Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Good morning, and welcome to the Capital District's Money and
Investment program. You're listening to the Fagan Financial Report on
Dennis Fagan sitting here with my son Aaron, as we
do every Sunday right here on News Talk eight ten
and one oh three and one WGY. Got a few
things to talk about today that I think you will
find of interest. When is a letter or an email
that we receive from a client talking about the losses
(00:22):
an overall portfolio of gains, but some losses in three
exchange traded funds that he had, and it turns out
that those three exchange traded funds are in the bond market.
So talk a little bit about really what diversification really means,
the benefits of diversification, and I think the bottom line
is the diversification means that you know, you do have
(00:44):
losses in your portfolio, or you do have and losses
there can be referred to on a number of fronts.
You know, things have losses relative to other investments, meaning
that if one investments up percent and another's up ten
you know, well then that's a relative loss. So we'll
(01:04):
talk about exactly what that means to diversify your portfolio
and what the benefits are really when it comes to
diversification for long term peace of mind and long term
portfolio growth. So that's one thing we're going to talk
about today. The second thing we're going to talk about
really is a a letter from Larry Fink, the CEO
(01:25):
of Blackrock. And I know Blackrock makes everybody a little
bit upset these days with their with their really esg posture,
and let's forget about that and talk about really what
he has to say relative to retirement, and we'll dovetail
that into what JP Morgan's the CEO, Jamie Diamond, has
to say, and then on from a tax perspective, some
(01:46):
ideas to help you reduce your taxes. So that's so one,
and why don't we take that route one at a
time and.
Speaker 2 (01:55):
Go from there.
Speaker 1 (01:55):
So the email that I received, you know, basically said
ninety two percent of the losses on thef's result from
three funds, would it makes sense to dump them and
reserve the cash balance for other future investments.
Speaker 2 (02:08):
So talk a little bit.
Speaker 1 (02:09):
About that and I think we'll talk yes the second thing.
But I said to him, I then responded, the ETFs
represent the bond or stable side of your portfolio. Selling
those will increase volatility as well as risk, but do
provide more potential to the upside. If you think you
would like to still consider liquidating these, we should speak
let me know then then you.
Speaker 3 (02:29):
Know, he is it in a taxable portfolio?
Speaker 1 (02:32):
Yes, he responded, I'm tempting to understand why the reduction
of value is actually a good part of the portfolio,
and that's where really the crux of this matter lies.
Speaker 4 (02:42):
Yeah, you know, and I guess that's a hard part
of managing your own portfolio, or portfolio management in and
of itself, is you know, a you know, sometimes things
are hard to understand, and you know, as Uncle Chris
would say, sometimes sometimes it allows you, which isn't good
to well watch right, to only go into things that
(03:05):
are working. And you know, in market cycles, you see
a lot of you know, you see a lot of
different things that work at different times. You know, if
you have it, you know, let's say you have growth
work at one point, then you have industrials, and you
have X.
Speaker 3 (03:19):
Then you have X, then you have X.
Speaker 4 (03:20):
But you know, let's say in you know, two thousand uh,
you know, let's say two thousand and one, happens and
you have you know, growth did really well, right, So
what do you do?
Speaker 3 (03:32):
Put all of your stuff in major cap tech? Look
how that would have worked out? Right?
Speaker 4 (03:36):
Not major major cap tech, let's say even tech technology
in and of itself, and how would that work out? So,
you know, it is so important to have things in
your portfolio that you know don't have the correlation or
I guess the.
Speaker 3 (03:51):
Covariance would be a better word.
Speaker 4 (03:53):
You know that has that doesn't move in lockstep with
you know, the core holdings in your PORTFOLI So, like,
let's say if you do have a good amount of
portfolio in your s and p. Five hundred and you say, okay,
a lot of my portfolio then is in Microsoft, Google, Apple,
things like that. So you want to build a portfolio
that has things outside of that for when those stocks
(04:16):
and sectors don't work. Uh, you know you're still participating
in in in in what's in what's working. Well.
Speaker 2 (04:25):
That's a good all good points. And I think that
if you.
Speaker 1 (04:29):
Think about diversification in general and take it, take it
into its to its simplest form. Let's just have one stock,
then let's just have Apple, Let's just have Amazon. Oh, no, No,
I would never do that. Well, then you're setting yourself
up for disappointment if you consider diversification or something that's
not performing well relative that now now relative to other
(04:54):
a waste of capital. So so then you say, okay, well, no,
I would never just have one S security. Now, you
could certainly have an S and P five hundred fund
if you want to just large cap, but then then
you'd be not having exposure internationally. You not have exposure
to mid cap or small cap. If this individual in
particular is seventy plus years old, you would not have
exposure to the bond market.
Speaker 3 (05:15):
Yeah, and I think that's important. You know, just.
Speaker 4 (05:19):
When I think about things like this, you know, there's
two people that come to mind. One is warm Buffett.
You know, he said basically like diversification is protection against ignorance,
which I think is very true. But also diversification preserves wealth,
but concentration builds wealth. So you know, if you're talking
from you know, a personal standpoint, what do I think is,
you know, I see a lot of clients who are
(05:39):
sixty seventy years old, where that you know, build that
wealth building stage of your life is over, and you
know the preservation of your wealth is just as important.
It's more important than the building of wealth, you know,
as the United States specifically goes, you know, away from
the pension system that you know we're obviously seeing. So
(06:02):
you know, if you need four or five percent distributions,
you're from your portfolio. Diversification is key to getting to
hitting that number and making sure that you know you
have money to enjoy your life and live. The next
person I think of is uh is Ray Dalio, who
is the founder of the largest hedge fudge in the world,
(06:22):
one of the largest, and that's Bridgewater. And you know,
if you look at someone ask me, uh, you know, wow.
You know, Bridgewater only performs at x percent per year,
and that's all well and good. But what he's developed
is this quote unquote all weather portfolio that you know,
maybe if the S and P five hundred is up
twenty percent in a year, and it might only be
(06:43):
down nine but if that S and P's down twenty
percent in a year, it's still up too, you know.
So that's just as important for his clientele as as
outperforming the S and P five hundred is consistent returns
that protect you against the downside because you know, a
lot of his clients are pension funds, governments, things like
that that you know, care more about consistent returns. And
(07:05):
you know, I think you know, as an investor, you know,
investing money for other people, like that's what's so important
to me really is you know, making sure that people
can get the distributions that they want. And in some
portfolios that comes with maybe not the performance of the
S and P.
Speaker 3 (07:23):
Five hundred.
Speaker 4 (07:23):
Sometimes that's not to say, you know, our performance isn't
up there with the S and P five hundred when when.
Speaker 2 (07:28):
We want it to be objective.
Speaker 4 (07:30):
But you know, for a lot of people, that's not
the objective, and I think that's really important.
Speaker 3 (07:34):
You know, what our job is to do is to
help people sleep at night.
Speaker 2 (07:37):
Well, I think you brought that up a while back.
Speaker 1 (07:39):
And you know, there's something that I mentioned quite often
the clients, and that is, you know, you're sixty, sixty five,
seventy years old, You're you know, let's let's say you've
saved up eight hundred thousand dollars of the course of
your life. Yeah, there's not a good chance you're going
to wake up with three or four or five million.
You just don't don't want to wake up with three
or four or five dollars, you know what I mean.
You've cemented your lot in life. You have a standard
(08:02):
of living and you want to stay there. So I
think people that and especially now with the market the
way it was up until just recently, you know, up
ten percent during the first quota. I know we've given
back three or four percent during the month of April.
Speaker 2 (08:18):
But you are talking.
Speaker 1 (08:21):
People have a sense of a feeling of a feeling
of high like, Okay, I'm not getting the returns I
need and coincidentally are ironically, that's precisely the time that
we feel kind of concerned about the market is when
people are feeling giddy about their returns and their dollar
(08:42):
amounts and the.
Speaker 4 (08:42):
Like, yeah, wanting to take more risk and you know,
and you know again, like I guess on to piggyback
on that, we do have different portfolio models. One of
them would be a growth and income. So you know,
you have you can have up to seventy five percent
in the market. You know, ten years ago, you're hitting
that seventy five percent in the market because they on funds,
you know, over the past ten years. I think that
you were just saying that agg has averaged one percent
(09:04):
per year, So you know, you had to be up
on that limit of you know, growth and income because
you need, you know, you need your distributions from your account.
You know, now you have bonds in the four to
five percent range, and it's not a bad time maybe
to be like, Okay, you know, maybe that's seventy five
twenty five that I needed ten years ago can really
(09:25):
be sixty five thirty five. So you know, going forward,
you know, you know, if you you know, if you
look ten years from now, you know, maybe you are
sacrificing some returns by going down to sixty forty, but
you're also drastically reducing the risk in your portfolio. And
(09:45):
that's the goal of you know, a retirement portfolio when
you're taking distributions in retirement is to is to get
the most to seek out for all, right, you know,
get the most bang for your buck and you know,
get the most returns for the least amount of risk.
And you know that might go with sacrificing some performance,
but again that'll help you sleep at night, that'll help
(10:05):
you hit your goals. And you know, the the wealth,
the build the wealth building part of your life is
kind of over, you know, and I think I think
you should build a portfolio for that.
Speaker 1 (10:17):
Agree one hundred percent, because that downside is it's too grigorous.
So so by diversifying your your objective is to reduce
your risk, you know, you know, like buying an insurance
policy uh against downside risk.
Speaker 4 (10:32):
UH.
Speaker 1 (10:32):
And you do that by you know, spreading your assets
across you know, different sectors of the economy. UH, different
asset classes, stocks, bonds, cash, uh, different areas of the world.
Different So if you look at the stock side, just
let me let me stick on the On the equity side,
diversification includes UH market by market capitalization, by by industry sector,
(10:59):
by by geographic region of the world, by some pay
dividends some don't, by you know, the type of business
that they're in. So that's that's kind of this that
is the the the equity side. On the fixed income
you diversify by credit quality, duration duration you know, UH
(11:22):
when when when when when the bond matures UH, geographic
risk UH, United municipality municipal bonds perhaps UH government bonds
that are don't you're not exposed to state tax uh
around the world. Both developed and then undeveloped economies. So
you want to diversify across of course that but you
(11:43):
can you can see just from the the the reduction
of concentration in any one specific area. You know, just
kind of like to circle back to what you know,
you were saying according to Ray Dalio, you can't you
reduce your risk, but you also give up return. You
so give up return, and you're you're you're recognizing that
by that reduction of risk, I'm guaranteeing. I'm not guaranteeing,
(12:06):
but I have my best shot at maintaining my lifestyle.
Speaker 2 (12:10):
It comes with lower volatility.
Speaker 1 (12:12):
Uh, it comes with uh as I mentioned, lower potential
returns smooths out the returns a little bit more. Uh
and and and you're you're better off while you're in
that phase of your life that that you're utilizing some
(12:34):
of the money that you're not going to have to
utilize it in a down down equity market, I think
where people are having I guess a bigger issue with
with the bond side of the equation, Aaron is you know.
Speaker 4 (12:50):
We get back to the I guess the question, right, Yeah, well,
what what kind of it is?
Speaker 2 (12:55):
Why do we even have bonds. That's the question.
