The Fagan Financial Report

September 10th, 2023

Episode Transcript

(00:00):
Good morning, and welcome to theFagan Financial Report. This is Aaron Fagan
sitting here as we do every Sundayhere on Sunday, September tenth, twenty
twenty three, you know, thefirst day of football. Giants play the
Cowboys tonight, so that's something tolook forward to. My dad is out
of the office this week. He'straveling with my mom. It's their fortieth

(00:21):
anniversary, so they're going on alittle trip together and we gave him the
day off. But you know,happy anniversary to them. It was August
thirteenth, but you know, theydecided to take a little trip and you
know they're they're they're enjoying themselves.But you know, to get into the
show. It was quite a eventfilled week this week in my opinion.
You know a lot of things cameout this week that I think are maybe

(00:47):
front and center for I guess growingconcerns in this economy. You know,
we had Saudi Arabia head of thehead of OPEC in Russia. OPEC plus
will extend their oil production and cutsthrough the end of the year. I
think it's about three hundred thousand barrelsof oil a day. They're gonna cut,
So you know what that means foryou know, not only the oil

(01:08):
industry, but also you know theglobal economy and where we're going. And
yeah, I guess where the worldis going. You know, we're we're
seeing deglobalization, as you know,one of the front and center topics we've
been talking about lately and how it'llaffect the market. You know, with
our supply chain, how we howwe get so how how we manufacture as

(01:29):
a country so much and in thelikes of let's say China, India and
in the East that you know whathappens if there's just a you know,
a strategic shift in how we startdoing business. And you know, I
think we saw that a little bitthis week with you know, you saw
Nvidio down a bit, and youknow that could have just been tied that

(01:52):
could have just been tied more inwith you know, technology in general.
But you know, down six percentthis week. But then you had into
global foundriies have a pretty good week, as you know, you know,
we talk about that all the time. That you know, if we think
that we're going to try and buildthis middle class up in America, you
know, the way to do itin our opinion is semiconductors, chip makers,

(02:14):
chip manufacturers, as you know itsaid, being a seventy percent service
based economy and having so many ofour service sectors, you know, in
grain and technology. We think it'sa good way for and you know,
the United States to grow the middleclass. And I think I think it
will work. We talked about onthe show a few weeks ago. You

(02:35):
know, Intel with the Chips Act, Intel Global Foundries, they're they're they're
doing some expansions time on. Semiis building a few plants over here as
well, So you know, itshould be good for the middle class.
I think fifty colleges now community collegesnow have programs geared towards chip manufacturing.
So we really think it's a goodthing for for the for the country.

(02:55):
But you know, Apple falls onreport that China restricted iPhone use for it's
government officials. According to the WallStreet Journal. You know, the the
the the iPhone is the only devicenot scanal by their by their spying tools
attributed to every police So basically,you know, if if you know they

(03:15):
don't have access to to the iPhone, then you know the CCP can essentially
monitor every single cell phone any governmentemployee is using. You know, we
could see this shift to two Chinesecitizens as well, and you know,
I think it's a you know,I think important going forward, as you
know, everyone sees China as thebig bad wolf. You know, we

(03:38):
talked about bricks a few a fewa few weeks ago and how their emergence
to destabilize the dollar. But youknow, on average, across twenty twenty
nine different pairs of currency, localffx has dropped two hundred and ninety three
basis points first the dollar this year. So the dollar continues to be strong
amidst all this. I don't knowrhetoric so far as we're not seeing you

(04:02):
know, we're seeing a lot ofhandshakes from countries like Argentina, Brazil,
India, China, but we're notseeing much done yet. You know,
we're seeing trade done in maybe theircurrencies that you have never seen before.
But what's happening with these currencies rightafter they make the deal that they are,
they are converting that to the US styllar as it is still the

(04:23):
safest, the safest asset out there. As the concern over inflation becoming embedded
in the economy, Linger investors willkeep a close eye on the release of
the consumer Price Index and this Wednesdayand Thursday, which was inflation at the
retail and wholesale level. So youknow, I think we're going to kind
of continue to see inflation at thefront and center, especially now that as

(04:44):
we saw where was I going withthis, you know, as we're sewing
people run out of money, youknow in my packet, let me just
check it here. We had unemploymentlast week, so we did the tape
show last week, so we didn'treally touch on this, but unemployment rate
unexpectedly roads of three point eight percent, meaning August perils increased by one hundred

(05:05):
and eighty seven thousand. Son nonfarm perils increased by one hundred and eighty
seven thousand in August, ahead ofthe esmen of one hundred and seventy thousand,
which is very hot still. Butunemployment also went up as well to
three point eight percent, meaning youknow, a lot more people are entering
the job market. And you know, we thought this would happen about this
time, about this time this year, because you know, people are starting

(05:25):
to run out of their excess savingsthat that was there because of COVID,
So you know, I think inflationis going to continue to be front and
center. You know, also thisweek we had a rise in services and
manufacturing, so the ISM came out. Service Price Index road by fifty eight
point nine percent, a four monthhigh and two point one above the July
level. A reading of above fiftypercent represents an expansion, So we're still

(05:47):
in an expansionary environment with the economy. You know, when what does that
what does that really mean for forinflation? What the Fed should do going
forward? So I think that hada little bit to do with, you
know, the uptick in and interestrates this this this past week. You
know, we had the three monthat five point five one, the six

