The Fagan Financial Report

October 29th, 2023

Episode Transcript

(00:00):
Good morning, and welcome to theCapital District's Money and Investment Program. You're
listening to the Fagan Financial Report.I'm Dennis Fagan, sitting here with my
son Aaron, as we do everySunday right here in News Talk ten and
one O three one w g Y, Good morning Air. How are you
I'm doing great? How are younice? Nice? You went to the
Schwab Impact Conference. How was that? Yeah, you know, it was
good. It was you know,Schwab has their annual conference and it was

(00:23):
in Philadelphia this year, so itwas Tuesday, Wednesday and Thursday. You
know, it's one of the biggerfinancial conferences in the country. There's you
know, thousands of people there.It's at the Convention Center in Philadelphia,
and you know, you learn alot of good things. So it's all
it's mostly for Ria's. You goto a lot of you know, investment
ad investment advisors, so it's youknow, mostly seminars on alternate alt investments,

(00:48):
you know, a technology I'm twentytwenty four trends. So it's nice.
You get to hear a lot ofdifferent opinions from a lot of different
people, and also you get tohear what other people are I guess are
doing in our business to and Iguess what we could do better? What's
stuck out as far as trends go, anything in particular, you know,
technology, Really trying to leverage technologyto make our jobs easier, to communicate

(01:10):
with clients, to be able todo more financial planning and things like that.
So you know, I think,you know, as as a company,
we're on the right path. Youknow, trying money guide Pro for
financial planning. You know, wealthBox for a CRM system. You know,
we just signed down with Advising,which is a portfolio management system.
So you know mailchimuse mail Chimp sowe get something out every week. So

(01:33):
really just leveraging technology to you know, make our clients more knowledgeable, you
know, give them more information,more access to information, because that's kind
of kind of what I got.One thing that's stuck out from the show
is or from the conferences. Youknow, there's a lot of being invested
in the stock market. You gothrough a lot of ups and downs.

(01:53):
It's just it's kind of what youhave to you know, pay to play
really, you know with the bullmarks, although the boomer because so much longer
does come bear markets and you knowwhat I think what technology can do for
our clients and for people in generalis give them a peace of mind when
the market is going down. Forexample, you know, using money Guide
pro and a Moni Carlo simulation,which is, you know, a simulation

(02:17):
for many different outcomes of a portfolio. So you know, basically getting information
out to clients so they know,hey, no matter what, there's a
you know, ninety seven chance ofprobability that you will be where you are
when you're retired. So you know, using technic, you know, sending
things out to clients when the market'srough, like you know you did this
week with you know, just achart of the day. So using technology

(02:38):
to give clients a peace of mindso they don't do the wrong thing at
the wrong time, which is that'swhy the knowledge, to give them the
peace of mind so they don't dothe wrong thing at the wrong time.
Yeah, you mentioned the chart talkthat we sent out. I think it
went out Wednesday Thursday. We're hopingto do that every week. That will

(03:00):
kind of supplement our weekly snapshot thatgoes out every Sunday morning. We have
cordially reports go out to send out. Yeah, so you know, I
think a lot of our job asfinancial advisors is to give people a peace
of mind. So yeah, so, as I was saying, so they
don't make the wrong decision at thewrong time, because that's that's half of
investing, in my opinion, andthey So, you know a couple of

(03:23):
things that that I would add tonot having not go into the conference,
but just some of the things thatjust said. I don't know, we've
all been in a position where it'slate at night, we're lost driving,
and it just makes everything a lotmore a lot more difficult. You know,
where am i? You know,am I going to get out of
here? When am I going toget out of here? How far is

(03:43):
it to home or to my hotelor wherever you might be going, all
the variables that come along the way, right, So if you can eliminate
some of those variables and give historicalcontext to help that person who is lost
see where they are and where theywhere the market is relative to historical guidelines,
you know that that helps them.Now you could tell people they shouldn't

(04:04):
worry, You can't, obviously,you you could tell them not they don't
need to worry. You can't tellthem that they're not going to worry.
That's That's one thing I wanted tosay. The second thing is, you
know, if someone says it's differentthis time, you ask them, you
know, you know, and thisis this is from the heart. Really,
you know, how big of anarc do you want to build for

(04:24):
that, Let's say five percent,two percent, three percent, chance,
whatever, it's different this time.Now they may say, well, I'm
sure it's different this time. Well, then you're gonna build the biggest dark
and put all your money in it. But then someone might say, well,
the US is not gonna be ableto pay the debt. Well whatever,
whatever armageddonis, situation that you paththat you go down on in the
it's different this time. I saidto somebody literally this past week, and

(04:47):
I kind of been thinking this,as you know, we have four or
five people in our life who arestruggling with their health. I mean close
people who are struggling with their health. And you know, you imagine,
like at me, it's sixty two, if I'm an armagedonist or or you
know, and I wake up ateighty two and armageddon the end of the
world didn't come. I'm gonna haveall this money and it prepared for armageddon.

