The Fagan Financial Report

November 17th, 2024

Episode Transcript

Speaker 1 (00:00):
Welcome to the Capital District's Money and Investment program. You're
listening to the Fagan Financial Report. I'm Dennis Fagan, sitting
here with my son Aaron, as we do every Sunday
right here in news to K ten on one oh
three one w G y uh lot going on there.
Good morning, first morning. How are you. How's life treating you? Good?

Speaker 2 (00:16):
Kids are good, kids are good, you know, you know, yeah,
you know, I don't have that much new in my
life for you.

Speaker 1 (00:24):
No, which is good. At my age at sixty three,
it's a good thing. You know, your age, it's not good.
But at my age it's very good not to have
anything new, because usually at my age it's a negative.
You know. Yeah, well things are good.

Speaker 2 (00:33):
Givings coming up, yeah, and training for the Turkey Trot.
You're a pack leader, Well that's unfortunately, that's a that's
a slow moving sled.

Speaker 1 (00:43):
If I'm the pack leader, you.

Speaker 2 (00:44):
Know, you're the pack leader when we did the forty
six high peaks.

Speaker 1 (00:47):
You're the pack that I that I was, Yeah, that
I was you you uh slept on the way up
and the way down. So anyways, today's Esme's fourth birth
fourth four month birthday.

Speaker 2 (00:58):
Your daughter is her for Yeah, I feel like a
bad father. I didn't even realize that, but you know
it is well, there's lots of other days. Four months
old sleeping pretty good. That's all you can ask for,
you know, she big girl.

Speaker 1 (01:10):
Yeah. So talk about the election. You know, we came
out of the gate. You know a lot of people
were and I think fairly the market is the performance
since the election is okay. You know, it's not historically
and anomaly good or bad. I think leading up to
the election, I think is you know, when President elect

(01:33):
Trump was gaining in the polls, the market seemed to
do better, you know. And we'll talk a little bit
about what that might bring. It seems like not seems
like pharmaceuticals have been hit. They're down a bit, nomination,
you have, defense stocks are down a little bit. We'll
talk a little bit about that. On the economic front,

(01:54):
inflation at the wholesale level is measured by the producer
price inecks, and then the consumer price indecks have firmed
up a little bit, they're not continuing to go down.
We'll talk a little bit about some of those components
and what that might mean. Interest rates have continued to
back up a little bit to ten years around four forty.
And for those that don't know, you know, we've talked

(02:14):
about it quite often on the radio show that the
short end of the curve, you know, the treasuries that
can do three six, three months, six months, twelve months
are basically impacted almost one hundred percent by FED action.
As you go out in maturity, out in duration, so
to speak, more and more that the interest rate on
those treasuries are impacted by inflation expectations, so.

Speaker 2 (02:37):
Economic expectations, and yeah, and you're seeing a rise in
the ten yure based on I think Trump's policies and
what they will mean for the economy as a whole.
We talked a little bit about it last week, and
I think, you know, voters voted for Trump, and I
think a lot of it had to do with the border,
but I think a lot of it had to do
with inflation, maybe some unnecessary spending by the BiDi adminute

(03:00):
stration coming out of COVID, which in turn, you know,
made prices skyrocket. I think they're up twenty percent since
since since Biden was elected or thereabouts. But you know,
now we're now now we're seeing you know, the ten
year rise on what Trump campaigned on was bringing jobs

(03:21):
back home, high tariffs, and those are all things that
are inflationary historically. So I think, you know, the ten
years rising based on inflation expectations. And you know, we
saw CPI and PPI come out this year that this
week CPI was two point six percent. I think that's
what it was last week. Last month. I think maybe

(03:42):
it was two point four percent last month. I don't know,
but it did not go down. So and if all
things being equal, I think everyone would have to say, hey,
you know, inflation might be here to stay for a
little bit, for a little bit longer.

Speaker 1 (03:56):
You know.

Speaker 2 (03:56):
That said, I think that those who voted for Trump
would take a little bit higher inflation because you know,
it would mean bringing jobs back home. And you know,
I think some economists have come out recently and said, Okay, yeah,
it might be inflationary for one or two years, but

(04:16):
hopefully over the long run a little bit deflationary as well.
We'll have we'll bring manufacturing back home. So I think
we're still in the way and see mode a little bit.
And I think you're seeing some uncertainty and that's shown
by the bond market.

Speaker 1 (04:32):
I think there's also other things too, though, I mean
because Biden, also President Biden and the Vice President Harris
also just through the Chips Act and the Inflation Reduction Act,
their their their efforts, and also the fact that they
kept some of the tariffs on China. We're also in

(04:54):
an effort to reshure or on shore or reshore close
shore American jobs, you know. So I think it's that,
but it's also the quest of that Americans may may
bear from from from tariffs. We've yet to see how

(05:16):
they're going to apply how President Electrump is going to
apply them, either in a broadbrush or you know, more
specifically and historically in an economic basis s you'd be
better off applying them, you know, more with a scalpel
then really with you know, a machete. So I think
there's that. There's also President Trump's probably be more pro growth,

(05:42):
you know, less regulation. The banks have done very well,
financials have done very well, so more growth also means
in interest rates stay higher for longer. There was an
eighty percent chance that the Fed was going to cut
at their December meeting. That's come down to about sixty percent.
So there's a lot of things. I think you know,
you were saying just a couple of minutes ago that
you know, sit back, take a deep breath, you know, uh,

(06:03):
take away and see attitude as to a lot of
things President Trump is left. Trump is setting up his cabinet.
You know, none none that pertains to the economy directly
pertained to the economy. A Treasury secretary has not been announced.
So I think when you get into those types of things, uh,
you know that's something you know, we'll also pay attention to,

(06:25):
but you know, indirectly r F. K Junior, you know,
impact on the on the and the healthcare system. You know,
we'll see how that goes. Also, uh, Department of Defense
with the Hegsworth Hegsworth is news analysts, Right, we'll see
how that goes. Tulca Gabbert with Homeland Security. Uh so

(06:48):
we'll we'll we'll see how that goes and what what
what sectors that influences. Also, you know, the cessation really
of the EV tax credit, you know that'll be what
do you think that'll mean for Tesla?

