The Fagan Financial Report

November 12th, 2023

Episode Transcript

(00:01):
Good morning, and welcome to theCapitol District's Money and Investment Program. You're
listening to the Fagan Financial Report onDennis Fagan sitting here with my son Aaron,
as we do every Sunday right herein News Talk Gay ten and one
oh three one w g Y.Good morning, Aaron. How are you.
I'm doing good? How are yougood? Good? Good? You
know, usually are notes for theshow, which we also post on our

(00:23):
website if you want them Faganasset dotcom, Sam or Aaron Ryan. They
push out a weekly snapshot. Ifyou want to copy that, please feel
free to go to that. Butthe reason for me saying this is not
to push that. It's more tosay, man, there is almost three
pages of stuff that we've either writtendown or retained from prior weeks. It

(00:44):
still is appropriate for this week.Yeah, you know, I think you
have a lot of you know,economic statistics coming out this week. You
had the FED with Powell earning seasonend of the year, so yeah,
there's just a lot going on,it seems like in the markets. Yeah,
Moodies grades US debt. You know, Joe Manchin not running again for
the Senate. In a traditionally readstate of Virginia, you know, kind

(01:07):
of implying that he might be runningfor president. He is a Democrat,
and he has been kind of workingboth. He goes to both sides of
the ouse. He's kind of likethe the last vote that comes in on
major issues and then he decides,you know what, approve it or disapprove
it. And his state has actuallybenefited from that. But I know he's
being challenged by the current governor,so uh, and that may have something

(01:27):
to do with it. But youknow, he appears a lot with Mitt
Romney. I've seen him in differentinterviews, and I don't know, either
as a third party or a challengeto Joe Biden. You know, it's
interesting to see, you know,what what would happen if he ran,
and who he would take votes awayfrom, you know, in terms of
let's say, let's say him,Biden and Trump all won. You know,

(01:49):
who would he take votes away from? You think both Trump and Biden.
I know he's not gonna run,and he's probably gonna challenge Biden.
But yeah, it's just a he'san interesting candidate. I think he's kind
of running on more centric policies.Yeah, I agree with that, and
I like it, and I likehim, you know, And so you
know, do we live in ain a we live in a politically charged

(02:13):
environment, and we also live,in my opinion at sixty two years old,
we also live in an environment thatpeople can't take a joke. And
you know, so this is somewhatof a joke. But I was listening
to CNBC the other day and oneof the news anchors basically said, you
know, the presidential and I paraphrase, presidential election next year pits one individual
that you might find wandering in yourgarden at two in the morning against another

(02:34):
who you might go inside and findin bed with your wife. You know.
I mean, look, if you'regetting mad at that, so be
it. You know what. Oh, I love it because it kind of
like it is it seems like ina nutshell. Yeah. So anyways,
but stocks filed up the best weekof the year last year with another rally,

(02:55):
although this one on very narrow leadership. Yeah, you know, both
in York Stock Exchange as well.And there as that composite laggers outpaced advancing
issues by about a three to oneratio. And there's one hundred and thirty
eight sectors out there seventy nine weredown, fifty nine up, And you
know, kind of is a isa portrait of a year end rally where

(03:15):
yeah, And you know, Ithink what we're seeing a little bit too
is I think in a higher interestrate environment, you're going to see a
lot of high quality companies work.And I think a little bit what we
saw this week is saying, hey, you know this Wrestle two thousand and
companies in the Wrestle two thousand onlydid well because we saw interest rates go

(03:36):
down. We saw him go upa little bit this week, and now
you see the Wrestle two thousand downthree point one five percent. So you
know, I think things can stillwork in a high interest rate environment.
But you know, I think whatwe're seeing with kind of what we saw
this week is it will be anarrower group of companies. And you know,
I think there's some that make toomuch of it and there are some

(03:58):
that make too little of it.I think it's a factor. I think
you want broad leadership. But youknow, the S and P five hundred
is a market capitalization weighted index.Large cap tech dominates that index, and
that is the way it's going rightnow. So I think to turn the
blind eye to that and say,well, look I'm right and the rest
of the world is wrong. Andthat's what I suggest investors do, is

(04:21):
they look at their portfolios and seewhere they come down in terms of,
you know, how their equities aredoing. And I think, like when
if you manage your own portfolio orany investor, I think you have to
position your portfolio that if you're wrong, you still participate. Amen, And
that's you know. And I thinksometimes if you get too much into fundamentals

(04:43):
or too much into value investing,you can miss out on, Yeah,
some of the companies that have doneso well in the past ten years or
so, if you're consistently kind ofthinking they're overvalued or what else. So
I think that's why it's really importantto have at least some correlation to the
stock market, so you know,if the overall indicies are going up,
you are going up. So evenif you do want to like pick your

(05:05):
own stocks or your own sectors andthe market's up twenty percent, you know,
and if you're up fifteen percent,you know, and you can live
with that. I think that's fine. It's about you know, if the
market's up twenty percent and you're upfive. That's where the problem is in
my opinion, right, and thingscan remain overvalued for a very long period
of time, So you've you've gotto be concerned about that as well,

(05:26):
that you're not adhering. And youknow when people say they adhere to principles,
and we certainly have a set ofprinciples that we adhere to and disciplines,
but sometimes they're challenged. Like youknow, we we did have shares
of plug Power. Plug Power wasdown precipicously this week, and you know,
generally speaking, not generally speaking,we've lost money in that, but