(05:11):
You know, maybe not traveled withCarroll Mom, maybe not done this,
done that, you know, notwithin reason, and then then you're
gonna die. You know. Yeah, it's like it's crazy, It's coming
no matter what. Right, Soso that's kind of what this what you
know, what the information from myperspective, why we get it out so
so that people can cope with theenvironment and we're in and it is and

(05:33):
know that we always have an opinionon what's going on now, right and
that opinion's longer dated, you know, you know, it's a longer dated
opinion based upon you know, you'vebeen here for twelve years. I've been
in this business for forty forty years, forty years this year, you know,
and I think even with financial planningyour own portfolio, but just yeah,

(05:55):
in information in general, there's athere's just an information overload right now
for people, and it's really hardto pick and pick pick through what's important
and what's not important. You know, that's right. I mean, how
many times are you hurt? Andyou know, there's a lot of things,
Yeah, that's going on in theworld right now, and we have
what is actionable and what's historically meaningfulto your portfolio, based upon war,

(06:19):
based upon you know, military events, based upon interest rates, you know,
and how far do you go?The other thing I would say is
like, you know, this isdriving me crazy at this point in time.
But and it's not for my ownhealth. But you know, we
have people who have their their theirhealthcare portals, you know, Yeah,

(06:39):
and you're getting you're getting information,right. Me and Lauren had to go
for something and they tell us yougotta get your you gotta get blood taken
or something. And they're like,you'll get the results tonight and we'll get
them tomorrow. How is that goodfor the for the what do the results
like? Yeah? You know,it's like a pilot, you seeing the
pilots in a seven forty seven orseven eighty seven. You seeing the pilot's

(07:02):
screen and a red light comes on, you know, and before you know
that it's just the red light thatthe bathroom door was open, you know
what I mean, Or someone seatbeltwas unhitched, unhinged. You know,
you you go crazy, And Ithink you know that that's the information.
That's the overload of information we're gettingtoday. But put the to narrow down

(07:23):
to kind of get what we're whatwe're talking about is, you know,
stocks fell again this week. Youknow we are ten percent. If you
look at the July thirty first,which was the post October twelfth, twenty
twenty two in the market bottom,that was that was the low for this
this cycle, and the market hashas moved up since then. Above that's

(07:43):
the Dow is up about fourteen percentfrom that October twelfth, twenty twenty two
closing low, the S and Pof fifteen, the NAIs deck up twenty
one but all three of those indicesare below there January or excuse me,
July thirty first, twenty twenty threehigh, and we're so we're in.
We're in a typical secular, secularlysecular bull market with a cyclical type of

(08:05):
a correction involved. I pushed upsome information from I think it was from
Ben Carlson and was supported by NewYork University, basically saying that the S
and P since nineteen twenty eight hasbeen up ten percent, of the T
in anyone county year has been upten percent or more fifty five times.

(08:26):
So ninety five years has been upten percent fifty five times. However,
twenty three times of those fifty fiveyears has been a correction from peak to
trough of ten percent or worse.And so almost half the time, despite
the fact that the S and Pmight be up ten percent, you've got
a ten percent pullback. Right now. The SMP is up about seven percent
year to date. You know,we have pulled back a bit from the

(08:48):
high. But this is somewhat normalwithin the context of the average, the
average trading year, and it's nothingthat you really can you know, anticipate.
I think, you know, whatdo you think is causing the pull
back to these bond interest rates?Yeah? Mostly, don't you think.
I think it's probably fifty to fiftyIsrael, Israel, the lass, you
know, I think the people areafraid, you know, just a completely

(09:09):
changing geopolitical environment. I think thatglobally global. Yeah, global environment,
and I think that's going to bethe next foreseeable future really and how we
can pivot as an economy in thisnew environment. Yeah. Looser ties we
were talking about that earlier, looserties between the US and its allies,

(09:31):
you know, a little little morewhere it used to be whatever the US
said our allies did into their benefit, and now it's like Okay, all
right, we're going to listen toyou us, but we're gonna be We're
going to also be concerned about ourselves. Yeah, you know, you know,
and I think when when was theChips Act signed? Chips Act was

(09:52):
two. And what I think,what I'm getting at here is you're seeing
a lot of events going on geopolitically, and the Chips Act was going to
be one of the one of thethings that really propelled us to be more
manufacturing at home in the like selfsufficient with with semiconductors. You know,
what I'm kind of getting at is, uh, Intel, Intel had really

(10:15):
good earnings in Ford guidance this week. Things are going the way they should
be. Essentially EPs forty one versetwenty two cents per share, revenue at
fourteen point one six verse thirteen pointfive six pac. Elsinger said they were
kind of firing and all cylinders.Things are going according to plant. What
I'm saying is it's only taken acouple of years for actually us to see

(10:37):
the United States to see the progressat home of of things like the Chips
Act. And I think we're goingto see more and more things like that.
And it's honestly faster acting than Ithought it was going to be.
And I think that's you know,great for the economy and great for the
United States in general. That we'realready seeing Intel stock really doing well with

(10:58):
the manufacturing chips at home. Andyou know, again, I think we're
going to see more and more ofthis in different ways. That companies are
going to get out of countries thatthey're not one hundred percent confident that they
can build a plant that's supposed tobe around for let's say thirty or forty
years because they don't know where.We don't know what type of relationship we're
going to have with some of thesecountries in thirty or forty years. Yeah,

(11:20):
Intel's one of our larger chip holdings. It's about one person. We
don't have a lot of money inchips per se. In Vidia is our
largest, uh well, actually AMDis our low well, AMDN and Vidia
just about the same at about wehave one hundred thousand shares of AMD to
tune of about nine point five milliondollars. And then also for the benefit