Speaker 2 (07:03):
It should be good for them, really, I think, yeah,
you know it's you know, they have that first mover advantage.
I think you were saying that earlier today that you know,
Ron barn came out and said they had Mary Bara,
the CEO of GM, lead the you know, e V
summit in Washington, d C. And they sold twenty nine cars,
you know, while Elon Musk is selling hundreds of thousands.
So you know, when you say it's almost it's almost

(07:25):
like you bring on regulation. You know, we have this
advantage now, and you know, I think it would just
be good for Tesla overall, especially think because I think
Tesla's starting to maybe branch out a little bit into
more of an energy company, an artificial intelligence company. You know,
they have Space X, they have you know, Project X,
which is artificial intelligence. They also have you know, the

(07:46):
power wall, the solar panels, so you know that like
whole you know, being you know, one stop shop for energy.
I think I think that's kind of the you know,
next phase of what Elon Musk wants Tesla to become.
So I think, you know, he he would be that
would be good for Tesla in in the long run
and the short run.

Speaker 1 (08:06):
You know, And I think that the market is responding
also to positively to bureaucracy, is shaving a bureaucracy a bit,
you know, uh, whittling down the numbers employed in the
public sector because you know, the spending in the public
sector certainly takes away from the private sector. It takes

(08:29):
capital away from the private sector. You know. It's called
the crowding out theory.

Speaker 2 (08:33):
You know.

Speaker 1 (08:34):
So we'll see, we'll see how it plays out. So
I think to date, you know, But but you were saying,
you have you've got some numbers about, you know, how
the S and P performs, you know, after the election,
and what what what have you found like with this
election versus prior elections. There anything, anything.

Speaker 2 (08:50):
Stands out to think, anything really stands out.

Speaker 1 (08:53):
You know.

Speaker 2 (08:53):
The week after Biden was elected, the mark was at
five percent. The week after Trump was elected, the mark
was up one point nine to one percent. But the
average is down point eight four percent. You know, it
was down the week after Obama was elected both times
in two thousand and four was up two point nine
seven percent. That's that's Bush, right, and then Bush prior

(09:14):
was down three point four to two percent. So the
average is about down point eight four percent. So it's
it's it's obviously up on the averages. So that's kind
of I don't think you paint anything with too broad
of a brush here. I don't take too much of
you know, one week stock market performance or you know,
a week and a half of stock market performance. But

(09:36):
you know, I think I think you had the little
euphoria as you know, slashing you know, budgets, maybe less
regulation in the beginning, and now I think what you're
seeing now is uncertainty. And you know, the market doesn't
like uncertainty, but it does climb a wall of worry, right,
So I think we're going to still be in that
way and see mode, and I think the market could

(09:59):
be volatile at the beginning of next year when we
see what policies Trump really tries to spearhead going into
next year.

Speaker 1 (10:08):
It's funny because or ironic because I think I think
you're you're one hundred percent right. The market doesn't like uncertainty. Well,
we just got certainty from the election.

Speaker 2 (10:19):
We we could be over that. Yeah, we could be
past that. Part of that's now now we're in like
economic uncertainly.

Speaker 1 (10:24):
Uncertainty over the administration. But who's gonna know we You know,
I don't.

Speaker 2 (10:28):
I don't have it right up in front of me,
but but maybe I do and it's basically, uh, Jim Paulson,
who's a fund manager, came out and he has a
sub stack, so it's basically a blog that I pay for,
and you know, I guess in short, he basically says that,
you know, the more uncertain economic policy is, the better

(10:49):
the market does historically. And just the fact that the
market does usually climb a wall of worry, you know,
it's the whole bi low sell high or and you
really should be eyeing when you know that there is
a pullback and there is uncertainty, because you know, it
does become certain eventually. But I thought it was was
an interesting article, and we're seeing companies still do pretty well.

(11:12):
You might you might say that, you know, some sectors
of the market are overvalue, but I think overall, you know,
companies are healthy, Companies have more free cashrow than they've
ever had, especially in the S and P five hundred.
We are in a declining interest rate environment, so it's
all things that are historically good for, uh, the stock market.
I think we're again, you know, I think we're just

(11:33):
in that way. And see, you know, attitude as investors
with you know, what happens with a lot of these
you know, policies Trump Trump has talked about. But you know,
at the end of the day, you know, I I
these words aren't mine, but I was listening to a
podcast and they're like, you know, Trump does have some
narcissistic tendencies, and he he likes looking at the scoreboard,

(11:54):
and the stock market is the scoreboard. Scoreboard, it's the
ultimate scoreboard. So you know, I do think there is
a floor in the stock market in that. I think, uh,
you know, President elect Trump will always have that in
the back of his mind.

Speaker 1 (12:07):
Yeah, how's that because that's a reflection on him. I
think reflection on him.