(06:08):
months at five point five three,nine month at five point four two,
one year five point four one,two year five point zero two three or
four point seven five four point four, and the tenure at four point two
six. So you're really starting tosee a real return, of real return,
that is a return greater than inflationon some of these bonds. So,

(06:30):
you know, I think you're reallystarting to see that sixty forty portfolio
for some people start start to reallywork. You know, we had some
other things that we can talk aboutgoing strong at ninety three. You know
a little bit about Warren Buffett.You know, Apple falls on China US
China restrictions with the iPhone. Whatelse we got here? You know,
I covered unemployment a little bit,but I can cover that a little bit

(06:53):
more. The Euro, the eurois still struggling. We're seeing the euro,
the euro GDP was I think uppoint three percent. Inflation at five
point three percent. You know,you're also seeing inflation struggling in in the
UK especially. I think they're stillstruggling, struggling to deal with Brexit.
I think we saw chicken prices,poultry prices in the UK up seventeen percent

(07:16):
two years in a row. Sothat's a total of thirty four percent over
two years. So you know,it's really hard to you know, that's
going to obviously put it down inpeople's in people's pockets. You know.
I talked to my cousin who ownsa bar, and he was saying that,
you know, twelve wings at theirbar is twenty four dollars, And
he got into a little bit ofan argument with their customers, like,

(07:38):
hey, well, I mean,what's twenty four percent? It does sound
like a lot, but he wassaying that, you know, with labor,
with the price of chicken, withthe price of blue cheese, vegetables,
celery, and carrots, it's abouttwenty two dollars when all is said
and told, that goes into twelvechicken wings. So their margin is you
know, two dollars per order,you know two on twenty four is you

(07:58):
know, one twelve, so youknow, less than ten percent, you
know, seven eight percent. Sohe's like, you know, order the
pretzel sticks. They cost twelve thousandcost us too per orders. So you
know, I think you're seeing inflationreally affecting people in many different you know
areas, and you know, you'reyou're seeing credit rise a little bit.
I think we salked about I thinkit was about ten billion dollars added credit

(08:22):
card debt over the past over thepast months. So and I think we're
gonna we're still trying to see,you know, what happens with you know,
the convergence of you know, higherinflation as we're seeing, especially in
food, I'm a plateauing of inflationas well as dwindling savings from COVID,
So you know, we have tosee how this plays out in that you

(08:43):
know, a lot of things inthe stock market and the economy right now,
we've really never been apart, We'venever seen before. So you know,
although you know, you have allthese economists economic historians come out and
say, you know, have allthese opinions, you know, with only
I would say sixty to seventy yearsof really kind create data and data that
I mean in and what I meanthat, you know, concrete data.

(09:07):
You know, I'm kind of talkingmore about data that we can trust in
that you know, let's say,in the eighteen hundred and seventeen hundreds.
Yeah, we do still have alot of economic data out, but at
the same time, we were sucha different economy. We were manufacturing trade
economy. Now we're you know,obviously a much more service based economy.
So you know, it's you candraw parallels between between you know, I
think where we were at the beginningof the twentieth century, you know,

(09:31):
early nineteen hundreds, late eighteen hundreds, but you know, I think it's
also hard to take historical data fromthat time and and and uh, you
know, compared to things today,because you know, we're just in a
totally different in a totally different worldright now. So you know, I
think those are the big things thatreally happened this week. But I'll touch
on all those a little bit more. But I think, you know,

(09:52):
we can go over the go overthe the weekly numbers. So let me
just get out of my my packet. And so the Dow Jones was down
two sixty one twelve to close thatthirty four thousand, five seventy six,
down point seven five percent for theweek, which held up pretty nicely.
You know, if you look atthe Dow Jones industrial average, you know

(10:15):
it is geared a little bit moretowards industrials and more towards some oil.
I think a little bit more towardsoil than you know, the allocation of
you know, industrials is about fifteenpercent, Energy is three point one eight
percent, Tech is eighteen percent.Defensive is twenty six percent. So it's
a little bit more of a youknow, a defensive. I think I'm

(10:37):
diversified, uh, you know,portfolio. I would say with the thirty
stocks that everyone held up a littlebit nicer than let's say the nastac as
as you'll say, So it's downpoint seven five percent, up four point
three one percent for the year,trailing twelve month up seven point five four
percent, needs about six point zerofour percent to obtain new highs. SMP

(10:58):
down fifty eight twenty eight to closethat four thousand and four fifty seven forty
nine, down one point two ninepercent for the week of sixteen point one
zero percent. For the year trailingtwelve month up nine point five nine percent,
Needing about seven point zero seven percentto obtain a new high. US
total market down NAZDAC composite down toseventy twenty nine to close at thirteen thousand

(11:18):
seven sixty one fifty three, downone point nine three percent for the week,
up thirty one point four eight percentfor the year trailing twelve month of
thirteen point six two percent, needsabout fourteen percent to obtain new highs.
We've seen a recent pullback in theNASDAC about five you know, I would
say five about a six percent pullbackwe've seen in the NAZDAC in the past

(11:41):
month or so, you know,I think that can be attributed a little
bit to you know, this SeptemberAugust dull, the dull end of summer
of September August that we've seen historicallythe only two months that historically have an
average that average actually down in themarket. I think it's both around you
know, they're both less than twopercent, but I think you know,

