The Fagan Financial Report

October 15th, 2023

Episode Transcript

(00:01):
Good morning, and welcome to theCapital District's Money and Investment Program. You're
listening to the Fagan Financial Reportum DennisFagan sitting here with my son Aaron,
as we do every Sunday right herein news Talk K ten and one O
three one w g Y. Igot a very good show. First of
all, Erin, I'm gonna curseyou for the turkey trot. I know
you did well this morning, wentout getting ready for the turkey trot.

(00:23):
You know, this is gonna beour third year doing it together. Oh
man, right, we did itlike you know, I've done it,
you know, sporadically throughout my life, probably ten fifteen times. But yeah,
this is our third year doing together. It's kind of it's a great
uh. I love it. Youknow, it's fun. It's uh,
it's a great day. It's agreat day. You know. We usually

(00:43):
run by the Yelhouse. Yeah,we go back to the Aelhouse for a
little bit after then we pick upbecause I order Thanksgiving, we don't make
it we ordered, then we gopick it up. Yes, and it's
just a nice day. You know, it's one of one of our favorite
days. And I you know,I speed up. I hope no one's
listening. Speed up when I goby the house. I speed up when
I go by Ryan's wake a littlebit. Yeah, I just look forward.

(01:07):
I don't want to make eye contactwith anyone that I know. It's
a grind. It is as youget older too, I mean, and
you're not you're not saying shape though, like even me, what did you
call that? It's you know,I hate running, but I also love
it because, like in twenty andthirty minutes, you can get a pretty
good workout in. It's good,get your heart up. Yeah, you
always sweat, You always sweat,regardless. I was out there today,

(01:27):
did a couple of miles, gettingmy time down. Hope, hopefully I
can get down to a reasonable timewhere it's till people who are walking aren't
passing me. It's tough because youalways start off so slow. You know,
it's just like the hot the youknow, I don't know. I
don't know what bothers me more outof the pack. The ten year old's
passing me, or the people thatare much older than me passing me,

(01:49):
I don't know. Both is agrind both. I try to track well.
You always I feel like you always, uh, catch up to the
ten year olds sometimes, you know, sometimes because I throw candy in front
of them, Yeah, and theystop and pick it up and they come
down a little bit. So anyways, but you know, got a lot
going on this this week. Wegot obviously, the the war that Harmas

(02:14):
began with Israel, and Israel ison the precipice of really going into Gaza
and the poor Palestinians that are inthere that aren't involved in this at all.
Obviously, the poor Israel's citizens ofIsrael. Our hearts go out to
Israel, and there are a lotof innocent people in Gaza too. They're
under a certainly a terrible regime inHamas, and maybe this will get them

(02:38):
out from underneath it. I don'tknow, I'm not I'm not an expert.
We're experts on the market, butuh, you know, coming on
the heels of Russia and the Ukraine, there's sad times sometimes, you know,
So you know, it's a reminderof what we have, you know,
talk about what the second half.Yeah, we'll talk a little bit
about it in the second half,not that as much, but JP JP

(02:59):
Morgan head Innings. Jamie Diamond usuallysays some things during you know, their
earnings, and he does talk aboutyet geopolitical tensions just kind of continue to
be on the rise, even inthe United States, and you know,
anti Semitism, you know, butyou know, historically they've had little influence
on the market. So we'll talkabout that, talk about our fourth quarter

(03:21):
news that that's all in the secondhalf. But as we do in the
first half, we take a lookat the markets this past week and actually,
you know, we start out oursnapshot that we send out all of
our clients and those that aren't ourclients who want a copy of our snapshots,
about four or five page weekly missivethat goes out. You know,
we worked on this together. Stocksheld their own this past week as earning

(03:43):
season has begun. Despite voluntility inthe bond market along with the terrorist attack
upon Israel, Treasury yields moved loweras many global investors through the dollars of
safe haven investment, which may causethe Fed to not raise rates at their
upcoming meeting October first and second.In our opinion, at this point,
stock prices will be supported by betterthan expected earnings along with positive seasonality.
The second half of October November Decemberusually go, but held back by the

(04:06):
fears that the war between Israel andHamas will spread along along it will spread
along with valuation. We are mostlikely in a trading range with the bias
to the upside despite the gains.Thus for this year, you know,
we counsel patients, and I thinkthat makes a lot of sense in through
here, a rolling recession, notrolling correction really in the markets and specific

(04:27):
sectors, and I think we kindof will continue to see that. And
I think what you said is verytrue. I think there's a cap on
the market, but I think,you know, I think we do have
a little I think a little bitof upside momentum here with the past three
months being pretty dreary in the market. So you know, I'm still happy
with where we are. I thinkprices look pretty attractive here. You know,

(04:50):
we're picking up some stocks. Butyeah, I guess the upside is
a little bit capped, I wouldthink. And you know, however,
I think this is quite well,it's not. I think it is is
a fact that nobody knows where themarket's going over the short term. And
this past Thursday mark the one yearanniversary of the bottom of the recent bear

(05:13):
market the bear market that really beganat the beginning of twenty twenty two.
At one point in time, theS and P five hundred had been more
than twenty five percent off of it'sall time high. Right now the S
and P five hundred sits about tenpercent off of it's all time high,
so it's captured quite a bit ofthat back. But it has been a
large cap tech driven market. Butif you look back, if we were