(05:46):
we kind of limited our client likest alcation model to you know, about
one percent of their portfolio. Yeah, you know, and we'll talk a
little bit about that later. ButI think, you know, it also
reminds me of like Warren Buffett,you know, he owns Apple Computer,
a man who once said they'd neverown any technology stocks. Now maybe he

(06:09):
would quibble and say Apple's not atechnology stock, but you know, I
think you gotta admit that it is. So my point is that I think
you've got to kind of progress asor advance as the market advances and I
think he's done a good job withthat, and I think, you know,
the investors have to do that aswell. There is that saying,

(06:29):
as I mentioned earlier, the marketcan stay you know, overvalued for a
longer period of time than you're usedto. And also, you know,
when shorting stocks, you know,you can lose a lot of money.
The stocks can continue to go upwhen you run out of money. So
but but I think you know,now if the if the strength continues to
advance in this fashion, you know, in a classic year end rally mode,

(06:56):
if you driven by those who havemissed out of the large cap rally
thus far this year and they're tryingto play catch up, you know,
I think that that's not really healthyfor the market. But if we saw
you know, the market advanced,bread, market advanced, broaden and then
kind of continue into early next year, I think that bodes well. So

(07:18):
we are well positioned with the currentmarket. Rather, I think we're also
well positioned with the market in general. Energy hasn't held in. Energy hasn't
done that well this year. Howdo you feel about that? And I
still like energy from a fundamental standpoint, you know, I think we will
be in a longer term rally foroil. I'm talking years, not not

(07:39):
a few months. So you know, I think these companies are well positioned.
They're consolidating, and you know,I think I think they'll be higher
two, three, four years fromnow. So I think I think they're
still we continue to buy them evenas they go down. They've had a
they've had a rough month or two, and I guess, yeah, it's

(08:00):
never fun to see, but youknow, I'm okay with it still from
again, like a fundamental standpoint withoil and gas companies. Energy companies,
I agree. I think they're digestinglast year's games. If you take a
look at just like if you lookat the XL, will say the Energy
Select Spider ETF, and you goout ten years, you'll note that that

(08:22):
has severely underperformed the S and Pfive hundred. S and P five hundred
up one hundred and sixteen percent.The XL you have forty one percent.
If you go back five years,you're looking at pretty comparable performance. If
you look at three years, theS and P five hundred's outperforming the excuse
the Energy Selex Spiders outperformed the Sand P five hundred by far, but

(08:43):
over the trailing year, it's it'slagged it precipitously, down about eighteen percent.
Reute to the SMB, My pointis is that I think you mentioned
consolidation. I think that's what it'sgoing through right now. And you know,
it's had a rough year. Itwas down twelve percent at one point.
Then you know, two months agoit's September eighteenth, they hit a
high up eight point one three percentfor the year. Now it's down two

(09:05):
point zero nine percent for the year. So a lot has been going on
geopolitically. But I think these stockswant to do well and I think I
think people you'll continue Does that meanthe stocks want to do well well?
I think when there's a chance tobuy, people step in and buy them.
They go down. Yeah, Excelly'sdown two percent, Chevron has a

(09:26):
four point two three percent dividend.Xon has a three point sixty six percent
dividend. So these these companies arestill really well run and I ye,
I think they'll continue to they willdo well going forward. So sticking on
like we we you know started outthe show talking about Joe Manchin and not
running for Senate again in Virginia.Uh, staying on that same the policy

(09:48):
front kind of that's influenced in themarket, and then we can move to
like Microsoft that hit an all timehigh this past week, Berkshire Hathaway had
good earnings, uh, and they'lllike. But staying on the economic portion
of the market. Before the IMFChairman Jerome Pole basically said, you know
that he's not confident that they've receivedthat they've achieved a policy that is conducive

(10:18):
to their two percent inflation target rate. And I think that's something that I
think is going to continue to influencethe market. I don't know what did
he say specifically, you have that. I don't know if you have that
in front of him, just likea paraphrase. Yeah, I can't really
either. Just said he issued aone two Investors too giddy on the prospects
of rate cuts next year. Right, That's that's what I'm seeing. I

(10:41):
said, Oh, okay, wego. The FOMC is committed to achieving
a stance of monetary policy that's sufficientlyrestrictive to bring inflation down to two percent
over time. You're not confident thatwe have achieved such a stance, he
said in his prepared speech. Andyou know, I agree you know,
I think we're gonna con that thatwill continue to be debate upon and we
won't know what the right answer isfor let's say, a year or two

(11:03):
from now. But yeah, Ithink even this week ahead, credit cards
still spending pretty high, which signalsa strong consumer. But now you're seeing
some job cuts some City Group anda couple other companies. So I think
kind of what he's saying is,hey, you know, we haven't this
is not a success yet, andwe have to you know, continue to
I think, remain a little bitnimble. But you know, the consumer

(11:24):
is just still in such strong shapethat Yeah, I don't think there's any
rate cuts coming anytime soon. Well, I think the problem with the FED
the job of the FED. Andthis is for the listeners out there who
are investors and also our clients.They haven't achieved success yet. They the
FED never achieved success. One ofthe difficulties of this business. And you
and I in this business and otherinvestors, either professionally or retail, you

(11:48):
never achieved success. Really, it'san ongle. You just just move from
one issue to another that might derailyou from your longer term goals. Yeah,
and you know, just being apart of the mark. And every
single day it's like, you know, you have every single quarter is a
new quarter. Then you know,all of a sudden, December thirty first
and January first is gonna hit andyou're gonna like, all right, new

