The Fagan Financial Report

November 19th, 2023

Episode Transcript

(00:01):
Good morning, and welcome to theCapitol District's Money and Investment Program. You
were listening to the Fagan financial Report. I'm Dennis Fagan, sitting here with
my son Aaron, as we doevery Sunday right here in News Talk Gate
ten and one oh three to onew g Y. It's a little bit
cooler out today than it was.A beautiful week, beautiful week in the
market. I think when you takea look at it tonight, it kind
of begins the Christmas season. Yes, John Denver Christmas. What is it

(00:25):
called? John A Rocky Mount experienceand experience, you know John Tree Music
call. Yes, three o'clock thisafternoon, we were going. We got
about fifteen We have about twenty peopleactually going to that. I love the
Troy Music Hall. Jude's excited.Jude was excited, and that's all that
matters. I'm excited. Hope it'snot too loud. Poppy was a big
John Denver fan. Yeah. Ican remember Uncle Chris played basketball at Colgate

(00:49):
and we go out Route twenty,you know, through du Waynesburg. Pasted
the cheese house in Esprince past thishouse it was a it was an Esprince
cheese house. It was a placethat sold a lot of cheese right by
this Skahari River. And then andI know this is boring people, but
it brings back good memories for me, so I apologize. But so then
you keep going out Route twenty andyou go past the tpee. It was

(01:11):
a souvenir shop right before you hitCherry Valley. Down in a Cherry Valley
where it woud always snow. Wehad a big station wagon and it was
part of the snow it's still partof the snow belt where the snow was
coming off the lake, you know. And we went to most of Uncle
Chris's home games. What Lake offthe Great Lakes co gates off by Utico,

(01:34):
So we'd come off the Great Lakesthe snow and just kind of dump
on Utica, dump on Syracuse,and you know it, it'd be nice
here in the Capitol District. Weget the Cherry Valley and that was kind
of like usually the point where itwould be snowing. And they had you
know, you see that with Buffalothey get nine feet of snow. We
get nothing. But it's not asbad there, but you know, certainly
they would get a lot more snowthan we would and then we go up

(01:56):
the other side of Cherry Valley andfinish we go to the Bluebird Diner once
in a while. And in seventythree and seventy four, there was an
oil and bargo. I don't knowif you know, couldn't you like,
you know, couldn't only get gason specific days in the yek or something
if it was odd and even day. And I don't remember really what it
was, but if but if youryour license plate ended with let's say A
four, you could only get gason the even days. And if you

(02:21):
know four, two, four,six or eight or zero, you get
it on the even days, andone, three, five, seventy nine
you get it on the odd days. So you know, this has come
full circle kind of. And nowwe're kind of talking about oil and gas
and I guess the stock market inthe Middle East. It was an oil
and bargo in the Middle East.You know it came came uh, I
forget exactly how it came about.It came about tensions between US and and

(02:43):
I forget who, but it wasseventy three and seventy four, I don't
remember, but it was fifty yearsago. Pack imposing embargo against the United
States and retaliation for the US decisionto resupply the Israeli military and to gain
leverage in the host War peace negotiations. How times have changed exactly tongue in

(03:05):
cheek, but it was also interestingabout it is that, Yeah, the
odd and even days were much moreself reliant really now and energy and we
want to obviously maintain that. Theother thing too, is that and you
know it's fifty years ago, literallyfifty years ago. So I'm sure the
person who was breaking the law backthen gave it to us. But my

(03:27):
poppy knew somebody that would give usguests even on the even days, you
know, whatever the case may be, so he would stop, you know,
because the old Ford station wagon,you know, did not get great
mileage back then. But times havechanged. But those those are good memories.
And I don't know how I gotoff of that. So so good
week, but it was a goodweek for the market. I think it

(03:49):
was. We came into Friday,you know, the the Dow up two
percent, the Russell two thousand,the takeover really of the second third thousand
largest American stocks we've been it's ascomprises, which comprises the Russell two thousand
up four percent, the S andP five hundred up two percent or so,
the US total market in the nextup two percent, the NAS like

(04:09):
up two percent. We've seen kindof a kind of evening out of the
playing field. You have the NASthat can posite up well over thirty percent
year to date almost you know,thirty four to thirty five percent, the
S and P up about half ofthat. Excuse me, the Dow Jones
industrial average hasn't been doing that well, and the Russell two thousands just about
break even. I think the realquestion right now is is that are we

(04:33):
going And usually usually as as interestrates come down, growth stocks, secular
growers tend to do well. Imean, in a case in point is
if you remember twenty and twenty two, as interest rates went up, these
secular growers. The technology stocks didnot do well this year as they've continued

(04:54):
to go up, but at amuch slower pace. As that has really
bounded forward and outperformed the other industries. Now as are coming down, you'd
also expect technology to continue but butbut it has. There's there's there's The
talk on Wall Street is that we'llsee the smaller cap stocks assert themselves and

(05:16):
the value stocks assert themselves out.Yeah, you've seen SHV, which is
Schwab Value large cap value up twopoint six percent over the past five days
into positive territory for the europe onepoint one five percent going into Friday.
So yeah, I think you're kindof seeing maybe a shift. And you
know, I think sometimes in themarket you see I think this is almost