(11:41):
of our clients in VideA, wehave twenty four thousand, five hundred shares
about the same amount as far asfar as dollar value, nine point eight
nine point nine million and one hundredand twenty two thousand shares of Intel that
after Friday Street point gain it soclose it around thirty five fifty Our basis
right there, because we've just beenbuying probably with the past three or four

(12:01):
months, those one hundred twenty twothousand shares about four million dollars there.
Those are our big chip holdings.Chips have come down a bit as the
war of words really and also moremore than just the war of words is
heated up between the US and China, which manufactured a lot of our chips,
and as you mentioned, with theChips Act, the US bringing some
production home, and then also theconcern that there is going to be retaliation

(12:24):
from China regarding you know, regardingchips. But I would say, you
know, when you the market neverreally goes as you would anticipate over the
shorter term. It's like the weatherversus the climate. Hey, we know
we're gonna have snow this winter.We know it's gonna break and we're gonna
have a nice spring and the summer. But the weather day to day,

(12:45):
you know, if you look atyesterday here it was eighty degrees. You
know today it's fifty. So youknow, to predict the weather, just
like to predict the market, isalmost an impossible task. At least the
weather somewhat more scientifically based on itfor the media just out there. They
do a good job locally, butyou know, but the climate is much

(13:05):
more easy to predict it. Youknow, the the four seasons flannel,
flannel, summer, and flannel,you know, in our minds, so
so so there is so that's so. I think you look at the war
Israel and Amas. The I thinkalso the the the maybe Ukraine, that
we have a we have an electioncoming up next year, the election.

(13:26):
We're starting to get a little bitnervous about the election. I mean,
the market did really well this yearand I think the Nasdaq was up thirty
forty percent at one point, almostforty percent at one point. So I
think it's just a natural pullback thatcome. And I think when you are
in the midst of a pullback,you look for reasons of the pullback.
So you're that that maybe are morethat aren't as detrimental as we think they

(13:52):
are. So we're correlating, likethe pullback to all these different things that
could be big, bad and scarywhen it is kind of just a natural
pull back in this market cycle,right you know, So so what what
I some things that that I thinkcome to mind at this time given the
pullback and the average listener, thelistener might might be feeling this right now.

(14:16):
And every environment has a temptation toit. Every environment has the temptation
to move too much money in thatdirection. It's okay to move some money
in the direction of your temptation.For instance, we have a little bit
of bitcoin and it's had a greatyear, and if it's gold is your
thing, put you know, fiveten percent of your money in gold?
Right? You just don't want thoselike alternative investment type things to be the

(14:39):
drivers of your entire portfolio. RightBut right so, I don't know.
I mean the path I was goingdown with the alternative investment and it's not
even an ad, but perhaps itis an altern investment. But right now,
that siren song, that mermaid onthe shore calling you to come into
the water is cash for some people. You know, Oh my gosh,

(15:00):
cash is picking up five and ahalf percent. Why would I go into
a seven year treasury at five whenI can get five and a half,
I'll just you know, I'll stayin this money market to stay in this
short term CD and then renew it. But every every environment has that temptation
of man, I'm going to getfive and a half and after that I'll
decide what to do with it.And you know, when we say use
cash for short term liquidity, it'snice that you're getting a return on the

(15:22):
cash over cash is not a longterm investment option because you know, nobody
knows where the market's go going overthe short term. So you don't want
to find yourself if you think we'regoing into recession. At some point in
time, there will be a recessionand perhaps interest rates will move lower than

(15:43):
where they are now. You don'twant to have a short term certificate and
find yourself renewing that at three percent. You know when you can lock it
in longer. I also, wealso wrote something there and I don't know
how you feel about this, butI think you feel I know how you
feel about it because you're the onewho brings it up most of the time,
that your money is not a competition. You're not in a competition for

(16:03):
returns. You're you're you're basically tryingto allocate your assets in such a manner
that allows you the freedom to dowhat you want to do according to your
objectives as well. You know,your your portfolio is supposed to be built
for different things, and for alot of clients, it's built for distribution.
And because of that, when youhave a portfolio built for distribution,

(16:27):
it comes with less risk but lessupside really, and I think that's fine.
I think people forget sometimes that alot of investment planning isn't just you
verse the S and P. It'sright, your goal, your your portfolio
verse your goal essentially, you know, seeking alpha, right, it's trying
to You're trying to build the bestportfolio for your goals, most return with

(16:52):
the less risk, right for forwhatever your objective is. And I think
that's really important for people to understandis, yeah, you know, your
competition isn't the S and P fivehundred every year, it's your Your portfolio
is supposed to be built for whatwe have, what your goals and objectives
are. And there's a lot ofsoftware out there that kind of can help

(17:17):
us build a portfolio for people toachieve x amount of return with the less
with as least risk as possible.And that siren call is going to be
when the market's going up, isgoing to be that s and P five
hundred your cash returns in your cashat five percent cheap per chincy for time,
right, and you're gonna be like, oh my gosh, the market's

(17:40):
up twenty percent. I should gomore there. And I often say to
people, look, you know whenthe market was up twenty percent, Let's
say their account was up thirty percentat one point in time this year,
maybe it's up whatever now, youknow, let's say a growth portfolio.
It's not like we're calling people saylook, you got to move more money
to this mark. This is youknow, you allocate your money aarresids for