(12:09):
year, who ca And then everyone'slike, who cares about last year?
You're three months into twenty twenty fourand your twenty twenty three numbers are already
kind of irrelevant to some people,So you know, you just kind of
try and yeah, I guess moveforward with your you know, allocation and
you know financial planning, and andknow that you kind of always have to
remember remind yourself and your clients thatit is long term and you know,

(12:33):
year to date numbers do matter.One year, threeear those numbers all matter.
But yeah, it's just an ongoingprocess. The third it is an
ongoing process and it's never ending,and you got to take to go with
the better oft. I often referto it both on the air and off
and with clients that you know,investing is like a great marriage. Mom
and I've been married over forty years. I'm sure Mom doesn't wake up every

(12:54):
morning, look over and say,thank God, I'm here. You know
what I mean, there's times whereshe's like, Okay, what's going on
here? So but on the wholeit's very good and investing is the same
way, moving to in that samevein. Moody's Investor Services low after the
market closed on Friday, just aboutas I closed. I think it was
a little bit afterward that they loweredits rating outlook on US government debt to

(13:20):
negative from stable, citing the contextof higher interest rates without effective policy measures
to reduce government spending or increased revenues. Moody expects that the US fiscal deficits
will remain very large, significantly weakingdebt affordability. Continuing on. Political polarization
with the US Congress raises the riskthat successive governments will not be able to

(13:41):
reach consensus on a fiscal plan toslow the decline in debt affordability. You
know, Winston Churchill once said theUS will do the right thing. It's
usually at the last minute, Iwon't, you know. And although we
say we cite that that quote fromWinston Churchill very often, not very often

(14:03):
often enough to say hey, we'llget it right. You know, sometimes
I wonder, Yeah, I thinkI'm wondering more and more we get it
right in this debt or will thedebt all of a sudden be matter.
It hasn't really mattered. The dollarsrelatively strong, interest rates are relatively low.
Last time Moodies did this, itreally didn't matter to interest rates because

(14:24):
the demand was there. But demandis kind of there's so much supply coming
on and demand is kind of notas as hot as it once was.
I think, how can you notdowngrade the United States debt when you're going
from you know, one percent ratestwo three years ago to five plus now,
you have thirty one percent of USdebt coming due by November of next

(14:46):
year, you have government shutdowns,you have you know a lot of political
instability. It's like of it kindof it has to be downgraded, in
my opinion. With so many unknownsout there right now, how can you
give a positive outlook on it becauseyou don't know what the future is going

(15:07):
to look like. And so Imean, and I think my main concern
is not the level of the debt. It's not how we got here,
you know, that's what are underthe bridge. What is my main concern
just is a lot of other thingsin business life right now is continued political
polarization within the US, within USCongress raises the risk that successive governments will

(15:30):
not be able to reach consensus ona fiscal plan. You know, everything
seems to be the third rail rightnow. The debt seems to be the
third rail, you know. Taxesseemed to be the third rail. Social
security seems to be the third rail, you know. And and our leaders
are not courageous enough to really addresssome of the issues that really could could

(15:52):
derail us from the position of strengthglobally that we've been in. You know,
so well that that is that thatis an issue, and you know,
the right's gonna play and by Biden, the left's gonna play. Blame
Trump. But they both have spent, both have have and both have inherited
good economies, and both have rundeficits. Yeah, so we go from

(16:18):
there. What else you got there? And we've got tons of things.
You want to want to review themarket or what do you want to do?
You know, let's take a look, let's take a little look at
that that that too to the bondmarket. After we address take a look
at the stock market. Why don'tI do it? And you can chime,
and you can raise your hand lastyear last week I said you it's
hard to read and see. Raiseyour hand at the other end of the
table when I did that, whenI did the horse Shack from you ever

(16:41):
see Welcome back Cotter the guy there'sone guy in the and and for those
of us that are fifty five orsixty one of the cotter, welcome back
Cotter. Gabe Kaplan was a teacherand John Travolta was in the class.
Actually this was one of his firstgigs. I guess as an actor.
And there was one The guy's namewas horsees Shack and whenever he had a
quick shu need raise his hand andgo oo oo oo ooh, and the

(17:03):
guy would pick on him. Codderwould pick on him. But anyways,
So Dow Jones industrial leverage up twohundred and twenty one points to close at
thirty four thousand and two eighty three. Dowb six tens of a percent,
up three point four to three percentyear to date, trailing twelve month up
one point five nine percent. TheDow still sits about seven percent below its
all time peak. It is upeighty four percent from its three twenty three

(17:26):
close, it's up seventeen excuse methree twenty three twenty, which was the
low post COVID low. It's alsoup seventeen percent from its pre COVID high.
Putting some context in. It's alsotwenty five percent above the election day
closed when President Biden was elected Useventeen percent above the recent low in the
market about a year ago. Imean, I'm going to bring these to

(17:49):
light all across the board. TheS and P five hundred up fifty six
points to close at forty four tofifteen, up one point three percent for
the week, up fifteen percent yearto date, up ten percent over the
trailing twelve months, up ninety sevenpercent from the low post COVID low.
It's up twenty three percent from thehigh before cod excuse me. It's up

(18:10):
thirty one percent from the pre COVIDhigh. It's up thirty one percent from
election day. It's up twenty threepercent from the low in October, and
it's got about eight percent to makean all time high. NAS that composite
up two point three seven percent forthe week, up thirty two percent for
the year. A year to datea large cap tech market, it's been