(12:01):
August is a little bit less thanone percent historically down in the month on
average, and I think September isa little bit more than one percent.
So you know, I think we'rehas a little bit to do with that.
You're seeing interest rates hit five percent, so you know that that obviously
affects the more growth growthy areas ofthe market, and you know that includes
the NASDACS. So you know,trailing twelve month up thirteen point six two

(12:24):
percent, fourteen point three percent toobtain a new high. US total market
down six sixty three eighty two toclose that forty four thousand, four sixty
seventy seven, down one point fourseven percent for the week, up fifteen
point four two percent for the year, trailing twelve month up eight point four
two percent, So you know,you're seeing the total market do do do

(12:45):
obviously very well this year. Alongwith the total market, you know,
I think it's always important to lookat the RSPA, which is the invest
go equal weighted ETF. So youknow, SMP's obviously market cab weighted RSP
is the equal weight of that,and you know you're seeing that up.
You know, five it's five daywas down one point five one per cent,

(13:09):
So you know that that's gonna gettough too, because you know everyone
is saying, hey, you knowyou've seen it. Hearing a lot of
people say on the on the internet, you know, maybe it's time for
this market to broaden out a littlebit. But you know, I don't
think we've we've seen that really.You know, the SMP one month is
down point zero five percent, theRSP is down two point four nine percent.

(13:31):
You know, so even if youeven if you look at the three
month SMP out performs up up threepoint six three percent and the RSP is
only one up one point seven twopercent. So you know, we're continuing
to see here people say, hey, maybe I think we were going to
see a shift out of you know, the large cap stocks, because you
know, I think the SMP ifyou look at the SMP five hundred being

(13:54):
a market cap weighted index, andyou look at the holdings in there,
you know Apple is seven percent,Microsoft the six point six percent, Amazon
is three point three percent, andvideos three percent. Google is about four
percent, so you know, youkeep on hearing. Hey, you know,
these companies can't lead us forever.But you know, I think,
and we continue to be holders ofthese companies, I guess looking to trim

(14:16):
a little bit at times when theybecome too much percentage of your portfolio.
So, you know, if you'reover seven percent in Apple, you're actually
you're you're obviously overweighting it. Soand I think once you get to the
you know, Apple for instance,you know, I think once you get
to that seven percent mark, ifit isn't your portfolio, I do think
that if you do invested individual stocks, if you're seeing your Apple at around

(14:37):
you know, above ten percent,I do think it'd be prudent to trim
it a little bit here. Ithink Apple is a great company, don't
get me wrong. I think they'regoing to have a new iPhone out.
I think people a lot of peoplehave waited for this iPhone. I think,
you know, my one of mybuddies use the term yesterday when I
was seeing him. But you know, it's there's a term for how you
know your iPhone stops working when anew when a new one's about to come

(15:00):
out, and I think you're seeinga lot of that. To be honest,
me and my wife both are gonnaneed a new phone as mine doesn't
even charge anymore and hers dies andabout fifteen minutes, so you know,
are going to see us buy thesenew iPhones. But you know, I
think Apple's issue is going to continueto be, you know, at a
three trillion dollar company, you know, they're going to continue to have to
find new ways of revenue, andbeing that big, their new ways of

(15:24):
revenue will be in emerging markets.And you know, China is about six
point six percent of iPhone sales inChina. China is about six Apple is
about six percent of smartphone sales inChina, So you know where they need
to see growth will be in placeslike China and India. And you know
they don't have the consumer really beingthat you know, the average family in

(15:48):
China I think makes about you know, eleven to fifteen thousand dollars per year,
and that's per family, So youknow they're gonna it's gonna be it's
gonna continue to be hard for Applein my opinion, to you know,
grow the wave. They've grown obviouslyover the past fifteen years because their their
avenues of new revenue are a littlebit trickier in that they're they're going to
have to be in emerging markets.You know that said Apple has done also

(16:11):
done a great job of you know, even their headphones, watches, wearables
are continuing to be a bigger andbigger driver. Their VR headset, it's
gonna be priced about four thousand bucks. But they are services, so they
are finding ways to have more revenue. I think they had about ninety five
billion dollars in revenue last quarters,so they're obviously making a lot of money.

(16:33):
It's just it could you know,I think you could still continue to
see geopolitical risk with Apple, asyou know, it is one of the
largest countries in the world. Butyou know, Tim Cook has done a
very good job of navigating China thusfar, so you know, we'll see
what happens Apple. Apple did havequite the rough week. Looking at the
five day chart, it was upa little bit on Friday. I think

(16:56):
the NASDAC was down almost every daythis week other than it inched positive.
But yeah, five day for Appleis down five point nine five per cent,
So you know, I think you're, yeah, it's going to continue
to see you know, maybe seesome headwinds geopolitically, you know, especially
with China. Russell two thousand,down sixty nine twenty eight close at one
thousand and eight fifty one down threepoint six one percent for the week.