Speaker 2 (12:11):
Yeah, and I you know, good for business, stock market
does good, et cetera. So I I think that does
put a floor in the market. But it's so contradictory
with what his policies really are with inflation and bringing
jobs back home, and you know what happens with retaliatory terrorists,
although we didn't really see any and his lasted in

(12:32):
his last administration. So you know, I think the market's
in pretty decent shape here. You know, I'm not too
optimistic or too pessimistic, but you know, I think it's
I think what he's doing is so experimental, you know
that it could have long lasting effects on the economy

(12:53):
for decades.

Speaker 1 (12:54):
Uh.

Speaker 2 (12:55):
And it's it's.

Speaker 1 (12:58):
Well, I think the people would I mean a little
uh you know that would say, right, it is unnerving
a little bit. But there's a lot of potential for
those two kind of positive potential for his economic policies.
You know. But but and I remember reading the economists
and they were saying that, which is why they they
endorse Kamala Harris, is that the United States Trump is

(13:22):
the range of potential outcomes is broader Trump for sure,
for sure. And and so you just got to keep
an eye on on where you think as a person
who manages money, that that that what that direction is
trending at the time, and and that not the short
Here's here's one thing I would say, okay, and and

(13:43):
and then get into the consumer and wholesale infation. You know,
And I know you know you mentioned what rates are
coming down. You know, you know, I think they're bottoming.
I don't think we're gonna get made the Fed may cut.
And with the FED cuts I said earlier, you have
the low the short end come down, but I think
the intermediate and intermediate six seven, eight, nine, ten, twelve

(14:06):
year treasuries. I think this is kind of it, you know,
I think this is kind of it. To the downside,
I don't think you're going to get though the tenure
maybe goes from four forty back to four.

Speaker 2 (14:16):
That's always going to be uncertainty.

Speaker 1 (14:19):
And I think the inflationary policies, whether it's the debt,
whether it's with whether it's you know now some some
say that.

Speaker 2 (14:26):
But it's that that's that should be good for investors.
You know, on the pond side. At least you can
pick up four percent for the foreseeable future. And if
they hover, if you know, it's all about you know
there there, If they stay range bound, that's even better
I think for the bond market.

Speaker 1 (14:41):
And it's right now, and I and I and I
don't I don't disagree with this I've heard, you know,
kind of like Elon musk Is is a disruptor, Vivic
Ramaswami is a disruptor. Uh. They are going to head
the Department.

Speaker 2 (14:53):
Of whatever right, government efficiency.

Speaker 1 (14:55):
Government efficiency right, So tariffs if if there is some
passtor and costs the American consumer, maybe you offset if
this this d O G E not coincidentally dosee government
uh uh, I don't know. Agency uh can can reign

(15:17):
in bureaucracy. You may offset the increase in price from tariffs,
the one time increase by you know, lower costs. You know. So,
so we'll see how it plays out. But you're but
you're you're you're right, And this is not a negative
about Trump. He's the range of potential outcomes are going
to be broader than if if you had your your
traditional type of politician re elected in this case, Kamala Harris.

(15:40):
You know, so we'll say, now some and what what
I think played out there? This what I think is
playing out in keeping interest rates kind of where they
are is inflation. And I've often said inflation is like rain.
It's not a bad thing. You know, you can't grow
a garden without some rain. So you can't have a
good economy without some Inflation could spurs demand. If you

(16:01):
think the price of something's going to be higher next
year a little bit, you're going to buy it now.
If you think it's gonna be lower next year, That's
what happened to Japan, you're not going to buy it,
and that's what's happening to China. Right now. Is China's
in a cyclical inflation deflationary spiral with housing prices down
in the like. But we'll see if it turns into
something longer term or secular. But the two numbers that

(16:21):
came out this week, the consumer and producer price indexes
in this is kind of showed that that inflation is
kind of here. The Consumer Price Index up two tens
of percent during the month of October. That's the same
as during the prior three months. That is what was expected.
The year over your increases two point six percent. If

(16:42):
you look at the CPI less food, energy, and shelter,
it was also up two percent. It's two point one
percent year over year. Shelter costs, I believe, and I
have it right in front of it. We're up four
tenths of a percent. So I think shelter remains a
thorn in this Of those that think can finished, I

(17:02):
think so.

Speaker 2 (17:03):
And you know, I don't know, I haven't heard any
policy talk with Trump, but you know, I do think
that it's about time the government got a little bit
more involved in uh, just housing in general. You know,
you have just housing beyond a you know, county by county,
state by state, town by town kind of plan. And

(17:26):
I do think we're going to need some, you know,
major changes in the housing sector, especially it being a
supply issue to get more houses built. Yeah, and it's crazy.

Speaker 1 (17:37):
You know, not you don't want to loosen up the qualifications.
But I think there's pent up now and four housing
four houses, right, I.

Speaker 2 (17:43):
Mean, I think you need to we need to build
more of those four hundred, five hundred thousand dollar houses.
It seems like there's a lot of a million dollar house,
seven hundred and fifty thousand dollars houses on the market.
But you know, those first time home buyers that there's
there's there's not much available.

Speaker 1 (17:56):
There isn't much available at all. So and then you
also had prices that the at the wholesale level is
measured by the Producer Price Index also kind of leveling
off in that two tenths of a percent or so
PPI have two tents of a percent and up two
point four percent year over year. Again, the Fed's inflation
target is two percent, so they wanted so they're sitting

(18:16):
around two point four to two point five two point
six depending upon what you're looking at excluding food and
energy inflation rules at three tens of percents, up two
point two percent year over year. So I think what
you're seeing is food prices actually fell, they still up
two point seven percent year over year. So you continued
energy prices down three tens of percent last month, down

(18:36):
eight percent year over here. You could get some deflation
in in energy costs if we really drill to the
extent that President Trump wants to, President Electrump wants to.
So we'll see what happens there. Jerome Powell, testifying yesterday
or in a speech yesterday, in his speech Thursday, basically

(18:58):
said the FED doesn't need to be in any real
hurry the economy, and I quote, the economy is not
sending any signals that we need to be in a
hurry to lower rates. And I and I would agree
with that. Ye me too, you know, I would agree
with that. I think you can. You can. You can
sit back and see.