(18:32):
up twenty one percent year over year, up one hundred percent from the COVID
low, up forty percent from rightbefore COVID when the market made a high.
It's up fourteen it's fourteen percent fromits record high. It's up twenty
three percent since President Biden was elected. And the reason we have these numbers
too, And Aaron, you know, you get calls, Hey, Trump's

(18:55):
abum, Biden's a bum my.Portfolio hasn't go anywhere. Well, you
know, you can see that ithas in certain circumstances. The three the
US Total Market Index, which isa very true representation of the overall market,
up thirteen point four percent year todate, of eight point six percent
year over year, of ninety fivepercent from the COVID low, up about

(19:17):
twenty six percent from the COVID high. It's got about ten percent to make
a new high. It's up twentysix percent from when President Biden was elected,
and it's up twenty one percent fromthe low we said last year.
So all those the larger cap market, the larger cap innessies are doing well.
The Dow Jones Industrial Average is alagger. It's a dollar weighted index.

(19:37):
It's not a market capitalization weighted innext so Boeing rests Boeing more important
than other the higher yeah, thehigher price stocks. Whereas a Nasdaq US
total market index in the SMP fivehundred are are market capitalization waited index.
Where we get into problem and youmentioned it earlier, there is the Russell
two thousand, down three percent forthe week, down nine percent year to

(20:00):
date. Yeah, you know,thirty percent from a record high. And
I think that's what we kind oftalk we were talking about a little bit
earlier. Is that's why you wantcorrelation to the major indices, you know,
you know, it's you can't getyou know, yeah, no matter
what type of investment style you have, I think you have to make sure
that you know, a good chunkof your portfolio is correlated to major indices
because you know, the track recordof them is up over time, and

(20:23):
I think you can not guarantee thatbut kind of a you know, over
a five ten year period, soyou know, even if you are a
value investor or, you know,whatever type of investor you are, I
think, yeah, you know youhave seventy eighty percent. Correlation to the
market is really important for people.And then you know that other twenty percent.

(20:44):
Yeah. You know, if ifyou want to take shots in different
sectors or with different different individual securities, I think that's fine. It's just
you don't want to do anything to, you know, harm your financial wellbeing
over the long term. Right,the market's going to take you where you
want to go. If history's anyguide. What's so and you want to
be there. But one thing Iwill say, though, and you're gonna
start feeling this I think, isthat the last record high for the S

(21:07):
and P five point it was Januarythird of twenty and twenty two. We're
approaching two years since the markets seta record high. The Dow January fourth
of twenty two. The Nazak hasn'tset a record high since November nineteenth of
twenty and twenty one, and allthe major innities in and around those dates
setting record highs, you know,November December of twenty one or January of

(21:30):
twenty two. So you know,if you look at the Russell two thousand,
its last record high was two yearsago this past Wednesday, and right
now it's thirty percent from it's high. Been a large cap driven market.
Fortunately we're in that air arena.Russell two thousand is the second third thousand
largest American stocks, and that doescome with some issues as far as the

(21:53):
level of debt and the like.It's a something about bonds you want to
mention. Yeah, I don't knowhow much time we got left. We
have to take a break and comeback to that. We got a couple
of minutes we can star in thenext half, we can start with Yeah
on side we you know, let'sfinish out with it, like what what
advanced worth versus we're getting a breakon gasoline prices. They've come down from

(22:15):
around three eighty or three ninety threeforty crude aisles come down. Gold really
hasn't broken out. Most would expectgold to break out. Gold still nineteen
thirty seven years. Cryptocurrency breakout alittle bit though, Yeah, that's you
know, you have to that's alsoas technology is kind of doing well too,
So I think you have to takethat with a grain of salt a

(22:36):
little bit. But maybe, hey, some people are using cryptocurrencies as bitcoin,
as you know, maybe different avenuesto invest in something that would be
historically like gold or silver. Yeah, I don't think it's a I don't
think it's going to be used forcurrency, you know what I mean,
it doesn't seem to be moving inthat direction, but a store of wealth.

(22:57):
So digging under the hood a littlebit, Yeah, oils come down
despite the war in the Ukraine's obviouslysubsequent war between Israel Almas. We have,
like I said, a lot ofadvancing stocks, a lot of declining
stocks over advancers this past week.And you also have really the dollar hanging

(23:17):
in there, you know, bears, you know. In addition to that,
we had a bullish sentiment pick upthis past week. I know you
noted last week there it was verylow at twenty four percent. It's now
back up to forty two percent.That's the contrary and indicator. And we
had mortgage rates come down from sevenpoint seven six according to Freddie Mac to
seven point five percent, and thefifteen year from seven oh three to six

(23:37):
eighty one. So I think whatyou had is really a market supported by
the year end rally, supported bystabilizing bond yields, stabilizing investor sentiment.
The dollar has been relatively comfortable aswell. We'll talking about interest rates when
we come back, but right now, it's ten thirty on the station.
Depend upon for news, weather,and Information news to K ten one of

(24:00):
three one w G Y Good morning, Welcome back to the second half hour
of the Capitol District's Money and Investmentprogram. You're listening to the Fagan financial
report. You know, during thefirst half we're you know, kind of
it's important to address different different Uh, input different, I guess, uh.