(18:02):
the long term and let it gofrom there. Let's let's take a few
minutes, Eric, we're running.We got about five more minutes to the
end of the first half or sosix more minutes. Let's take a look
at the market and could you giveus some of the breakdown for the week
or yeah, you could do that. Dowd Jones justrir Avage was down seven
oh nine sixty eight to close thatthirty three thousand and four to seventeen down
two point one four percent for theweek, down two point two zero percent

(18:25):
for the year. Trailing twelve monthis now down one point three five percent,
So we dipped into negative territory forthe Dow Jones Industrial average for the
trailing twelve months and year to date. I think we dipped in negative territory
last week year to date, butnow also the twelve month year to day
nine point one nine percent to obtaina new high. SMP five hundred down
one oh six seventy nine to closethat four thouye seventeen thirty seven, down

(18:48):
two point five three percent for theweek, up seven point twenty four percent
for the year trailing twelve month,up ten point four zero percent fourteen point
one six percent to obtain a newhigh. Nasdaq down three forty eighty goes
twelve thousand, six forty three ohone, down two point six two percent
for the week, up twenty pointeight percent for the year trailing twelve month,
up thirteen point oh eight percent.US total market down one thousand and

(19:11):
eighty nine eighty six to close atforty thousand and eight forty seven, down
two point six percent for the forthe week, up six point oh four
percent for the year trailing twelve monthup four point oh one percent. Russell
two thousand down forty three eighty fiveto close at one thousand, six thirty
six, down two point six onepercent for the week, down seven point
oh six percent for the year trailingtwelve month, down eleven point three seven

(19:33):
percent. Utilities were up for theweek, up five point seven four to
close at eight twelve, up pointseven one percent for the week, still
down fifteen point nine seven percent forthe year trailing twelve month, down eleven
point seventy five percent. Transports downeight ninety four to close at thirteen five
fifty six, down six point onenine percent for the week, which is
pretty significant obviously, up one pointtwo three percent for the year trailing twelve

(19:59):
month down one point one four percent. So you know, every major index
down, you know, Nasdaq,SMP, Dow Jones, US total market
all down two plus percent for theweek. You know, NASDACK down two
point two point sixty two, totalmarket two point six zero, Vessel two
thousand and two point six to one, so even sm P two point five
three percent. So we're seeing alot of similarities. And you know,

(20:22):
the market, uh, this week, everything pulled back. So that's kind
of what I'm seeing, all right. So so I would say to that,
like, you know the first thingthat you read and I did you
know? And I'm sure you dothe same thing. I'm working on my
computer a little bit while you're speaking. Dow Jones industrial leverage down seven to
nine points for the week, downtwo percent for the week, down two

(20:45):
point two percent year to dating,down one point three five percent year over
year of the trailing twelve months.So I thought to myself, Okay,
I'm gonna go back three and fiveyears. So my and I'm going to
go back three five ten year theaverage return and the Dow is ten percent
a year fifteen year, twelve thirtytwo. But that encompasses a a longer

(21:07):
period of time, and b ifyou look at the last fifteen years ten
twenty seven, eight to ten twentyseven of twenty three, where we were
towards the tail end of the GreatRecession, so you could say, well,
those numbers are skewed. But soI'll go to the and let me
give you some numbers. Okay,the three year the Dow's average seven point
six eight percent, So I'm looking, Okay, what did the five year

(21:30):
encompass. Okay, so from tentwenty seven eighteen to twelve twenty four of
eighteen, the Dow was down twelvepercent. That was the when the market
really got bludgeoned on Christmas Eve,the Christmas Eve at Massacre. So in
the first two months of that year, almost two months you were you got
out of the gate down ten oreleven percent, you so, and then

(21:52):
you had the pandemic, and thenyou had the bear market of twenty one
twenty one into twenty two, soyou had two big bear markets, and
you had an eleven percent pullback rightout of the gate, and the Dow
is averaged seven point seventy nine percentover the trailing five years. And that's
what kind of we were talking aboutabout extending your your your your your point

(22:14):
of view or your perspective to includegood and bad and recognize that the market
works, you know, works itsway higher over time. Now you could
certainly say it's different this time.And that's what Aaron and I were speaking
about early and alluding to I don'tknow what to tell you. You know,
you know how much of your eggsor how much of your you know,
you know your money, you wantto put in it's different this time

(22:37):
basket. And look, I don'tknow why we're getting quite in a tangent,
because I always do. Anyways,the S Andp's down ten percent from
its peak. But this is whatbegins to stoke fears and irrational activities,
and investors move into something that theyshouldn't move because they think it's different this
time. And you can't. Youreally can't live your life that way.

(22:59):
And I think, you know,you've got to fight that feeling of financial
insecurity. So I don't know,it's just about ten thirty. So what
are we gonna talk about in thesecond half? The normal A lot of
earnings. You know, we hadGoogle earnings and Amazon earnings, Microsoft earnings,
Facebook's earnings, so you know,I think mostly that Chevron bought has
this of those pieces of paper Russellche Chevron bought has forward to postpont postpone

(23:25):
about twelve billion in EV investments.So EV's good on, let's let's get
out of the gate with the EVbecause I know you probably I don't know,
you know, EV is something thatI think that uh, people have
feelings about. And then where weshould go and what that means and Toyota
chairman said the same thing. Youknow, you got to be careful about
ev. But right now it's tenthirty on the station you depend upon for
news, whether in Information and theFagan Financial Report, News Talk K ten