Speaker 1 (12:57):
Yeah, you know, I look at this piece from Schwab
why Diverse Vacation Matters and the S and P five
hundred over a thirty year period, and it was down
what was up an average of ten percent? Why bonds
averaged six point one percent? However, if you look at
the last ten years, and I think this is what
really is getting UH to that question as well. Look,
(13:19):
you know the Vanguard Total bod Market ETF sym will
BND averaged one point one eight percent per year trailing
five years, negative point zero three percent per year trailing
three years, and negative three p fifty five a year.
You know, if you if you push that or marked
that against the S and P five hundred, you know
you're looking at average annual returns over the past ten years,
(13:42):
and the S and P five hundred, as represented by
the index fun spy much greater than that ten year,
twelve forty seven, five years, thirteen forty eight, three years,
eight oh six. So people say, well, why do I
even have bonds? I think we explained the bulk of that.
You know, we are were to explain the bulk of that.
But I think that as interest rates go up, the
(14:02):
value bonds go down. So it's a mathematical equation to
a certain extent that the worst forget credit quality, forget
the fault ratio. So let's say with with a US treasuries,
the worst trailing performance is potentially the better it's going
to be going forward. And it's almost mathematical in the
(14:27):
calculation and as much that at some point in time
interest rates will peak and they'll head back down.
Speaker 4 (14:33):
Yeah, you know, and we're getting there, you know, be
patient hopefully, you know, I know inflation is still remaining sticky.
But you know the goal of the Fed rate really
right now is to cut rates as soon as possible.
I think, as we've seen with their rhetorics. So you know,
hang in there. You know you'll not you'll not only
get like the agg now is north of five percent.
You know, if they do cut, they do cut rates,
(14:56):
which you can only get five percent. Your microphone, feil.
You know you'll not only get the five percent, but
you know you could get some capital. Why don't you
plug that back in and I'll talk a little while
it is plugged in.
Speaker 3 (15:08):
All right, we'll hear me.
Speaker 2 (15:10):
Yeah, I can hear, I can hear. You have to
put that back onto the table.
Speaker 1 (15:12):
Let's take a little bit of a break, and then nope,
you're good, all right, all right, so I would say that,
so as we move forward, then you look like a.
Speaker 2 (15:20):
Singer over man. Now hold hold on the phone in
your hand.
Speaker 1 (15:23):
We'll fix that at the break. But so as interest
rates go up, the value of bonds go down. I
think that's what we've seen over the past ten years,
that interestrates have gone up, especially over the past five
and the bat the price of the bonds have going down.
Interest rates have now gotten up to about four sixty
four to seventy on the ten year, and I think
that they will be stabilizing. FED has come out recently,
(15:49):
there's there's still someone hawkish. I think the difference between
the real interest rate and relative to inflation is higher
than the FED would like, and that they really haven't
seen inflation continue to decline. I don't think the FED
expected inflation to really go down in a straight line.
Speaker 4 (16:08):
And it's going to be hard, you know. I think
almost forty percent of like CPI numbers are shelter shelter,
So you know, as shelter remains sticky, these things are
going to remain sticky, and you know, I heard someone
at CNBC also note that, you know, China's economic data
is starting to come in a little better, which could
also be inflation area as well.
Speaker 3 (16:29):
So you know, it's gonna it's this this last you.
Speaker 4 (16:31):
Know, what one and a half is percent is going
to be tough for the FED to achieve. But you know,
sometimes I think, you know, you have to. If everyone
didn't think about the Fed's goal of two percent, we
wouldn't be talking about this in that this is very manageable.
You know, at least we got inflation to a manageable area.
And as we've seen over the past year, you know,
(16:53):
a lot of companies can still do well in this
inflation area. In this type of inflation environment, it's going
to be harder obviously the higher you go up, but
you know, I think you're still seeing, yeah, companies, you know,
especially S and P five hundred companies still performing pretty
well in you know, with three three and a half
inflation environment.
Speaker 1 (17:13):
You know, and consumers can live in this environment as
well because it gives them, gives them options. When everything
is going up at the grocery store, you really don't
have a choice. But when when some things are going
up four or five percent in others, other items are
staying flight you have you have somewhat of a choice
as to as to you know, what.
Speaker 2 (17:32):
To buy at a grocery store.
Speaker 1 (17:33):
So a lower inflation rate, you know, south of three
is somewhat manageable. As you mentioned, it also provides I
think the FED with a glide path that I think
they can live with. They're never going to say that,
and I think you see I think you see that
this week with the Fed's rhetoric being a little bit
more hawkish than you would have expected. But I think
(17:55):
the market had already kind of discounted that. The market
had already pushed up to ten year to four to
sixty five from four to twenty five. So the Fed
is kind of getting in line with market sentiment right now.
I don't think you're seeing anything really new, you know,
out of the Fed this this, this recently. So diversification
is going to help you, whether there's strong the other thing.
Speaker 4 (18:16):
I yeah, you know, I think you always have to
ask yourself a question when you're investing, is what if
I'm wrong? Now, if people come in here and say,
you know, you do you have lump some invest or
do you you know, you work your money down and
you know seventy five percent of the time it's smart
to lump to lump some invest because you know the
market's up seventy five percent of the time. But you
(18:36):
always have to say, hey, what if you're wrong? What
if there's a black swan event? What what if this?
What if this?
Speaker 3 (18:40):
So you know, I think, yeah, when you invest, always
ask yourself what if you're wrong?
Speaker 4 (18:44):
And never be too confident in one thing because that
usually doesn't end well and you know, could be disastrous
your portfolio. You know, Yeah, you don't want to, you know,
put all the hard work that you've done over the
past ten, twenty thirty years.
Speaker 2 (19:01):
At risk at risk. Yeah, you know.
Speaker 1 (19:02):
And I think what happens too when we we've been
in business thirty five years, will be thirty five years
in August. I think what happens to people is they
rather than dila quest average if they if they invested
in the market in a lump sum.
Speaker 2 (19:16):
And sometimes it's not a bad ideas. It's a lateral move.
Speaker 1 (19:18):
If you're let's say you're eighty twenty and you're four
to one k and you roll it over to your
IRA let's say with Fagan Associates, we clear through Schwab.
You know, we'll get to eighty twenty pretty quickly, so
we don't have a problem with that. But if you've
been in fixed income for your whole life and now
or you inherited money and now you've got one hundred
or two hundred, three hundred thousand dollars or whatever, you know,
it's best served to kind of work that in the
market at at we would see opportunistically rather than in
(19:42):
a lump sum, because if you decide to put it
into a lump sum, transfer it over and get in
to eighty twenty ratio, let's say too quickly, and the
market goes down, you know, that could definitely compromise your
confidence in the market and you may not be around
for the rebound when it comes.
Speaker 4 (20:03):
Yeah, and you know we also try and take I guess,
like our expertise and how fast we get cash invested.
You know, the more bullish we are on the market,
the faster we'll get invested in. The more barrass we are,
the slower we'll get invested. You know, especially with rates
at money market rates at five percent, you know that's
our hurdle rate.
Speaker 3 (20:19):
Right now.
Speaker 4 (20:19):
So you know, we try and strategically find things that
we think we'll do better than that over the next
year and get it invested. And if you know, there's
not as many options right now out there, you know,
we're happy with the five percent sitting on the sidelines
until we find something that we think could do a
little bit better.
Speaker 1 (20:36):
And I think that in our right now, we are
looking at for growth and income. Investor someone approaching retirement
into retirement, you're looking at roughly sixty to seventy percent
of your account in the stock mark with the balance
and bonds and cash, and we invest a good chunk
of money of the cash into money market funds that
(20:59):
are paying about five percent from a cash position or
BIL which is a short three month in check, which
is one to three month treasuries that pays over five
percent as well. So that's the areas that we're looking
at for cash liquidity needs. And I would think too,
like I've heard a lot of the sixty to thirty
ten portfolio because of the.
Speaker 3 (21:21):
What is the ten cash or all ten cashs tense cash.
Speaker 1 (21:24):
Well, people are saying, look, if interestrates continue to go up,
let's kind of look at at holding some cash just
in case. Certainly you're not going to benefit if interest
rates head back down. But you know, I can live
with that sixty percent in the stock market and forty
and fixed incoming cash. I think that works for the
vast majority of investors, and I think investors feel more
(21:47):
comfortable with that as well, given the run up we've
seen in the market. You know, for growth investors, it
would be at least seventy five percent in the market
in the balance in cash, waiting to get cash in
that short term one to three month treasure bill, looking
to get it into the stock market at some point
in time. Because as a growth investor, you are saying, hey,
you're in it for the long term, and you're going
to accept the volatility as a from the excuse me,
(22:10):
the income side. For us, it's less than fifty percent
in the stock market. So but going back to that
one comment, you know, I don't believe you're setting yourself
up for failure with having a diversified portfolio. You're always
going to have if failure is measured by things that
are either up less than others or might be down,
because there it's appropriately allocated for your needs and we'll
(22:33):
accept that all the time. It's kind of have a
spare tire. I can't remember not gonna win the last
time I had a flat Yet I'm not taking that
spare tire out because the cost of doing so should
I have a flat tire.
Speaker 4 (22:43):
And it's also your needs and also what you're comfortable with.
You know, you don't want to get outside your comfort
zone and then make the wrong decision because you're outside
your comfort zone.
Speaker 2 (22:53):
Now it's possible.
Speaker 1 (22:53):
I'll speak with this individual and he'll say, well, I've
got this in the bank and that in the bank.
And I think other people that that's the mistake people
make too, is they look at their investments like slivers
of pie. Okay, this needs to be in the market,
you know what I mean, rather than taking their whole
investment portfolio and then calculating the ratio of the let's
if you have four hundred and fifty thousand dollars, strip
(23:15):
out what you don't want, what's not long term, and
the balance should conform to your longer term objectives. And
that's kind of what we do. So that'll just about
wrap up the first half of the hour. Honey Bees,
US population or in the Samantha fay Dowd a r
at an all time high, and I'm happy about that.
Speaker 2 (23:35):
A lot of a lot of individual.
Speaker 1 (23:36):
What are they called beekeepers, I forget what they call them.
They're not beekeeper aparis. They have APIs. I'll mention it
when I get back, but right now, it's ten thirty
on the station dependent on for news, weather and information
News Talk A ten and one O three one w
g Y.
Speaker 2 (23:51):
Good morning, and welcome.
Speaker 1 (23:52):
Back to the second half hour of the Capital District's
Money and Investment program. You're listening to the fague and
financial report that the trials, tribulations and perils of live
radio is the microphone.
Speaker 2 (24:03):
Yeah, I know, but we we I did that once myself,
remember that.
Speaker 3 (24:05):
I remember that. Yeah.
Speaker 4 (24:07):
It's tough because it's it's on the side of the
side of the table, and the side of the table
is not just like you know, I don't know, it's
not flat, so you can't really attach well onto it.
Speaker 3 (24:18):
But we got through it.
Speaker 2 (24:19):
It's just an old table.
Speaker 3 (24:20):
I forget heavy. I think I think you won that
like an auction or something like that.
Speaker 2 (24:25):
I think I did get this. I forget where I
got it.
Speaker 3 (24:27):
Down to old Misselli's I think it might have been.
It's a nice table. It's it's you know, nice and hard.
It is a nice table solid.
Speaker 2 (24:34):
But anyways, it has like a bevel side. That's the
word beveled side. So that, uh, and your microphone went off.
Speaker 1 (24:40):
So we apologize to the to the listeners out there
if you your ear drum is ruptured. But that's the
price you pay for listening to the fakean financial report.
Speaker 2 (24:50):
We never.