(24:25):
Yeah. Input affects the market.Sometimes it's economics, sometimes it's data.
Sometimes it's geopolitical, sometimes it's corporateinformation. I think this week was
one of the weeks where we hada lot of things coming into the market
and it affected the market. Ithink from from top to bottom, or
most important to least important. Ithink it is destabilization and interest rates.

(24:49):
I think it's share pals. Despitethe fact that he's still still speaking hawkishly
and we talked in the first halfhour about that, I think he kind
of sees the end of the endof the tunnel, so to speak,
as far as having to raise rates. I think it's the year end.
I think, you know, abody in motion stays in motion, a

(25:11):
body of motion stays at rest.And you know, the market has been
in motion this year. Large captech has been in motion this year,
and I think until something, youknow, impedes that motion or changes the
direction of that motion. I thinkyou stay, you stay with large cap
growth stocks, you know. Andalso historically we're by the period where we're

(25:33):
in the period where as rates arepeaking, large cap growth tends to do
well. You know. I thinkwe saw that this week and you know,
I yes, you know, hespoke put together some good information and
talks about dividend paying stocks. AndI had a meeting with client this this
Friday, and it talked about sowe talked about you know, he wants

(26:00):
dividend paying stocks and although it mighthave worked last year, over the longerhul
and look, we have dividend payingstocks. Yeah, I think, you
know, a well diversified portfolio portfoliohave dividend paying stocks. But you know,
at the same time, you know, we we don't buy dividend paying
stocks just because they buy a dividend, pay you know, pay a dividend.

(26:25):
You buy dividend stocks, you know, that is one factor into why
you buy them. But you buythem because they're they're well run companies as
well, they're they're good companies aswell. So or you like the sector
like like oil and gas, butyou know, I don't. I don't
think you it's hard. In myopinion, it's hard to build a portfolio
of dividend paying stocks because I don'tlike that many companies out there that pay

(26:48):
high dividends that are that attractive,right, And I think, and this
is a warning, I guess forthe investor out there who wants wants a
portfolio of dividend paying stocks. Ithink you have what's Apple's dividend? You
know, what's what's their current yield? The largest company in the S and
P five hundred. You know,the yield on Apple is zero point five

(27:08):
percent? What's Amazon's dividend yield?Guess what zero? What's Google's year yield?
Zero? I think you know,you know, and I think too.
It's so if you go to SHD, that is just Schwab dividend paying
ETF is down two percent this year. But you know, you look at
VIG, it's Vanguard Dividend Appreciation Index, So it's dividend growers, you know,

(27:30):
investment return to common stocks of companiesthat have recorded an increasing dividend over
time. And I think that's justas important, more more than the dividend
being paid. You know, SDHDpays about three point seven seven percent,
and this only pays one point nineto nine percent, but it's up six
percent year to date, so itgreatly makes up. So, you know,

(27:52):
when looking at dividends, I think, yeah, as I was saying,
just as important is the companies thathave continued to raise their dividends over
time, because you know, itobviously means they're well run companies and they're
more paying a dividend as not agift to shareholders, but they're not paying

(28:12):
you with dividend just so you investin their company. And I think you
see a lot of that with justhigher dividend paying companies. You know.
The other thing too, I thinkas an investor, you have to remember
at sixty two years old, youknow, I grew up in an era
where there was I think there wasmuch more stability in what were the what
were the leaders of industry? Yeah, you know, I think that's well

(28:34):
said. You know, now wedon't now now we don't. I mean
if you look at Apple, Apple'sbeen around for a while, Microsoft's been
around for a while, but Facebookor Met has only been a publicly traded
company twelve or thirteen years. Googlemaybe a little bit more than that.
Alphabet companies that in the technological environmentwe're living in, companies come to rise

(28:55):
to prominence much quicker. Their marketcap gets greater, and the younger the
company. And I don't have datain front of me to support this,
but I'm fairly fairly positive that it'strue. The younger of the company,
the less inclined they are to paya dividend because they're still in that period
of growth mode. And I'm surethat's true. So that's why you have

(29:18):
the Amazons and the alphabets, andthe Apple's not paying they'd rather reinvest that
cash flow earning. They do paya dividend, though it's not high,
but you know, it's a halfa percent. You can't live on it,
no, you know, a Starbucksis that I think won and change
right now, And I guess mypoint is is that it's and it's supported
by the fact that that information fromBespoke, the one hundred highest yielding s

(29:44):
and p five hundred stocks at thestart of the year are down an average
of seven point nine four percent yearto data on a total return basis,
compared to an average gain of eightpoint nine four percent for the hundred stocks
that had no dividend yield at thestart of the year. Year. Now,
we're not suggesting that having a dividendor not having a dividend is the
right direction. We are suggesting thatbuying a stock because it doesn't have a

(30:07):
dibbting or buying a stock before thedividends solely is not a good foundation premise
for investing. Agree agree? Wouldyou agree with that? Yeah? I
would agree with that. And youknow, even the largest holdings in v
I G, the Vanguard dived inappreciations Microsoft, Apple, Exon Mobile,
u n h JP, Morgan,Johnson and Johnson, and Visa, and

(30:30):
we own every single one of thosecompanies we do. You know, they're
they're high quality companies. Yeah,their dividend might not be the greatest,
but overall they're they're good companies andthey pay something. You know, the
the as I was saying, onepoint was it one point nine nine percent?
Isn't isn't awful with for for adividend yield on a stock that's up
six percent or ETF that's up sixpercent year to date. So yeah,