(17:18):
So, you know, Russell twothousand another one that people you know kind
of continue to think might might pickup a little bit. But you know,
again it's going to be hard foryou know, the smaller cap companies,
ones that might need a little bitmore help from let's say banks and
financing, and you know that thathurdle rate is going to be obviously much
higher. You know, you're seeingmortgage rates at you know, seven plus

(17:38):
percent. Personal loans obviously are abovethat personal loans rates. So you know
that that era of free money thatyou maybe helped smaller businesses develop the growth
numbers that that they had over thepast ten to fifteen years, you know
that hurdle is obviously so much highernow at five percent that I think it's

(17:59):
going to continue to be hard foryou know, maybe smaller companies to make
money, especially if we're in aslowing economy and they're gonna have to be
smarter and smarter about you know,what loans they take out, how they
spend their money, because you know, it's not free like it once was.
So you know, the rustle twothousand, down three point six one
percent for the week, up fivepoint one three percent for the year,
trailing twelve month down one point sixsix percent, needs about twenty four point

(18:22):
two percent to obtain a new highdown. Utility is the only industry that
the only sector that we you know, track on our statistical weekcap that was
up up five point zero nine percentto close at eight seventy one seventy five
up five point nine percent for theweek, down nine point eight nine percent
for the year, So you're seeinga little bit of a shift towards maybe
well for the week. Utilities trailingtwelve month down seventeen percent percent to obtain

(18:49):
a new high is eighteen point sixpercent. Transports down six twenty seven fifteen
h cleos at fifteen two o eightdown three point nine six percent for the
week, up their team point fivesix percent for the year, trailing twelve
months down eight point one six percent. So you know what I'm thinking if
you just look at the statistical recapand said, hey, you know,

(19:10):
what do you think about that whatdo you think of the market? You
know, you'd have to say,Hey, the naz Dad composit done one
point nine three percent for the week. And I think that has a lot
to do with specifically, you know, the raising rates and seeing seeing that
around five of you know, thefive percent mark, and I think that
you know, that could continue toyou know, put a ceiling on technology

(19:36):
at least for the time being.Oh, you know, I read something
that was actually pretty interesting. Itwas in buy the Numbers? Who does
buy the numbers? And we geta lot of information out from companies that
we work with by the numbers isdone by that doesn't say it on here,
but I will let you know nextweek. But you know I had
an interesting stat on it and itsaid going strong at ninety three. Investing

(19:59):
legend Warren Buffett turned ninety three onAugust thirtieth. Baron showed last year that
Berkshire Hathaway's A shares could fall ninetynine percent and still be outperforming the S
and P five hundred since nineteen sixtyfive, when Buffett's Berkshire performance began.
From nineteen sixty five through twenty twenty, when Berkshire shares generated a compound and
a return of twenty point one percentagainst ten point five percent for the S

(20:22):
and P five hundred, so,you know, almost double. So I
think it's easy to talk about,you know, everyone wants to I guess
Hayden a little bit of you know, people in my opinion that are successful.
And I think you've seen that alittle bit, you know, especially
recently. If you look at youknow, Berkshire stock, even in the

(20:42):
past five years, you know,it's up sixty nine point six six percent.
You know, well, let mejust get this chart back up because
you know, I'm just kind ofcomparing it to the Triple Ques because you
know, everyone kind of says,hey, you know, you know,

(21:04):
Chippleques up one hundred and five percentover the past five years. Berkshire's up
sixty nine percent. So you know, everyone kind of said, hey,
you know that has has Warren Buffettlost his his his moja a little bit.
But you know, I think youcan obviously see that that isn't the
case at all. He's a specifictype of investor, obviously one of the

(21:25):
most successful investors ever, and hehas a specific you know, and I
think what good investors do really wellis have a specific philosophy and you know
kind of developed that philosophy over years, but you know, stick to it.
You know, don't whale watch,miuncle Chrissy Stolways call it whale watching.
You know, by the time youget to the other side of the

(21:47):
boat, it's gone. So Ithink you see a lot of that in
investing, and you know, jumpingin, you know, buying when you
should be selling, and selling whenyou should be buying. And I think
that's the best thing that Warren Buffettsgood at is is buying when everyone's supposed
to be selling, investing in companies, really going through the fundamental the fundamentals

(22:08):
of these companies, the balance sheets, the financial statements, and really you
know, trusting his process. Andhe's done a great job at that.
You know, I don't think themajority of investors can obviously do that type
of you know, fundamental deep diveinto companies in stocks, but you know
it's an interesting, really interesting youknow in yeah, I guess, interesting

(22:32):
way to invest and you know it'sthat whole Benjamin Graham, you know,
deep value type of investing that youknow, he's perfected over his you know,
ninety three years. So you know, I think it's always good to
read, you know, good thingsabout him, although you know, you
do hear a lot of obviously goodthings about him. You know, I
think it uh, you know,I think lately, you know, without
his I guess huge investments into technology. He does own Apple, he does

(22:56):
own some Amazon, but you knowhis you know skew. I guess towards
non technology has given them a littlebit of a hate over the year,
and that that's just kind of anamazing statistic. What else do we got?
Oh, you know, I readsomewhere no. I was listening to
a podcast this week, and Ithink this is important to really note to

(23:18):
clients and investors in that ninety fivepercent of Bank America warriors are under five
percent. So only have thirty moreseconds here, but ninety five percent under
five percent mortgage and you're seeing youknow, mortgages of over seven percent now.
So I think that's going to beextremely important going forward. And I
think FED and drone power will reallyhave to pause for a while as people
are really locked into their long termdebt. But you know that that about

(23:41):
does it for the first half ofthe second half, we'll talk about some
you know, fault upkeeping for yourportfolio, talk about China a little bit
more, but that's that. NowIt's ten thirty on the station you depend
on for news, whether and informationradio A ten w g Y. Good
morning, and welcome back to theFagin Financial Report. This is Aaron Fagan
sitting here as we do every singleSunday here on what September tenth, twenty