Speaker 1 (24:52):
Expressed their stated the fact that we were experts about
the radio.
Speaker 3 (24:57):
We did this ourselves during COVID. We created this studio.
Speaker 1 (25:02):
I think that people would people would not be surprised.
Speaker 4 (25:05):
I think it's I think it looks you know, it's
in one of our old offices. There's stuff everywhere, you know,
there's some poppy stuff. Yeah, you know, but we got
we got some soundproving thing up here. We got the
technology to work.
Speaker 2 (25:16):
Technology works great.
Speaker 3 (25:18):
We do miss Zach at the Zach every day.
Speaker 1 (25:20):
But they said we didn't have to come over anymore
during COVID, and they said don't bother.
Speaker 3 (25:24):
So if your setup is so good, you don't need
to come.
Speaker 2 (25:26):
And they don't let you drink coffee in the studio.
Speaker 1 (25:29):
But I will say so, you know, talking in the
first half, we talked a bit about diversification and what
it means, what the benefit is. You know, it's always diversification.
I read this somewhere. It's always having to say you're
sorry about something. Yeah, right, you know, why don't you
have more this? Why do you have any bonds?
Speaker 2 (25:45):
You know? Why do you sell this? You know?
Speaker 1 (25:47):
Why do you why you know you sold A and
went to B and A is still going higher and
b's going on. People pay more attention to the things
we sell than what they own.
Speaker 3 (25:56):
It's things that are going down also.
Speaker 4 (25:59):
But yeah, you know, you pick some things outside of
the sect, like you know, we try. We're growthier investors,
growth at a reasonable price correlation to the S and
P five hundred, try and use some expertise to you know,
outperform the S and P five hundred by you know,
a few percentage points per year. But you know, I
think what's important that we do, and you know that
(26:19):
you know that I try and do is you know,
you pick five or six really good companies in sectors
that you know kind of are outside your you know,
maybe investment philosophy, of your scope of investments and you know,
you stick with them, you know, and whatever those companies
may be or sectors may be, know that, hey, you know,
they might underperform at times, but these are great companies
(26:39):
that will do well over time, you know.
Speaker 2 (26:42):
And I right, but you know, I'm.
Speaker 1 (26:44):
We're I'm talking more of the risk side too, that
we talked about, and I know you talk about all
the time. And I learned a lot from that that,
you know, And I was met with somebody this morning
about they're well into their sixties, they don't have children,
They've got a great chunk of money, and and I
think sometimes at the risk of insulting people out there,
and I find myself doing it sometimes.
Speaker 4 (27:06):
You know.
Speaker 1 (27:07):
Yeah, when you're in your thirties, forties, fifties, fifty five, whatever,
thinking about retirement, it's about accumulation, accumulation of money, you know.
Speaker 2 (27:16):
You know, you obviously you.
Speaker 1 (27:17):
Have parts to your life that are not about finances,
but this is a financial show, you know. You know,
So it's about accumulating assets within your tolerance to risk
so that you can retire and do the things you
want to do. I think sometimes when people flip over
to the retirement stage, understandably, so they have a hard
(27:39):
time moving to that. They're still in the accumulation stage
in their mind. Or oh my gosh, my portfolio is
worth you know, eight hundred thousand and last year was
worth seven hundred, whatever the case may be. And really
that becomes the objective rather than you know, this eight
hundred thousands can kick off forty grand year income for
you and your spouse to do the things, or you
(28:01):
and your partner, or you to do the things that
you want to do, you and your kids, you and
you and you and.
Speaker 2 (28:06):
Nobody, and I think we end up.
Speaker 3 (28:09):
It's hard, though, like I under but I understand it.
You know, it's hard watching.
Speaker 4 (28:13):
Your assets go down, especially when you don't have income, right,
you know, it takes years of getting used to Some
people are never used to it.
Speaker 2 (28:20):
You know.
Speaker 4 (28:20):
You got to be comfortable with being uncomfortable, and that's hard,
you know, especially after like programming yourself for five decades,
four decades of work to do.
Speaker 3 (28:31):
It's hard.
Speaker 4 (28:32):
It is hard, you know, but you have to just
put systems in place, on procedures in place, knowing that
it'll go up and down. But it's the right, you know,
you try and do what's right for.
Speaker 3 (28:41):
You and for your portfolio.
Speaker 4 (28:44):
And it's hard when you know, you see a twenty
percent pullback or when COVID happens, you know. So you know,
I feel for people, and you know, just try and
make their life a little bit easier by providing some
historical contexts, some statistical historical context to, you know, tell them, hey,
this time isn't different, and.
Speaker 3 (29:02):
That that has worked.
Speaker 1 (29:03):
That has worked, you know, And and I think that
you look at like to kind of go to the article.
It's perfect timing for it that we read Larry Fink's
annual Chairman's Letter to investors from Blackrock, and I mentioned
in the first half that you know, we've had some clients.
Speaker 2 (29:21):
Calls and say, don't buy any black Rock funds because
of their what are they doing?
Speaker 1 (29:26):
Just the social governance they were they were they were
kind of on the other side of oil and the
like and using their proxy their their share power for
for green and the like. And you you know, whether
you agree with it or not, and I disagree with it.
I don't think it's I think the first of all,
if you're a shareholder, you should vote your own proxy,
(29:47):
you know, because that's going to reflect what you believe
rather than somebody like even us or or yeah, yeah,
people are getting more involved than you know that that
type of investing, and yeah, we try and stay out
of that you as a whole, and just you know,
just kind of like people.
Speaker 4 (30:02):
We think people should do what's best for their shareholders.
We try and do what's best, you know, as for
douce shares for our clients.
Speaker 2 (30:09):
True.
Speaker 1 (30:09):
And so if you if you want a copy of
this letter or just you could just google Larry Thinks
twenty twenty four, Anneal Chairman's Letter to Investors, or give
us a call or at five two seven nine ten
forty four send us a message at investment at Figan
Associates dot com.
Speaker 2 (30:23):
But it's asset dot com.
Speaker 4 (30:24):
You know, like a company like Blackrock, when you become
so big, you're just gonna tick everyone off somehow. You know,
you have one side being mad about the esgu you
have the other side being mad at them because they're
buying up, you know, residential property and we're all going
to be renters. So you know, they're kind of in
a no win situation, no win situation. But just what
do you just say about the retirement age of sixty five.
Speaker 1 (30:46):
Well, he's saying that in the year twenty and fifty three,
the United States will see more people leaving the worst
workforce than coming in. And you also said, basically that
retirement age at sixty five is forget about it. It's
it's it's it's it's silly, you know, for a variety
of reasons. But he starts out with, what.
Speaker 4 (31:10):
Do you how do you think about that? Do you
think I think silly? Is almost defensive.
Speaker 1 (31:15):
Well, he didn't say it's silly, don't get me wrong.
He did not say it silly. Basically said that it
was anachronistic. It's it's it's it's old way of thinking.
It's uh, it's it's not the right way to look
at things now.
Speaker 4 (31:30):
Uh yeah, it's almost like a new phenomena. You used
to work to your dad type thing. You know, this
is something that we've yeah, we've developed me aspired to right.
Speaker 1 (31:43):
So and now in the twenty first century, that has
to change. And what he what he had mentioned is.
Speaker 4 (31:50):
Is that.
Speaker 2 (31:52):
Is that as as a as a as.
Speaker 1 (31:54):
A country, we spend a lot of time and energy
helping people live longer lives through through medicine. There's a
new OBCD drug he mentioned, for example, can take more
than ten years off more, can take more than ten
years off of somebody's life expectancy, can add ten years more,
can add ten more than ten years to someone's life expectancy.
(32:16):
And we focus a lot of time on the on
the on the financial side, but very little time excuse me,
a lot of time on the healthcare side, but very
little time on the financial side. And he says today
in America, the retirement message at the government companies to
their work workers is effectively.
Speaker 2 (32:32):
You're on your own.
Speaker 1 (32:33):
You know, we've moved from a country of defined benefit
plan to define contribution plan.
Speaker 2 (32:40):
And he goes on to say.
Speaker 1 (32:42):
That that is a big problem and that he'd you know,
he he and Blackbrec don't have the answer, but there's
a lot of data to suggest that that the demographics
of our country, which more people leaving the workforce and
coming in in about thirty years, is going to put
(33:02):
a burden on first of all, the workforce to take
care of all and that maybe AI is a good
thing in that respect, but it's going to put a
burden on social security and something's got to change there,
and that the United States, the average worker does not
have the confidence really that and the optimism that is
(33:29):
going to be taken care of. He also goes on
to say that in nineteen fifty two, most people were
not preparing for retirement because more than half of them
passed away before they got to retirement, so they never
really lived into the system until that.
Speaker 2 (33:43):
So, you know, I know, we talk a lot.
Speaker 1 (33:45):
About social security, we talk a lot about our clients
and social security, but there's nothing like saving on your own.
Speaker 2 (33:56):
What does your generation think about Social Security?
Speaker 3 (33:59):
I don't know.
Speaker 4 (34:00):
So I think everyone thinks it's just not happening. And
you know, rightfully so right now, in my opinion, you know,
you'd say, hey, what the Winston Churchill quot the United
States is the right thing at the wrong at the
very last moment, right so I think you always have
that hope. But yeah, you know, I don't think our generation,
(34:20):
in those younger than me, are yeah, as optimistic about
about the future as as others. You know, And I
you know, you don't want to say things. You know
on the radio it's like, oh, classic kids think you know,
blah blah blah. But you know, yeah, you know, homes
are less affordable, you know, the pension system is is
(34:41):
not what it used to be. I was just reading
an article. In nineteen fifty, over ninety percent of people
made more than their parents. By the time nineteen eighty hit,
it was about fifty percent. So, you know, I think this,
I think that's kind of what people are, you know,
frustrated about, you know, the affordability of housing things that uh,
yeah of life today and you know, rent forever type
(35:03):
of type of you know, people don't think that they're
ever going to be able to afford.
Speaker 3 (35:07):
A house, and yeah, well that's just what you know,
I think people are.
Speaker 4 (35:13):
You know, you know, you get nervous about, you know,
being on the radio, people like the lazy millennials and
things like that. But you know, it's, uh, it's I
think it's tougher out there to get a middle income
job where you can afford a house, you can where
you can afford to go on vacation, where you can
live a happy life, you know, I think, and you
know I don't it's not people, you know, I think, Yeah,
(35:34):
I think it's this uh development of yeah, of putting
the putting the weight of your retirement on on on
your shoulders and having to contribute. Not only now you
have to contribute. You don't get a pension, you have
to contribute, even like we have a lot of people
that come in here with pensions that don't need the
savings that people. Yeah, so I think a lot of
(35:58):
people in my generation are like, let's score moneyway, Let's
scrow money away, Let's scrow moneyway, because hey, you know,
I'm not going to have the five thousand dollars a
month come in that that was once.
Speaker 1 (36:08):
Well, I think probable, you know, you would know more
than I would about your generation in that respect, but
I would say that, you know, I think that I
think your generation perhaps has a more I'm going to
call a laissez fair attitude towards retirement. But they're gonna
enjoy They're going to enjoy the journey more. Maybe they're
going to you know, not maybe that maybe you know,
(36:32):
and I'm not suggesting that the millennials don't work as hard,
but you need to. You need that, you need that
caret there. You need the ability to move ahead, You
need that belief that the system will allow you to
move ahead before you're going to really, you know, go
with Gusto down.