(05:41):
the beginning of I think these indicesare doing really well because people are trying
to predict what's going to do well. But I don't necessarily think these funds
are going to do well going forward. Now. I think this is you
know, I like when the whenmid cap does well, usually when people
give us a call, you know, to to maybe help allocation their four
to one k or or you know, deferred comp you usually say, hey,

(06:03):
maybe have five ten percent in midcap, you know, usually five
I think I recommend, But youknow, it's great to see MidCap duel.
But at the same time, youknow, I think when you're seeing
a plat mate, when you're seeingpeople saying there's a plateauing of interest rates,
and then you see what is likejust SCCHM is Schwab MidCap and that
five day performance uh for that isup three point seven three point oh seven

(06:28):
percent. That you know, I'mnot I'm not too confident in mid cap
when, in my opinion, itrelies so much on interest rates to do
well because they have a lot moredebt, because they have a lot more
debt, you know, the relianceon low interest rates to succeed as a
company. I don't know, itjust it doesn't sit well with me when

(06:49):
investing. Yeah, you know,I think if you I think I would,
I think I would. I thinkthere is going to be some sort
of an evening out in performance.You know, if you look at the
XLK, which is the technology sector, technology sector ETF, you know,

(07:10):
that's up you know, roughly fiftypercent. I think thus far this year.
I think back in the late ninetiesthat that parabolic move really spelled doom
for for the technology stock. Saysthat the subsequently collapsed back in two thousand
and two thousand and one. SoI don't really you know, you certainly

(07:35):
don't want to see that again.So I think a rational or irrational investing
would pull money out of that,you know, sell some of the huge
winners, or at least put afloor under them. So that, so
you don't, you know, ridethem down and then allocid assets elsewhere.
You know, we were talking alittle bit before the break, you know

(07:58):
about not before the break, butfor the the show about you know a
few different stocks and in in acouple of different a couple of different areas
outside of technology, you know,one being one being Home Depot. Home
Depot posted very good earnings and thestock we did well because of that.

(08:26):
Now there's the there's the the freight. The point of hey, are we
going to is the weak housing marketreally going to influence the home depots of
the world to a negative extent?Or are we going to see declining interest
rates you know, prop up thehome depots of the world. And I
think the latter is true. Ifinterest rates flattened out or or you know,

(08:50):
go down, I think that's goingto help Home Depot. I think
if they go up, I thinkHome Depot and low still might do well.
I don't know, I know you'vetalked about it before on the show
and off the air that uh,we still expect housing to housing to remain
relatively strong, at least people workingon their houses. Yeah, you know,
I think, I think I meanand Lows in home depot are obviously

(09:11):
the two I guess major players inhome depot. But you know, I
think that they will continue to dowell going forward, you know, especially
Lows. I think Low's is doinga good job getting into more of a
more contracting, you know, settingup I guess appointments and you know,
they're kind of setting up contractors withthe with the customer that I think could

(09:33):
continue to do well either. Also, yeah, if I mean if even
if you see a pickup in thehousing market, I think they they will
still do well. They should dowell, yeah, you know, and
pick up an interest rates, Ithink, you know more more so even
people financing different things on their house. Yeah, I think I think they'll
continue to do well. So that'san area, you know, and I
guess to broaden it out to givegive us, give us a little you

(09:56):
know, a movement out of technology. Yeah. So you see, you
look at housing, housing, housing, the supply demand equations out of back,
so's out of out of wax.So as supply comes come back comes
back hopefully, you know, Ithink you'll you'll see housing do better,
housing stocks do better, and thehome improvement sector do better. What other

(10:18):
areas like out of technology or ifyou had to move out of technology a
little bit. Because of the runup this year, you know, RSP
did well this this year. Youknow, I think when we when we
do have a portfolio that's kind ofskews towards more growth. I think r
SP, the equal weight E tF S and p equal weight ETF is

(10:39):
a is a good place to go. I still think healthcare should do well
going forward as well as biotech.You know, our two large biotechs are
Vertex in Regeneron. We also ownsome IBB XLV, which is the healthcare
ETF. And you know, Ithink there's tons of innovation, as we
were just talking about with Eli Lilly, I think there's going to continue to
be tons of innovation and and andEdison in biotech. So you know,

(11:01):
I think and they've gotten hurt thisweek as interest rates have changed, so
but I still think they will dowell going forward. Large cap biotech.
You know, we don't really getinto small cap biotech as it's kind of
a crapshoot sometimes getting through fait,getting through trials. So I think the
IBB is a pretty good way toplay that XLV, which is a healthcare
ETF and you know, we likeRegeneron in Vertex, they kind of have

(11:24):
huge moats in the fields that they'rein, especially Vertex with rare drugs.
So you know, you try andlook for companies, especially in biotech that
do have a moat and that dohave some some earnings and you know,
have a have some history of revenueand free cash flow to do some R
and D on new drugs. Youknow, I think if you take a
look at those two, I guess, uh specific healthcare sector ETFs U n

(11:52):
H as well, and a goodchunk of that. But the XLV are
talking, uh, you know,a decent dividend. The large you just
mentioned un H, un H asa component of the XLV, which is
a select sector Spider Healthcare index tenand a half percent, ELI, Lilly
right behind the nine point eight eightpercent, Johnson and Johnson at seven and
a half, Murket five, ABVIat five, ThermoFisher Scientific at five.