(24:04):
twenty three. You know, it'sbeen a it's been a tumultuous week in
the market, to say the least. You know, we had the NASDAC
down I think Monday, Tuesday,Wednesday, Thursday and bounce back a little
bit. But you know, asas I talked on, you know at
the beginning of the first half ofthe show, you know, the triple
cues are up forty percent year todate. You know, we have you

(24:26):
know, as of as of Friday, you know, you had the one
year sitting at five point four,the two year sitting at five percent,
three years sitting at four point six, you know, five years even at
four point four, and the tenyears at four point two. So you
know, I think what you're seeingnow is, you know, if you
look at the triple ques, youknow, week to date, you know

(24:47):
it's five day performance. You know, you have it down one point four
to six percent. So you knowwhat I think you're seeing here is you
know, as you've seen a lotthis this year, is you know you
have the battle between you know,stocks, equities and fixed income. You
know in the past that wasn't muchof a battle, you know when you

(25:10):
saw the ten years sitting below onepercent in the past three or four years.
So you know, right now Ithink you're seeing you know, hey,
you have ten thousand people turning sixtyfive every single day. You know,
you have the you know, thethe ten year performance of the triple
queues up four hundred and twenty ninepercent. And I think what you're seeing
is you know, retirees as theyretire and need to start taking distributions saying

(25:33):
hey, you know, enough's enoughfor now. You know, you have
a lot of you know issues geopolitically, I would say in the market,
you know, whether it be beingfrom you know, inflation concerns. You
know US government debt. You know, thirty one percent of all US government
debt outstanding matures within twelve months.You know, you have what's going on

(25:56):
in Saudi Arabia with oil cut productions. You have what's going on with China
and the CCP. You have theEU with you know, the gatekeepers of
Alphabet, Amazon Meta, you know, the advertising giant technology gatekeepers. Restrictions
might might apply to them, andyou know, you just have you know,

(26:17):
jobless claims are at the lowest they'vebeen in six months. So you
know what you're seeing is you knowa lot of conflicting data, you know,
coupled with UH you know, higherinterest rates. You know, the
triple queues that's already up forty percentyear to date. So what I think
you're seeing now is you know,getting into the fall is you know people
are people are a little bit skepticalabout the market. And while being skeptical

(26:38):
about the market, you know nowit actually pays to wait, you know,
other than you know, in thepast, you had you had UH,
you know, interest rate at onepercent, so people would be like,
hey, you know it doesn't payto weight. But now that you
have money markets, you know,we use the Schwab value money market funding

(26:59):
that symbolst s vxx and you know, as of Friday, it is yielding
you know, seven day yield sevenday yield of four point two five five
point two three percent. So youknow, as as if you're you're in
the camp like we are, thatyou're you're still still seeing a really strong

(27:22):
economy. You so, I snumbers come out, IM numbers come out
this week. Manufacturing numbers still isstill very strong. You know, you
had last week, you know,we had a tape show last week for
Labor Day. But you know,we had jobs numbers way higher than expected.
Although you had a little bit uptickin the in the unemployment rate,
you know, job openings were stillWe're still very very strong. So what

(27:47):
I what I think you're seeing reallyis, you know, I guess a
lot of different, uh, conflictingdata coming out in the economy that people
are saying, hey, you knowthat hurdle is five point five and a
quarter percent. You know, Ithink it pays to wait a little bit.
We're seeing you know, a lotof our clients come in with uh,

(28:07):
you know, with checks from fromtheir bank account saying hey, you
know, if we can get youknow, five and a quarter percent on
you know, some money market accounts, you know, why not have that
there instead of you know, let'ssay at you know, a regional bank
or wherever, where you know,the rates aren't rate rates aren't as generous
sitting in a sitting in a youknow, a savings account. So you
know, I think, you know, you're seeing the uptick in interest rates

(28:30):
this week, and I think that'sthe main thing, really the main driver
that as well that as well asChina, China's crackdown on Apple, that
are you know, the main driversof you know, where the market went
this past week. You know,I know, on the beginning half of
the show, I did, youknow, go over you know a lot
of things that happen this week,whether it be from you know, Apple,
uh with with their issues with Chinaand the CCP, to IM numbers,

(28:55):
to Saudi Arabia. You know,I think, you know, yeah,
people are a little bit of theweight and sem But you know,
before I get into you know,the real second half of the show and
the second half, we like tobroaden the topics out. So you know,
this week I printed out a couplethings and they were you know,
fall planning, fall planning for youngfinances from wealth management dot com. You

(29:17):
know what you can do in thefall to get ready for you know,
to get your I guess you know, uh, you know, seasonal upkeep
with your account, which I thinkis very important. I think, you
know, it's important, and Ithink it's a good time to do that.
You know, people look at theend of the year to do that.
I think, you know, theend of the year is is obviously
a good time to do that.But also I think it's a good time

(29:37):
in the market to do that.You know, I see the market you
know, churning around here for awhile for the next few months or so,
I think, you know, we'regonna I think Powell will pause for
for a good amount of time,which should keep that you know, money
market accounts yielding you know, inmy opinion, plus four and a half
plus percent for the for the fourseal bill future, you know, the