Speaker 4 (36:48):
There, even like you know, the median salary in two
thousand and two was forty two thousand dollars a year,
and twenty twenty was fifty four thousand dollars a year.
That's a twenty seven percent increase. The median home went
from one hundred and eighty thousand dollars to five hundred
and fifty. You know, that's I think these are you know,
now you need to make triple the median salary to
afford the median home, you know. And I think these
(37:09):
are things that you know, I think those are worried
some you know, forty percent of people don't have mortgages.
When are we going to have houses come back on
the market, you know, maybe when you have these ten
thousand people turn sixty five every day start to pass away.
And you know, I've yet to say my opinion on things.
I'm just saying what people think and why people are frustrated.
The cost of college is going up nine percent per
(37:30):
year since nineteen eighty.
Speaker 3 (37:33):
That's kind of.
Speaker 1 (37:36):
Right, you know, I think sometimes and people may call, well,
if you look at the cost of college, the government
has their hand in what three.
Speaker 2 (37:49):
Major aspects of life though, really.
Speaker 1 (37:51):
Health, healthcare, housing, house, Yeah, and education and when there's
not really constraints on that when you know, and if
we're now forgiving.
Speaker 2 (38:02):
Potentially college debt. I mean, it's just it's just.
Speaker 4 (38:05):
So many moving parts right right, some who knows what's
going to go on? You know, who knows what's going
to happen. You know, we were kind of just talking
about that this morning, about how you know Biden's gonna
forgive student loans why because he doesn't really have a
chance not to, because people have already gotten used to
not paying them since COVID. So what happens you start
paying your student loan debt and the economy tanks before
(38:26):
the election, or you just throw it on our balance
sheet for later. What are you going to do as
a politician trying to get elected? Yeah, you know, all
these people are trying to do is get re elected.
You know, nothing's happening really, And I think that's what
people are frustrated about.
Speaker 1 (38:38):
And I think you can cut across stages. But there
was a there was a Happiness type of a poll
that was done globally and the United States has dropped
from the top ten to maybe going off memory to
a lot lower than that, and a lot of it
is because of the responses of people in their thirties,
you know that they are not optimistic, they are not happy.
Speaker 4 (39:00):
People even younger than me are even more pessimistic. I've
just been finding this out by like researching on gen Z.
They're really not happy.
Speaker 1 (39:07):
But you know, but but I think sometimes it's you know,
when we talked about the education system, the upper education system,
we've gotten away from maybe the work ethic of America.
Speaker 4 (39:18):
Yeah, And I think people and I think we're electing
politicians that have fooled their constituents into doing things both
on the left and right, that are in the best
in the best interest of their constituents when they're not right,
you know. And I think that's uh, you know, people
are starting to get a little bit mad about that.
Speaker 3 (39:35):
People just want to be able to afford to live,
you know.
Speaker 4 (39:36):
And I think, you know, I think we've gotten away
from the important parts of uh, you know, America that
make you know, our country great, but also you know,
help put money in people's pockets.
Speaker 1 (39:51):
Right and also make sure that we take care of
people and also make and I think COVID was a
demarcation point of of that's that schism. So to speak,
if you want to call it, that rift between a
lot of different factions of America. Like, you know, the
people that don't have we're calling they're not working hard enough.
(40:12):
The people that you know are you know, not here.
The immigrants were calling terrists there. In reality America, we
need we need all types of people in America. But
if you want to certainly we need immigration that needs
to be regulated, regulated. But I think for the younger people,
and this is a global problem, you need opportunity for
(40:35):
those people, and you need something that they can say, well,
I worked for this, so I achieved this.
Speaker 4 (40:41):
Yeah, And I'm a little bit worried about that. Just
with the rise of artificial intelligence. You know, you're starting
to see layoffs. Layoffs are on the rise, part time
jobs are on the rise, full time jobs are on
the decline, but job numbers are going up in unemployments
going down because of part time jobs. Right, So I'm
a little bit worried in the future of you know,
the impact artificial intelligence and technology has on the middle income,
(41:03):
the middle class. So you know, you know, I think
we talked about this a lot on the show, and
that's what's most.
Speaker 3 (41:08):
Important to me politically, is building.
Speaker 4 (41:10):
Up the middle class economically, economically, politically, for the stock market.
I think that is that is the biggest cause for
concern when talking about a black Swan event, in my opinion,
is the dying middle class.
Speaker 1 (41:26):
And I think President Trump and President Biden, I think
are working on that, maybe in different ways, but I
think both of them have realized that the shifting of
production to just from just in Time, which was, Okay,
we're going to work down inventories. We're going to manufacture
(41:47):
everything overseas, you know, including some things that would be
in our national interest not to manufacture overseas. We're going
to bring them back. We're going to on shore them
or near shore them, you know. I think it will
help a lot. So that justin Time is going to well,
just in case, just in case China cuts us out,
just in case we have another pandemic. We want to
bring things here so that we're not compromising our national security,
(42:10):
which in turn will most likely help the middle class,
which which in turn might will most likely I'll say,
keep inflation. It's gonna be hard to get inflation down
to two percent. And if you get inflation down to
two percent, I think.
Speaker 4 (42:28):
Is bringing inflation down to two percent the best thing
for the middle class in the long run.
Speaker 3 (42:32):
I don't think so.
Speaker 1 (42:34):
Well, it's kind of like saying, well, if you can
do it, it's the well, it's it's a congressionally mandated
thing that goes back to that. Believe the seventies, you know,
full employment and inflation at two percent, you know, maximum
sustainable employment, inflation at two percent, and at one point
in time that that that number was thought to be
you know, for you know, well they figured maximum employment
(42:56):
unemployment would be uh, you know, about four four and
a half percent, said you know so, and then inflation
would be about two But maximum employment has come down.
We see excuse me, unemployment as unemployment's now three point
seven percent below the four point five or four point
six that was we thought was maximum employment at one
point in time. So it's gonna be tough. But I
(43:19):
often say too, it's kind of like we are. It's
like king of the hell, you know, when they're when
there it's global production. They're gonna be individuals and countries
that are going to be much cheaper, much much more
able to produce things cheaper than in America.
Speaker 2 (43:33):
Yeah, you know, and that's just the way it goes.
Speaker 1 (43:36):
But Larry Fink addresses a lot of things, and one
is you know, and and I think, and now I
said this to somebody, uh yesterday or the day what
it wasn't yesterday this past week on the phone, that
you know, people in their sixties and above probably don't
have to worry about their Social Security benefits being there.
People maybe forty forty to sixty are going to get part.
Speaker 3 (43:57):
So it's just a tax for us, right.
Speaker 1 (43:59):
Well, no, I think you're going to get it. I
think it's got to be changed. And I do think
the age is probably going to be changed for everybody.
I think it's going to become much more means tested
than it is now. Right now, right maximum is eighty
five percent of social scurity benefits are taxable at a
federal level.
Speaker 4 (44:14):
We can start losing benefits to deter people from taking
it earlier.
Speaker 2 (44:17):
Yeah, things like that.
Speaker 1 (44:19):
That or maybe one hundred percent of benefits are taxable
if you get above a certain income threshold or asset threshold.
So those are some things that think you're seeing. So
as it pertains to our show, and we don't digress,
I think doing this forty years you've been here twelve,
been in business thirty five. All these things go through
a mind that out of the bottom comes Okay, these
are some areas that look good from an investment standpoint.
(44:41):
This is what this means to the bond market potentially
over time, and we invest our clients' money according to that.
But you know, as someone who is you know, helping
clients along the way, you know, we certainly you want
to make sure that you get into an investment, get
into your four oh one k, you know, match the
(45:03):
employer's match, think about what journey you want through life
and go from there. Very think mentions in the Netherlands,
they decided to about ten years ago to gradually raise
the retirement age and now to adjust to life expectancy.
You know, so if life expectancy the Netherland goes up
by a year, so does the retirement age.
Speaker 2 (45:24):
And also talks about making it easier.
Speaker 1 (45:27):
You know, if someone's if someone's got to work an
hour to enroll in their company's four oh one k,
why you know, some people.
Speaker 4 (45:33):
Will say it should be an opt out out as
opposed to an opt in. That's a huge chapter of
Richard Taylor's book. I think it's I think it's Richard Taylor, but.
Speaker 1 (45:42):
Judge right, I don't. I don't know if that's the case,
but I know the book, so I don't know. So
so right, do do a lot of of maybe your
contemporaries do. But do a lot of people know that
your employer is going to match a lot of them
one hundred percent of your friend three percent of your contributions,
things like that that I don't think they realize. And
(46:04):
I think that's what Larry thinks in has to be
made easier for for the average worker before we can
you know, kind of kind of figure this thing out
a little bit, you know.
Speaker 2 (46:14):
Yeah. Anyways, So that is that's what's going on here.
Don't know what else? What else did he have to
say within this within this article?
Speaker 1 (46:26):
So we live in a you know, and I and
I say, I think a lot of I might say
in a lot, I think we live in that we
live in an environment of fear rather than hope. And
I think some of that has to do with, well,
it has to do it in part because of the
eradication more or less of the Defined benefit plan. It
has to do with you know, as you mentioned, housing costs.
(46:47):
I think it has to do with social media. I
think and think the result is that it probably probably
leads to uh, the average person your age investing, them
investing their portfolio to conservatively yeah you know where you
have investors.
Speaker 2 (47:03):
Who concertainly let me see. So that's Larry Fink has
to say.
Speaker 3 (47:10):
Over the last That was kind of the gist of it.
Speaker 4 (47:12):
You know, I think, you know, like a lot of things,
we read the headlines and don't read into you know,
you saw this all over the news of you know,
Larry Fank sixty five blah blah blah.
Speaker 3 (47:20):
But you know, I think when you read into it.
Speaker 4 (47:22):
He has a lot of good points to make, and
I think everyone should read it and not just read
a headline and make an assumption like you know, we can't.
Speaker 1 (47:30):
Yeah, but you asked me that to start, Like what
do I think? I think people need to stay active
and engaged somehow for their entire life. I think you
need to stay engaged. And I think that yeah, yeah,
but statistic show you need to stay engaged.
Speaker 3 (47:45):
But what's engaged?
Speaker 4 (47:46):
You know, forced engagement because you have to because you
can't afford to live, or for your mental health.
Speaker 1 (47:51):
I think the recognition that life is a journey, and
that that journey, probably for a lot of people, includes
work because if you are should the risk of a
portfolio because you don't have a defined benefit plan, you'll
feel much more comfortable so doing if you're if you're
engaged in the workforce a little bit, at least part time.
Speaker 2 (48:10):
So I think if you.
Speaker 1 (48:11):
Don't have a pension, uh, you know, you know, even
if you can work two or three days a week
or something like that, or a couple of days just
to kind of ease your mind when things hit the fan,
that'll just about do it. Thanks for listening. We need
to get us hold of us during the week five one,
seven four. Check us out on the web at fagatasset
dot com or like us on Facebook.
Speaker 3 (48:30):
Take care
Good morning, and welcome to the Capital District's Money and
Investment program. You're listening to the Fagan Financial Report on
Dennis Fagan sitting here with my son Aaron, as we
do every Sunday right here on News Talk eight ten
and one oh three and one WGY. Got a few
things to talk about today that I think you will
find of interest. When is a letter or an email
that we receive from a client talking about the losses
(00:22):
an overall portfolio of gains, but some losses in three
exchange traded funds that he had, and it turns out
that those three exchange traded funds are in the bond market.