(23:48):
and one O three one W gY, Good morning, and welcome back
to the second half our of theCapitol District's Money and Investment program. You
were listening to the Fagan Financial Report. We talked about mermaids in the first
half. We're gonna stretch that outtalk a little bit something. Yeah,
yeah, No, there's the sirencall of things that will bring you to

(24:10):
your financial doom. And you know, I guess one is thinking it's different
this time. Another is to say, you know, and I think that
the argument again against people will comein and when they say it's different this
time, you'll say, well,you know, go through hell those litany
things I went through in the firsthalf. If you want to, you
can listen to our podcast. Yeahdo where do you go to listen to

(24:30):
our podcast? There? Apple podcastpodcast or iHeartMedia. I heart Media.
But you can go right on theApple podcasts on your phone. Fagan Financial
Report. They should have it uptoday. Good and so you do that
to listen to the first set.But it's that, you know that when
people say it's different this time,and you say, you got to be
careful about being this different this time, and they'll say, well, you've
got to be careful about it beingthis time is different this time because it

(24:51):
is different this time, Like,okay, what I'm gonna tell you because
you can't prove it. And Ioften say, it's kind of like seeing
a you know, a snowplow ona truck in July in some let's gonna
snow tonight, Okay, you know, and then you just got to go
from there. But but we wewanted to start the second half with just
the whole you know, I guesswe'll start with Ford and UAW reached the
agreement, and that appears to bespreading out or hopefully to you know,

(25:17):
GM and Stilantis as well as someothers. But there's a few things there.
One as part of the agreement,and when we don't own any Ford
per se, we don't own anyGM per se. We do own eleven
thousand shares of Tesla for the benefitof our clients. That's less than,
you know, less than one percentof our common stockholdings that we manage for
our clients. But the deal basicallywages raises the top wage to more than

(25:41):
forty dollars an hour, starting wagesto twenty eight dollars an hour. That's
sixty eight percent on starting wages andtwenty five percent pay increases for those that
are already there. And you look, I'm not. I know, if
you've listened to our show for quitesome time, you'll know that, you
know, Aaron and I are proponentsof really bringing the middle wage, middle

(26:06):
income people back into America rather thanyou know, carving out the wealthy and
and then and they're not so wealthy, you know, so we're not we
we we applaud this deal with theU A W. However, we will
say, you know, it's gonnaput you know, the Big three so
to speak. Uh, you know, uh, Stalantis, GM, and

(26:27):
Ford at somewhat of a disadvantage toto those that aren't unionized, you know,
like like a Honda, a Toyotaand Tesla. And and also it's
gonna the burden is going to beheavy. Uh, these costs if if
Ford is going, Ford or anyof the others are going to meet you
know, guidelines set by the federalgovernment and certainly some state governments towards you

(26:51):
know, uh, you know,an emissions free you know, electrical cars.
I think that's gonna just make itthat much more difficult because they'll have
less money to spend for these Andalso there seems to be could be good
for the economy because people have moremoney in their pockets. So yeah,
you know, I think it's aI think it's a obviously not great for

(27:15):
the car companies from a from afrom from antibility standpoint, from a profitability
standpoint, but I do think it'sgood for our country. I think it's
great for the middle class. Ithink it's what this country needs. I
think we can we need to continueto have these things happen to build up
the middle class because you know,I think one of a black Swan event
that could happen in America is justso is the continued social discourse that that

(27:41):
we've had for the for for discorddiscords that we've had for for a good
amount of time now. Yeah,and you know, it's it's a fine
line that that you walk. Reallyif you remember eight o nine, the
US government had to bail out youknow, I may be wrong here.
I think GM in stillantis and Fordmade it through. So if you strike

(28:03):
too good of a deal with theUAW and Ford had decent earnings this past
quarter, but you're also run therisk of sending them back into bankruptcy and
eventually billion out. So that alittle bit. They postponed their twelve billion
dollar investment in ev as well asthey took away all forward guidance for twenty

(28:26):
twenty three, so they're an unknownterritory right now. So I think it's
tough when you have car companies likethis that that are old, that have
so much fixed assets, try topivot. It's really tough for them.
Well, you much fewer employees thatyou need to produce something, you know,

(28:47):
an electric car as opposed to combustibleMorgin cars. You got those legacy
costs, and you got the unionprotecting obviously their employees or their their members.
And you also have the number ofjobs out there three million less or
excuse me, three million more thanthe number of people that are looking for
jobs. And you had this strikego on for six weeks, so you

(29:10):
have the carmakers up against the wall. So you have then you have a
weakness really in the car makers.GM down a buck thirty three on a
Friday to close the twenty seven totwenty two GMS down eighteen percent year to
date. Ford also closed down adollar thirty nine, And you know it's
kind of not too great earnings.And also on the deal with the UAW,

(29:36):
they almost have like the balance sheetsand the financial statements that look more
like a utility, but they don'thave the recurring revenue that utilities had.
They're not and they're not regulated.Yeah, they're not regular. So they're
just gonna have to continue to fightfor their next dollar. You know,
even as you've seen say what youwant about the car combs, but you
know you have you have Lucid owners, you have Tesla, you have Polestar
owned by Volvo, you have Beyond, which is a Chinese company, So

(30:00):
you have a lot of Rivian Imean rivian. Think of all these new
car companies that have started within thepast five to ten years. That's kind
of unforeseen. Yeah, the thirtyyears prior, so many new car companies
popping up, But you know you'reseeing it happen. You're seeing them be
able to be more innovative as they'restarting from scratch and sometimes that's much easier
than being a legacy company. Yeah, they used Southwest there as an example.