(30:53):
I think exactly what we were saying. You know, you buy, you
buy stocks dividend is a factor inwhy you buy a company. At the
sole factor well, to support yourlifestyle. Think about it, if you
need a five percent distributiony and you'regetting two percent from the dividend. And
I use the Dow because a lotof people are familiar with that index.
If it's sitting at thirty four thousand, it's got to go up about a
thousand points over the course of ayear. So the Dow can go from

(31:15):
thirty four to thousand to fifty thousand, and again the numbers aren't perfect for
you to withstand your lifestyle with sustainyour lifestyle over the next fifteen years.
So you know, it's it's it'shaving a dividend is important, you know.
And our our dividend and ours thestock side of our portfolio. Adjust
the stock side because we have alot of the XLI and the bond side

(31:40):
is sitting at one point one percent. On the equity fund side, it's
sitting at one point six percent.Yeah, so you know, and maybe
that should be a little bit higher, but we do use ets as to
balance out a lot of the stocksize of our portfolio. So that makes
sense, and I'm glad that's that'sthe case. Well, the other thing
is you often say invest in stocksfor growth, in bonds for income.

(32:00):
I believe that that's the case.You know the other thing too, but
you talk about the I guess dividendsare one bigger issue that investors face.
And we talked a little bit aboutthat. We talked about you know,
what's going on in the market rightnow, not the last thing. Nothing
the old sixty to forty portfolio,which was kind of brought out for dead

(32:22):
or is coming back. You know, if you look at the Vanguard,
the Vanguard Balanced Index Admiral Shares vbiX, it's up about eight point six
percent this year, so it's had, you know, a nice little rebound
from last year. Last year wasdown about sixteen point nine percent. But
I don't think if you can't forgetthat last year was a horrible year for

(32:45):
bonds as well as stocks. Yeah, it'd be hard to see us repeat
that, in my opinion, unlessyou'd have to see rates go up to
eight nine percent agree average and yourreturn on that fund over three year period
seven point eight percent average five yearreturn, you know, just north of
ten or eleven percent. So Ithink it's it's average five year returns I'm

(33:10):
sorry six point eight percent, soten year return seven point one eight percent.
So I think it's doing its jobas far as providing growth at a
reasonable price at you know, reasonablevolume, should do well going forward.
You know, why is that withthat other half of its portfolio sixty forty
percent of its portfolio yielding you know, five percent four and a half percent

(33:32):
agreed, agreed. So so yeah, you have that going for you as
well. So coming into the endof the year, considered uh a sixty
forty portfolio as as you as youget older? Speaking of as you get
old? Did you see what Iput in there? I did put in
that. As as the average lifeexpectancy going on here, I don't know.
I thought I I sixty two inone month. Respecting to social Security,

(33:55):
my Dennis life expectancy is twenty onepoint five five years, which will
bring me to eighty three point fiveerrands at age thirty four to forty.
See. I saw that, andI'm like, really, do you really
have to tell me only have fortyseven more years? I know you're I
know you're gonna forty seven years.I would kill for it. Think about
that all. Let and I'd belike, I got forty seven summers left.

(34:15):
We're not that far off. Ilove that statement, I know.
But the how off we are asyou're twenty eight years younger than me.
Yeah, I guess you are runningsub ten ten minute miles I know,
I know two miles and nine tofifty eight. For those of you that
think you're going to win the Turkey, tried, think again, Think again.
Although I've been doing added would havebeen at it now because you're you're

(34:37):
running like four or five miles now. Yeah, I'm trying. You know,
what do you mean? You're sucha great workout? It is.
It's quick. It's quick too.Yeah, you don't have to think about
it either. You don't have tothink about the workout you're doing. You
just get outside, you put yoursneakers on and go. So I just
said to those who are running theTurkey, try and think they're gonna win
it. Beware, but I will. I'm also going to say something to
those that are that. The thepeople who take care of the Oak with

(35:00):
Cemetery, which we run a lot, great job. They do, do
a great job. They're such nicepeople too. They always wave, you
know, some of them talk toyou, it's it's because they want your
business. They just because they wantyour business. They just put like a
little book library. Yeah, likethose many I think that's what it is.
Yes, it is. I'm usuallyrunning by it. But yeah,
like you know when people go visittheir you know, dead relatives or friends,

(35:22):
family. Yeah, it's like oneof those little like take a book,
leave a book type things. Ithought that was a really good idea.
I love those too. You know. One thing I will tell them
though, just a little bit ofcriticism, if they could flatten it out
a little bit. I know it'ssolly. Yeah, there's no flat area
there. It's always it's up ordown. Yeah, you know which which
is which. But it's so peaceful. It's just such a great place.

(35:44):
It's it's one of my most favoriteplaces in the entire Capital district. I
agree. You know a lot offamous people buried there. Yeah, General
George Thomas, the Rock at Chickamaugafrom you know, the Civil War Lore
Rock. A lot of you goin there if you're from Troy. A
lot of the streets in Troy,you know, you can see, you
know a lot of these people.Uncle Sam's buried there, you know,

(36:07):
and I a war veterans Spanish SpanishAmerican Spanish American war. So you know,
there's so much history in there.But so so I don't know how
we got into to that. Butbut I am running, that's right.
Ye you were killing me, knockingme out. But then and then look,
I mean, this is just andyou. If you want, you
want the link, just request thelink from US or go to go to

(36:30):
calculating my life expectancy. They'll takeit to a Social Security link. But
look at it. Look, youknow, here's the thing, okay,
according to AARP, so here ismy life expectancy is sixty two. I'm
working, so I can't collect soulsecurity, but I could. You know,
if I wasn't working and mom's collectingsocial security, why is she collecting
solid security at sixty two? BecauseI'm still working. Mineo still grow ified