So talk a little bit about really what diversification really means,
the benefits of diversification, and I think the bottom line
is the diversification means that you know, you do have
(00:44):
losses in your portfolio, or you do have and losses
there can be referred to on a number of fronts.
You know, things have losses relative to other investments, meaning
that if one investments up percent and another's up ten
you know, well then that's a relative loss. So we'll
(01:04):
talk about exactly what that means to diversify your portfolio
and what the benefits are really when it comes to
diversification for long term peace of mind and long term
portfolio growth. So that's one thing we're going to talk
about today. The second thing we're going to talk about
really is a a letter from Larry Fink, the CEO
(01:25):
of Blackrock. And I know Blackrock makes everybody a little
bit upset these days with their with their really esg posture,
and let's forget about that and talk about really what
he has to say relative to retirement, and we'll dovetail
that into what JP Morgan's the CEO, Jamie Diamond, has
to say, and then on from a tax perspective, some
(01:46):
ideas to help you reduce your taxes. So that's so one,
and why don't we take that route one at a
time and.
Speaker 2 (01:55):
Go from there.
Speaker 1 (01:55):
So the email that I received, you know, basically said
ninety two percent of the losses on thef's result from
three funds, would it makes sense to dump them and
reserve the cash balance for other future investments.
Speaker 2 (02:08):
So talk a little bit.
Speaker 1 (02:09):
About that and I think we'll talk yes the second thing.
But I said to him, I then responded, the ETFs
represent the bond or stable side of your portfolio. Selling
those will increase volatility as well as risk, but do
provide more potential to the upside. If you think you
would like to still consider liquidating these, we should speak
let me know then then you.
Speaker 3 (02:29):
Know, he is it in a taxable portfolio?
Speaker 1 (02:32):
Yes, he responded, I'm tempting to understand why the reduction
of value is actually a good part of the portfolio,
and that's where really the crux of this matter lies.
Speaker 4 (02:42):
Yeah, you know, and I guess that's a hard part
of managing your own portfolio, or portfolio management in and
of itself, is you know, a you know, sometimes things
are hard to understand, and you know, as Uncle Chris
would say, sometimes sometimes it allows you, which isn't good
to well watch right, to only go into things that
(03:05):
are working. And you know, in market cycles, you see
a lot of you know, you see a lot of
different things that work at different times. You know, if
you have it, you know, let's say you have growth
work at one point, then you have industrials, and you
have X.
Speaker 3 (03:19):
Then you have X, then you have X.
Speaker 4 (03:20):
But you know, let's say in you know, two thousand uh,
you know, let's say two thousand and one, happens and
you have you know, growth did really well, right, So
what do you do?
Speaker 3 (03:32):
Put all of your stuff in major cap tech? Look
how that would have worked out? Right?
Speaker 4 (03:36):
Not major major cap tech, let's say even tech technology
in and of itself, and how would that work out? So,
you know, it is so important to have things in
your portfolio that you know don't have the correlation or
I guess the.
Speaker 3 (03:51):
Covariance would be a better word.
Speaker 4 (03:53):
You know that has that doesn't move in lockstep with
you know, the core holdings in your PORTFOLI So, like,
let's say if you do have a good amount of
portfolio in your s and p. Five hundred and you say, okay,
a lot of my portfolio then is in Microsoft, Google, Apple,
things like that. So you want to build a portfolio
that has things outside of that for when those stocks
(04:16):
and sectors don't work. Uh, you know you're still participating
in in in in what's in what's working. Well.
Speaker 2 (04:25):
That's a good all good points. And I think that
if you.
Speaker 1 (04:29):
Think about diversification in general and take it, take it
into its to its simplest form. Let's just have one stock,
then let's just have Apple, Let's just have Amazon. Oh, no, No,
I would never do that. Well, then you're setting yourself
up for disappointment if you consider diversification or something that's
not performing well relative that now now relative to other
(04:54):
a waste of capital. So so then you say, okay, well, no,
I would never just have one S security. Now, you
could certainly have an S and P five hundred fund
if you want to just large cap, but then then
you'd be not having exposure internationally. You not have exposure
to mid cap or small cap. If this individual in
particular is seventy plus years old, you would not have
exposure to the bond market.
Speaker 3 (05:15):
Yeah, and I think that's important. You know, just.
Speaker 4 (05:19):
When I think about things like this, you know, there's
two people that come to mind. One is warm Buffett.
You know, he said basically like diversification is protection against ignorance,
which I think is very true. But also diversification preserves wealth,
but concentration builds wealth. So you know, if you're talking
from you know, a personal standpoint, what do I think is,
you know, I see a lot of clients who are
(05:39):
sixty seventy years old, where that you know, build that
wealth building stage of your life is over, and you
know the preservation of your wealth is just as important.
It's more important than the building of wealth, you know,
as the United States specifically goes, you know, away from
the pension system that you know we're obviously seeing. So
(06:02):
you know, if you need four or five percent distributions,
you're from your portfolio. Diversification is key to getting to
hitting that number and making sure that you know you
have money to enjoy your life and live. The next
person I think of is uh is Ray Dalio, who
is the founder of the largest hedge fudge in the world,
(06:22):
one of the largest, and that's Bridgewater. And you know,
if you look at someone ask me, uh, you know, wow.
You know, Bridgewater only performs at x percent per year,
and that's all well and good. But what he's developed
is this quote unquote all weather portfolio that you know,
maybe if the S and P five hundred is up
twenty percent in a year, and it might only be
(06:43):
down nine but if that S and P's down twenty
percent in a year, it's still up too, you know.
So that's just as important for his clientele as as
outperforming the S and P five hundred is consistent returns
that protect you against the downside because you know, a
lot of his clients are pension funds, governments, things like
that that you know, care more about consistent returns. And
(07:05):
you know, I think you know, as an investor, you know,
investing money for other people, like that's what's so important
to me really is you know, making sure that people
can get the distributions that they want. And in some
portfolios that comes with maybe not the performance of the
S and P.
Speaker 3 (07:23):
Five hundred.
Speaker 4 (07:23):
Sometimes that's not to say, you know, our performance isn't
up there with the S and P five hundred when when.
Speaker 2 (07:28):
We want it to be objective.
Speaker 4 (07:30):
But you know, for a lot of people, that's not
the objective, and I think that's really important.
Speaker 3 (07:34):
You know, what our job is to do is to
help people sleep at night.
Speaker 2 (07:37):
Well, I think you brought that up a while back.
Speaker 1 (07:39):
And you know, there's something that I mentioned quite often
the clients, and that is, you know, you're sixty, sixty five,
seventy years old, You're you know, let's let's say you've
saved up eight hundred thousand dollars of the course of
your life. Yeah, there's not a good chance you're going
to wake up with three or four or five million.
You just don't don't want to wake up with three
or four or five dollars, you know what I mean.
You've cemented your lot in life. You have a standard
(08:02):
of living and you want to stay there. So I
think people that and especially now with the market the
way it was up until just recently, you know, up
ten percent during the first quota. I know we've given
back three or four percent during the month of April.
Speaker 2 (08:18):
But you are talking.
Speaker 1 (08:21):
People have a sense of a feeling of a feeling
of high like, Okay, I'm not getting the returns I
need and coincidentally are ironically, that's precisely the time that
we feel kind of concerned about the market is when
people are feeling giddy about their returns and their dollar
(08:42):
amounts and the.
Speaker 4 (08:42):
Like, yeah, wanting to take more risk and you know,
and you know again, like I guess on to piggyback
on that, we do have different portfolio models. One of
them would be a growth and income. So you know,
you have you can have up to seventy five percent
in the market. You know, ten years ago, you're hitting
that seventy five percent in the market because they on funds,
you know, over the past ten years. I think that
you were just saying that agg has averaged one percent
(09:04):
per year, So you know, you had to be up
on that limit of you know, growth and income because
you need, you know, you need your distributions from your account.
You know, now you have bonds in the four to
five percent range, and it's not a bad time maybe
to be like, Okay, you know, maybe that's seventy five
twenty five that I needed ten years ago can really
(09:25):
be sixty five thirty five. So you know, going forward,
you know, you know, if you you know, if you
look ten years from now, you know, maybe you are
sacrificing some returns by going down to sixty forty, but
you're also drastically reducing the risk in your portfolio. And
(09:45):
that's the goal of you know, a retirement portfolio when
you're taking distributions in retirement is to is to get
the most to seek out for all, right, you know,
get the most bang for your buck and you know,
get the most returns for the least amount of risk.
And you know that might go with sacrificing some performance,
but again that'll help you sleep at night, that'll help
(10:05):
you hit your goals. And you know, the the wealth,
the build the wealth building part of your life is
kind of over, you know, and I think I think
you should build a portfolio for that.
Speaker 1 (10:17):
Agree one hundred percent, because that downside is it's too grigorous.
So so by diversifying your your objective is to reduce
your risk, you know, you know, like buying an insurance
policy uh against downside risk.
Speaker 4 (10:32):
UH.
Speaker 1 (10:32):
And you do that by you know, spreading your assets
across you know, different sectors of the economy. UH, different
asset classes, stocks, bonds, cash, uh, different areas of the world.
Different So if you look at the stock side, just
let me let me stick on the On the equity side,
diversification includes UH market by market capitalization, by by industry sector,
(10:59):
by by geographic region of the world, by some pay
dividends some don't, by you know, the type of business
that they're in. So that's that's kind of this that
is the the the equity side. On the fixed income
you diversify by credit quality, duration duration you know, UH
(11:22):
when when when when when the bond matures UH, geographic
risk UH, United municipality municipal bonds perhaps UH government bonds
that are don't you're not exposed to state tax uh
around the world. Both developed and then undeveloped economies. So
you want to diversify across of course that but you
(11:43):
can you can see just from the the the reduction
of concentration in any one specific area. You know, just
kind of like to circle back to what you know,
you were saying according to Ray Dalio, you can't you
reduce your risk, but you also give up return. You
so give up return, and you're you're you're recognizing that
by that reduction of risk, I'm guaranteeing. I'm not guaranteeing,
(12:06):
but I have my best shot at maintaining my lifestyle.
Speaker 2 (12:10):
It comes with lower volatility.
Speaker 1 (12:12):
Uh, it comes with uh as I mentioned, lower potential
returns smooths out the returns a little bit more. Uh
and and and you're you're better off while you're in
that phase of your life that that you're utilizing some
(12:34):
of the money that you're not going to have to
utilize it in a down down equity market, I think
where people are having I guess a bigger issue with
with the bond side of the equation, Aaron is you know.
Speaker 4 (12:50):
We get back to the I guess the question, right, Yeah, well,
what what kind of it is?
Speaker 2 (12:55):
Why do we even have bonds. That's the question.
Speaker 1 (12:57):
Yeah, you know, I look at this piece from Schwab
why Diverse Vacation Matters and the S and P five
hundred over a thirty year period, and it was down
what was up an average of ten percent? Why bonds
averaged six point one percent? However, if you look at
the last ten years, and I think this is what
really is getting UH to that question as well. Look,
(13:19):
you know the Vanguard Total bod Market ETF sym will
BND averaged one point one eight percent per year trailing
five years, negative point zero three percent per year trailing
three years, and negative three p fifty five a year.
