
is being being priced in. You know, before the break,
Ed was also talking about you know, portfolio construction, you know,
and there was a time where it was you know,
stocks bonds and that was really it. And you know,
(27:32):
now we've seen a growth in alternative investments. And you
know that term gets thrown around a lot and means
different things to different people, and so I thought ed
would give us a little bit of a color of
what are alternative investments, how you might use them in
a portfolio. We've actually, you know, when we saw the
direction that bonds were going to be going, when when
(27:54):
the Fed started increasing rates, we made a move of
getting out of bonds and we placed them with some
alternatives that you know really functioned like fixed income. So
alter we have some alternatives in our portfolio. Very conservative also,
I would say, because the alts do, it's a wide range, right,
and that's where I think, you know, the term gets
(28:16):
thrown around and it means it can mean a lot
of things depending on how you take it. So and
if you don't mind just kind of walking through what
are alts and how how they might be using a portfolio.
Speaker 2 (28:27):
Yeah, no, awesome, thanks John. I would say alts are
it really is a broad world, but alters anything that's
not historically contained under an equity or a bond, you know, tag,
which does make it tough. You know, when you think
of alts, you have got private equity, private credit, you know,
(28:47):
you have commodities, you know, like a gold or a
silver or you know, even invested in something like wheat maybe.
But then you also, you know, so on the newer
side you have something like bitcoin. Now on top of that,
the you know, finance world has grown incredibly complicated with
the rise of technology. You know, you used to just
own a stock or track a basket of stocks. Now
(29:10):
with active strategies coming out in the use of derivative products,
you know, they these fun families can get really creative. So,
you know, two alternatives and we use in our portfolio
right now. You know, one is a buffered product, so
that's just going to track s and P five hundred,
but it's going to give you a cap on what
you can make on the upside. But then the flip
(29:32):
side of that is you get a buffer on the downside,
so you know, typically you might see something like ten
and ten percent, so you get ten percent upside and
then ten percent downside protection. And then the other one
we use is it's called a covered call strategy. I
don't want to get two into the weeds on it,
but essentially it's going to track a basket of stocks
and that's going to sell call options on top of
(29:54):
that basket of stocks, so while you are tracking equity,
both have fixed income like proper these you know, to
limit some of that downside. So those are a couple
of uses, and you know you're thinking, well, you know,
why would you want to do that? And the idea
is to add some sort of decorrelation benefit into your portfolio.
(30:15):
So you know, in a in a perfect world, you know,
you would have you know, essentially just two investments that
are you know, perfectly correlation of negative one right, so
and one's up the other ones down. Now if those
are both positive returning assets, uh, then you know you
basically take all of the volatility out of your portfolio.
So that that's the goal when you're adding in alts.
Speaker 1 (30:37):
Perfect and I know alts can be a lengthy discussion.
I think we're gonna pop that back into that. We
got a caller on the line, so we've got Bill
from burn Hills. Bill, we appreciate you listening this morning,
and what can we help you with? Hi?
Speaker 5 (30:52):
So, yeah, I retired a couple of years ago and
I'm still fairly aggressive with the you know, utual fund guy,
but been doing some rebalancing and I'm just wondering which
of the tour if you have another recommendation, if I
want to move like one level down in risk. So
(31:13):
if I you know, if I take some money out
of my you know, growth stocks, would like a dividend
fund or a balanced fund be a better choice.
Speaker 1 (31:23):
You know, just a little bit more color, do you know,
like in your in your allocation, you know what percentages
in equities versus fixed income?
Speaker 5 (31:35):
Oh yeah, yeah, I mean it's I'm still like ninety ten, okay.
Speaker 2 (31:39):
Okay, right, yeah, So I mean I would say right now,
with where we're at in thinking about rate cuts on
the horizon, and you know, depending on what your stance is,
you know, maybe on the general GDP growth of the future,
if we're going to see a really acceleration of inflation
forced the FED to maybe hik again next year. I mean,
depending on what your use are with that, bonds can
(32:01):
certainly look very attractive, which would maybe you'd think about
the balanced portfolio. A balanced portfolio is going to have
some stocks and some bonds, and again, you know, without tickers.
I can't say for certainty, but one thing we have
been looking at a lot and over the last you know,
a couple of months here, Bouchet, we have been leaning
into quality, you know, with evaluations so frothy. You know,
(32:21):
we're certainly bullsh but we do see some opportunity for
breath expansion markets outside and necessarily your large cap tech.
So I would say, if your if your equity allocation
is you know, completely growth, it's going to be a
lot of tech pairing back some of that and adding
you know, some quality uh, you know, good companies, the
dividend payers uh can can complement your existing portfolio really well.