(12:16):
So if you take in that's six. But if you take the top five
holdings in there, you're talking onethird of that index is in UNH,
United Health, ELI, Lilly,Johnson and Johnson, MURK and ABV carries
a dividend of one point sixty sixpercent, which isn't as attractive really as
it once was given the spike upin interest rates, but nonetheless it still

(12:39):
pays the decent dividend. It's gotsome of those larger holdings in there as
opposed to the IBB, which ismore of a biotechnology in dex you're talking.
The largest holding there is Vertex,Amjen, Gilead, Regeneron, Cgen.
Those are the top five holdings there. Represents about thirty five percent of
the IBB. You know we ownoutright. We just sold or Gilead within

(13:00):
the past couple of weeks. Wedidn't own a lot I think about sixty
five hundred shares for the benefits ofour clients, benefit of our clients,
but we still own a good chunkof Vertex, still own a good chunk
of Regeneron. So two of thetop five holdings in that area we do
own, you know, quite abit of in fact, I think if
you take a look at I don'tknow if it's both of them, but
certainly Vertex is one of our topfive twenty five holdings. It's our largest

(13:24):
holding in in healthcare. Let mesee with in Vertex is in one of
it's our twelfth largest holding regender onour sixteenth largest common stockholding. Yeah,
you know, when I obviously forgothis energy. Energy has had quite an
awful month. Xl is down eightpercent, you're to date down I think

(13:46):
two or three percent, but youknow, again, you know, it
has a three point sixty six percentdividend. I think forty percent of Xcel
is in Chevron and Exxon, inmy opinion, which continue to be extremely
strong fundamentally. Think you'll continue tosee consolidation in the oil and gas industry,
you know, as we make aswitch to renewables. I think and

(14:07):
I continue to and I think thatChevron Exon will do well going forward.
Haven't had a great year, butyou know, I'm kind of okay with
I'm kind of okay with that.As you know, a lot of things
in our portfolio did really well,and it had a really great twenty twenty
two. So I think I wouldcontinue to be a buyer of energy and

(14:28):
energy technology stocks like like Slumberg,and I think maybe we were missing that
kind of prefacing what we're talking about. We're talking about bar Belling Technology,
communication services, consumer discretionary, whichyou know, if you look at those
three sectors, they've done very wellthis year, bar belling that with some

(14:50):
sectors that maybe haven't done so wellor are more value oriented. I think
if you take a look at consumerdiscretionary, you know, the largest holding
in that sector is Amazon. It'sone quarter of consumer discretionary is Amazon,
eighteen percent is Tesla. Yeah,so you're looking at forty four per see

(15:11):
that a lot with the spider ets. Because if you have you know,
the ten largest companies in the worldand they're in a few different you
know ETFs, Yeah, you're goingto see their market cap weighted. So
you know, even Berkshire I thinkis thirteen percent of xl F, followed
by JP Morgan. So you definitelyhave exposure to the largest companies in the

(15:33):
world, which makes the ETS goodinvestment in my opinion. So if you
take a look at the symbol onthat is xl Y, I think if
then you say the xl K istechnology, xl C is communications services,
and the largest holdings in that sectoris Meta which is which is Facebook twenty
five percent, Alphabet which is twentythree percent, and Disney which is five

(15:56):
So half of that index is nownow within three three three different companies.
So uh and then the then thexl K, as I mentioned, is
technology. We've got very xl yuhconsumer discretionary, XLC communication services, and
xl K is technology. And asyou can imagine, in that sector,

(16:17):
we have Microsoft at twenty five percent, Apple at twenty three percent, and
Vidiot five So once again three stockscomprise half of that. And so as
those three stocks go, so goesthat index, those index, those in
those ETFs. So we're trying tolook at, okay, where can we
where can one move either from someof those individual names or from those sectors

(16:41):
and and and and get some performance. Uh if and I know I'm jumping
about, and I apologize, butour top large our largest holdings, Apple,
Alphabet, Microsoft, we mentioned Lowsis number four. This is just
our common stockholdings. And then Chevron, so we've we have Lows and Sheep
run in our top five holdings.To kind of move to another theme other

(17:03):
than hey, technology, then wego in Nvidia, A m D,
Amazon, which is a consumer discretionary, Amazon, and Starbucks, MasterCard,
JP, Morgan, Vertex, Visa, Johnson and Johnson, and FedEx.
So although some of our larger holdingsare in those three areas that are doing
well, and thankfully it's been thatway. I think we have other sectors

(17:23):
that have we've we've really benefited fromover the years. And when we are
long term investors, Low's in homeimprovement, Chevron and energy with a nice
divnend we have Exxon Mobil in thatsame area, a Berkshire good amount of
Berkshire. So you know, Ithink when you have you know, investment,
let's say philosophy or style, Ithink it's kind I think it's really

(17:47):
important to know your investment in styleand diversify out of that when you when
your style goes out of favors.So you know, we like to have
you know, four or five companiesthat maybe aren't in our style but will
do well or balance us out alittle bit when when your style goes out
of favor, like a unh islike a Berkshire Low, So you know,