(05:36):
sitting here a year ago, ereyou know, lots of things you don't
remember, and there's quite often there'sa lot of events you do remember.
And I kind of remember last yearthe growth to value trade was in full
bloom, the belief that tech wouldnever rebound. You know, we kind
of held our own with what wehave generally speaking, historically speaking, with

(05:58):
more growth investors in value investors,and for those that aren't that aren't familiar
with that terminology, that the growthinvestors, generally speaking, investing companies that
increase earnings regardless of the economic environment. People are still going to buy Apple
computers, iPhones and the like Microsofts. Value investors are more they try to
time the cyclicality of things. Infrastructureplays the rails and the like, and

(06:24):
we kind of think, you know, you can date the growth side the
value side. You've got to beright twice when they get in and when
they get out. Generally speaking,the valuations more in metrics than then growth
side. Growth plays a little momentum. But I would think, as I'm
going on here, but I wouldthink, and I don't know if you
agree that the value side was wasall but you know, proclaimed DA last

(06:46):
year, dead last year, andit's rebounding. Yeah, you know,
I think what we're seeing a littlebit is the you know, the fact
that these large cap tech stocks,mainly that you know, let's say seven
that are the reason the S andP five hundred are up this year,
all have you know, a lotof value within them. You know,
they all have extremely strong financial statements. And you know, I and and

(07:09):
you can a lot of times,you know, the leaders of today aren't
the leaders of tomorrow, but Ithink they're trying to. They're kind of
showing you that they might they mayas well be the leaders of today and
and of tomorrow. So I thinkthat's a reason why they held up.
You know, they've continued to havestrong earnings so thus far this year,
so you know, it's hard toreally get out of, you know,

(07:30):
the large cap growth stocks that thatwe invest in, because every time you
look at their you know, theirfundamentals that it looks they look really good.
They do it. And I thinktoo, there's there's been so many
false starts in the other sectors thatI think, I think that's why the
average investor will gravitate back to thegrowth stocks. And I think, yeah,

(07:51):
and you know, I think toois you know, I didn't mean
to cut you off, but youknow, I think when you when we
do invest in you know, traditionaltraditionally value companies, we kind of buy
companies that we can hold on toforever. You know, if you just
look at Schwab large cap value,their three largest holdings are Berkshire, x

(08:11):
On, JP, Morgan, Johnson, and Johnson. We own all three.
We own all four of those ina decent amount of all four of
those. So you know, onthe on the value side, we kind
of tend to buy the best inbreed and let them you know, yes,
go in and out of favor,but you know, they're all extremely
strong companies that will grow over time. You know, Yeah, I agree
with that, and I think you'veseen that in returns this year. The

(08:33):
naz dec is up thirty percent,the SMP excuse me, off the bottom
this October twelve, twenty twenty twobottom. Then nazc's up thirty point three
to one. S and p's uptwenty one point six. These seven or
eight stocks make up forty percent orso of the S and P five hundred,
So those seven or eight stocks areprobably forty or fifty percent. It's

(08:54):
helped to drag the S and Pup. And that goes to and with
with such a lot of indexing outthere, index benchmark to the S and
P five hundred, it's hard.It's hard to see they're coupled. It's
hard to see how they become decoupledunless it's over a very long period of
time. I think that's what alot of investors thought last year, that

(09:18):
yes, these companies, these largecap tech stocks have are going to become
decoupled from the S and P fivehundred. But it just didn't happen.
And now you have that reversion andit's almost like, oh, here we
go again. You know, someonecried, well if we went to value,
and I'm not saying we did,because I think those of us who

(09:39):
invest with us know that our largestfifteen or twenty holdings have kind of been
in the mix other than trimming positionsbecause they became outsized, you know,
and just from a large cap techstandpoint, and if you look at Microsoft,
Apple, Google and Amazon, youknow, you do go back and
forth, and you know, CNBCand everyone, and from an overvaluation standpoint,

(10:01):
it's always are they overvalued? Arethey not overveted? Are they undervettered?
Are they overvaled? But you know, it's never, hey, we
have someone else, We have anothercompany that's kind of nipping at their heels.
There's no substitutes for these companies rightnow. There's not much competition outside
of each other. So you know, until until I think you see something
more transformative and you know, maybesome new innovative technology that might disrupt these

(10:28):
companies. And I guess you're seeinga little little bit with you know,
Chad GPT, But then again,Microsoft is one of its largest investors.
So you know, until I thinkyou see other companies that you know,
maybe aren't even around yet or arestill in their infancy become I guess competitors
to these large tech cap tech companiesyou know, they're going to continue to

(10:48):
do really well in my opinion,Right, where do you go? Yeah,
you know, yes, that's they'reovervalued. Either raise cash, and
cash is a difficult, uh kindof position or asset class to hold for
a long time. You raise cashand hope that maybe you can buy some
of these larger cap stocks back lower. Maybe you trim a little bit.