Speaker 4 (32:43):
So I'd probably lean more in that direction.
Speaker 5 (32:46):
Okay, all right, Super, I appreciate you.
Speaker 1 (32:49):
Yeah, I appreciate that call, Bill, And I would say
from our portfolio, ed, you know, part of the moves
you know made was add some high quality dividend payers
and some ETFs around that. And again, I know, you
know Bill mentioned he's a mutual fund investor, you know,
still would say, hey, take a.
Speaker 3 (33:06):
Look at ETF.
Speaker 1 (33:07):
So we certainly still believe ETF's lower cost and just
more tax efficient. So but appreciate that call, Bill, and
appreciate you tuning in and encourage other listeners. Hey, give
us a call. We're here to help you out. Answer
any question you have, you can reach us at eight
hundred talk w G Y. That's eight hundred eight two five.
Speaker 3 (33:27):
Five ninety four nine. So I interrupted Ed Raymond.
Speaker 1 (33:30):
He was in the middle of his role on on alternatives.
So Ed, if you don't mind picking up where I
where I broke it into you on.
Speaker 4 (33:39):
Yeah, perfect.
Speaker 2 (33:40):
I hate to jump around, but I with him talking
about mutual funds real quickly.
Speaker 4 (33:44):
Did want to just touch on that?
Speaker 2 (33:46):
So, oh, you're going off the script ed, I am
going off the scar right, forgive me John, you got
to go with it. So a bigfore, big proponent of
ETF's here at Bouchet. You know, they're more modern vehicle
now typically one of the historic benefits to ETFs with
a more modern structure it allows the fun families to
roll them out at a lower cost, you know, being
(34:07):
here now for a few years and getting to see,
you know, really the industry in practice for clients what works.
I would say the hardest part about owning mutual funds,
especially in a taxable account is the capital gain distributions.
Speaker 3 (34:20):
Right.
Speaker 2 (34:21):
What it does is it forces you to take capital gains,
you know, in any given year depending on how well
the fund did and how it's constructed, but it gives
you less control over your taxes, and in an ideal world,
you want to be able to be very nimble around
your taxes and where those gains are coming and when
they're coming. So I'd say that's that's the biggest proponent
of ETFs, and.
Speaker 1 (34:43):
That's that's a great point to make because you know,
I will tell you and again, if you listen to
this show, you hear let's talk about a lot. You know,
one of the areas that we've really beefed up is
our tax area. And you know, tax planning is becomes
such an integral part of really financial planning and helping uh,
you know, help helping individuals not only manage their money,
(35:06):
but then manage distributions in the most tax efficient way possible.
So all starts with holding holding the instruments that right
are the most tax efficient, and certainly is you know,
Ed pointed out ETFs very tax efficient, so great, great,
great information.
Speaker 2 (35:21):
There, Ed and then certainly happy to jump back into
the exciting world of alternative investments. So I was just
talking about why you'd want to own alts, and really
that just comes down to adding some decorrelation benefits in there,
you know, that's the whole point of why you would
own bonds in a portfolio. Yes, equities return more, but
(35:41):
sometimes you hit some roadbumps and if you need money,
you got to pull from somewhere, and in a down market,
you definitely don't want to be selling your equity, so
that that gives you the opportunity to pull from bonds.
When equities rebound, you rebalance. That's just essentially modern portfolio theory.
Now you add in alts, so it's kind of a
third bucket, adding in something that again is decorrelated from
(36:03):
both equities and bonds, you know, and certainly depending on
what all, you'll have periods where it may be correlated
with an equity or correlated with a fixed income. But
the idea is to just take some of that overlap
out and kind of use it as a third bucket
for rebalancing. So that's really where we see the most
use case out of it. It's not necessarily adding to
total return, while it certainly can if you think about
(36:25):
something like gold this year or you know bitcoin over
the you know, since its existence, but yeah, no, just
going back to alts, and it's really that decorrelation benefit
using it as a third bucket for rebalancing. And you know,
it's a it's a it's a deep world. You know,
a lot of alts you know, maybe previously have not
been accessible to retail investors, but as the world's grown,
(36:46):
they are becoming more and more accessible, even through ETFs
or mutual funds. So that's definitely exciting to see.