(18:11):
and I think that's a really goodapproach, you know. And a
lot of our clients are our retirees. And you know, I think it
was a Warren Buffalo who said,you know, consolidation is for asset accumulation,
and diversification is for asset distribution andasset preservation. And I think a
lot of times, you know,a lot of our clients are rightfully so

(18:33):
and in the asset preservation as thedistribution phase of their life. So I
think that's it's important, you know. And I think you're on the phone
with someone the other day and itwas like asking, hey, we should
sell these stocks, and of coursethey were the three stocks that were down
or something like that. And Ithink that's what I think. When you
have a well diversified portfolio, thatalways means having years where you have a
few things that are down, andthat just is kind of that that is,

(18:59):
I guess the cornerstone of a goodportfolio construction. I guess right,
you know, and you talk aboutportfolio construction that maybe people's eyes glazed over
it. You know. I hadto like use the analogy of putting cargo
on a ship, you know,think about and unfortunately and it's it's a
sad story and one person died fromthat that. Uh, I guess that

(19:19):
party boat or party ship tourist boatin the Bahamas that tipped over. But
if you think of it as likea cargo, think of the loading ont
of the cargo ship and you haveyou know, eleven sectors in the market.
Do you want to have put youknow, all your cargo on one
side of the ship. Yeah,you know, so you want to spread

(19:40):
your cargo out. You want tomake sure you have different sectors so you
have a balance, diversified portfolio.Now, I think where that analogy fails
a little bit is you have tooverweight certain areas. And we we thankfully
overweighted technology. But when this person, this individual had called, you know
and good guy, great guy,you know, great client. You know,

(20:02):
we've had this conversation quite often,and I said to him, and
I'll change his name, I said, Bob, you know you've been you've
just because you've made money doesn't meanyou've been right, you know. And
I used to use this analogy allthe time with Uncle Chris. You know,
if you drive ninety from Albany toMontreal and don't get a ticket,
that doesn't mean you were right.That means you were lucky. And I

(20:22):
think at some point in time,this music is going to stop and we're
not going to get a We're notgoing to get a pullback like we saw
back in two thousand. But thesestocks could lag and you just want to
have a plan for that. Andand this is not a conclusive thought either.
I don't I don't, you know. I think through the balance of
the year, these technology stocks,communities, communications services stocks, and community

(20:45):
consumer discretionary stocks are going to continueto roll as as as people play catch
up. But you know, Ithink the market is is much more fairly
valued in other areas. I agree, you know, And I think you
saw that. I think RSP thisweek, and I think you might be
seeing a shift a little bit inin in what people are investing in.
And I think, you know,I think that's kind of is the consensus

(21:07):
a little bit, is the market'sgetting a little ahead of itself here and
I think, yeah, this week, I think this. But you know,
I think people still want to beinvested in stocks as well. So
I think that's why you saw thisweek, you know, as the five
day performance of the RSP is twopoint eighty six percent. So I think
that's what people still want to investThey think, you know, maybe the
largest companies in the world are alittle bit overvalued in but they still want

(21:29):
to be in the market. Aswe're seeing maybe interest rates peaking a little
bit or nearing peaks. So they'rethey're they're looking for different places to invest.
And I think that's kind of whatyou're seeing going on now, and
we're and we are seeing opportunity,like like Aaron was saying in the in
energy, you know, had itkind of a rough year. You know,
we would recommend buying on weakness theresome of the home builders Home improvement

(21:52):
is the way we're playing it.And then some healthcare you know, thankfully
Regeneron and Vertex I've had a greatyears, but but overall, you know,
healthcare sector has not had a goodyear, so either either and I
think they'll do okay. I thinkthe Mark Johnson and Johnson's had a rough
year. We do own that forclients. Xl V as in Victor is
a great way to play the healthcaresector if you want to do that.

(22:15):
You know, one of the thingsthat when we only have a couple of
minutes before the end of the sectuh this this is the first half of
the show, is the XLF.You know, the financial services sector in
that area are some of our largerholdings are not are not the classic banks,
but but they are they are VisaMasterCard, Visa MasterCard, the payment

(22:41):
providers Berkshire's thirteen and a half percent, JP, Morgan nine, Visa eight,
MasterCard seven, Bank of America four. So all things that we do
own that comprises about, you know, thirty the entire portfolio, right,
but MasterCard and v are the onesthat are really performing there and Jam we're

(23:02):
still spending, you know, whichis good or bad? You know,
I think it's good for now.You're still seeing spending on cards, so
yeah, yeah, I guess it'sgood for the short term. I think
there's still confidence in the consumer,although it dipped a little bit this week
this month, but yeah, Ithink they'll continue to do well. Yeah,
I think with A with A atsome point in time, I think
they're going to perform. But they'veunderperformed for so long and they're almost acting

(23:27):
utilia utility esque. I think it'salmost like a Missouri sector where it's you
got to show me, it's gotto get some momentum, I think before
people climb back into that sector.All Right, that'll just about do it
for the first half. It's tenthirty on the station you depend upon for
news, weather and information news toK ten and one O three one w