(30:00):
x three to six months. Andyou know, while in my opinion,
in the market, you know,chur churns around, you know, let's
say within five percent or so.I think it's important to go through,
to go through your account. Youknow, a lot of people ask us
when they come in to uh,you know, to meet with us.
You know, what what do weprovide people? And you know, I
think it's important to know, youknow, we do manage money and at

(30:21):
the end of the day. Wedo we do talk a lot about investment
planning, but you know, it'salso important to know that, you know,
as important as investment planning is,so is social security planning, estate
planning, tax planning, you know, insurance planning, things like that that
we kind of try and provide people. And you know, at Fagan Associates,
we we use ye charts for investmentplanning, for valuing companies. Fundamentally

(30:45):
where we get our key statistics arecharts things like that, you know,
but we also use money guide Pro, which is a financial planning software that
we use for clients. So youknow, we we can input all your
data you know that you have atSchwab pensions things like that, and you
know, kind of tell you whereyou'll be and you know, let's say
five, ten, fifteen years,let's say you're retiring. We can,

(31:06):
you know, show you what yourretirement's gonna look like with this software,
you know, we can give you, you know, the when you should
start taking social Security, when youshould start drawing your pension, things like
that. So you know, wetry and you know, really work with
clients not just on an investment.From an investment standpoint, but you know,
a holistic financial planning standpoint, Ithink that I really do think that

(31:30):
is just important, just as importantas as the investments. But you know,
going forward, you know there's fourdifferent I think it's four, yeah,
four different I guess things that thefall planning for your finances does bring
up. And the first one isrevisit your asset allocation. You know,

(31:51):
the end of the year fall isa good time to uh, you know,
go over your asset allocation in youraccount. And you know a lot
of people are in target dated funds, which you know, I really kind
of push a little bit for targetdated funds with you know, clients that
are not with retirement accounts like fourone case that we can't manage because you

(32:12):
know, I read a statistic onetime it was something like seventy seventy four
percent of all individuals who start afour one K plan never change their asset
allocation from what from when it began. So let's say you have a job
and you're there for twenty years,right, and and you you know,
accidentally and let's say you start ajob and you're like, hey, I'm

(32:35):
going to talk to my advisor beforeI before I pick my asset allocation.
So I'm gonna put it on themoney market account for now, and then
ten years goes by and you know, well, you although you do get
you know, the deductions from puttingin a retirement account, maybe maybe some
growth now obviously if if it's ina money market account yielding five percent,
but that that hasn't been the norm. Let's say twenty years goes by and
you have all of your money ina money market account when it really should

(32:59):
have been you know, the majorityof it, let's say you're around my
age thirty five, should have beeninequities. You know, if seventy four
percent of people don't change their assetallocation, you know, that could really
be detrimental to your uh, youknow, financial well being when when when
you hit retirement age, you know, if you're let's say your maxim and
your four one k R i Rand you never you know, reconfigure that,

(33:22):
I mean, it could be prettydetrimental to your portfolio. So I
think you know now more than everit is important to revisit your asset allocation
also because you know, I thinkit's gonna be the theme of this second
half is, you know, becausewe're seeing Schwab value advantage and money market
Schwab government money market yielding you know, five plus percent, So you know,

(33:43):
I think it's important. Now,let's say you know you are sixty.
Let's say you are fifty five.You know, maybe five years ago
when you're you know, let's sayforty five or fifty, you had eighty
percent of your money in the market. And you had eighty percent of your
money in the market because you know, the ten year treasury was yielding one
percent, so you had to takethat risk. Now that's not so much

(34:04):
the case. Now, let's sayyou're fifty five. Uh, let's say
you're fifty, same situation you were. You know, you were eighty twenty.
Now you could really be you know, maybe sixty forty because you have
that forty percent guaranteeing a yield offive percent for the foreseeable future. So
you know, if you have youknow, at Fake and Associates, we
say, you know, a fourpercent distribution rate is safe and we kind

(34:28):
of say, you know, afour to six percent performance per year year
over year, is you know asafe bet that you know that having forty
percent of your portfolio yielding five fouror five percent now makes that stock side
of your portfolio not have to beas volatile and as risky, So you
really don't have to, you know, go for the you know, momentum,
go go stocks as much as youmight had to in the past.

(34:51):
You know, maybe maybe you don'thave to skew as much towards technology.
Maybe you can skew wait more towardsvalue. You know, maybe PEPSI looks
a little bit better in your portfolio. You know, if that SMP is
up twenty percent, maybe PEPSI won'tbe up of twenty percent, you know,
but but PEPSI might be up youknow, seven or eight percent.
You know, just looking at thisyear when you see the triple queues up

(35:14):
up, you know, yet fortypercent. You know, year to date,
PEPSI is flat. So I guessit's not doing what you know,
I thought it would be doing upa bit. But you know, Schwab
value is is you know, upup three percent, so at least it's
performing a little bit. Yeah,definitely not in line with where where I
thought it would be. The sand P up you know, sixteen or

(35:34):
seventeen percent, but you know,you won't have to take that risk let's
say in the technology stocks that youhad to in the past, because you
know now at least you're having someyield in your fixed income side of your
portfolio. The second one is plannedfor your tax return, whether or not
you live in a state with hightaxes. Consider how mitigating the impact of

(35:57):
taxation on your portfolio can help youbuilding your sustain year wealth over time.
For example, a tax aware assetallocation strategy, which accounts for different differences
in tax treaments of various accounts,may help increase after tax returns. So
what is this saying? And fortax real accounts of strategy known as tax
lost harvesting cans help mitigate taxes oncapital gains. We've been doing that a
lot this year, and it's agreat year for that. You know,

(36:19):
last year was an awful year forthat from from a you know, I
guess from just an investment standpoint,because you had you know, not only
bonds did not perform. You know, you had years of gains within your
portfolios. So if you didn't taxlost harvest along the way, you know,
along the way of this bowl market, you know, you didn't really
have much, you know, capitalgains to harvest, and that was tough.