(11:09):
And by the way, you know, we certainly advise kind of leaning towards
your bias incrementally, you know,by five or ten percent, no problem,
but to go from one side tothe other. As you can see
just from these numbers marking the oneyear anniversary on Thursday, the average investor

(11:31):
has gotten hurt. In fact,if you look at the S and P
five hundred equal weight RSP, it'sup eleven point nine two percent, so
little more than half the performance ofthe S and P five hundred. The
Russell two thousand, which is thesecond third thousand largest American stocks, is
up only two point seventy five percent. So that that's where you get hurt
is when you aren't somewhat correlated tothe end of season, you find yourself

(11:54):
really on the outside looking in asfar as performance goes and that hurts you
right now on a on a yearto day basis. Our largest holdings outside
individual securities are the Invesco Legal Aid, so we do have allocation of that
up about twelve percent. Then Energyto Schwab Dividend parnasss correct with in the
Schwab Us broad market, so weget correlation to the markets with ETFs.

(12:20):
And then our largest five common stockholdings are Apple, Alphabet, Microsoft,
Lows, and Chevron right. Sowe are adhering to our to our I
guess what we're what we're preaching rightnow on the air. A couple of
the things. If you look atthis week in particular, you have the
consumer wholesale and consumer prices out thisweek, and once again I think we

(12:45):
talk about getting down to you know, around three percent and perhaps struggling to
get to get past there. OnWednesday, the Producer Price Index that's prices
at the wholesale level of five tenthsof a percent during September. This is
after rising seven tenths of a percentin August. Over the last year,
the PPI has risen two point twopercent. It was at one point in
time it was actually down on ayear over year basis, but the last

(13:07):
two monthly increases has caused the producerPrice Index to kind of push into positive
territory. You look at some ofthe components of that finished food prices up
nine tens of percent, Energy upthree point three percent during September, up
ten percent or in August. Sowe've got a bump in energy. However,
if you exclude food and energy,which is difficult to do for the

(13:28):
average American, for any American,the core PPI was just up two tenths
percent in September, is up twopoint seven percent year over year. So
that's kind of the hope that oncewe get some energy inflation out of the
way, food inflation cools down,the PPI may cool down as well.
We also had Consumer Price Index showme to go on and talk about that

(13:50):
consumer price index, which is inflationat the wholesale level up four tenths of
a percent. That's up three pointseven percent year over year. The FEDS
mandate congressional mandate from I think themid nineteen seventies is two percent inflation and
two percent real GDP growth. ConsumerPrice Index up four tenths of a percent,

(14:11):
up three point seven percent year overyear, so you can see it's
well above the two point seven percenttwo percent GDP excuse me, a inflation
rate year over but it is downfrom around eight or nine percent that we
saw in March of twenty twenty threeon a year over year basis, but
still three point seven percent. That'swhere the Fed is gonna have a difficult
time. Shelter costs remain high.Energy, you know, a key component

(14:35):
of the CPI of one and ahalf percent, so you know, rents
are coming down. I think that'sgreat. We'll see. I mean,
I think the jury's out as towhether or not the Fed can get inflation
down to two percent on a glidepath that the markets can really live with.
You know. Yeah, and Iagree, especially with gasoline, energy
and you know, rent although comingdown. You know, ages are up,

(15:01):
you know, lodging is up.So yeah, I think that final
one point seven percent is going tobe really extremely difficult for the Fed to
do. You know, they canonly do so much by raising rates too.
I think we've kind of been sayingthat for a bit. You know,
they don't obviously don't want to raiserates, and all of a sudden,
the economy comes crashing down and youknow, and they and I think

(15:22):
pausing for a longer amount of timeis kind of what's going to work because
I think, I think time isthe only thing that can really bring inflation
down to two percent. I agree, you know, it's yeah, And
how much time does the FED wantto give it? The FED has already
shrunk its balance sheet by over trilliondollars over the past year. You know,
bonds, both mortgage backed securities andtreasuries as they come do the FED

(15:45):
would reissue new you know, youknow, reissue new ones, and that
would you know, push more money, or they'd buy them back and that
would push more money into the economy. They can't do that anymore now.
They're not doing that, so they'reletting them roll off. And that's taking
that one hundred billion dollars a monthout of the economy. So that's that's
another thing that that that that's goingon right now. So they're shrinking their

(16:07):
balance sheet, but the balance sheetstill remains about four trillion dollars above the
pre pandemic level. So the Fed'sprobably going to keep going this. Let
me ask you, let me askyou a question here, h and this
is in a snapshot people say,well, in the late nineties, the
market did great, and I knowyou were very young, but I'm sure
you're history. You're a fan ofthe market. In the early nineties and

(16:30):
late eighties, interest rates were alot higher, so interest rates came down
from like ten percent to five percent. So the tenure was at five percent
in the mid nineties and the marketdid great for four years. However,
interest rates were two percent for thelast ten years now that interest rates were
five percent. Do you think theinvestor quite often looks at where what things

(16:51):
were like mortgages, Yeah, yeah, yeah, yeah, right, So
I think you know, before twothousand or in two thousand and seven,
you had mortgage rates had around sevenpercent, but we don't remember that.
So I think, you know,in the early nineties, I think you
had a couple of things, butI also think you had higher interest rates
were just a thing like a lowinterest rate previous to that was probably four

(17:14):
to five percent, so ten percent, you know, although high interest rates
were still high. You had aperiod of really high interest rates in the
eighties late seventies. But I alsothink you had the emergence of technology,
so you know, how to valuecompanies was kind of changing, especially on
the growth front. You had Ciscogrowing exponentially, you know, IBM Intel,