You know, if you if you push that or marked
that against the S and P five hundred, you know
you're looking at average annual returns over the past ten years,
(13:42):
and the S and P five hundred, as represented by
the index fun spy much greater than that ten year,
twelve forty seven, five years, thirteen forty eight, three years,
eight oh six. So people say, well, why do I
even have bonds? I think we explained the bulk of that.
You know, we are were to explain the bulk of that.
But I think that as interest rates go up, the
(14:02):
value bonds go down. So it's a mathematical equation to
a certain extent that the worst forget credit quality, forget
the fault ratio. So let's say with with a US treasuries,
the worst trailing performance is potentially the better it's going
to be going forward. And it's almost mathematical in the
(14:27):
calculation and as much that at some point in time
interest rates will peak and they'll head back down.
Speaker 4 (14:33):
Yeah, you know, and we're getting there, you know, be
patient hopefully, you know, I know inflation is still remaining sticky.
But you know the goal of the Fed rate really
right now is to cut rates as soon as possible.
I think, as we've seen with their rhetorics. So you know,
hang in there. You know you'll not you'll not only
get like the agg now is north of five percent.
You know, if they do cut, they do cut rates,
(14:56):
which you can only get five percent. Your microphone, feil.
You know you'll not only get the five percent, but
you know you could get some capital. Why don't you
plug that back in and I'll talk a little while
it is plugged in.
Speaker 3 (15:08):
All right, we'll hear me.
Speaker 2 (15:10):
Yeah, I can hear, I can hear. You have to
put that back onto the table.
Speaker 1 (15:12):
Let's take a little bit of a break, and then nope,
you're good, all right, all right, so I would say that,
so as we move forward, then you look like a.
Speaker 2 (15:20):
Singer over man. Now hold hold on the phone in
your hand.
Speaker 1 (15:23):
We'll fix that at the break. But so as interest
rates go up, the value of bonds go down. I
think that's what we've seen over the past ten years,
that interestrates have gone up, especially over the past five
and the bat the price of the bonds have going down.
Interest rates have now gotten up to about four sixty
four to seventy on the ten year, and I think
that they will be stabilizing. FED has come out recently,
(15:49):
there's there's still someone hawkish. I think the difference between
the real interest rate and relative to inflation is higher
than the FED would like, and that they really haven't
seen inflation continue to decline. I don't think the FED
expected inflation to really go down in a straight line.
Speaker 4 (16:08):
And it's going to be hard, you know. I think
almost forty percent of like CPI numbers are shelter shelter,
So you know, as shelter remains sticky, these things are
going to remain sticky, and you know, I heard someone
at CNBC also note that, you know, China's economic data
is starting to come in a little better, which could
also be inflation area as well.
Speaker 3 (16:29):
So you know, it's gonna it's this this last you.
Speaker 4 (16:31):
Know, what one and a half is percent is going
to be tough for the FED to achieve. But you know,
sometimes I think, you know, you have to. If everyone
didn't think about the Fed's goal of two percent, we
wouldn't be talking about this in that this is very manageable.
You know, at least we got inflation to a manageable area.
And as we've seen over the past year, you know,
(16:53):
a lot of companies can still do well in this
inflation area. In this type of inflation environment, it's going
to be harder obviously the higher you go up, but
you know, I think you're still seeing, yeah, companies, you know,
especially S and P five hundred companies still performing pretty
well in you know, with three three and a half
inflation environment.
Speaker 1 (17:13):
You know, and consumers can live in this environment as
well because it gives them, gives them options. When everything
is going up at the grocery store, you really don't
have a choice. But when when some things are going
up four or five percent in others, other items are
staying flight you have you have somewhat of a choice
as to as to you know, what.
Speaker 2 (17:32):
To buy at a grocery store.
Speaker 1 (17:33):
So a lower inflation rate, you know, south of three
is somewhat manageable. As you mentioned, it also provides I
think the FED with a glide path that I think
they can live with. They're never going to say that,
and I think you see I think you see that
this week with the Fed's rhetoric being a little bit
more hawkish than you would have expected. But I think
(17:55):
the market had already kind of discounted that. The market
had already pushed up to ten year to four to
sixty five from four to twenty five. So the Fed
is kind of getting in line with market sentiment right now.
I don't think you're seeing anything really new, you know,
out of the Fed this this, this recently. So diversification
is going to help you, whether there's strong the other thing.
Speaker 4 (18:16):
I yeah, you know, I think you always have to
ask yourself a question when you're investing, is what if
I'm wrong? Now, if people come in here and say,
you know, you do you have lump some invest or
do you you know, you work your money down and
you know seventy five percent of the time it's smart
to lump to lump some invest because you know the
market's up seventy five percent of the time. But you
(18:36):
always have to say, hey, what if you're wrong? What
if there's a black swan event? What what if this?
What if this?
Speaker 3 (18:40):
So you know, I think, yeah, when you invest, always
ask yourself what if you're wrong?
Speaker 4 (18:44):
And never be too confident in one thing because that
usually doesn't end well and you know, could be disastrous
your portfolio. You know, Yeah, you don't want to, you know,
put all the hard work that you've done over the
past ten, twenty thirty years.
Speaker 2 (19:01):
At risk at risk. Yeah, you know.
Speaker 1 (19:02):
And I think what happens too when we we've been
in business thirty five years, will be thirty five years
in August. I think what happens to people is they
rather than dila quest average if they if they invested
in the market in a lump sum.
Speaker 2 (19:16):
And sometimes it's not a bad ideas. It's a lateral move.
Speaker 1 (19:18):
If you're let's say you're eighty twenty and you're four
to one k and you roll it over to your
IRA let's say with Fagan Associates, we clear through Schwab.
You know, we'll get to eighty twenty pretty quickly, so
we don't have a problem with that. But if you've
been in fixed income for your whole life and now
or you inherited money and now you've got one hundred
or two hundred, three hundred thousand dollars or whatever, you know,
it's best served to kind of work that in the
market at at we would see opportunistically rather than in
(19:42):
a lump sum, because if you decide to put it
into a lump sum, transfer it over and get in
to eighty twenty ratio, let's say too quickly, and the
market goes down, you know, that could definitely compromise your
confidence in the market and you may not be around
for the rebound when it comes.
Speaker 4 (20:03):
Yeah, and you know we also try and take I guess,
like our expertise and how fast we get cash invested.
You know, the more bullish we are on the market,
the faster we'll get invested in. The more barrass we are,
the slower we'll get invested. You know, especially with rates
at money market rates at five percent, you know that's
our hurdle rate.
Speaker 3 (20:19):
Right now.
Speaker 4 (20:19):
So you know, we try and strategically find things that
we think we'll do better than that over the next
year and get it invested. And if you know, there's
not as many options right now out there, you know,
we're happy with the five percent sitting on the sidelines
until we find something that we think could do a
little bit better.
Speaker 1 (20:36):
And I think that in our right now, we are
looking at for growth and income. Investor someone approaching retirement
into retirement, you're looking at roughly sixty to seventy percent
of your account in the stock mark with the balance
and bonds and cash, and we invest a good chunk
of money of the cash into money market funds that
(20:59):
are paying about five percent from a cash position or
BIL which is a short three month in check, which
is one to three month treasuries that pays over five
percent as well. So that's the areas that we're looking
at for cash liquidity needs. And I would think too,
like I've heard a lot of the sixty to thirty
ten portfolio because of the.
Speaker 3 (21:21):
What is the ten cash or all ten cashs tense cash.
Speaker 1 (21:24):
Well, people are saying, look, if interestrates continue to go up,
let's kind of look at at holding some cash just
in case. Certainly you're not going to benefit if interest
rates head back down. But you know, I can live
with that sixty percent in the stock market and forty
and fixed incoming cash. I think that works for the
vast majority of investors, and I think investors feel more
(21:47):
comfortable with that as well, given the run up we've
seen in the market. You know, for growth investors, it
would be at least seventy five percent in the market
in the balance in cash, waiting to get cash in
that short term one to three month treasure bill, looking
to get it into the stock market at some point
in time. Because as a growth investor, you are saying, hey,
you're in it for the long term, and you're going
to accept the volatility as a from the excuse me,
(22:10):
the income side. For us, it's less than fifty percent
in the stock market. So but going back to that
one comment, you know, I don't believe you're setting yourself
up for failure with having a diversified portfolio. You're always
going to have if failure is measured by things that
are either up less than others or might be down,
because there it's appropriately allocated for your needs and we'll
(22:33):
accept that all the time. It's kind of have a
spare tire. I can't remember not gonna win the last
time I had a flat Yet I'm not taking that
spare tire out because the cost of doing so should
I have a flat tire.
Speaker 4 (22:43):
And it's also your needs and also what you're comfortable with.
You know, you don't want to get outside your comfort
zone and then make the wrong decision because you're outside
your comfort zone.
Speaker 2 (22:53):
Now it's possible.
Speaker 1 (22:53):
I'll speak with this individual and he'll say, well, I've
got this in the bank and that in the bank.
And I think other people that that's the mistake people
make too, is they look at their investments like slivers
of pie. Okay, this needs to be in the market,
you know what I mean, rather than taking their whole
investment portfolio and then calculating the ratio of the let's
if you have four hundred and fifty thousand dollars, strip
(23:15):
out what you don't want, what's not long term, and
the balance should conform to your longer term objectives. And
that's kind of what we do. So that'll just about
wrap up the first half of the hour. Honey Bees,
US population or in the Samantha fay Dowd a r
at an all time high, and I'm happy about that.
Speaker 2 (23:35):
A lot of a lot of individual.
Speaker 1 (23:36):
What are they called beekeepers, I forget what they call them.
They're not beekeeper aparis. They have APIs. I'll mention it
when I get back, but right now, it's ten thirty
on the station dependent on for news, weather and information
News Talk A ten and one O three one w
g Y.
Speaker 2 (23:51):
Good morning, and welcome.
Speaker 1 (23:52):
Back to the second half hour of the Capital District's
Money and Investment program. You're listening to the fague and
financial report that the trials, tribulations and perils of live
radio is the microphone.
Speaker 2 (24:03):
Yeah, I know, but we we I did that once myself,
remember that.
Speaker 3 (24:05):
I remember that. Yeah.
Speaker 4 (24:07):
It's tough because it's it's on the side of the
side of the table, and the side of the table
is not just like you know, I don't know, it's
not flat, so you can't really attach well onto it.
Speaker 3 (24:18):
But we got through it.
Speaker 2 (24:19):
It's just an old table.
Speaker 3 (24:20):
I forget heavy. I think I think you won that
like an auction or something like that.
Speaker 2 (24:25):
I think I did get this. I forget where I
got it.
Speaker 3 (24:27):
Down to old Misselli's I think it might have been.
It's a nice table. It's it's you know, nice and hard.
It is a nice table solid.
Speaker 2 (24:34):
But anyways, it has like a bevel side. That's the
word beveled side. So that, uh, and your microphone went off.
Speaker 1 (24:40):
So we apologize to the to the listeners out there
if you your ear drum is ruptured. But that's the
price you pay for listening to the fakean financial report.
Speaker 2 (24:50):
We never.
Speaker 1 (24:52):
Expressed their stated the fact that we were experts about
the radio.
Speaker 3 (24:57):
We did this ourselves during COVID. We created this studio.
Speaker 1 (25:02):
I think that people would people would not be surprised.
Speaker 4 (25:05):
I think it's I think it looks you know, it's
in one of our old offices. There's stuff everywhere, you know,
there's some poppy stuff. Yeah, you know, but we got
we got some soundproving thing up here. We got the
technology to work.