Speaker 2 (19:14):
Yeah, I think you can. And I think you're seeing
by this sticky inflation around you know, the mid two
percent that you know it's it's gonna be really hard
for inflation to continuously go down when we do still
have a very strong consumer. So no matter you know what,
you're here on on the TV or radio. Now, the
consumer is in actually pretty good, really good shape, and

(19:36):
the economy is actually doing pretty well. So you know,
it's going to be very difficult for the FED to
get that two percent target.

Speaker 1 (19:43):
And you also, which you also have too, you have
past inflation impacting wage growth, you know, and I know
that's not not as big of a percent, but at
the at the periphery, you know, you have you have
you just look at like the long the DOC strike,
if you look at the Boeing strike were there were
huge settlements. Now again there's not a lot of private

(20:05):
unions left in the United States that percentage of the
total working population. But you know, at the fringes, it's
gonna keep you know, even if you're not a unionized
and you you know, you're still going to keep in
mind that inflation was twenty percent and the aggregator of
twenty three percent over the past four years and you're
paid and keep up with it, so you're gonna want
pay bumps. So that almost begets itself. Wage inflation almost

(20:28):
begets its you know, you know, almost begets more wage inflation.
So so and again, so where do you go with
this there? So if if someone's listening, they're like, oh
my god, I listened for twenty minutes. And what I
get out of this for my portfolio? What do you
get out of this for your portfol You can pick
the stock side or the bond side, and I'll take
one of the other way. What do you do with
the Trump administration? What do you do with the inflation numbers?

(20:49):
You know, you said you thought, hey, the market's kind
of fairly valued in through here deregulation.

Speaker 2 (20:54):
I think I think tend to diversify your portfolio. If
you have a lot of large cap tech, I think
it's a decent time to maybe pair back some of
that large cap tech and go into some sectors that
haven't done as well over the past five or six years.
If we are going to bring jobs back home, I
also think it's a decent time to It will be

(21:15):
a decent time in the next you know, three or
four years for the bond market. You know, I think
you'll see, Honestly, I think you'll see kind of a
reduced volatility on the long end after after after January first,
because I think we'll see I guess where we think
Trump's policies are going. I don't think there will be

(21:35):
much downside pressure to the BOONB market, but neither neither
upside pressure as well range you know. I also I
do think that yeah, Trump Will Trump does keep score,
so I don't think he will allow the stock market
to plummet really or I don't think there will be
a major pullback. So yeah, I don't know. I think

(21:56):
I think we're gonna be rangebound. On on bolts.

Speaker 1 (21:58):
Get out of tech. What do you get get out
of tech? You get into industrials, get into.

Speaker 2 (22:04):
Uh, industrials. I think companies like Regeneron and pharmaceuticals that
have been beaten up after the Robert Kennedy junior appointment
will actually could could do well going forward. You know,
I do like industrials, you know, I do like companies
that are you know, fiscally responsible, like the n OBL,
like you know, companies that have high free cash flow.

(22:25):
But I also don't think it's gonna be one sector
the or the other. I think I think that you know,
large cap tech, you know, could continue to do well.
But I feel like if large cap tech does well,
a lot of other sectors will do well, if not better.

Speaker 1 (22:38):
Right, we got we got a couple of minutes ago.
So I will say too that we were talking about
the market. Uh, one thing was said, and I've I
found it in a Franklin Templeton piece.

Speaker 2 (22:53):
Uh.

Speaker 1 (22:53):
They have what they put out seven or ten excuse me,
ten principles for investment success. And number seven was a
rising market. And this is a Wall Street adage. I
don't know if Franklin Templeton, you know, originally said it
or not, but a rising market is born on pessimism,
grows on skepticism, mature is on optimism and dies on euphoria. Yeah,

(23:16):
and where are we? Where are we maybe that we
might be in the Born on pessimism, Yeah, right, the
bottom everyone hates the market grows on skepticism. Is this really?

Speaker 2 (23:26):
I think that's kind of where we're at. Yeah, still skeptical, right,
people are still skeptical about the market again, you know,
there's so much uncertainty there. But you know, I don't
think you have that euphoric feel to the market yet.
Although you've seen some companies like Tessa, like Palenteer, some
kind of you know, rocket labs things like that, go
go a little bit crazy. But you know, I still
think we're in the skeptical phase skeptic.

Speaker 1 (23:48):
Yeah, I would agree. We'll talk a little bit about
that maybe when we come back. Right now, it's ten
thirty on the station you depend upon for newsweather and information.
News to K ten on one O three one w
G Y. Good morning, Welcome back to the Capital District's
Money and Investment program. You're listening to the Fagan Financial Report.
I'm Dennis Fagan's, you know, with my son Aaron, as
we do every Sunday right here in news took eight
ten and one O three one w G Y. Uh.