(17:37):
So I think you had these newemerging technologies that were still in their
infancy, I think in video evenwhen public in the mid nineties. So
you know, I think it's Ithink it was a little bit of emerging
technologies as well as you know peopleit was a one off thinking that technology

(17:59):
companies could do that forever, right, I think that was a big thing
as well, And I do thinkit was it was a one off environment.
People like to compare whatever era we'rein by eras that support their argument.
So well, geez, you know, like even now with the late
seventies and right right, Paul Volkeris essentially like a you know, a

(18:22):
household name now just because we're comparingwhat's happening with the FED right now with
you know what Volker did in notVolker, Yeah, Volker did in the
you know, early eighties, lateseventies. So yeah, I think we're
always trying to figure out exactly,you know, the best fit time historically
and and say hey, this iswhat's going on. And you know,

(18:45):
when you were saying, you know, monetary policy, central banks are pretty
much a pretty recent phenomenon is,like I think, within the last thirty
or forty years, so you know, we're still kind of in the you
know, beginning stages of what theseeven mean for the economy. But I
do think, getting back to myinitial comment was a question to you,

(19:07):
I do think that and for lackof a better word, let's call it
sticker shock. I still think theaverage homeowner, who home buyer, is
going to have sticker shock for awhile when it comes to looking at purchasing
a home and interest rates at sevenand change versus two, and like,
it's a weird you know, psychologicalphenomenon out there too is if you ask

(19:30):
anyone what their interest rate is ifthey own a home, they know it.
Yes, so it's which is reallykind of crazy. But also the
fact that it's so everyone knows thisso well now that even people that are
new home buyers are almost embarrassed tobuy a home now because rates are so
yo. And you know, ifsomeone asks, oh, you're buying a

(19:51):
home now, my interest rates twoand a half percent, you're crazy to
buy a home. It's like,well, home you're supposed to be in
for fifteen, twenty thirty years.It really shouldn't be an investment, right.
You know when we do calculations forpeople, you know, you have
people submit forms with you know,all their financial finances and they include like
their house with their net worth,which you know, I don't really do,

(20:11):
so I don't know. It's ait's a weird, you know,
psychological thing going on right now.And I think the we need to get
farther and farther away from the twopercent. Think people thinking two percent interest
rates are normal. Well, theother thing too is and to kind of
piggyback on what you just said,you know, when you talk, I

(20:32):
get to sit here and think aboutwhat I would say. And and I
was thinking about when you were growingup as as somebody, and you said,
you don't include your house and yournet worth, and you you know
it is there, but you don'tinclude it. I think you have to
differentiate between quality of life and inan investment, you know what I mean.
And I think for those of youout there that are looking to buy

(20:53):
a house, who maybe your friendsare saying, oh my god, how
can you pay seven percent? Youknow, I don't think we made any
money on our first house. Weput a ton of money into it.
Mom and I. We had agreat garden in the backyard, we had
a pool. You guys grew upthere. I really don't care that I
didn't make any money out. Youguys had a great period, you and
Sam growing up there. You know. Now, if I was somebody who

(21:15):
wanted to make money on that house, I wouldn't have done that. Conversely,
you have people who drive big,fancy cars. More power to them
because that that's a quality of lifething. But I don't go to them
and say, oh, don't youknow you're losing money on this, you
know. So I think when youwhen you when you purchase a house,
you have to look at you knowwhat, what's the quality of life?
How much? Because I'm in thishouse right and the experience it's it's more

(21:38):
than all the experiences the Christmases thatyou guys had in the pool and your
friends over and my shed in theback and the garden and this and then
the dog and and whatever. Soanyways, I you know, beating a
dead horse. But the other thingI wanted to mention before we close,
about a couple more minutes of theFED may or may not be done raising
rates, But is the market donewell, Monetary policy impacts short term interest

(22:02):
rates. As maturities lengthen, theFed's influence on interest rates decreases, while
the influence of the market participants increases. So an evidence that this can be
seen in the volatility treasury investor's experiencespast Thursday, when the yield on the
thirty year bond rose about zero pointtwo percent to four point nine to seven
percent, because it was like therewasn't a lot of people bidding for the

(22:23):
thirty year, So as the numberbid to cover those those sales goes down,
the interest rates go up. Itrebounded on Friday, so you gotta
be careful. The Fed kind ofcontrols the short term rates almost directly by
the FED funds rate and the discountrate to a lesser extent, But as
you go out that yield curve five, seven, ten, fifteen, twenty

(22:44):
years, the market has much moreto do with it than the Fed does
not much more to do it,but has a lot to do with it
as well. So just be carefulabout thinking, oh my gosh, is
the Fed done raising rates or not? What's that going to mean to some
of my some of my investments.Yeah, anyway, I'm just about done
with the first half. The secondhalf, we're going to talk We've got

(23:06):
upcoming economic reports, we've got we'rein the midst of earning season. We're
gonna talk about Jamie Diamond's comments onJP Morgan's earnings. We got about eight
or nine other earnings we're going totalk about and what we think about them.
And we're gonna talk about, hopefullyabout bear markets, and maybe touch
on our fourth quarter newsletter. Ifwe don't get to that this week,
we'll get to it next week.Right now, it's ten thirty on the

(23:26):
station you depend upon for news,weather and information, news Talk A ten
and one O three one w gY, Good morning, and welcome back
to the second half hour of theCapitol District's Money and Investment program. On
this beautiful Sunday morning. You arelistening to the Fagan Financial Report on Dens
Fagan. Sitting here with my sonAaron, as we do every Sunday.
It's always a great day when theGiants are about to trounce the Bills.