(36:44):
You know, you did have thebond side of the portfolio down,
you know, exponentially and not exponentiallyfairly significantly, so you could harvest on
the bond side, but you reallycouldn't harvest on the stock side. If
you're a long term holder and youdidn't harvest along the way, let's say
you let your winners run a littletoo much, you really didn't have you
know, with the stock market performingso well over the past, let's say

(37:06):
you know, ten thirteen years,you know, you didn't have the stock
side of your you know, portfolioto tax lost harvest from. You know,
this year, I think it's alittle bit of the opposite. You
do still have bonds, which,as I said, you know, it's
I think the first time in twohundred and fifty years you had three straight
years of bonds being down, sothe interest rates rising essentially, you know.

(37:30):
Now, you know, we arefinding a little bit more opportunity for
tax lost harvesting in let's say securitiesthat we start investing in the last one
or two years. So like sometimesI say, even if you like a
stock, I still think it's it'simportant to maybe cut it loose build up
some of those capital gain losses,and you know, you still have thirty
days, so you know, youcan't invest in the company within thirty days.

(37:51):
But once that, you know,thirty one days, it's if you
still like the company, you know, you you re reevaluate it, and
if you want to jump back in, I think you can jump back into
into the holding. But you know, as I was saying earlier, I
do see the market churning around here. So let's say you do like something
for the long term, and Ido think it is a pretty good time
of year, maybe two, anda pretty good time in general too.

(38:12):
You know, maybe cut your cutyour losses for now. Uh, you
know, reassess the situation, youknow, in thirty one days, and
if you if you if you stilllike the company, you know, you
know, buy it again. Butat least you get to you get to
write that off. Third one,update your estate plan, you know,
I think that's always important, whetherit be five twenty nine plans, trusts,
you know, anything that you know, uh is set for the future.

(38:37):
I think it's a good time to, uh, you know, see
where that is and uh and Iguess plan accordingly and in the fourth one
is plan plan your charitable and holidaygiving. So you know, you can
if if you have an RMD,you it's up to one hundred thousand dollars,
you can donate in a qualified distributionand get that written off for your

(38:57):
taxes. And you know, wedo, you know, for you know,
a lot of clients need their rmds and they live off I think
I don't know their percentage, butyou know a good amount of people in
the United States now do just liveoff, you know, off distributions and
social Security. So you know,not everyone can do it, but you
know, if you're not one ofthe people in those boats and you don't
need your RMD, you can alwaysdonate it to nonprofit and uh and at

(39:23):
least get that right off for thetime being. You know. Next up
for the show, you know,I do think it's important to talk about
China a little bit. You know, I did talk a little bit on
the first half about you know,Apple and their iPhones and I and I
and how China is here, whatwe're do. I have the article right
here, you know, on reportsthat China is restricting iPhone use for government

(39:47):
officials. And you know, Isaw a comment about this and you know
the comment is and you know,obviously it's not good for China. I
think it. I think it's aboutsix point six six point seven percent of
all smartphones sales in China, soyou know it doesn't have as large as
share that that one might think.But you know, this quote or this

(40:07):
comment on on an article on Ithink it was CNBC was iPhone is the
only device not scannable by China's spyspying tool distributed to every police banning can
make every phone in China scannable.Now you can't. Now you can't say
anything remotely about the remotely bad aboutthe CCP with the restrict that if you're

(40:30):
a govern employee, with the restrictionon on on Chinese accounts, with restrictions
on the Apple phone. You know, and I think it's important to know.
You know, I've had a lotof you know friends, UH mentioned
what's going on with China right now. You're seeing bricks the bricks nations.

(40:50):
So you have China, you haveIndia, you have Brazil, I think,
Argentina, Nigeria, so you know, you have a lot of emerging
economies you know kind of form thisbricks, you know to uh to I
think, you know, I thinkto you know, to go to you
know a little bit of a combatwith the US and the US dollar,
and you know it is scary.You know, China's a big country population

(41:13):
wise. India is a big countrypopulation wise. But you know, I
saw this chart from visual Capitalists,and I think it's just kind of a
graph from you know, visual capitalists, and I think there's some things to
really remember about China. Do youreally want to invest in a totalitarian government?
I don't really. China's average householdsincome is between eleven and fifteen thousand

(41:38):
dollars per year, So although theyhave a lot of citizens, their spending
power isn't even remotely close to developednations in Europe or North America. Essentially,
you're seeing their youth unemployment rate abovetwenty percent, You're seeing their consumer

(42:01):
price index flat, You're seeing exportswe're down eight point eight percent this week,
and you have GDP growth at pointeight percent in Q two. You
have what's going on in their realestate market. So China can only I
guess, hide and manipulate the troublesof their economy so much until it's kind