Speaker 2 (25:16):
Technology works great.
Speaker 3 (25:18):
We do miss Zach at the Zach every day.
Speaker 1 (25:20):
But they said we didn't have to come over anymore
during COVID, and they said don't bother.
Speaker 3 (25:24):
So if your setup is so good, you don't need
to come.
Speaker 2 (25:26):
And they don't let you drink coffee in the studio.
Speaker 1 (25:29):
But I will say so, you know, talking in the
first half, we talked a bit about diversification and what
it means, what the benefit is. You know, it's always diversification.
I read this somewhere. It's always having to say you're
sorry about something. Yeah, right, you know, why don't you
have more this? Why do you have any bonds?
Speaker 2 (25:45):
You know? Why do you sell this? You know?
Speaker 1 (25:47):
Why do you why you know you sold A and
went to B and A is still going higher and
b's going on. People pay more attention to the things
we sell than what they own.
Speaker 3 (25:56):
It's things that are going down also.
Speaker 4 (25:59):
But yeah, you know, you pick some things outside of
the sect, like you know, we try. We're growthier investors,
growth at a reasonable price correlation to the S and
P five hundred, try and use some expertise to you know,
outperform the S and P five hundred by you know,
a few percentage points per year. But you know, I
think what's important that we do, and you know that
(26:19):
you know that I try and do is you know,
you pick five or six really good companies in sectors
that you know kind of are outside your you know,
maybe investment philosophy, of your scope of investments and you know,
you stick with them, you know, and whatever those companies
may be or sectors may be, know that, hey, you know,
they might underperform at times, but these are great companies
(26:39):
that will do well over time, you know.
Speaker 2 (26:42):
And I right, but you know, I'm.
Speaker 1 (26:44):
We're I'm talking more of the risk side too, that
we talked about, and I know you talk about all
the time. And I learned a lot from that that,
you know, And I was met with somebody this morning
about they're well into their sixties, they don't have children,
They've got a great chunk of money, and and I
think sometimes at the risk of insulting people out there,
and I find myself doing it sometimes.
Speaker 4 (27:06):
You know.
Speaker 1 (27:07):
Yeah, when you're in your thirties, forties, fifties, fifty five, whatever,
thinking about retirement, it's about accumulation, accumulation of money, you know.
Speaker 2 (27:16):
You know, you obviously you.
Speaker 1 (27:17):
Have parts to your life that are not about finances,
but this is a financial show, you know. You know,
So it's about accumulating assets within your tolerance to risk
so that you can retire and do the things you
want to do. I think sometimes when people flip over
to the retirement stage, understandably, so they have a hard
(27:39):
time moving to that. They're still in the accumulation stage
in their mind. Or oh my gosh, my portfolio is
worth you know, eight hundred thousand and last year was
worth seven hundred, whatever the case may be. And really
that becomes the objective rather than you know, this eight
hundred thousands can kick off forty grand year income for
you and your spouse to do the things, or you
(28:01):
and your partner, or you to do the things that
you want to do, you and your kids, you and
you and you and.
Speaker 2 (28:06):
Nobody, and I think we end up.
Speaker 3 (28:09):
It's hard, though, like I under but I understand it.
You know, it's hard watching.
Speaker 4 (28:13):
Your assets go down, especially when you don't have income, right,
you know, it takes years of getting used to Some
people are never used to it.
Speaker 2 (28:20):
You know.
Speaker 4 (28:20):
You got to be comfortable with being uncomfortable, and that's hard,
you know, especially after like programming yourself for five decades,
four decades of work to do.
Speaker 3 (28:31):
It's hard.
Speaker 4 (28:32):
It is hard, you know, but you have to just
put systems in place, on procedures in place, knowing that
it'll go up and down. But it's the right, you know,
you try and do what's right for.
Speaker 3 (28:41):
You and for your portfolio.
Speaker 4 (28:44):
And it's hard when you know, you see a twenty
percent pullback or when COVID happens, you know. So you know,
I feel for people, and you know, just try and
make their life a little bit easier by providing some
historical contexts, some statistical historical context to, you know, tell them, hey,
this time isn't different, and.
Speaker 3 (29:02):
That that has worked.
Speaker 1 (29:03):
That has worked, you know, And and I think that
you look at like to kind of go to the article.
It's perfect timing for it that we read Larry Fink's
annual Chairman's Letter to investors from Blackrock, and I mentioned
in the first half that you know, we've had some clients.
Speaker 2 (29:21):
Calls and say, don't buy any black Rock funds because
of their what are they doing?
Speaker 1 (29:26):
Just the social governance they were they were they were
kind of on the other side of oil and the
like and using their proxy their their share power for
for green and the like. And you you know, whether
you agree with it or not, and I disagree with it.
I don't think it's I think the first of all,
if you're a shareholder, you should vote your own proxy,
(29:47):
you know, because that's going to reflect what you believe
rather than somebody like even us or or yeah, yeah,
people are getting more involved than you know that that
type of investing, and yeah, we try and stay out
of that you as a whole, and just you know,
just kind of like people.
Speaker 4 (30:02):
We think people should do what's best for their shareholders.
We try and do what's best, you know, as for
douce shares for our clients.
Speaker 2 (30:09):
True.
Speaker 1 (30:09):
And so if you if you want a copy of
this letter or just you could just google Larry Thinks
twenty twenty four, Anneal Chairman's Letter to Investors, or give
us a call or at five two seven nine ten
forty four send us a message at investment at Figan
Associates dot com.
Speaker 2 (30:23):
But it's asset dot com.
Speaker 4 (30:24):
You know, like a company like Blackrock, when you become
so big, you're just gonna tick everyone off somehow. You know,
you have one side being mad about the esgu you
have the other side being mad at them because they're
buying up, you know, residential property and we're all going
to be renters. So you know, they're kind of in
a no win situation, no win situation. But just what
do you just say about the retirement age of sixty five.
Speaker 1 (30:46):
Well, he's saying that in the year twenty and fifty three,
the United States will see more people leaving the worst
workforce than coming in. And you also said, basically that
retirement age at sixty five is forget about it. It's
it's it's it's it's silly, you know, for a variety
of reasons. But he starts out with, what.
Speaker 4 (31:10):
Do you how do you think about that? Do you
think I think silly? Is almost defensive.
Speaker 1 (31:15):
Well, he didn't say it's silly, don't get me wrong.
He did not say it silly. Basically said that it
was anachronistic. It's it's it's it's old way of thinking.
It's uh, it's it's not the right way to look
at things now.
Speaker 4 (31:30):
Uh yeah, it's almost like a new phenomena. You used
to work to your dad type thing. You know, this
is something that we've yeah, we've developed me aspired to right.
Speaker 1 (31:43):
So and now in the twenty first century, that has
to change. And what he what he had mentioned is.
Speaker 4 (31:50):
Is that.
Speaker 2 (31:52):
Is that as as a as a as.
Speaker 1 (31:54):
A country, we spend a lot of time and energy
helping people live longer lives through through medicine. There's a
new OBCD drug he mentioned, for example, can take more
than ten years off more, can take more than ten
years off of somebody's life expectancy, can add ten years more,
can add ten more than ten years to someone's life expectancy.
(32:16):
And we focus a lot of time on the on
the on the financial side, but very little time excuse me,
a lot of time on the healthcare side, but very
little time on the financial side. And he says today
in America, the retirement message at the government companies to
their work workers is effectively.
Speaker 2 (32:32):
You're on your own.
Speaker 1 (32:33):
You know, we've moved from a country of defined benefit
plan to define contribution plan.
Speaker 2 (32:40):
And he goes on to say.
Speaker 1 (32:42):
That that is a big problem and that he'd you know,
he he and Blackbrec don't have the answer, but there's
a lot of data to suggest that that the demographics
of our country, which more people leaving the workforce and
coming in in about thirty years, is going to put
(33:02):
a burden on first of all, the workforce to take
care of all and that maybe AI is a good
thing in that respect, but it's going to put a
burden on social security and something's got to change there,
and that the United States, the average worker does not
have the confidence really that and the optimism that is
(33:29):
going to be taken care of. He also goes on
to say that in nineteen fifty two, most people were
not preparing for retirement because more than half of them
passed away before they got to retirement, so they never
really lived into the system until that.
Speaker 2 (33:43):
So, you know, I know, we talk a lot.
Speaker 1 (33:45):
About social security, we talk a lot about our clients
and social security, but there's nothing like saving on your own.
Speaker 2 (33:56):
What does your generation think about Social Security?
Speaker 3 (33:59):
I don't know.
Speaker 4 (34:00):
So I think everyone thinks it's just not happening. And
you know, rightfully so right now, in my opinion, you know,
you'd say, hey, what the Winston Churchill quot the United
States is the right thing at the wrong at the
very last moment, right so I think you always have
that hope. But yeah, you know, I don't think our generation,
(34:20):
in those younger than me, are yeah, as optimistic about
about the future as as others. You know, And I
you know, you don't want to say things. You know
on the radio it's like, oh, classic kids think you know,
blah blah blah. But you know, yeah, you know, homes
are less affordable, you know, the pension system is is
(34:41):
not what it used to be. I was just reading
an article. In nineteen fifty, over ninety percent of people
made more than their parents. By the time nineteen eighty hit,
it was about fifty percent. So, you know, I think this,
I think that's kind of what people are, you know,
frustrated about, you know, the affordability of housing things that uh,
yeah of life today and you know, rent forever type
(35:03):
of type of you know, people don't think that they're
ever going to be able to afford.
Speaker 3 (35:07):
A house, and yeah, well that's just what you know,
I think people are.
Speaker 4 (35:13):
You know, you know, you get nervous about, you know,
being on the radio, people like the lazy millennials and
things like that. But you know, it's, uh, it's I
think it's tougher out there to get a middle income
job where you can afford a house, you can where
you can afford to go on vacation, where you can
live a happy life, you know, I think, and you
know I don't it's not people, you know, I think, Yeah,
(35:34):
I think it's this uh development of yeah, of putting
the putting the weight of your retirement on on on
your shoulders and having to contribute. Not only now you
have to contribute. You don't get a pension, you have
to contribute, even like we have a lot of people
that come in here with pensions that don't need the
savings that people. Yeah, so I think a lot of
(35:58):
people in my generation are like, let's score moneyway, Let's
scrow money away, Let's scrow moneyway, because hey, you know,
I'm not going to have the five thousand dollars a
month come in that that was once.
Speaker 1 (36:08):
Well, I think probable, you know, you would know more
than I would about your generation in that respect, but
I would say that, you know, I think that I
think your generation perhaps has a more I'm going to
call a laissez fair attitude towards retirement. But they're gonna
enjoy They're going to enjoy the journey more. Maybe they're
going to you know, not maybe that maybe you know,
(36:32):
and I'm not suggesting that the millennials don't work as hard,
but you need to. You need that, you need that
caret there. You need the ability to move ahead, You
need that belief that the system will allow you to
move ahead before you're going to really, you know, go
with Gusto down.
Speaker 4 (36:48):
There, even like you know, the median salary in two
thousand and two was forty two thousand dollars a year,
and twenty twenty was fifty four thousand dollars a year.
That's a twenty seven percent increase. The median home went
from one hundred and eighty thousand dollars to five hundred
and fifty. You know, that's I think these are you know,
now you need to make triple the median salary to
afford the median home, you know. And I think these
(37:09):
are things that you know, I think those are worried
some you know, forty percent of people don't have mortgages.