(30:25):
When they came around, they reallydisrupted the legacy carriers in airlines.
But you know, then then,as for the investor out there listening to
the show, you know, Teslawas actually up on Friday. Tesla has
come under, has come under somesort of has come under. Their stock
has come under pressure also down fromyou know, probably three hundred or so

(30:47):
the high you know, high two'sto where it sits now two oh seven.
So does so there's the UAW dealin the in the financial cost that
it puts on Ford and most likelySTILLANTIS and GM probably helps Tesla. And
yet you have, as they can, they continue to cut the cost of
their vehicles, which should continue toincrease their their volume sales. But then

(31:15):
you have Toyota chairman A. KioToyota come on and say, you know,
people are finally seeing reality. AndToyota is always for for you know,
since its inception, of the inceptionof the evs been a little slow
to the to the party, soto speak. They took a more cautious,
measured approach and he goes on tosay, there are many ways to

(31:36):
climb the mountain that is achieving carbonneutrality. Uh and and and you know,
he's you know, he's he's he'sseeing people are buyers have been to
pull they pulled back a little bitfrom the from the EV market. It
has it has uh tabled a littlebit, plateaued a bit, and he

(31:57):
sees that more as a sign offuture activity and not just the temporary lull.
You know. Toyota's Toyota you know, is not a union shop in
the US, UH and very verywell managed company. Yeah, it's known
for their management, right. AndI think if I were to and we
don't own Toyota either because just justthe just the UH I think in the

(32:21):
car company in general are very unpredictableand and and then they're also uh their
profitability is very cyclical. And they'realso it's also you know, uh uh
cost intensive you know to to producethe uh to produce it so much as
much as labors yea. And youknow, I think what tests what what
Toyota is doing well in the EVspace is not jumping in and they're really

(32:44):
working on their battery technology to getthat full charge up to let's say,
six seven hundred miles per charge rightat about three hundred now, And I
think that I'm not positive, butI think they're really being cautious until they
can see people going long distances withoutmuch hassle in an ev. You know,

(33:07):
I took an electric vehicle to Philadelphiaand it was a pain in the
neck. And now candidly, Ihad to stop for forty five minutes to
charge it. So it was apain in the neck. And I think
that it will be until you getthat battery up to you know, six
seven hundred miles per charge to makethat really sense people saying, okay,
this is a good viable option forme, right you're because six or seven

(33:31):
hundred miles per charge is you know, is basically a whole day of driving.
Yeah, you know, right nowyou drive it's sixty miles an hour,
you drive five hours. If yougot three and you barely you don't
get nine and three. Ye youknow, test is going through a lawsuit
right now. I think with overemphasizing what their batteries actually get. And

(33:52):
I do see that driving, especiallywhen it's cold out. So so we
talked earlier about the promise or Idon't know if we talked earlier in our
snapshot. If you want our snapshot, please feel free to email us
at fagan Asset dot Coments goes outevery Sunday morning by about noontime. Aaron
Ryan's taking care of it this morning. She and Samantha Dow take care of
it for us one or the otheron the Sunday and I hate to eat

(34:13):
text him, hey can you dothe snapshot? Hey? Can you do?
I get to be more consistent with, you know, rather than ask
somebody. But anyways, that's Idigress. But we talked about really the
hype, so to speak, versusthe reality of AI, you know,
or the promise of AI versus theeconomics of AI. And it's a good

(34:35):
segue to start talking about that becausewe've just been talking about the promise of
EV versus the economics of EV.And I think the promise is not as
alluring an EV because of the parenteconomics of it. And it's becoming political.
Evs are political too, you know. I've had a couple of people

(34:57):
say say stuff to me just drivingan electric vehicle, and I like,
I drive an electric vehicle vehicle becauseit's the most convenient for me. I
worked four miles away from my work. I have to charge it once a
week. You know. It's butit has become this political moved. It's
not convenient, I think, Butit's also it's also you know, mom,
your mother has an electric vehicle andI have a truck. You know,

(35:17):
like I like my truck. Ilike the ability to drive as far
as I want with it. Andshe likes you know, and you you
look. I mean, with withclimate change, you want to do something
that helps the environment, right ifyou can, Yeah, if you can,
you know, even if it comesout a little bit of additional cost.
You know, Fortunately we can affordit, but a lot of people
can't. But but but you're butyou're right, and you have the same
thing. You have you have ajeep and then you have you have a

(35:39):
tesla. You know. But butI think so. But moving forward to
the promise of AI versus the economics, I think if you know, we
were going to touch on some ofthe earnings that came out, you know,
and I think you know, youhad we had Alphabet go down this
past week as as as their earningswere were very sound, but mostly on

(36:01):
the on the advertising side, andnot so much on cloud. Cloud revenue
came in about twenty five million lessthan anticipated, and that caused the stock
to pull back on revenue of seventysix billion, which better than expected.
Yeah, which which was better thanexpected. But you know what I got
out of earnings and is I thinkwe're seeing these companies competing against each other.