Speaker 1 (36:53):
Yeah, and you know, you know, one of the alts
that that obviously is getting a lot of conversation in play,
you know, is in the crypto world, right, and so
we do get questions from that, and you know, full disclosure,
we don't have any you know, crypto exposure currently in
our portfolios. Uh, you know, you can now hold crypto
(37:14):
exposure number of ways, including there's a number of ETFs
and so you know, like and I'll put it like
the category of international, right, Like we're not in international
right now. But we also you know, we are underweight
a number of years and we've actually been out of
it now. That doesn't mean we're out of it forever,
right because you know, Investment Committee has their eyes on
that all the time. And but you know, really the
(37:36):
thesis right now is we still feel from a long
term investment point of view, the US equity market is
where we want to be. But crypto, you know, we
do get questions from clients, and you know, there are
a number of ways, you know, you can open up
accounts where you can buy into some some you know,
bitcoin and other things. And I would just say if
somebody really wants to do because there is this fear
(37:57):
of missing out right, because you know, in vesters, you know,
hear about a friend who made a lot of money
or saw these returns and uh, you know, so if
somebody wanted some exposure to crypto, there's ways they can
get it. I would just say, you know, from our
from my perspective, I would put a very small percentage
of your portfolio there. Certainly, if this is your retirement funds,
(38:20):
I would not I would not play in that area.
Speaker 3 (38:23):
But if you had some money on the side, and.
Speaker 1 (38:25):
You were okay with some volatility, and you were okay
with it potentially going to zero, not saying it would,
but I think you you have to have potential, you know,
because let's face it, you know, you invest in an
ETF or an individual stock, right, you have a ETF,
you have a basket of stocks, you can kind of
look at something tangible and say, hey, uh, these tech companies,
(38:47):
I believe that I can see their balance sheees, I
can see you know, every quarter what their SEC filings are.
So you've got some visibility into that. You know, you
don't things like cryptos and you know it's what it's
worth because somebody is willing to pay for it. And
so again I'm not going to sit here and say,
(39:08):
you know, I think the belief is cryptocurrencies are here.
They're not going away. From an alternative investment point of view,
I you know, would just say caution right that if
you if you really want to get into it because
you fear, hey, I'm missing out and I'm seeing these returns.
To me, it's I put a very small percentage of
your portfolio in there, and in a part of your portfolio,
(39:30):
you're willing to accept a lot of volatility because you
definitely have.
Speaker 3 (39:34):
To accept that in the all world. So appreciate that.
Speaker 1 (39:38):
We are going to take a quick commercial break, So
please stay tuned and we'll be right back with Let's
Talk Money on eight to ten. WGY, Well, thank you
for giving us that quick commercial break. As Ed mentioned earlier,
we're both we're both feeling the effects of the season change.
So having a little litle bit of time to get
(40:01):
a drink of water and and cough was well needed.
So we appreciate that. And so you know, we're coming
close to the end of the show, and you know,
encourage listeners to call in with questions. It's not too
late to sneak in before the end of the show.
You encourage listeners to call with questions. You can reach
us at eight hundred talk WGY. That's eight hundred eight
(40:24):
two five five nine four nine.
Speaker 3 (40:27):
So I appreciate you.
Speaker 1 (40:29):
You know, that segment on alts and you know, again
we do get a lot of questions about portfolio construction,
and you know there's certainly you know, as you mentioned,
a home for alts in the portfolio, and as you mentioned,
we've got them in our portfolio, so you know there.
Speaker 3 (40:44):
Is a need.
Speaker 1 (40:45):
So you know, one of the things that we want
to touch on just you know, real briefly. And you know,
this is an unfortunate one. We're having more and more
of our conversations with clients and I'm just gonna you know,
really touch on it very briefly, just to really raise awareness,
right is is just fraud and cybersecurity. You know, as
a firm, we're going to be doing a cybersecurity webinar.
Speaker 3 (41:05):
In a couple of weeks.
Speaker 1 (41:07):
Uh, you know, this has just become just such a
big problem. And you know, I know, you know, as
individuals sometimes we think, well, you know, that's not gonna
happen to me. I'm too smart, I'm too alert. I'm
not going to fall into something like that. I'm just
going to tell you it can happen to anyone. We've
We've had clients, I've had friends, you know, very smart.
Speaker 3 (41:28):
Intelligent individuals.
Speaker 1 (41:29):
It's just, uh, these fraudsters are tricky, and you know
they they create this sense of urgency. And just remember
you know your phone, right that, if you have that
mobile phone, that is the primary gateway, right, So just
be be leery of anything coming through that phone. If
you get that text that says hey where are you?
(41:50):
Don't respond, don't if you don't, if you don't know
who that is, just delete it because they're just fishing
to get do I have a real person on the
other end, and your financial institution.
Speaker 3 (41:59):
If you get a.
Speaker 1 (42:00):
Text that's saying they're from Fidelity or whatever, bank, or
schwab ignore it if you if you think there's any concern,
go to to your statements, go to their website, call
at a known number. Don't exchange you know, don't engage
in any conversation through a text link or anything on
your phone. That's not how they're gonna wait, they're gonna operate.