When are we going to have houses come back on
the market, you know, maybe when you have these ten
thousand people turn sixty five every day start to pass away.
And you know, I've yet to say my opinion on things.
I'm just saying what people think and why people are frustrated.
The cost of college is going up nine percent per
(37:30):
year since nineteen eighty.
Speaker 3 (37:33):
That's kind of.
Speaker 1 (37:36):
Right, you know, I think sometimes and people may call, well,
if you look at the cost of college, the government
has their hand in what three.
Speaker 2 (37:49):
Major aspects of life though, really.
Speaker 1 (37:51):
Health, healthcare, housing, house, Yeah, and education and when there's
not really constraints on that when you know, and if
we're now forgiving.
Speaker 2 (38:02):
Potentially college debt. I mean, it's just it's just.
Speaker 4 (38:05):
So many moving parts right right, some who knows what's
going to go on? You know, who knows what's going
to happen. You know, we were kind of just talking
about that this morning, about how you know Biden's gonna
forgive student loans why because he doesn't really have a
chance not to, because people have already gotten used to
not paying them since COVID. So what happens you start
paying your student loan debt and the economy tanks before
(38:26):
the election, or you just throw it on our balance
sheet for later. What are you going to do as
a politician trying to get elected? Yeah, you know, all
these people are trying to do is get re elected.
You know, nothing's happening really, And I think that's what
people are frustrated about.
Speaker 1 (38:38):
And I think you can cut across stages. But there
was a there was a Happiness type of a poll
that was done globally and the United States has dropped
from the top ten to maybe going off memory to
a lot lower than that, and a lot of it
is because of the responses of people in their thirties,
you know that they are not optimistic, they are not happy.
Speaker 4 (39:00):
People even younger than me are even more pessimistic. I've
just been finding this out by like researching on gen Z.
They're really not happy.
Speaker 1 (39:07):
But you know, but but I think sometimes it's you know,
when we talked about the education system, the upper education system,
we've gotten away from maybe the work ethic of America.
Speaker 4 (39:18):
Yeah, And I think people and I think we're electing
politicians that have fooled their constituents into doing things both
on the left and right, that are in the best
in the best interest of their constituents when they're not right,
you know. And I think that's uh, you know, people
are starting to get a little bit mad about that.
Speaker 3 (39:35):
People just want to be able to afford to live,
you know.
Speaker 4 (39:36):
And I think, you know, I think we've gotten away
from the important parts of uh, you know, America that
make you know, our country great, but also you know,
help put money in people's pockets.
Speaker 1 (39:51):
Right and also make sure that we take care of
people and also make and I think COVID was a
demarcation point of of that's that schism. So to speak,
if you want to call it, that rift between a
lot of different factions of America. Like, you know, the
people that don't have we're calling they're not working hard enough.
(40:12):
The people that you know are you know, not here.
The immigrants were calling terrists there. In reality America, we
need we need all types of people in America. But
if you want to certainly we need immigration that needs
to be regulated, regulated. But I think for the younger people,
and this is a global problem, you need opportunity for
(40:35):
those people, and you need something that they can say, well,
I worked for this, so I achieved this.
Speaker 4 (40:41):
Yeah, And I'm a little bit worried about that. Just
with the rise of artificial intelligence. You know, you're starting
to see layoffs. Layoffs are on the rise, part time
jobs are on the rise, full time jobs are on
the decline, but job numbers are going up in unemployments
going down because of part time jobs. Right, So I'm
a little bit worried in the future of you know,
the impact artificial intelligence and technology has on the middle income,
(41:03):
the middle class. So you know, you know, I think
we talked about this a lot on the show, and
that's what's most.
Speaker 3 (41:08):
Important to me politically, is building.
Speaker 4 (41:10):
Up the middle class economically, economically, politically, for the stock market.
I think that is that is the biggest cause for
concern when talking about a black Swan event, in my opinion,
is the dying middle class.
Speaker 1 (41:26):
And I think President Trump and President Biden, I think
are working on that, maybe in different ways, but I
think both of them have realized that the shifting of
production to just from just in Time, which was, Okay,
we're going to work down inventories. We're going to manufacture
(41:47):
everything overseas, you know, including some things that would be
in our national interest not to manufacture overseas. We're going
to bring them back. We're going to on shore them
or near shore them, you know. I think it will
help a lot. So that justin Time is going to well,
just in case, just in case China cuts us out,
just in case we have another pandemic. We want to
bring things here so that we're not compromising our national security,
(42:10):
which in turn will most likely help the middle class,
which which in turn might will most likely I'll say,
keep inflation. It's gonna be hard to get inflation down
to two percent. And if you get inflation down to
two percent, I think.
Speaker 4 (42:28):
Is bringing inflation down to two percent the best thing
for the middle class in the long run.
Speaker 3 (42:32):
I don't think so.
Speaker 1 (42:34):
Well, it's kind of like saying, well, if you can
do it, it's the well, it's it's a congressionally mandated
thing that goes back to that. Believe the seventies, you know,
full employment and inflation at two percent, you know, maximum
sustainable employment, inflation at two percent, and at one point
in time that that that number was thought to be
you know, for you know, well they figured maximum employment
(42:56):
unemployment would be uh, you know, about four four and
a half percent, said you know so, and then inflation
would be about two But maximum employment has come down.
We see excuse me, unemployment as unemployment's now three point
seven percent below the four point five or four point
six that was we thought was maximum employment at one
point in time. So it's gonna be tough. But I
(43:19):
often say too, it's kind of like we are. It's
like king of the hell, you know, when they're when
there it's global production. They're gonna be individuals and countries
that are going to be much cheaper, much much more
able to produce things cheaper than in America.
Speaker 2 (43:33):
Yeah, you know, and that's just the way it goes.
Speaker 1 (43:36):
But Larry Fink addresses a lot of things, and one
is you know, and and I think, and now I
said this to somebody, uh yesterday or the day what
it wasn't yesterday this past week on the phone, that
you know, people in their sixties and above probably don't
have to worry about their Social Security benefits being there.
People maybe forty forty to sixty are going to get part.
Speaker 3 (43:57):
So it's just a tax for us, right.
Speaker 1 (43:59):
Well, no, I think you're going to get it. I
think it's got to be changed. And I do think
the age is probably going to be changed for everybody.
I think it's going to become much more means tested
than it is now. Right now, right maximum is eighty
five percent of social scurity benefits are taxable at a
federal level.
Speaker 4 (44:14):
We can start losing benefits to deter people from taking
it earlier.
Speaker 2 (44:17):
Yeah, things like that.
Speaker 1 (44:19):
That or maybe one hundred percent of benefits are taxable
if you get above a certain income threshold or asset threshold.
So those are some things that think you're seeing. So
as it pertains to our show, and we don't digress,
I think doing this forty years you've been here twelve,
been in business thirty five. All these things go through
a mind that out of the bottom comes Okay, these
are some areas that look good from an investment standpoint.
(44:41):
This is what this means to the bond market potentially
over time, and we invest our clients' money according to that.
But you know, as someone who is you know, helping
clients along the way, you know, we certainly you want
to make sure that you get into an investment, get
into your four oh one k, you know, match the
(45:03):
employer's match, think about what journey you want through life
and go from there. Very think mentions in the Netherlands,
they decided to about ten years ago to gradually raise
the retirement age and now to adjust to life expectancy.
You know, so if life expectancy the Netherland goes up
by a year, so does the retirement age.
Speaker 2 (45:24):
And also talks about making it easier.
Speaker 1 (45:27):
You know, if someone's if someone's got to work an
hour to enroll in their company's four oh one k,
why you know, some people.
Speaker 4 (45:33):
Will say it should be an opt out out as
opposed to an opt in. That's a huge chapter of
Richard Taylor's book. I think it's I think it's Richard Taylor, but.
Speaker 1 (45:42):
Judge right, I don't. I don't know if that's the case,
but I know the book, so I don't know. So
so right, do do a lot of of maybe your
contemporaries do. But do a lot of people know that
your employer is going to match a lot of them
one hundred percent of your friend three percent of your contributions,
things like that that I don't think they realize. And
(46:04):
I think that's what Larry thinks in has to be
made easier for for the average worker before we can
you know, kind of kind of figure this thing out
a little bit, you know.
Speaker 2 (46:14):
Yeah. Anyways, So that is that's what's going on here.
Don't know what else? What else did he have to
say within this within this article?
Speaker 1 (46:26):
So we live in a you know, and I and
I say, I think a lot of I might say
in a lot, I think we live in that we
live in an environment of fear rather than hope. And
I think some of that has to do with, well,
it has to do it in part because of the
eradication more or less of the Defined benefit plan. It
has to do with you know, as you mentioned, housing costs.
(46:47):
I think it has to do with social media. I
think and think the result is that it probably probably
leads to uh, the average person your age investing, them
investing their portfolio to conservatively yeah you know where you
have investors.
Speaker 2 (47:03):
Who concertainly let me see. So that's Larry Fink has
to say.
Speaker 3 (47:10):
Over the last That was kind of the gist of it.
Speaker 4 (47:12):
You know, I think, you know, like a lot of things,
we read the headlines and don't read into you know,
you saw this all over the news of you know,
Larry Fank sixty five blah blah blah.
Speaker 3 (47:20):
But you know, I think when you read into it.
Speaker 4 (47:22):
He has a lot of good points to make, and
I think everyone should read it and not just read
a headline and make an assumption like you know, we can't.
Speaker 1 (47:30):
Yeah, but you asked me that to start, Like what
do I think? I think people need to stay active
and engaged somehow for their entire life. I think you
need to stay engaged. And I think that yeah, yeah,
but statistic show you need to stay engaged.
Speaker 3 (47:45):
But what's engaged?
Speaker 4 (47:46):
You know, forced engagement because you have to because you
can't afford to live, or for your mental health.
Speaker 1 (47:51):
I think the recognition that life is a journey, and
that that journey, probably for a lot of people, includes
work because if you are should the risk of a
portfolio because you don't have a defined benefit plan, you'll
feel much more comfortable so doing if you're if you're
engaged in the workforce a little bit, at least part time.
Speaker 2 (48:10):
So I think if you.
Speaker 1 (48:11):
Don't have a pension, uh, you know, you know, even
if you can work two or three days a week
or something like that, or a couple of days just
to kind of ease your mind when things hit the fan,
that'll just about do it. Thanks for listening. We need
to get us hold of us during the week five one,
seven four. Check us out on the web at fagatasset
dot com or like us on Facebook.
Speaker 3 (48:30):
Take care
Popular Podcasts
Amy Robach & T.J. Holmes present: Aubrey O’Day, Covering the Diddy Trial
Introducing… Aubrey O’Day Diddy’s former protege, television personality, platinum selling music artist, Danity Kane alum Aubrey O’Day joins veteran journalists Amy Robach and TJ Holmes to provide a unique perspective on the trial that has captivated the attention of the nation. Join them throughout the trial as they discuss, debate, and dissect every detail, every aspect of the proceedings. Aubrey will offer her opinions and expertise, as only she is qualified to do given her first-hand knowledge. From her days on Making the Band, as she emerged as the breakout star, the truth of the situation would be the opposite of the glitz and glamour. Listen throughout every minute of the trial, for this exclusive coverage. Amy Robach and TJ Holmes present Aubrey O’Day, Covering the Diddy Trial, an iHeartRadio podcast.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!