(24:11):
Talking a bit earlier Aaron about the ten principles for
investment success. You know, we we spent the whole first
half of the show talking about the new administration. We
talked about, you know, inflation at the PPI wholesale and
retail level, a little bit about Jerome Powell, you know,
maybe uh, trimming some of the larger cap tech getting

(24:31):
into some other areas. You know, medical has been getting
beaten up, pharmaceuticals giving the appointment or potential the nomination.
Robert F. Kennedy, Junior for Health and Human Services, hustle
like industrials because we do think they're the re nshoring
will continue. And I think you were saying, you know,

(24:55):
n ob L is a good ETF to look at
a little bit on the value side. Cow Z cows
another one that concentrates on companies with good cash.

Speaker 2 (25:03):
A lot of mid caps as well. Yeah, I think
you know, one is about forty nine one is about
twenty three percent mad caps. So you know, I do
think the mad cap sector could continue to do well.

Speaker 1 (25:15):
And and and and and in an environment where the
market is not cheap on an evaluation basis. You had
also mentioned, hey, let's stay diversified. Uh, let's not. And
also I think with the Trump administration, we really don't
know how this this whole thing is going to break,
you know, love it or hate it. There are there's
a broader range of potential outcomes as opposed to your

(25:37):
traditional politician and uh, you know, so you just got
to kind of try to stay nimble. And also you
could have the range of you could have a great
outcome for the economy in the market, and you don't
want to misjudge the the results or the repercussions on
a specific sector and say, oh my gosh. A good

(25:57):
example is, oh my gosh, if ev credits are cut.
Tesla's gonna do great that maybe it looks like but
if it's not, you don't want to hit your horse
to solely to that wagon. So diversification is really the key. Now,
you wanted to bring up something this half hour. Correct?
You know that great? Are you? Yeah?

Speaker 2 (26:16):
I'm not, But you know, I thought what was interesting.
I guess this wasn't was that what I was talking
about before the show, But tourists and stock from Apollo
Asset Management came out and you know, talked about how
there's a growing need for retirement savings and better retirement
products and how you know, the population is aging, there
is not enough retirement savings and retirement asset asset allocation
is this story with too much money and daily liquid

(26:39):
equity is highly concentrated in the Magnificent seven. And the
bottom line is that more retirement savings are needed and
it better and better retirement products are needed, you know.
Then he goes on to say the US population is aging.
Eighteen percent of the US population is sixty five or older,
and twenty twenty five it will be twenty twenty fifty,
and twenty fifty it'll be twenty three three percent you're

(27:00):
having ten thousand people turn sixty five every day, you know,
fifty one million retired workers receive Social Security. You know,
then it kind of goes on. You know, the average
four one K bounce is one hundred and thirty four thousand,
and more than half of the four to one k
bounces are in equity. So you know, in nineteen eighty,
I had about fifty to fifty pension to four to

(27:21):
one K options. Now it's about ninety ten four to
one K to pension, So that is I think what
he was saying is that's a little bit worrisome for
the older population being so invested in you know, the
Magnificent seven as well as the equity markets, and you know, yeah,
it goes on to say, yeah, basically that you know,

(27:44):
some change needs to happen. That said, you know, it's
kind of interesting and you know, you have annuities, you
have you know, just a well allocated portfolio. But did
you see that stone Ridge Longevity Income ETF that you
show me the other day Life accident. It's really interesting.
So basically, I mean it has distribution rates. You know,

(28:06):
it goes from you know, the year end twenty forty
eight twenty fifty three, twenty fifty eight, twenty sixty three.
So basically that's that's when your money will run out.
So it's kind of interesting immediately you get.

Speaker 1 (28:20):
Them on the show, do more due diligence. First of all,
they get them on the show.

Speaker 2 (28:25):
And it has distribution rates anywhere between seven and a
half and five percent. So basically, if you're looking three
thirty years out, almost forty years out, I mean, you're
looking at a five percent distribution rate of your portfolio.
But I thought it was pretty interesting.

Speaker 1 (28:40):
Yeah, me too, Me too, will So the five percent
distribution rate by amortizes your money over a specific period
of time on the fixed thing comes like, yeah, we
got to check into that. But that's that's what I'm been.

Speaker 2 (28:52):
There more that you know, you are seeing even Jeppy
and jef Q I think jep I uses you know,
they buy Jetpee buys you know, underlying s and P
five hundred securities and then it writes call options against those,
you know, when you use those premiums as income. You know,
it is only formed in twenty you know, it looks
like late twenty twenty and has thirty seven billion dollars

(29:14):
under management. So I think you'll continue to even direct
indebt indexing for for wealthier clients, you know, taking advance.
So basically what you can do is mimic you know,
the S and P five hundred with almost a wrap account,
so you always have the you know, if I think
it's like since the last twenty years, at least one
hundred and twenty five stocks have been down the S

(29:34):
and P five hundred any given year every single at
least that many time that many stocks have been down
in any year. So using direct indexing to you know,
get S and P five hundred returns as well as
you know, being tax efficient. So I think you're going
to continue to see innovation in the in the in
the in the investment on the investment side of financial planning.
And I think, yeah, I think you have. You have

(29:58):
seen some you know recently as.