(23:48):
It's the Giants Bills today, GiantsBill Time. Daniel Jones is out,
saykon Barkley's out. Daniel joneses outyeah, with his neck. Who's ourr
backup? I think it's Tyrone Taylor. Tys pretty good? All right,
it's good, is what it is. We're one and four. I don't
know. I don't have to bein a backup quarterback that your your another
quarterback was stacked eleven times last week, thirty times year. Good luck,

(24:11):
have fun exactly exactly. Oh mygod, it's like running the Turkey trod?
Are they won in the core?One and four? You anyways,
the Braves are out of them.All one hundred win teams are out and
Raves the Orioless. I'm a Metsfan, but I'm an Orioles fan as
well. That's a question for thelisteners. Do you have to do you

(24:33):
have to have a backup team,and you know, well I always had.
It was the Rorials until the Royalsbeat us in the World Series and
then you threw them out like awet dish rag, like a dirty dish.
I hated the way they played baseball, single, single, still single.
It was just so boring rather thanlike, hey, that's that's how
I like close scoring games. Ilike close scoring games. You know,

(24:56):
I'm a big fan of those scoringbut you know, I don't you know
who my my second favorite team.I liked the Oros grow up. I
had a hat, I had anOels was a kid. I know the
Mets, you know. Yeah,I don't know. I don't know who
you really like to burn Jones,I guess Adam Jones. Adam Jones.
Yeah, I'm like Cedric Wontz.I guess from the from the from the

(25:17):
football perspective, it's probably the Bills. Yeah. Same. You know,
I'm not a Jet hater, youknow, to be honest with you,
you know, lots of times Giantshate the Jets and make Yankees hate the
Metsys have never been good in mylifetime. No, they had Sanchez for
a little bit where they were adecent. They had to take a year
with Sanchez. Are They're pretty good. I'm not an Aaron Rodgers fan.
Mean, I mean that's kind oflike he's pretty annoying. But anyways,

(25:40):
we digress. Second half hour Acost of living adjustments? What's it nearing
twenty percent over the last three years? If you think about it right,
it's probably between eighteen and nineteen anda half. Personally it was sixty.
Yeah, I betch it's nineteen sixand eight and three or four of the
oh this uh this year. Theincrease for medicares, excuse me, solid

(26:00):
security and so supplemental solid security isthree point two percent based upon the cost
of living adjustment, that'll meeting anaverage of fifty dollars per month in the
pockets of seventy one million Americans.That's a plus, although obviously it's based
upon this not obviously, but it'sbased upon the consumer price Index. So
it's not like you're getting more moneyin your pocket after inflation. You know,

(26:22):
you're you're good with inflate with socialsecurity. So I read I think
I saved it on my phone.Okay, so I read this yesterday on
social security, and this is justa comment on social security. Right,
So if you take social Security atsixty two, the average break even point
is eighty years old, and theiraverage rate of return by waiting to seventy

(26:44):
and a half years old is threepoint twenty six percent. It depends on
your personal situation. I'm sorry toput you on the spot here. It
depends on your personal situation, ofcourse, But if you plan to live
past eighty, or if you feelyou can beat three point two six percent
in the market, then collect atsixty two. Right, so if you
can get better than three point twosix percent, you collect social Security and

(27:07):
invest the difference if you don't needit, and that therefore you're getting more.
That it's take into account if you'restill working though and losing benefits.
Well no, no, no,it doesn't. You're assuming you're retired.
It's apples to apples. It saysif you're assuming you're retire at sixty two
and don't take it, or retireat sixty two and take it. That

(27:29):
calculation says if you retire at sixtytwo, you've got to get better than
three point twenty six percent. Idon't know if that's inflation adjusted or not.
Yeah, that's just what comments,right, So I I don't because
I've worked on the numbers in thepast, and I've read the numbers in
the past. I don't think it'sinflation adjusted, meaning that if you can
if you can get five or sixpercent in inment government notes and you can

(27:55):
now, then you're better off totake it. I'll also say that a
couple things. One is that that'sonly you're gonna get more every month.
That's that's reinvesting that you know twentyone hundred bucksnet every month, and who
knows, okay, exact amount toright right right, exact amount, and
the treasuries and who knows what you'regonna get. So I would say,

(28:17):
in general, it comes down toa couple of things. Okay, if
you don't need it, and reallydon't need it, you put it off
a little bit. And you know, you put it off not till sixty
seven. You put it off andthen periodically look at it every every six
months or so and say, hey, how are we doing here. It
also depends upon your tax bracket.It depends upon your health. It depends

(28:41):
upon spending upon your health. LikeI personally, and you're you know way
more about social Security than I do. But you know, I usually try
and skew towards taking it earlier ifit's somewhat you know, either equal or
a little bit better, even alittle bit worse, because you know,
I don't like to take chance withhealth. Things can go south pretty fast

(29:03):
sometimes. Well, I would say, if you're if you're over eighty years
old, so I don't know.I mean, I think you'll enjoy the
money more and your you know,in your early sixties than in early seventies.
Yeah, early to mid seventies.Oh you know, yeah, maybe
you'll have three grand a month comingin at seventy, but you know,
twenty two, fifty, at sixtytwo, I don't know. Well.