(23:48):
G y, Good morning, andwelcome back to the second half hour of
the Capitol District's Money and Investment programming. You're listening to the Fague and Financial
Report. Aaron and Dennis Fagan sittinghere as we do every Sunday right here
in news to K ten and oneO three one WGY will spread out.
In the first half hour, Italked about watching my brother Chris play basketball
at Colgate, your uncle and thechallenges of getting over Root twenty in the

(24:14):
wintertime out to Kolgate, which isa little bit southeast south west of Utica,
and spread that out to talk aboutwhat are some options outside of you
know what's been working the big threeconsumer communication services, Consumer discretionary and technology.
They've really done all the lion's shareof lifting for the S and P
five hundred this year. In fact, without those the S and P five

(24:36):
hundred will be up one or twopercent rather than the seventeen or eighteen that
it's up. This half hour willturn our focus to some economic data that
came out this week. Talk alittle bit about some of the broader issues
that are affecting the global economy.President Joe Biden and China President she'sing ping
met in San Francisco, and TargetCEO claims customers Brian Cornell saying, customer

(25:03):
is saying a big thank you forlocking up merchandise you okay? And then
also it's something I know, thankyou for locking like I mean, I
don't know, you don't want toget in an a trash one. But
like he's almost like he reminds meof like if every single I don't know,
like everyone that has their like theclassic NBA speaker, let's talk about
like you know, he just haslike business word buzzword after business word buzzword.

(25:27):
Right. Meanwhile, the stock isback to the pre pandemic levels.
You know, I guess you know, why don't we We can we can
lead with that and and and kindof a sign of the times, uh
what Brian Cornell as I as Ihad mentioned said, customers are saying a

(25:48):
big thank you for locking up merchandisefor those of you that are are not
familiar with and it I can't imaginewho wouldn't be. You know, there's
been a lot of theft really insome of the discount stores what you would
call organized stuff, either either bygangs or or groups of people online getting
together when Yeah, and that's reallyaffecting, uh, some of the profits

(26:14):
of stocks obviously, some of therevenue. I forget what they call that
shrinkage, yes, uh, andand then there's got to be a name
for it. And and and Walmarthas closed some of their stores in response
to this, and in urban areas. Yeah, but they're also saying that
they're they're they're locking up some oftheir merchandise and that. Uh. It's

(26:37):
hard to have too much of anopinion about it, you know, I
don't know what what do I thinkabout? I get what comes to my
mind is I feel bad for theemployees that have to put up with this,
you know. Uh, And Iguess it's I guess the government should
probably step in at now, Butyeah, I don't know what they're supposed
to do, you know. Iknow in California, it's only a felony
if you're still up to a thousanddollars. So what do you mean misdemeanor?

(26:59):
Misdemeanor? Yeah, so I thinkyou'll see some maybe some shifts in
government policy around this. But yeah, it's I mean, it's something that
they're going through, and obviously it'snot great, but yeah, some Targets
down about ten percent year to Date'snot a round trip since before the before
the pandemic. Walmart's up about elevenpercent year to date. After dropping quite

(27:22):
a bit on Thursday, Walmart,you know, came out with just decent
earnings, gave somewhat of a sourforward look. Blamed more of a I
guess, a consumer that is morecautious, a consumer that's more discerning as
to what he or she is spending. Walmart gets about half of their profits
from or half of the revenue fromthe grocery side of it, and the

(27:48):
consumer is being much more judicious asto where they're spending their money. Target,
on the other hand, had goodearnings. Their stock got a nice
bump from it this past week,although, as I mentioned date, Wilmart's
outperforming Target. You know, Iwhy, I think, generally speaking,
we did own Target. I don'tknow if we made money or lost money
in Target. We sold it probablythree or four months ago. I think

(28:11):
retail is tough, Yeah, youknow, I think it'll continue to be
tough. I think when I thinkyou coined retail eventually with the Liliputians from
what is that book Glover's Travels,Culver's Travels, and you know, and
that's you know, a large,large cap or large retail you know,
kind of continuing to be hampered downby you know, I think there was

(28:36):
like two million business applications in UHin twenty twenty. And where I'm going
kind of is you're seeing the progressionof of you know, Shopify becoming more
relevant, boutique online stores becoming relevant, Instagram shopping, TikTok shopping become more
relevant, relevant, even Pinterest justadded a buy button. So you know,
I think with companies like this,they're gonna continue to be I guess

(29:03):
hampered a little bit by UH theease of starting your own business online,
the ease of starting your own clothingbrand online. And yeah, I think
it it'll continue to be a strugglefor them because there's a lot more options
than there used to be even tenyears ago, five years ago, you
know, so I think they'll continueto Yeah, I think it'll can continue
to be a problem with them,and and and from from from our perspective

(29:26):
in retail, and you look atCoke Coal's, you look at RUSS stores,
It's it's been tough and I think, well, and Walmart had run
up. You know, so Ithink if you if you're taking a look
at you know, what Walmart's trainingat, you know, as a as
a ratio, I think you justkind of want to be a little bit
careful in here. Uh. Italso weighed on costco. Uh the costo