(36:51):
die, she'll get mine, okay. So that so there are a lot
of factors in determining whether you shouldtake Social Security or not, whether you're
married, your health, or yourincome needs, whether or not that extra
income is going to help you dowhat you want to do in the active
phase of your retirement. Aaron andI separate active from a passive phase of
retirement. And I'll bring that upa little bit of statistics with the passive

(37:14):
stage may entail or entails for alot of people. You know, what
you've burned versus your spouse, yourspouse's health, that type of thing.
So there's a lot going on.But aarp assumings at around age seventy eight
and eight months is when you breakeven. You reach the break even point

(37:35):
when your cumulative benefits from claiming atsixty seven's are past those you'd get by
taking retirement at sixty two. Nowtat you got. You know, you
have to take your tax bracket intoconsideration, your return on that investment in
the consideration that. But let's usethat figure seventy eight and eight months.
You know your grandmother and this isjust this is just our life. You

(37:58):
may have a totally different life,but your grandmother on my mom, you
know, basically had you know,minor strokes and then developed Alzheimer's, a
dementia at like seventy two or seventythree, slowed your grandfather's really traveling down
quite a bit a couple of yearsthere after. You know, your grandmother
died in twenty eleven at seventy nine. You know, your grandfather, you

(38:23):
know, as as we were fortyand fifty years old, you know,
he traveled a bit with us,but didn't have his partner, and it's
hard to travel to a partner,as those of you know who have lost
a loved one or don't have apartner in general, or lost you know,
if you've never had a partner,then you're probably used to traveling without
one, but if you've lost oneat sixty five or seventy or seventy five,

(38:44):
you know, it's more difficult totravel. So so that's saying.
And on your on mom's side,I think her dad had a stroke at
around seventy two or seventy three,probably the same age as Graham, and
was kind of incapacitated. And thenby the time he died, your great
mother was eighty two eighty three anddidn't travel a lot other than with us
again or Mom's sisters. So mypoint is more that anecdotally, you know,

(39:08):
once you get to be let's say, seventy eight or seventy nine,
you enter like a more passive stageof your life that tends to be Yeah,
that's expensive, Yeah, you know, so do you when you know,
if that break even point comes atseventy eight and eight months, you
know, and I understand anyone everget into that age and be like,
yes, I made the right choice, right, you know. You know,

(39:30):
that's a great point, you know, And I'm I'm pretty big proponent
of if you skew towards taking itearlier, take it earlier. Obviously there's
instances that you're just be killed bytaxes or get money taken away where you
just can't you obviously shouldn't. Butlike I don't know, if you're gonna
use the money to increase your qualityof life, I'd say go for it.

(39:52):
Now, look at the money you'releaving behind. You are you are
leaving a lot. If you liveto ninety, you are leaving money behind.
But the quality of life from eightyto ninety, generally speaking, is
not the quality of life from sixtytwo. Guarantee, it's not going to
keep you up at night, right. People are going to be thinking about
true at that age, you know, And it's just one part of a

(40:14):
financial decision that you make throughout yourentire life that you know. I think
a lot of people put a lotof weight into it. But I think
you make decisions like this every day. How much to put away for retirement?
What is my correct allocation? Youknow? What are my distribution rates?
When are my contribution rates? Youknow? I think we take this
when to take it. It's justsuch a talking point when there's so many

(40:37):
other things that are just as importantin my opinion, And there there are.
And the other thing I would sayis that there are and you said
it a couple of minutes ago,there are there are circumstances like I would
never take mine, because if youweren't over like about twenty one thousand dollars
in wages and salary, you're goingto lose fifty cents in the dollar until
you reach the normal age of retirement, and then that that moves about fifty

(40:58):
some thousand, and then after you'reat the normal age of sixty seven.
For me, you can earn asmuch as you want. But you know,
so that's that's that's something that Iwouldn't do, you know. But
for those that are in a grayarea, you have to seriously consider.
I know this flies in the faceof the norm normal uh thinking from investment
or financial retirement planning professionals but youknow, I just think you take a

(41:22):
look at the active versus the passivestage, and I think you've got to
You've got to think of, youknow, when when you should take social
Security? And also you know bothand also can think what I mentioned earlier,
the fact that you know, forboth you and your spouse to enjoy
retirement, you know, at somepoint in time. And you know,
I don't have statistics in front ofme, and I'm not going to suggest

(41:44):
that it's that I know this answer, but you know, is it in
your seventies where one of you can'ttravel because of a like a physical ailment
or like a you know, uh, you know, uh, where you
have something going on with your abilityto comprehend hand either Alzheimer's or dementia,
or you just don't want to travel, you get tied up with your with

(42:05):
your family or whatever. So justtake that into consideration before you before you
either say I'm definitely taking my retirementearly or you don't. And you also
don't have to also don't have to. It's not a decision that you have
to make at sixty two and sayI'm not taking it till sixty seven.
At sixty three, sixty four sixtyfive. You can always make that change
should your health change or something likethat. What else we oh, you

(42:29):
know what else you got there?You go thinking that, I know,
I've monopolized this show a lot,and I apologize for that. So it
goes as a father. You getto do whatever you want for a while
too. So plug power, yeah, Dress, plug power, you can