(29:26):
The other thing too, is yougot so there's a lot of different factors
that go into this. So let'snot I don't want to generalize it,
but you know, I think butto generalize it, you know how many
you know, how many people I'vebeen doing this forty years since nineteen eighty
three, I've been in this industryforty years. You've got twelve years.
But I would say that you knowhow many people? Just think about even

(29:48):
if you're not in this industry andyou're thinking for yourself, think of all
the people that you know, andlet's say you're sixty two or sixty three,
that are a generation above you.Yeah, how many do you how
many people do you know that peoplethat are married will say that they're they're
they're both healthy cognitively and physically,they're both of those partners are alive,

(30:10):
both of those partners want to dothings, both of those partners are capable
of doing things. You know,so you know, the break even point,
generally speaking, comes just in timeto enter your passive stage of retirement
where you don't need that money asmuch. And in fact, other than
nursing home care, there's actually aninflation adjusted there's deflation really in spending.

(30:32):
You just spend a lot less asyou get older. You don't go out
as much. You you don't travelas much. I mean, how many
clients do we have that quote unquotedon't go to as many clothing your your
kids are not children. They're nowfifty to fifty five. If you're eighty,
you know, they're able to maybespring for dinner once in a while,
you know, hello, hello,you know that type of thing.

(30:55):
So maybe when I'm eighty, right, if I'm sixty two and yeah,
you get a team more years,that's going to go down here. So
so those are some considerations rather thanjust you know, taxes are another consideration.
You know, if you're gonna loseif you if your sole security benefits
are going to be eighty five percenttaxable, you know, and there's different
brackets for that. It's all allfactors you want to you want to play

(31:18):
in this. Well, your medicarepremiums go up and so you'd factor that,
and but I think generally speaking,it comes down to quality of life.
Well, that social security enable youto have quality of life. No
mom started taking her soul security.She's retired. She's retired, and uh,
I'm still working. So if Idie, she'll she'll bump up to
mine. Also, if there's abig discrepancy between your soul security and your

(31:41):
spouse is sold security one way orthe other, you might want to consider
he or she taking it if it'sa lot lower, because they'll bump up
to yours. So so there's alot of different factors. But but I
I think that, and no one'sreally going to invest the difference every month,
so I don't really go by thosecalculations. I go by yeah,
you know, you know what areyou going to do? Have enough quality
of the dollar spend, quality ofthe dollar spends perfect? Are you going

(32:05):
to break even? Are you goingto go past the break even point just
just in time to sit on yourporch? Yeah? And I'm not saying,
oh, people can call in,Well I don't. I'm to eighty
four and I'm still doing this andmowing the lawn and and whatever, and
hopefully I'm running the turkey trot bythem. But by and large, when
you get to be eighty or eightyone or eighty two, you begin to
slow down a little bit, youknow. And like I said, you
know, of my mom and dad. My mom had ended up with dementia,

(32:30):
but had a you know, astroke probably maybe she was seventy two
or seventy three. You know,your grandfather lived till eighty six, and
also he did a lot less whenshe passed. Yeah, you know,
because because thirty four years old.You know, this job is tough sometimes
because I'm always talking about the retirementand getting older. Nothing wrong with that.
It's good to think about it.For your clients, it is the

(32:52):
other thing, you know. Andthen and then even with your grandfather on
mom's side, you know, it'sher I had a stroke in probably ninety
three or so, so at aboutseventy you know, again, it just
pinches. So you don't want toYou don't want to get to be in
the passive stage of retirement and havethe money to do everything you want to

(33:15):
do, but not the physical orcognitive capabilities. However, certainly in this
industry, we realize that you wantdon't want to be broke. Either Yeah,
you know, so there's that fineline balancing act, you know,
and we work on that all thetime with our clients to make sure they
understand it. Anyways, speaking ofspeaking of I guess I want to touch

(33:36):
on the Microsoft closes the acquisition ofActivision Blizzard. I don't know it was
the UK's Competition and Markets Authority gavetentative or gave approval to the deal on
Friday. I guess it close ActivisionBlizzard games such as Call of Duty,
Crash Bandicoot, Die Op, DiabloOverwatch. You can tell you StarCraft Tony
Hawk pro Skater that I did growingup. Yeah, Rash Bandicoot was like

(34:00):
that game too. What do youthink I mean, does it mean anything
for Microsoft in the gaming I don'tthink it's you know, I don't think
the gaming community really loves it.There's tons of consolidation over the past let's
say, ten fifteen years in thegaming industry. It's becoming harder and harder
to be an independent game designer.So I know there's some you know,

(34:22):
issues with it from a from agaming standpoint, Microsoft has about eight percent
market share of video games. Ithink that's where they were a little bit
nervous, that was it the EU. Yeah, so you know, I
don't know, I don't I don'tmake much of this, and uh yeah,
it's you know, initially the gamesare free, right and then you

(34:43):
kind of pay for No, that'snot no, not with this deal like
Activision Blizzard is more like you know, Diablo three, Diabo four just came
out computer computer games and these typeof games are you know, you pay
and then yeah, you can paya little bit more to you know,
pay to play. So if youwant a better character or like that,
you can spend money. That's anotherissue I think in the gaming community in