(29:51):
Costco also also went down on Thursdayjust due to due to uh, you
know, I guess the cotail ornegative co tails from Walmart. So it's
not a sector we're looking at.I think the sectors that we're looking at
really to offset technology and give consumerdiscression because communication services would be as I
beat to death in the first half, would be you know, home improvement,

(30:15):
healthcare, to lesser extend financials,you know, it would be some
of the some of the bigger areas. Yeah, and you know you printed
out something here that I took alook at that I think, you know,
was interesting and that's his new funbets big on Eisenheer. How Yeah,
how are eristocks? Did you takea look at that? I did?
Yeah, And you know it's funnybecause with the with the rise of

(30:36):
the ETF, you're seeing a lotof uh, you know, I guess
innovation in the ets sector. Everyone'ssupposed to. Everyone's trying to find their
niche, whether it be you know, small cap China or or whatever it
may be. Even you saw youknow, I think Joe Arnov on CNBC
has his own ETF. You know, someone created Jim Kramer ETF. But
you know, this one kind ofI guess piques my interest a little bit,

(30:57):
and it says, you know,this fund has no exposure to it,
no exposure to communicated services. It'sa healthy overrate to consumer staples,
industrials, and then utilities, soit is a mix of your traditionally defensive
defensive sectors. He noted in thisETF there's no exposure to it and no
exposure to communications services. So forinvestors who are looking for to reallocate away

(31:18):
from those names that have led themarket higher this year, something like a
dividend Monarchs ETF can be an opportunityfor them. So I think this it's
actually I think that could be agood ETF or a good way to,
I guess, balance out your portfolio. If you're if you're really heavily weighted
in the S and P five hundred, or you really heavily weighted in you
know, large cap technology names,so I think it would be a good

(31:40):
Barbell approach for something like that.Really. Yeah, you know three M
Federal Realty, that Black Hills,so that's Stanley, Black and Deck are
some of their bigger holdings. Yeah, I mean that remains to be seen.
I think you know, the onething about it, uh, I
don't go back to Warren Buffett didn'thold any technology and then kind of re

(32:05):
defined what technology meant to him andnow his largest holding his Apple or Berkshire
Hathaways. I think you've just gotto be careful to say know this or
know that. I think some ofyour ESG funds and also or something that
they just you know, some ofthe green funds basically have lagged because they
haven't had it broad enough. Theyhaven't allowed themselves to participate in what was

(32:28):
working, you know, by definitionor by perspective. So I think you
got to be a little a littlebit careful with that. You know,
you have the cows cow Z,which is more of a cash flow type
of an ETF that we have someand also for income worrine investors, we
have the JP Morgan Equity Premium IncomeFund and the JEPQ the one that pertains
more so to the NAZ that compositeand those are those are some decent looks.

(32:54):
Getting to some of the economic datathat propelled the market forward this past
week and some of the as asinterest rates came down the ten years under
four fifty down from nearly five percent, I think started out really airing this
past week with the consumer price indecksup, consumer price indecks unchanged during October,

(33:16):
it's come down to three point twopercent year over year. Of course
CPI came in, you know,at point two with forecast at point three.
So yeah, I think it's allobviously, as we saw good news
for the stock market, it isgood news for the stock market. It's
funny every wh when it comes toI think where we are at though,
in the stock market, all goodnews can be bad news. We're all

(33:39):
bad news is good news and goodnews is good news. Yeah, at
some point in time that won't bethe case. So the other thing too,
I think is we're in that timeof year November the nineteenth, where
let's say you hold a big gainin something in a non qualified account,
You're going to not really want tosell that because of the tax ramifications,

(34:01):
so you're in the party, youknow, yeah, normally, but it's
uh, it seems like, youknow, the last two years are kind
of an anomaly. Though you cantake losses in bond funds that's a great
point gains too, So you know, I don't know, pop try not
to take too much into the lastlet's say, ninety days of the market,

(34:22):
you know, not ninety forty fivesixty days of the year, because
you know, yeah, there's alot of you know, catching up or
bouncing out to do for people.So yeah, yeah, yeah, yeah,
I would think that if you asyou as you move through these last
last forty five days, there's somemovements in the market that cannot where the
underlying explanation does not pertain to economicsor the viability of a corpse of a

(34:47):
public traded company at these prices.So you just got to be a little
bit careful as of now. Youknow, you want to let your winners
run I think through the balance ofthe year. But I think what we
saw this past week rid of theconsumer price index is inflation is coming down.
And when you have a September throughSeptember, the consumer price IndX was

(35:12):
up three point seven percent September throughSeptember now or October through October went down
to three point two percent. Listenersto our show know that you know part
of the dual mandate is to getinflation down to about two percent. So
the Fed still has work to do, and yet the Fed seems to be
on pause here, if not finishedfor this economic cycle. So inflation at

(35:35):
the retail level unchanged during October.Inflation at the wholesale level down five tenths
of a percent. Five tenths ofa percent during the month of October the
big it's the biggest one month declinedsince April of twenty twenty, when when
COVID was hitting with a vengeance.Over the past year, the PPI is
up only one point three percent,down from eleven point seven percent. A

(35:58):
lot of it, or some ofit, can be contributed to energy.
Energy prices down six point five percent, so PPI down point five. Energy
down six point five If you stripout food and energy, the PPI unchanged
during the month of October and uptwo point four percent year over year.
Prices for intermediate goods or goods inthe pipeline down four point five percent.