(42:50):
address plug power, plug power sharesfel and it really has come down from
about thirty to where it sits nowat about three and change. It's a
tough for ahead. Hydrogen costs haveever remained very high. Out outside capital
to almost continue running operations over theover the long term, they're pursuing a

(43:13):
number of debt capital and this isaccording to the company itself. The company
is pursuing a number of debt capitaland project financing solutions, including corporate debt
loan programs to the Department of Energyand a memorandum of understanding. Now it's
funny too. It's like, youknow, the CEO was just on a
I don't know if it was aroundtable or something like that with the Albany

(43:34):
Business Review, and he basically wasjust saying how perfect the company hits I
hate in the past three six monthsand now you come out here and it's
just like, you know, yeah, what's going on. You know.
That's it's kind of in the themethis year with just renewables in general,
though, I mean they're all downvery much. I would say fifty plus

(43:55):
percent en phase solar, edge plugpowers for solar, yes, you know,
And that's I think another reason whyyou know, x l E and
the energy ETFs and you know,we've been saying this for a while that
these companies are great. I thinkthey're they're trying to do a lot of

(44:15):
good. They're trying to make alot of money. Let's be honest.
But you know, let's say youwill do a lot of good with renewables.
But you know, as we've kindof said, is you need the
leaders of renewable energies to be energycompanies because they have the capital to do
so, they'll they'll they'll work onrenewable energies. Yeah, when it's cost
efficient for them, when the technologyis there, they have the free cashw

(44:37):
they have the balance sheets that arecapable of doing this. And I think
that's what we're seeing with plug power, and you are seeing a lot of
innovation in the oil and gas industry, especially in the likes of like chevron
X on BP. They all havethey all have sectors of renewable energy that
are way larger than any of thesecompanies. So I think that's what you're
gonna have to see with renewable energiesis, you know, the leaders of

(44:58):
renewable energies have to be energy companiesthat already exist because they're the only ones
that can financially do it. It'sa perfect way to put it, you
know. I will say though,you know, and here's a prediction.
I'm going to prediction say for nextyear, I think solar stocks are going
to have a good years. Imean, I think is a really good
company. First, SOW is areally good company. You know, if

(45:21):
you see a plateauing of interest ratesand then you see it start seeing a
cut of interest rates as long asbuilding, yeah, I mean, that's
kind of a recipe for better solarstocks. The cost of the input is
the issue. The cost of youknow, building these projects or and financing
these projects, either from a businessperspective or a consumer perspective, is quite

(45:43):
high. And in order to dothat, you know, because of interest
rates, so you're you're going tohave to see a plate toawing in interest
rates. But you know, wesold the balance of our plug Power and
again we had you know about youknow, one tenth of one percent of
our client's assets in there, probablyone percent at its max. We sold
them on. So the rest ofthem pretty much on frodact except for some

(46:04):
people who I know that bought itfor they bought it, they directed that
trade. I think a lot ofpeople, including us, are a little
bit biased to plug Power being localprobably you know probably what else. So
we're looking as we go into theend of the year. Look for if
you're not a client of Fake andassociates, look for capital gain distributions.

(46:25):
Capital gain distributions, whether you reinvestthem or take them in cash, are
taxable if they're in a non qualifiedaccount. How much mutual fund right mostly
mutual funds ETFs and stocks. Youcan control that that component of your portfolio.
You cannot in an open ended mutualfund. They'll declare the capital and
they have to pass those capital gainsalong to you. They cannot pass capital

(46:46):
losses along to you. And alsothey have to pass dividends along to you.
So whether reinvested or not. Capitalgain distributions and dividends are taxable.
They can come late, they cancome all the way up through the end
of the year. You might seeone on December twenty sixth twenty seven.
For our clients, were keeping aclose eye on those, and we'll try
to offset those gains with losses.You know, you have some funds because

(47:08):
of the volatility in the market thisyear, despite the fact that it's been
a good market, declare a tento fifteen percent capital gain and that goes
towards your basis if you're reinvesting it, if you get in cash, you
may want to It comes out ofyour it comes out of the price per
share. So you're gonna want tokeep a close eye on those for the

(47:29):
for the rest of the year.Yeah, T Bill and Chill, I
guess is the last time to putthat on a statement? Is something that
No, it's from there. They'resaying it's the whole Vanguard thing, T
Bill and Chill is what you wantto do. I think that's wrong.
If you say T note and Chillor T Bond and Hill, I'll agree
with you to a certain extent,But T Bill and chill. I just

(47:50):
think you're setting yourself up for reinvestmentrisk down the road, you know.
Anyways, agreed, but you know, keep an eye on it too.
You know, if you have moneyin a T bill, you know,
just you know, keep an eyeon it is yielding for five percent,
and you want to have moneys thereas well. All right, that'll uh,
that'll just about do it. What'sa plan for cowboys? I don't

(48:13):
want. What time is it?It's four o'clock game, you know,
and I don't want. And youcan tell how old people are if they
don't like the Giants or Jets orBills by who they like. And we
have and we I have some friendsabout my age who are big cowboy fans.
Your your uncle, uncle Bill's abig cowboy fan. Buoy Danio is
a big cowboy fan. You know, I think they forget they haven't won

(48:35):
a Super Bowl since the mid nineties. But you know, what are you
gonna do? So? But anyways, uh so the Giants and Cowboys today
got got help us. Uh geta hold of us during the week five
forty four. Check us out onthe web. But Fagan ask that dot
com or like us on Facebook andthanks for listening Air have a great take