(35:05):
general. But you know, justfrom an acquisition standpoint, you know,
I don't think this means much forMicrosoft honestly or Activision Blizzard. You know,
I think it's a good acquisition byMicrosoft, just for they call the
Duty franchise. But you know,I don't make much of it. You
know, when I when I seesomething like this more I think of,
you know, where we're going asa you know, where the world's going

(35:25):
in terms of anti trust and thingslike that with like the EU and this
passing is obviously you know, betterfor larger cap tech companies just with for
maybe further mergers and acquisitions. Right, Well, Lena Kahan is the head
of the FTC, and you know, she kind of I don't know,
it's kind of like nibbling, itkind of like pecking out a lot of

(35:49):
different issues and not only consolidation,but going after Amazon for some of their
behavior and that type of thing.And yeah, I think she's just looking
for a win here because over thepast several years, the FTC has had
little to cheer about. Well,you know, it's it's one of those
things that I think will just continueto be a bigger and bigger issue.
You know, as I talked abouton the first half, what you're seeing

(36:12):
a lot is, you know,new large cap tech companies, Like if
I can think of two different emergingtechnologies I guess that have taken place in
the past year or two, onewould be cloud services and the other one
would be artificial intelligence. You know, we've already seen Google, Amazon,

(36:32):
Microsoft, and Apple all be majorplayers in those two fields. So I
think that's what is the biggest issuewith I think with the FDC and what
it will be is that, yeah, the leaders of today are the leaders
of tomorrow, and then tomorrow andthen tomorrow it's like these companies are just
so big and so powerful. Theycan throw money at every single emerging technology

(36:54):
billions of dollars, while startup companieshave to you know, raise these funds
and and and it just it's justit's just it's just a lot more work
to get into emerging technologies now thanlet's say, than it was in the
past, because you have, youknow, large cap tech having so much
money, so much cash now thatthey've turned from kind of growth to growth

(37:15):
slash value if you just look attheir back, if you just look at
their financial statements. So I thinkthat is an issue going forward, is
the lack of innovation because large captech companies are the only ones that can
afford to innovate, and they're alsothe ones that are they're gonna buy up
every smaller company they're on the cuspof. They're also into new innovation,

(37:37):
that is what you're saying. Anyways, once dot that there one company,
and it's it's the whole I think. And I know what's more important with
JP Morgan's earnings, their earnings orJamie Diamond's comments. And you know,
I saw a hurricane coming a whileago. And I forget his exact words,
but I guess he feels that,you know, and look, I

(38:00):
mean, I like him a lot. JP Morgan. It's one of our
largest holdings. It's certainly our largestbank holding. We don't have a lot
in the banking sector. We ownsome Bank of America, some Key,
and then some JP Morgan. Ithink if you take a look at Bank,
JP Morgan's our eleventh largest holding,and then after that we don't.
Bank of Americas are twenty second largestholding. So those of our largest holdings,

(38:23):
we're not that heavy into the financialservices sector Visa v banks, more
so in the Visa and MasterCard,which have done very well. Banks have
not. But and yet Jamie Diamond, kind of the largest US bank,
talks about things, you know,kind of you know, grander, things
that are more concerning to him inhis bank on more of a global basis

(38:47):
than it may affect the economy.But I think he's just concerned about the
direction of the world more or lessin general. He says within the earnings
are poured that persistently tight labor markets, as well as extremely high government debt

(39:07):
levels with the largest peacetime fiscal deficitsever are increasing the risk that inflation remains
elevated and that interest rates rise furtherfrom here. I know he thinks that
interest rates are going up from here. Additionally, we still do not know
the longer term consequences of quantitative tightening, which reduces liquiditing in the system at
a time when market making capabilities areincreasingly limited by regulations. Furthermore, the

(39:28):
war in Ukraine, compounded by lastweek's the tax on Israel, may have
far reaching impacts on energy and foodmarkets, global trade, and geopolitical relationships.
This may be the most dangerous timethe world has seen in decades.
While we hope for the best,we prepare the firm for a broad range
of outcomes so we can consistently deliverfor clients no matter the environment. To
conclude, I want to thank ourextraordinary employees. Blah blah blah. What

(39:50):
do you think about that? Whatdo you think about it? Like more
or less? Those you know?First of all, his earn Their earnings
were much further above anticipation. Youknow, revenues above. You look at
earnings above, you look at loansabove, you look expectations I'm referring to.

(40:13):
So you look at a lot ofgood things came out from JP Morgan
four thirty three a share estimates wereI think, you know, less than
four bucks a share. Revenue camein about one billion more than estimates.
All the other banks, Wells Fargo, PNC City Group also posted better than
expected earnings. But those comments fromJamie Dimond, he's always kind of like

(40:37):
issuing like the hey be careful,hey be careful. I don't know what
do you think? You know?Yeah, I kind of agree. You
know, he saw hurricane coming then. I think after he saw a hurricane
coming, he was kind of like, oh, you know, things are
kind of are are pretty good.I do agree with him though, and
I do agree with the sentiment thatwe haven't been in this place geoepulolitically in

(41:00):
a long time. And I thinkby that I mean you have a lot
of I think technologically advanced countries,just with every country being technologically advanced,
uh in some with a lot ofunknown geopolitical and and like geoeconomical that's you