Speaker 1 (30:00):
Well, innovation that pairs returns or with risk kind of
like you know, like like the J E P I,
J E P Q and I and and right now.
So I think the danger that that that's out there,
you know, you know, within the context of this conversation
is are we are are that some individuals investors are

(30:28):
are looking too much at current the current yield like
a CD, well, the three months paying five that the
one year is paying four fifty, I'm going to take
the three month. You know, I think you've got a
fact now that that's kind of like that. That's an
example like if you were to go for a three
month rather than a year, you know, I probably would

(30:48):
go for the three month myself. But but if the
five year or the ten year treasuries are paying four forty,
you have to say to yourself, let me add let
me put add some predictability into my side of my portfolio.
You don't want to wake up in two or three
years say Fagan Associates was wrong and interest rates have
come back down to two percent or one percent, and

(31:10):
you be stuck with CDs maturing at one or two percent.
So you want to add. So how you would do
that is just ladder maturities. Extend your maturity. So if
you have all your money in at one year CD,
maybe you put half of it in a one year CD,
a quarter of it in a two year CD, and
a quarter of it in a three year CD to
then you maybe you have your average. Maybe your return

(31:31):
goes down a little bit right now, but you've added
predictability into your Perfore, let's say you're let's say you're
sixty five and you're retiring, Well, you know, the active
life goes to say eighty your active life until you
hit like a passive stage of retirement. You know that
that that you might be able to guarantee yourself a
four percent rate of You can guarantee yourself at least

(31:52):
a four percent rate of return UH for the next
ten years. So now you wake up at seventy five,
So a portion of your portfolio should be that way.
And you shouldn't just like grab on the highest rate
because that's going to have the shortest maturity.

Speaker 2 (32:04):
You know. And I know we've kind of been harping
on it, you know, a lot lately. But you know,
even if you look at what works in the past,
you know, I think, what, what's our disclaimer? It's your
money and we know, no, no, that's our but you know,
past reforms is no guaranteed of future results. And I
think you know, people have kind of lost that narrative
a little bit in that you know, you have the

(32:26):
you have the SMP being thirty three percent in technology,
communication services is nine percent, so communication services. You know,
between the two which are sensitive are you know, over
forty percent of the S and P five hundred, So
you know you're S and P five hundred is essentially

(32:47):
a growth stock. You know, I read a stat the
other day that you know, if you're retired in two
thousand with one million dollars and you need fifty fifty
thousand dollars a year plus inflation out you know your
money and put your money in the S and P
five hundred, you were out of money in seventeen years.
So you know two thousand to twenty ten, you know,
obviously at the dot com bubble, and it also had

(33:09):
two thousand and nine with the financial crisis. But you know,
it's when you're in retirement and you know you don't
have let's say a pension and all your money is
in a four to one k. Now, is not the
time to play games and be wrong. So you said,
I really won't have to go back to work at
seventy five because you you did not have a well
diversified portfolio and you essentially kind of gambled some too

(33:32):
much of your money on you know, riskier assets.

Speaker 1 (33:35):
But so you said that one hundred percent of your
money in the S and P five hundred into twelve
thirty one of ninety nine. Probably, yeah, because the market
peaked at March eighth, March eighth of two.

Speaker 2 (33:46):
I know, it's kind of you know, I don't sing
with statistics, but it is possible. Well no, it's not
thinking it's possible, is uh, it's full it's full of foolish.

Speaker 1 (33:58):
Yeah. So so you basically so that the loss in
that decade really matched let me let me rephrase it.
So people look at that was truly a lost decade,
and it was it was it was a lost decade
that conforms to what people think of a decade as
two thousand, two, ten two. That it's not like a

(34:19):
two thousand and one to twenty eleven. You know what
I'm saying that that kicked off this manial decade, right,
you know, obviously we're not talking every decade's ten years,
but this is this is you know, you know historically,
I guess what we're focused on. Okay, it's like, how'd
your portfolio do last year? Most people think, well, twenty
twenty three. They don't think the trailing twelve months. So

(34:40):
it's the same thing with a decade. My point is
that the market and it encompassed so many events, you
know that it is a sight sign of what could
what could go on.

Speaker 2 (34:53):
First of all, I think you know, sorry, no, you know,
I think as you always said, you know, people have
these like you know, high site bias is like, oh obviously,
but you know Microsoft, oh obviously Microsoft and Microsoft always
Microsoft this It took fourteen years, yeah for Microsoft to
recover from its highs and two.

Speaker 1 (35:11):
Intel and Cisco. I don't think I've ever gotten.

Speaker 2 (35:13):
Intel has not, Cisco has not. Maybe maybe Cisco is
around there, but I don't think it is. I think
it was almost a half a billion dollar company. I
don't think it is it is right now. So you know,
you just in which and I think that's not as
much of a fear now. I think the fear would be,
in my opinion, would be, you know, some sectors and
some companies doing well, and you know the leaders of tomorrow,

(35:37):
you know, are still great companies, but maybe they're at
the leaders of the next five years.

Speaker 1 (35:41):
That's usually the case.

Speaker 2 (35:41):
Yeah.

Speaker 1 (35:42):
So, but during that first decade, you had nine to eleven,
you had the housing crisis, so you had a few
things come together. But x ex dividends. The market was
down for those that decade. So what you're saying is
if if you put all your money in the S
and P. Five hundred and twelve thirty one of ninety
nine by twenty seventeen, if you if you were taking
a five percent distribution all along the way, I assume

(36:03):
index for inflation or not indexed for inflation, you're out
of money in seventeen years. In seventeen years, so I
think you want to add in. The classic retirement portfolio
is sixty or seventy percent in the stock market with
the balance and bonds and cash. And this is a
very opportune time to make sure that if you are
entering into retirement or in retirement and you need that
income from your portfolio. If you don't need it, there's

(36:25):
a whole that's a whole nother conversation. But if you
need it, you want to make sure you're in that's
sixty or seventy percent in the stock market to balance
and bonds and cash, and those bonds you know high
credit quality. Looma's Sales has a nice bond fund we use.

Speaker 2 (36:39):
JP Morgan has a nice income bound when First Trust
UCN has an unconstrained bond fund also FIXD. It's more
of an aggregate bond index. But you know, there's a
lot of great options out there, us.