(36:27):
You know, we're seeing AD revenuedown a little bit for Google,
but it was really good for Meta. You're seeing cloud revenue for a couple
of these companies very good, likeMicrosoft. So I think we're basically now
comparing each of these companies different segmentsagainst each other and seeing and some of
them are doing pretty good and someof them aren't doing as good as we

(36:47):
saw this past week. Yeah,you know, and I think that you
know, you look at that battlefor AI between Alphabet and Microsoft mostly and
Faceboo book more on a consumer frontwith their metaverse. You know, I
just think they're good plays over thelong haul, and generally speaking, you

(37:08):
know, I would purchase them tooif they continue to be weak. I
think I think this was just agood, uh good reason to kind of
knock a little bit of the fluffout of these stocks. You know,
Microsoft earnings per share two ninety nineversus a two points twenty sixty five cents
expected revenue came in about two billionabove expected. I think when guidance was

(37:30):
decent, you know, and andthat stock went up, but then was
pulled back by the rest of themarket's activity for the balance of the week.
And I think when you see morepositivity in the market, people care
more about earnings per sharing revenue.Then when there when there's a little bit
of uh, you know, cloudsin the sky with the market, you
see investors dig a little bit deeperinto the earnings reports. Looking at cloud

(37:52):
revenue, AD revenue, YouTube wayMo self driving cars was still you know,
revenue only two hundred ninety seven billiondollars or a loss of one point
one nine billion. So, youknow, I think you really try,
and people try rightfully, so diginto earnings a little bit more when there's
more uncertainty in the air. Agreedpromise versus the economics, the economics the

(38:14):
earnings, the promise of AI meaningthe the allure of it over the long
term, like show me. Yeah, you know, I think right now
we're in a little bit of ayou know, the Nasdaq is still up
what twenty percent year to date,So you know, on top of that,
these companies are going to have toshow us while they're why they're good
investments, more so than maybe ina low interest rate free money esque environment.

(38:35):
You know, we've been going,we've we've said and you know,
and in writing the quarterly snapshot,you know, as we've noted time and
time again over more than well overmore than the past quarter. You know
that, you know, with interestrates at five five and a half percent,
you know this, there are realalternatives, Terry, We've gone from
there are no there there is noalternative TEENA to teror there are real alternatives.

(39:00):
I think you've just got to becareful that those alternatives aren't short sighted,
you know what I mean that thatyou you you look at it alternative
like a like the cash you know, is an alternative. Now, you
know, for first, in somepeople's minds, short term bonds are an
alternative, and indeed they are.In fact, I want to you know,
I've seen more articles on bonds inthe past week or so, you

(39:22):
know, from from you know,the news media, from listening to the
news, watching the news, youknow, feeds. We get through our
through our computer system that I've seenforever. And I guess that would bring
me to a point of unless youwant to talk about little metas earnings,
we can talk. We can circleback to that. I don't think I
don't think we need to right nowgo so, so the question is really

(39:43):
the having you know, I thinkyou really want to begin to ladder bonds
three to seven, three to eightare I think it's the right thing to
do for most of our client's portfolio, being closer to retirement age. You
know, you can lock in sevenyears you know, gets you to twenty
thirty of at least you know,five ish percent, four and a half

(40:05):
five percent, And you know,I think that's really attractive for some clients.
You want to use weakness in thebond market, which means when interest
rates go up to do that.You know, so right now you look
at the seven year at four pointeight three, the ten years at for
eighty four, the tenure had beenas high as five. Personally, I
took I think one or two percentof your mom and my money and locked
in a twenty year treasury at alittle over five, you know, and

(40:30):
let's say one percent of our portfolio. Look, if interest rates go to
six, I'll lock in another onepercent, you know. So I think
that's the way you want to Youwant a dollar cost average into the bottom
market. And people don't talk aboutthat a lot. They don't always talk
about people always talk about dollar costingaverage into the into the equity market.
So, you know, I thinkthat's a really good point and a good

(40:51):
strategy going forward, dollar cost averageand then ladder yeap, and ladder into
the bonding mark. The three yearsat for eighty four, the seven years
at fort eighty three, the twelveyears at five thirty nine, five point
three nine percent. And by theway, treasuries are state tax free,
so but you want to be carefulthat the six months at five point fifty
five, So you're gonna get let'ssay we begin to do this, you're

(41:14):
going to get the question when wehave gotten the question, because we have
begun to do it. You know, why buy a seven year of forty
three when I can get five fiftyfive for a difference of point seventy two
percent and one hundred grand that's sevenhundred thousand year. Because if you're sixty
two, and let's say you're sixtythree. We're locking in, you know,
returns that say average out at fourlet's say four point whatever, let's

(41:38):
say four point nine percent till you'reseventy yeah, eighty yeah, half of
your active nos for seven years fromsixty three to seventy, you know,
so half of your active life youknow, before before you slow down and
retirement, you know. So Ithink that just makes some sense for people.
And we're gonna work, and youprobably get a tax deduction if it's

(41:58):
in a non qualified account on unfixedincome. The agg which is uh,
the agurate bond dedex is down fifteenpercent over the trail of the last two
years. That includes dividends, sothat's taken it outward. Yield is almost
hitting four percent now though, SoI mean that I guess that's good.
Yeah, you know, we'll seenot good year to date whatever it's down,