(41:22):
know, just even like China withTaiwan. But you know, I also
get nervous about China with you know, an extremely high youth unemployment. Things
aren't going great there you're there importantexport numbers were we're continuing to decrease too.
So like things I get nervous aboutare like, you know, I
get nervous when you have, youknow, powerful countries with their back up

(41:45):
against the wall a little bit.And those are things I get nervous about,
with China, with Russia, withwhat's going on in the Middle East
right now. So I think,you know, just the stirring of the
pot with geopolitical geo with geopolitics thatgets I think that's a little bit.
Yeah, I think I I thinkthat there's a reason for for a little

(42:07):
bit of concern and where we gofrom here. Yeah, I don't disagree
with that, you know, Ithink that because I think that what we
just said is, you know,yeah, reminds me of Ted ted Lasso,
the soccer one of the soccer players, Jamie said. Someone said to

(42:30):
him, Jamie, if you couldbe any anybody else, you know,
if you could be a hippopotamus ora rhino, what would you want to
be? No, if you couldbe yeah, he said, neither.
I want to be me. Ialways want to be me and ted Lasso
system. You don't know how profoundthat is, And I think what you
just said was profound, and youdon't think you realized how it is,
how profound it is, meaning thatthe capabilities, even countries that are not

(42:55):
First World countries, they're military capabilitiesare very very like prostructive, yeah,
as opposed to one hundred and fiftyyears ago. And not only that,
you have you have a lot ofyou know, let's say powerful countries just
like China, China, Russia,a lot of Middle Eastern countries that it's
they have a lot of power,and a lot of that power is within

(43:19):
a few people, like you know, the United States. You could say,
hey, yeah, the president,but you have in the entire congress,
you know, So you know,when you have a country like China
or Russia with Putin, you know, you have the power within a few
individuals, and that, you know, that makes me a little bit more
nervous than let's say you had,you know, another country that's you know,
even like a country in the EUor something like that that you know,

(43:42):
the power is spread out among manypoliticians as opposed to few democratically electried
truly democratically elected countries. I think, you know, hold the moral high
ground generally speaking, as opposed tothose that are not. You know,
yes, we're not, but youknow, I think yeah, but I
think it means we're held accountable.I think I think our politicians, at

(44:05):
least militarily are held accountable, youknow, that we they don't run willy
nilly like Russia could, or likeChina could, or like Iran could or
whatever, you know, And Ithink that's some some of the issues.
Certainly, you know, there areexamples of of that not being the case.
And I think that's you know,that's one of the concerns that Jamie
Diamond, you know, suffices tosay that, you know, historically speaking,

(44:27):
that hasn't been that detrimental to themarkets if you look back. Just
like government shutdowns, they are scaryand certainly they're tragic, the the wars,
but generally speaking, they haven't reallyunless they become that far reaching,
they haven't been They haven't been destructiveto the market. I think what is
destructive to the market is their interestrates and what what Jamie Diamond talks about,

(44:53):
you know, uh, the thehighest peacetime deficit levels the Fed's balance
sheet still is eight point six trilliondollars was four point something pre pandemic.
You know, we had a balancedbudget at the end of nineteen ninety nine
with with Bill Clinton. And yousee, like you know, even when

(45:13):
he says dimou currently US consumers andbusinesses generally remain healthy, although consumers are
spending down their excess cash buffers.So it's like the and this is just
coming from the one really good thingthat's going on in the economy right now
is kind of artificial because it washelicopter money for from doubling not doubling,

(45:34):
but almost doubling our debt. Soand that's again that these are things that
you know make you worried about theeconomy, not as much companies, but
obviously you know it'll spill over toindividual companies. But yeah, you know
that that obviously makes you a littleworried as well. The consumer being in
very good shape, it being artificial, and it's kind of the one really

(45:55):
good thing that's in my opinion,really kind of propping up the economy is
the strong US consumer. Well,you know, and you know, I
think that if you look at thatand people who say, well, are
you worried about No, I'm not. I think I go back to that
or statement that we made at thebeginning of the show. I think we're
you know, right now, we'resupported by earnings. Corporations are in much

(46:16):
better shape than our government. Andwe're supported on the downside by earnings and
value and excuse me, seasonality.Yeah, then buffeted on the upside by
really by valuation and the fact thatthe consumer has slowaned down. You know,
when people come in here, alot of times they come in here
really nervous about the economy, aboutpolitics in general. And I kind of

(46:36):
say that, I say, youknow, with politics in general, I
trust companies, these corporations in Americato make more money, to make money.
I trust them way more in thatability than I do politicians, right,
I know, Yeah, No,no, I know. They they're
they're diverse, they are innovative,they find ways to make money through through

(46:58):
all political environments, you know.So that's kind of who I have the
most faith in, you know,although they might be overvalued from time to
time. I do have faith inyou know, American companies and their ability
to continue to earn money no matterthe political environment. Yeah, I have
faith in our I actually have faithin in our government too. I think

(47:21):
we will do the right thing Ithink it'll just come a little little later.
And half the people in the worldthink the right thing is completely different
than the other have right, Iagree. All right, that'll just about
do it if you want to giveus a call during the week five.
This is on app on your iPhonetoo, so if you go on the
podcast on your iPhone and search FaganFinancial Report, everyone is up. So

(47:46):
if you want to, you know, look at listen to any of those,
even the past ones. They're upthere. So that's right, Have
a great day, take care,bye bye,