(36:22):
Excuse me, down point nine percentin October and down four point five percent
year over year. So so inflation'scoming down. It's good for the market
for a while. We'll see whereWe'll see where it goes. I still
think the FED has some work todo as far as inflation goes, and

(36:45):
I think it's more of a bidingits time rather than raising rates. I
don't think the FED is going toreduce rates. No, I don't think
they should reduce rates. I agree, we're still seeing economy that's working here.
You know, you don't want tobe behind the eight ball and start
cutting when it it's too late.But you know, I think I think
they have some time to see howthings play out with rates around where they

(37:06):
are now. I agree, AndI think, you know, I think
the FED should be like a goodreferee or a good umpire. You don't
really want to notice the job they'redoing. And I think that's what the
FED should be striving for. AndI think they are. They've been at
the four really of news probably thepast fifteen years, and they're certainly not
going to go away as far astheir job in the media. However,

(37:34):
I don't think they want this typeof prominence. I think they'd like to
see the economy work on its ownrather than you know, the volatility that
has had over the past four orfive years. Retail sales down one tens
of a percent dur in October.Retail sales are up nine tens of percent.
In September, retail sales up twentyfive percent year over year, not

(37:57):
surprising. Restaurant sales, yeah,down a little bit. You know,
they continue to do well, andyet they're they're down a bit in month
over month. As you know,the unemployment rates ticked up a bit.
Money's getting a little tighter, andpeople are going to more spending on credit
cards. So yeah, I thinkthat'll kind of be a continuing you know,

(38:17):
talking point through next year is theconsumer and how strong the consumer is
now and how much stronger they canthey really get. And unemployments drifted a
little bit higher as well. Initialclaims run employment benefits up to two hundred
and thirty one thousand line in thesands usually between two hundred and fifty and
three hundred thousand where you see itand closer to three hundred thousand where you
see really some upward pressure on unemployment. So initial claims two hundred and thirty

(38:43):
one thousand, So you can seethat the the labor market's still relatively strong
and still a lot more jobs outthere than there are people looking for jobs.
Yeah, so that's what we gotgoing on from from the from the
economic front. As we came intothis week, I think a lot of

(39:05):
a lot of investors were looking atthe at inflation data in the form of
the consumer and producer price index asbeing kind of like what was going to
drive the market, And it diddrive the market as inflation data came in
at a at a at a prettytame, pretty tame rates. I think
as we move forward, what willbe drive in the market, really,

(39:27):
I think is seasonality. Generally,historically speaking, November December a very good
months for the market, and Ithink that they also, as we mentioned
earlier, can can move, canmove can God bless you. I don't
know if you anyone heard that,but God bless you can can can move
the market. That is outside usuallywhat is moving the market, which is

(39:50):
just economic and corporate data. Acouple of things though. The more we
talked a little bit about home depotsearnings, we talked about a bit about
walmarts, is that what you wecan, Yeah, I can. Fox
con the Apple is one of Apple'smajor suppliers. Third quarter profits up eleven
percent from a year ago, revenueat one point five million, just about

(40:13):
in line with expected a net incomefar above expectations. So that you know,
we talked earlier about you know,Apple, Apple, Apple, Where
where does it really begin to slowdown? Services still remain strong for Apple.
They reported earning is probably a weekor two ago. It is our
largest hold aaribles remain strong. I'dlike Apple. I think it's going to

(40:35):
have a good quarter with their newiPhone sales. But I also think that
we're going to get into next yearand we're going to start asking the question
like we kind of have asked aHepple the past decade or so, is
where is your next revenue going tocome from? They've proved that they can
find different avenues of revenue. Imean when wearables came out, they consistently
underperformed for about a year or twountil wearables now is I don't know,

(41:00):
I don't have the I think it'sa quarter of their total revenue. Yeah,
so you know you're seeing revenue,you're seeing those do you're seeing wearables
do better. I don't think PCscan do any worse, which should be
which should be good for Apple.I think they'll start to go and get
into a new cycle of of PCbuying. I think the new iPhone is
going to get a lot of sales. But yeah, it's every once in

(41:20):
a while people keep asking, Okay, I know you're making money on services.
Now, I know you're making moneyon whatever. I know you're making
money on this, but let's see, now, where are you going to
make money? And I think we'regonna start getting into that next year.
I think they're coming out with theirway their headset next year too. Price
that about four thousand dollars, Soyou know, I don't think it'll do
good to begin with, but let'ssee in a few years. You know
where we are when when it comesto like a you know, an Apple

(41:43):
goggle or something like that, andif that actually becomes a thing, I
think, yeah, I think onI think on the on the horizon.
What are some things that you mentioned, some things that could help Apple,
namely services up rate cycle for theiriPhone. A lot of people we know,
including I think you you got anew iPhone going, your sister got

(42:07):
a new I phone. So Ithink in thoughts at this point in time,
after this cycle passes, investors arenow going to think of Okay,
what's next, and that may dragon the stock. I think other things
that may drag on the stock wouldbe, uh, China, you know
how how uh you know, what'sthe relationship between the US and China specifically