Speaker 1 (36:51):
Just treasury ETFs that have that mature and specific gears.

Speaker 2 (36:54):
So ladder them and you know, continue to.

Speaker 1 (36:57):
Ladder check out. Check out our website if thing and
asset dot com. You know we have our five largest
holdings in there for mutual funds and ETFs and also
our largest twenty five holdings regardless of the the asset class.
So you know, check that out Fagan Asset dot Com
and feel obviously feel free to give us a call
if you have any questions. Now, I was thinking of

(37:20):
what do you think of So bitcoin is over ninety thousand.
We don't really touch on it that much here. It's
come up from seven thousand to ninety. It was really
the paria of of it was really the paria of
the market for a while. We do have probably a
half a percent or one percent of our assets in
there for only for clients who careerly accept that type

(37:41):
of risk. But it is, you know, way outside, it's
going parabolic outside. It's uh, I'm looking at something from bespoke.
It's more than three and a half times it's standard,
three and a half times standard three point five standard
above its fifty day moving average. But you know what,

(38:04):
this is the one, two, three, four five, the eighth
time that that's happened, and we don't know, we don't
know now, but six of the other seven times bitcoin
was up how much like one year later. Five of
the other times it was up more than one hundred percent.

(38:29):
So but the one time it was down one year
later after being three point five state standard deviations above
its fifty day moving average, I'm sixty fifteen, it was
twelve seven of seventeen, it was down eighty percent in
a year. So despite that perform, despite the fact that
it's risen parabolically, you know, history, it's limited would suggest

(38:53):
I think it suggests two things. One that you know,
you could say, one, it's got a waste to go
to the upside, that the momentum is going to carry
it higher. The second thing I think it says is
that you know, it's a it's it'll be a wild
ride one way or the other.

Speaker 2 (39:06):
You know, I heard Ben Carlson call it on his podcast,
and you know, I guess, excuse my language a little
bit he owns it like one percent of it. It's
like as schmuck insurance in case he was wrong. And
you know, I don't know, but if if it's something
that you think your portfolio can take, yeah put half percent.

Speaker 1 (39:23):
Put one percent in it. And Pobby went to mad
about it. Bobby went to Mass every Sunday. He's who's Catholic?
That's it Dad? You know, you know, I don't think
it was in this context whatever, But he basically was saying, yeah,
I'm a believer, but I just want to make sure
that if I'm wrong, if I'm wrong, you know, I'm
following the code here, you know.

Speaker 2 (39:43):
Yeah, I doing something for myself.

Speaker 1 (39:45):
So I think, you know, and I think I agree
with Ben Carlson.

Speaker 2 (39:48):
And I have no idea what I bought it at.
To be honest, I have no idea. I know I'm
up in it, but I don't know what. I'm just like, Hey,
you know, I have you know, two three percent of
my account in it, and so do I know it
won't only if you know, if I continue to dollar
cost average into into my portfolios, it'll become less and
less percentage or hopefully more if it does really well.

(40:08):
But you know, it won't It won't affect my my
livelihood going forward.

Speaker 1 (40:14):
But I think if the listeners want an opinion on it,
it would be buy it on pullbacks and don't go
to the alternate coins. Other than that, Yeah, you do
want to stick with the biggest and best uh BTC
is I B I T g BTC. Those are all
that you can and it's speculative, you know, considered like

(40:35):
a plug power. It could go from ninety thousand back
to ten and a heartbeat, So just be careful. Now.
The election of President Trump also prompted prompted the rally
because you know he's more uh bullish or more open
to using digital currency, not to replace the dollar and
not even as a as a as A as A

(40:59):
as a as a way to uh. I guess transaction
not for transactional purposes, but just like a store value,
just like you store value. I guess it's kind of
like the Yeah, it's kind of like technologies answer to
to gold. Yeah, anyways, what else you got for me? Anything?
Before I before I go on something else things.

Speaker 2 (41:18):
I just went went to Disney with my probably that's why.
And I will say, you know, I'm not a Disney Adult.
I would never go there without my kids, but it
is an amazing place. It's amazingly expensive, which is kind
of ridiculous, but you know, it's free below three, So
if anyone's listened to this, it's free. Blow Jude and

(41:40):
asme could go there for free.

Speaker 1 (41:41):
You drop them off, didn't you drop them? Jude?

Speaker 2 (41:45):
The service is good, it's organized. You know, I think
they really went too hard into streaming for a while.
But you know, now they're seeing revenue for their entertainment segment,
which is you know, traditional TV director consumer streaming was
that fourteen percent year over year. They're starting to get
that on track. They're building a couple of boats. I
think the you know, the the cruise. The cruises are

(42:06):
really working out with with them, and I think I
think they've kind of turned the corner with with the
skepticism around Disney and and and where Disney is gonna go.

Speaker 1 (42:16):
So and they're moving away from taking political stances. And
I'm not making a comment on that, love it or
hate it, but that could have weighed on the stock
price a little as well. Bob Iger's back, but but
you know, could have weighed on the stock price a
little bit, But I think the bottom line really is
that their fundamentals are improving. Earnings were four cents above revenue,

(42:36):
came in above expectations.

Speaker 2 (42:39):
And if they have Mawana to coming out this this
uh this month, they had you know, Inside out to
the highest grossing animated movie as well as Deadpool and
Wolverine the highest grossing R rated movie.

Speaker 1 (42:50):
So you know you are a Disney adult.

Speaker 2 (42:52):
I'm not a I would never go to Disney without
my kids. But it's a fun place, man, you.

Speaker 1 (42:59):
Know, it's it's you know.