(42:24):
of blatantly obvious to the rest ofthe world. You know, you saw
oil take a little bit of ahit, the price of oil take a
little bit of a hit Thursday orFriday because of you know, the weaker
manufacturing numbers come out of China.So it's really hard. We don't We
don't have any Chinese investments, andif we do, they're nondiscretionary, so

(42:50):
they're not really they're not They're notour choice. We might have some emerging
market ETFs that are legacy ETFs,but we don't really invest in China.
As you know, we try andinvest in things we know, and even
if you look at Chinese companies andChinese companies financial statements, you know,

(43:10):
it's hard to believe them. Soyou know, if you if you come
from a you know, investment investmentphilosophy and investment standpoint that you'd like to
really do due diligence, and youknow the companies you're investing from a fundamental
standpoint balance sheet, income, freecash flow, you know, it's hard
to invest in something you don't knowif these numbers are real or not.

(43:30):
So I think that's really important toknow even going forward. You know,
I think you're seeing breaking news onon you know, on news channels all
the time. Now, I think, you know, getting close to the
election, we will see some moreyou know, big bad, scary China.
But you know, bricks has beenaround for twenty plus years. I
think they're trying to finally start maybedeveloping their own currency, but you know,

(43:54):
it's a long way off. They'vetried it before, and I think
it's gonna be really hard to completelydestabilize the dollars. So you know,
it's I think it's one of thosethings, you know, they have to
prove to people. I think thatyou know that this will actually work,
and I don't think there's any proofof that yet. You know. The

(44:15):
last thing I think I'm going totouch on is, you know, we
do like to broaden out the topicsin the second half of the show,
and I think you know a goodone is, you know, like him
or hate him. Let's say,you know, Jim Kramer has been in
the business for for a long longtime, and you know he has these
twenty five rules to investing and youknow, you know, again, don't

(44:37):
don't like him. Like him,you know, he does have some really
good points. Anyone that's on theyou know, on CNBC every single day
is going to call some losers,gonna call some winners. And I think,
you know a lot of times wejust pick out his losers. But
you know, some things that stickout for me is now it says cash
is for winners. And you know, I don't know what he means by

(44:58):
this, but you know, rightnow, as I was saying earlier,
investing in that in money market fundsnow does pay to weight. So you
know, I think important for everyonethat you know, you can open a
brokerage account at Fidelity, at Schwab, you know, Vanguard pretty easily,
and there's all these companies have moneymarkets yielding five plus percent, so you
know, I think risk free.So I think, you know, if

(45:21):
you are an investor, if youhave some cash sitting around, you know,
I think that's I think that's extremelyimportant for people right now, is
to you know, get that moneyworking in the money market accounts for you.
I mean, I think this isfunny. He says, you know,
don't own too many stocks, andyou know, I think Warren Buffett
said something he said, you knowone time that you know, diversification is

(45:43):
for wealth preservation, and you know, and I really firmly believe that.
You know, maybe you shouldn't owntoo many stocks, but you know,
if ten thousand people are turning sixtyfive every single day, you know,
diversification makes your stock portfolio way lessvolatile. You know, it's it's it
makes it way easier to get throughthe tough times when the market is up

(46:07):
and down and all over the place. You know, it brings down the
volatility in your portfolio, which helpsyou make the correct decision. So,
you know, I don't agree withdon't own too many stocks, especially with
for a lot of our listeners whoare retired. You know, I think
a portfolio of twenties stocks is iskind of the correct amount of stocks you
should have in your portfolio, coupledwith maybe some some sector based dts,

(46:29):
maybe some income income focused ets likeJEP or jet Q that can that aren't
as volatile. So you put fiveten percent of your money in there,
you can still get some yield fromthere, still some capital appreciation, and
don't have the volatility of the stockmarket here. What else is on here
that really is uh that we wereally adhere to is you know, do

(46:54):
do your Stockholm work? Because Iwas kind of just saying with China,
I think it's really important to toyou know, be able to you know,
really dive deep into a company's financials, their financial statements, and and
make correct decisions or the decisions youwant to do that that you want to
make based on based based on differentinformation that is out there. Don't forget

(47:21):
about bonds. You know, anotherimportant one that that that we've been saying.
You know, I think bonds aremore are now as important as ever
for people's portfolios. As you youknow, you have that yield of five
percent. You know, as Iwas saying earlier, we have so many
people come in and when you tellthem that they can yield four or five
percent on their bonds, are almostlike, you know, what's the catch
because it's been so long since youknow, this has been the case.

(47:42):
But you know this four or fivepercent is normal historically. So you know,
make sure you're correctly allocated. Youknow, call your advisor if you're
too much in the market, sayhey, you know, I think it's
time for me to you know,if you don't need the growth that you
did in the past, you know, maybe to take some money off the
table, you know, ladder somebonds we've been laddering out to about five
years. We haven't going out tothe ten year yet. We do still
see that rising a little bit.But you know, we've been laddering bonds

(48:04):
up to five years as well asputting you know, a substantial amount in
the money market. And but thoseare the things that you know, I
think are important. You know,it's the end of the end of the
show, So feel free to giveus a call at five one eight two
seven nine one zero four four.Check us out on LinkedIn, Facebook,
we have an Instagram now, goto Faganasset dot com. We do have
a questionnaire if you do want tomaybe set up an appointment with us and

(48:25):
we can get you in here.But right now it's ten thirty on the
station you depend on for news,whether it information, one oh three one
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