(42:23):
So again, I'm not gonna take up a lot of
time here on that, but I just it's something we
see more and more, and it's it's you know, share
because the reality is, you know, they are you know,
they are targeting elderly with this, you know, and so
if you have a family member you're caring for, you know,
share this information because uh, you know sometimes it happens
(42:44):
if people get embarrassed and they don't talk about it.
So definitely, you know, share that information. So I'm gonna
I'm gonna get off the fraud kick there, you know.
So ed certainly with you know the interest rate movements,
you know, we saw you know, bond yields fall this week.
You know you want to kind of give it, you know,
a conversation about bonds kind of what we're seeing where
(43:05):
we think things are going.
Speaker 2 (43:08):
Yeah, No, certainly, so just you know, friendly reminder to
all of our listeners. When yields fall, the price of
existing bonds rises. So you know, if you hold just
for example, say agg it's a US aggregate bond ETF
in your portfolio, when you see yields fall this week,
that means that position is going to be up. And
(43:28):
that's just because you know, as yields come down, new
bonds being issued are going to be at a lower
coupon rate than those existing bonds, so it means the
bonds you have, they're paying more more valuable. Now, we
saw yields come down this week, rightfully, so a lot
of that is going to be because of those weak
labor numbers. Right So we see the weak labor numbers,
(43:49):
the odds of future cuts increases. You know, with FED
funds rate coming down, that means new issued bonds are
going to have those lower coupon rates.
Speaker 4 (43:57):
So that's kind of how that chain reaction works right there.
Speaker 2 (44:01):
And then I think especially what we're seeing is you know,
some of those longer term bond yields are staying a
little sticky. So when we see yields fall, you know,
like on Friday, a lot of that is happening on
the shorter end of the curve. Now, what does that
tell us? That's going to tell us that markets are
looking at a potential reacceleration of inflation on that longer
(44:24):
term time horizon, So they could see you know, maybe
in that ten to twenty to thirty year time horizon
inflation staying sticky. A lot of that is because of
uncertainty on tariffs. So you kind of see the yield
curve start to steepen with those you know, shorter term
rates coming down faster than the longer end.
Speaker 4 (44:42):
So it's something to keep an eye on.
Speaker 2 (44:43):
I mean, we like kind of the belly of the
curve right now that that five to seven year time horizon.
And then you know, certainly still with these elevated rates,
you can't go wrong still on that shorter end. I mean,
you're getting paid for really little to no risk, and.
Speaker 1 (44:57):
You know, ed we're still seeing you know what and
having new client meetings. People got a lot of people
still sitting in cash, a lot of money in cash,
and you know, they've been enjoying some decent savings rates,
right but let's face it, as a FED is going
to start cutting rates, they're going to feel that and
there's there's still opportunity to go out there and grab
(45:18):
some long term yields.
Speaker 4 (45:19):
Yes, exactly.
Speaker 2 (45:20):
I mean one of the best things I think you
can do, and we do it for a ton of
our clients, is you know, setting up you know, an
individual bond ladder, right, so you know, getting out of
those ETFs of those mutual funds and getting into the individuals.
You know, you can customize your liquidity exactly as you're
going to need it as well. So a lot of
opportunity there. But yes, certainly think about if you're sitting
in a money market vehicle. Yields are still attractive now,
(45:41):
but as they come down, you might want to think
about rotating it at least to just an ultra short
bond fund. I mean, that's essentially what a money market
fund is.
Speaker 5 (45:50):
Uh.
Speaker 4 (45:50):
But you know, switching to an ultra short bond fund.
Speaker 2 (45:52):
Will give you a little bit more yield, but even
those will continue to fall as that shorter end of
the curve does.
Speaker 3 (45:58):
Right.
Speaker 1 (45:59):
Well, we're you know, coming to the end of the show,
and you know, we appreciate you tuning in, you know,
ed and I had fun in here in our new
podcast room using some of our equipment and we'll get
better and better with it. But I want to thank
you for tuning in with today. I hope you enjoyed
the show. I know that we certainly did, and hope
you enjoy the rest of this weekend and have an
(46:21):
amazing week ahead. Also, be sure to check out our
website Bouche dot com. We got a lot of great
blogs and other great content covering a number of investment
and financial topics. You've been listening to Let's Talk Money,
brought to you by Bouchet Financial Group, where we help
our clients prioritize their health while we manage their wealth
(46:45):
for life. Again, thank you very much for tuning in.
I know ed and I really appreciate you taking time
out of your Sunday spending with us. And we had
some fun here using our podcast equipment. So appreciate, appreciate
you listening, and have a great rest of your week.
Speaker 3 (47:00):
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