Speaker 2 (43:01):
I'm telling lore in that, like, you know, we went
to a pool one day, just we didn't stay at Disney.
And it's more work playing by a pool with a
two and a half ye old than just going to
Disney and letting him.

Speaker 1 (43:12):
You know.

Speaker 2 (43:12):
Maybe it's crowded, maybe it's paying the next sometimes, but
there's always something to do.

Speaker 1 (43:16):
Well the stroller back. The stroller gets all wet in
the pool. That's the problem helping to keep him in
the stroller. So when he's out and about, he's a
wild man.

Speaker 2 (43:23):
He's a shell of its former self.

Speaker 1 (43:25):
Though he is when he got back, he's still on
Disney Disney High ten principles. Let me see if you
have anything else in here about this.

Speaker 2 (43:34):
Did you see Ben Carlson came out and said, S
and P five hundred cattle indar your total returns more
than thirty percent?

Speaker 1 (43:41):
And you know so he looked into those numbers.

Speaker 2 (43:44):
Yes, and the market has been higher thirty percent or
more eighteen years, which accounts. So that's roughly twenty percent
of the time, or one in every five years, the
S and P five hundred is up thirty or more percent.
And if the market's up seventy five percent a year,
you know it's a good place to invest. Obviously you're
seeing around twenty five. I don't know what the market's

(44:07):
up here to date as of right now, but as
of right now, you know I did. I know it
did pass over you know that amount, but it's up
twenty six percent year to day. Do you think we
finished the year up more than thirty percent?

Speaker 1 (44:19):
Rup around twenty five? No?

Speaker 2 (44:20):
Twenty six two?

Speaker 1 (44:22):
No, I don't. I think at some point in time.
I think at some point in time people are gonna
lock in those gains. Everyone says, well, why would we
just sell now versus January first? Because you'll have to
pay capital gains. First of all, it's a qualified plan.
You don't have that concern. Second of all, because it's
almost like musical chairs when you get later in the year,
it's almost like, all right, I don't want to lag

(44:44):
the index, so I better stay here. I better stay here,
I better keep keep after it. And then all of
a sudden it's like I've had enough, this is good enough.
And then and then and then people start to get out.
So I think we're kind of getting to that point.
We also are seeing, you know, we've already had I
think September and October the market was up, and historically
that's not really they were stronger than is historically the case.

(45:07):
So I think we've come a long way over the past.
We're at record highs over the past month or two.

Speaker 2 (45:14):
So I don't know.

Speaker 1 (45:14):
I think maybe we take a break. How about you.

Speaker 2 (45:17):
I'll take the other side, you know. I don't think
we've hit that euphoric stage yet. I think we'll. I
think we'll start talking deregulation. I think we'll start. I
think we'll see a little bit of euphoria towards the
year end. Then I think we'll see a pullback, pullback
at the beginning of next year, similar to what twenty
twenty one we saw, you know, the market run up

(45:39):
into January. But you know, I mean this is all
speculation as well, right, But you know, I don't think
we've hit that, you know. I think Trump will continue
to talk about this being a friendly place for corporate
America and the stock market. So I think we'll I
do think we'll see a little bit of a run up,
and I think that we will finish the year over

(46:01):
thirty percent.

Speaker 1 (46:03):
Okay, I'll bet your cable coffee on that one. Fine,
you know, I make it. I make it anyway. So
I don't know what the difference. I don't benefit from that.

Speaker 2 (46:13):
Two and a half minutes left, you know, I don't
know if you want to get into, uh, you know,
the ten principles for investment success. So we can save
that for another show.

Speaker 1 (46:22):
We'll save that for next show. Here a couple of
things from MFS. They're beyond the news, uh sac you know.
And then because we're and then what happened was thank
you Giants. The Philadelphia Eagle fans are are chanting late

(46:42):
in that game, Thank you Giants two and eight. I'm
just like the Eagles they're They're probably my most hated
team right now.

Speaker 2 (46:52):
In all of sports. I hate the Phillies.

Speaker 1 (46:56):
I'm a hater hater fan in general. I love my team,
gonna hate everybody else. If everybody else could lose, if
that was possible, I would want that, you know. So yeah,
now we got you got a minute or two left
historic rallies. As we've seen a pick up in rates.
We've talked about that.

Speaker 2 (47:15):
Next week we have, you know, so stay tuned. We
hired from financial advisor Doug Keenholtz. He worked at for
pk SE where he's worked in the industry for a while.
So we're gonna have him on and you know, kind
of talk to him about you know, where he's been
in the past. Uh, and then you know, kind of
go from there.

Speaker 1 (47:34):
Got to take a test before he can actually provide advice,
and he's working on that a little bit, so, uh,
you know, we'll talk to him.

Speaker 2 (47:40):
Yeah, and you know, it's it's funny he worked in
the annuity side for a while and it's it's you know,
it's kind of been you know, a pleasure because we've
been sharing an office lately and it's kind of been
a pleasure you know, I've actually learned a lot about
annuities in the past month or so, so it's been
a lot of them out darting process for me as well.

Speaker 1 (47:58):
That in life insurance. You know, So I don't know,
all right, So give us a call during the week
four uh faganasset dot com. We put out a weekly
snapshot every Sunday morning. If you want a copy of that,
just email Sam will take care of that if you want.
We also put a chart out every Wednesday with accompanying

(48:19):
verbiage UH that that's a chart that pertains to uh
a topic that is a current, current current topic. UH.
So ask for that if you want a free initial
consultation five seven four you know. Other than that, you know,
enjoy the beautiful fall weather and we'll talk to you

(48:39):
next week. Take care,