(42:21):
but you know, you can downtwo point two nine percent. So
but you have you you you emphasizeaveraging in and I think dollar quest averaging
and I think thirty day at SCyield is four point eight five percent now,
so that's good. That's that's currentyield is three point three six percent.
That's the direction you want to go. What else? What else are
you anything else that comes to mind? Are that you Oh A, Solar

(42:42):
Stocks took it on the chin terribly. He's down sixty nine percent year to
date, almost like the Darling andSolar Innovation seventeen percent, down seventeen percent
after they issued weak guidance. Thecompany anticipates fourth quarter revenue in the range
of three hundred million to three hundredand fifty million, while the street called
for five hundred and eighty four million. So you're seeing, uh, yeah,

(43:05):
obviously quite a drastic pullback in anin in in phase right, So
Solar etf tan we also we havesome of that for clients and I can
tell you the number of shares weown, but down forty three percent year
to date. Uh, it's beenit's you know, I don't know if
it's it goes along the line ofthe line of the you know, the

(43:29):
promise versus the reality or the economicsof When we talked about EV we also
talked about AI in that same artificialintelligence in that same vein. You know,
is Solar in that same boat orI think that they're they're they're big
ticket items, you know, andyou know solar Edge does a lot of
just taking on that project is alittle a little difficult. You have to

(43:53):
be proactive in doing so as well, and I think it's a lot of
points we just don't really not asmuch new construction going on as before.
So yeah, I think you don'thave the option right in front of you
as you did past five or sixyears. So I think that has a
lot to do with it, andlots of times it's got to be financed

(44:14):
and the credits drying up a bit, so I think you have that as
well that you have. Let metake a look. We own sixteen thousand
shares of it worth about six hundredninety five thousand dollars. We manage about
a little over six hundred million dollars, so it's a drop in a bucket.
Nothing's a drop in a bucket ifyou own and we know that for
sure, and we've taken out ofthe chin with that quite substantially. So

(44:36):
I guess our opinion on that isfor tax purposes, lighting up on it
as we review accounts for non qualifiedaccounts for qualified accounts, you know,
i'd be careful given the environment we'rein to give up on those those types
of funds. The new normal fourpercent distribution study originally done by Bill Bengen

(45:00):
back in nineteen ninety four, sonearly thirty years later, has revised that
study. I don't know if it'sBill banging specifically or just the methodology that
he used to about a four pointseven percent distribution rate, and that number
represents how much you can take fromyour account and still kind of feel comfortable
that you're won't try out in thirtyyears, I think is the guidelines for

(45:21):
it. Yeah, let me seeChevron buying Hess this week. I think
that's a great purchase by Chevron,really great synergies. Who else someone bought
Exxon bought Pioneer Natural Resource, SoI think they were both really good buys
in that sector. I think we'regoing to continue to see consolidation the oil
and gas sector. You know,financials for most of the oil and gas

(45:42):
companies look really good here. Sothat's kind of how we're playing value a
little bit of our diversification away fromour normal growth at a reasonable price type
investments. And I think oil shouldcontinue to do well. I think he'll
do well. Chevron got beat upon Friday. Chevron was down ten points
on Friday. You know, higherinput costs one of the factors really hurting

(46:06):
Chevron earnings were not what was tobe expected. We do own quite a
bit of Chevron at for most peoplethat at lower prices and their fear.
You know, this Exon's purchase ofPioneer, Chevron's purchase of Hess any Middle
Eastern conflict I don't think is greatfor oil companies because it brings in certainty.
So right, So a few ofthose things and uh, you know,

(46:29):
we'll see how that plays out.We still like energy on a secular
basis over the longer haul. Yeah, though it's taken on the chin.
It has taken on the chin,so so we will see how that plays
out over the over the over thenext uh yeah, x at least flat
year to date, I mean that'sit was down I think over twelve thirteen

(46:50):
percent at one point. Then itwas up about eight percent. So yeah,
it's had it's had obviously a roughweek. It's down about six percent
in the past month. So mostpeople don't realize communication, services, technology,
and consumer discretionary the only three industriesup here to date. You utilities
are down sixteen percent, real estatedown twelve point four consumer staples, which
is you know, perked up alittle bit down ten percent, healthcare down,

(47:12):
nine financials down, eight materials downthree again against against the s and
P five hundred that's up about sevenpercent in a doal that's down. So
you know, we're just going throughthis period of I think, kind of
a mixed period, a period ofwe're getting towards the year end. A
lot you know a lot of investorsand I thought the same thing. I

(47:34):
think thought there was going to bea chase up in the stock market,
but it's seemed to to if you'reunderperforming to now catch up. Now I
think we're at least at the pointwhere we're now at the point where I
think investors are thinking, okay,do we do we need to protect our
profits, But that could change ina heartbeat. We have non form payrolls
coming out on Friday. I thinkPalill speaks this week too, Yeah,

(47:55):
and Pali speaks, So those areso there's those are some big issues and
we'll keep an eye on them.But also in the conflagration in the Mideast,
if you want to call it that, it's it's a mess over there.
So that's something that's impacting investors sentimentright now. Look, if you
want to get ahold of us duringthe week five one, eight, two
seven, uh, check us outon a web with Faganasset dot com.

(48:20):
Like us on Facebook. Do wehave a submission for him if you want
to, you know, set upa time to get together with us,
whether you're a client or not aclient, not a client, you know,
kind of just let us know youknow what you want to do.
Anyways, Air, have a greatday and giants and the Jets today.
I know I'm on over which NewJersey? All right, take care