(42:30):
on chips. I think they justtook it away government. No government employee
can have an Apple phone, Ithink. But I also I think Apple
is only about six percent of salesin China, So but yeah, I
think that could Uh. I thinkthat China, you know, our China
relationship will continue to not put youknow, down downward pressure on Apple,

(42:51):
but you know, it'll always beuh a talking point when coming to Apple.
And I think you know, alsoyou printed out that European Central Bank
President Christina guard said that where there'sincreasing science that the global economy is fragmenting
into competing blocks, and you know, I think that will continue to be
an issue China are Apple has toface when finding new sources of revenue,

(43:12):
as you know they had as acompany that large, needs to go outside
of the United States to define revenuewhere They're already in Europe, So you
know, I guess the next placewould be, you know, China in
India with half the world's population.And if there if there's some I guess,
uh, you know, divisiveness withinUS in China. Yeah, I
think that could you know, bea problem for for Apple. But you

(43:37):
know, Apple is moving into India. The you know, Indian economy is
doing well. If they can youknow, make some inroads there, that
could be good for Apple though.So I think it's where you're you're going
to kind of you know, withthe with the largest company in the world,
you know, one of the largecompanies the world. You're you're just
gonna it's just going to continue tobe a global economy. Uh, you're

(43:58):
gonna formidable, formidable in the globe. Came you know, you know,
I don't know. I mean,I think is this time of year,
You're like, Okay, this hasbeen a great year. Right, We've
had a great year. Our clientshave had a great year. By and
large, Right, we have beenin the areas that have worked. If
you look at the trailing five years, you think, all right, we've

(44:19):
had a we had a near baronmarket. SMP was down nineteen plus percent
in the fall of twenty and eighteen. We had the pandemic in the in
the spring of twenty and twenty,and we had that further obviously much more
extended in a time frame basis,but pertaining to the stock market, the
stock market was down thirty five percentin twenty three trading days. Then we

(44:42):
had the rebound in twenty twenty two. We had the S and P five
hundred down nearly twenty percent, downtwenty five percent from its peak at one
point in time. So we've hadthree two bear markets and one one market
correction that came within a quarter ofa point of a market in the past
five years, and you had youhave still performance over those five years,

(45:06):
Uh, pretty good, Yeah,you know, And and I thinks so.
And as you come out of theof a year as as as we're
getting to now, you know,you're more and more thoughtful as to Okay,
what are some what are some thingsthat are going to happen now that
you know, could really uh youknow, hurt the market or what are
some things now that that could affectthe market, both on a on a

(45:28):
short not not on a short termreally, but on an intermediate and longer
term. And we've talked about afew of them, but I think I
think the biggest one, and youknow, the United States is somewhat of
a has somewhat of a contained economy. But I think some of the bigger
things that could be impact in USmoving forward would be would be de globalization.

(45:51):
You know, I think the globalizationhas its benefits. And then you
know, it'll help support the UH, support the American consumer and the like
as we bring as we bring uhuh some manufacturing home. And yet it
comes with other issues too. Itcomes with military challenges, It comes with
markets that we may not get into. It compans with some inflation, some

(46:14):
inflation, maybe a little destabilization withthe dollar. Christy and the Guard referred
to critical juncture between deglobalization, demographicsand decarbonization. You have a Japanese population
that's dwindling. You have ten percentis over eighty I think ten percent of
yeah, these population is over eighty, you know, and you also have

(46:35):
a mix of population where you haveI think you had said that, you
know, they have a change inthe demographics of you know, of society,
even China, you know, goingit wasn't that long ago they had
the one child policy. It's goingto be hard to get over that and
start implementing news and getting people towant to have kids again. When you
know the meeting income is whatever itis in China. Yeah, it's not

(46:57):
something just stop and start up again. So there's some issue going forward that
I think the market has to dealwith. But I think if you look
at there's always opportunity. I thinkone of the one of the great things
about capitalism is that there are thereare always those who are seeking opportunity there
and certainly some of the expense ofothers. But it's also the global pie

(47:19):
is not it's it's it's not thesame size, it's expanding. I think
the last twenty years, I don'tknow how many million Chinese we're taking out
of We're taken out of poverty andinto where they're actually consumers, you know.
And so I think, you know, the job of the United States
is really for the for the toprovide our companies and our citizens with more

(47:40):
opportunity, both domestically and abrud SoI think on one hand, it's a
real opportunity. On the other hand, and I think Christine Le Guard makes
a very good point that it isgoing to be fraught with challenges moving forward
because deglobalization also brings, you know, isolationism and preservation. That it's it's
a concern for the United States.It's that benefits, it's its economy benefits

(48:01):
from globalization to a certain extent.You know. So, I don't know
was talking random. That was agood monologue to the show. I think
mon o log it's an Irish thirtyseconds last. That was great. Yeah.
So anyways, Uh, we'll beat the Troy Music Hall this afternoon.
It's going to be great if anyone'slistening and wants to come. Uh,

(48:21):
it should be fun and uh lookingforward to it. Otherwise, I
want to get a hold of usduring the week five one, eight,
two, seven ninety four. Checkus out on the web at Faganasset dot
com or like us on Facebook.I have a great day.