The Fagan Financial Report

May 11th, 2025.

Episode Transcript

Speaker 1 (00:02):
Good morning, and welcome to the Capitol District's Money and
Investment program. You're listening to the Fagan Financial Report. This
is Dennis Fagan sitting here. You ever see the two
women on Saturday Live.

Speaker 2 (00:14):
Good morning and welcome to the Fagan Financial Report.

Speaker 3 (00:18):
This is so this is what's your personality?

Speaker 2 (00:21):
I know, I know.

Speaker 1 (00:22):
This is Dennis Fagan sitting here with my son Aaron,
as we do every Sunday right here in News Talk
A ten and one oh three one w g y
A well, build an arc, build an arc?

Speaker 3 (00:33):
What is going on? What is going on?

Speaker 2 (00:36):
You know we used to say good for the garden,
good for the garden.

Speaker 3 (00:40):
Is good for the gardens?

Speaker 4 (00:41):
Not in yet, So it's like kind of frustrating a
little bit. I was gonna do it last weekend, but
my son it was his birthday, so I was preoccupied.

Speaker 1 (00:49):
Third birthday. Nice party, good party. It was a lot
of fun, great time. He did have a good time.

Speaker 4 (00:55):
He said, just made so many great, big goods. I
know you don't eat that stuff anymore, you know. Yeah,
had macaroons.

Speaker 2 (01:02):
She had chromes, crones. There were macaroons. People think coconut.
So people think coconut. They're not. They're like two uh
two cooks.

Speaker 3 (01:12):
You know what macrons are. You don't have to explain.

Speaker 1 (01:15):
You didn't even say it right, People thinking macaroon like like,
I'm like, I'm left on a desert island.

Speaker 4 (01:21):
I can get the more I do like coconut flavored things.
Me and Doug are talking about this the other days.

Speaker 2 (01:26):
He's a coconut, He's a coconut officionado.

Speaker 4 (01:28):
Yeah, I like I like coconut. I like coconut. The
other I cat right now.

Speaker 1 (01:34):
I've always liked choking and Poppy liked coconut. They have
the macaroons that are coconut with chocolate on top. You know,
it's a great bakery. Lea's is good. Inn Exit eleven,
take a right. Me and Kevin because Kevin lives out there.

Speaker 3 (01:49):
We were talking. We were talking a lot about Lias.

Speaker 2 (01:50):
Yeah. I go up there most.

Speaker 5 (01:52):
Saturdays, really yeah, every other set.

Speaker 2 (01:57):
I never go up there.

Speaker 4 (01:59):
The sense, you know, last ever since two weeks ago,
and you know, Sam had her twins, she did had
her twins, your two. Granted, we're just my family's just Choppliver.

Speaker 3 (02:11):
Now I don't see anymore, I.

Speaker 1 (02:13):
Mean now, I mean now anyways, uh so a lot
to talk about the second half. We're going to touch
on Berkshire, Hathway, Warren Buffett stepping down his CEO named
Greg Abel as a new CEO. And I'm sure if
you pay attention to the markets and listen to a
lot of what's going on with the markets, I'm sure
you've heard a lot of stories about Warren Buffett and
his his really uh buffet isms, so to speak about investing,

(02:38):
and we try to subscribe to to to.

Speaker 2 (02:41):
Most of them.

Speaker 1 (02:42):
Turn over our portfolios once every five years or so,
you know, twenty percent years of the average. We try
to stay out of the noise. And you know we
were talking. We'll talk about it in the second half,
but that you know, the day to day to day
stuff is really irrelevant to your portfolio, and I think
I think I think we're finding that now to a
certain extent with the tariffs. Now, I do you know,

(03:03):
people who have listened to us for the past six
or seven weeks know that we're not a fan of tariffs.
They know we think this is a drag on the economy.
They know we think it's somewhat inflationary. They know we
think you should diversify international because the bloom might be off.
The US rose for a little while just because of
a regression back to the mean, so they know where

(03:24):
we stand in that. But no, no, never, we raised
our cash level from about eight to twelve percent eight
to thirteen percent. So that's kind of what we've done
for a little bit of a conservative bent in the market.

Speaker 4 (03:36):
And that happened before it, you know, the cash runs down.
I heard Ben Crossen and Michael Batnik. They do a
great podcast called Animal Spirits, but they were talking about how,
you know, you have to weed out that day to
day noise, and you know, I don't know how I
came to this, but you know, over the recent market pullback.

Speaker 3 (03:56):
With that was you know, initiated by this Liberation Day.

Speaker 4 (03:59):
You know, I think everyone was like, oh, you know,
I think Trump's really serious this time about you know,
getting all these things past. And I think what we
saw was, you know, the ten year rise substantially in
a couple of days my market.

Speaker 2 (04:12):
And it really spooked President Trump.

Speaker 3 (04:15):
President Trump.

Speaker 4 (04:15):
But I think what we see now a little bit
in the market is is.

Speaker 3 (04:21):
Okay, maybe there's a little bit of a floor in
the market now.

Speaker 4 (04:23):
Because Trump is paying attention to these things, and he
does see them as things that do matter.

Speaker 2 (04:29):
Do you hear something I don't know? Okay, so, and
I agree with that.

Speaker 1 (04:36):
I think that the put under the market, so to speak,
or the support for the market could very well have
been caused by the increase in interest rates, is kind
of what you were saying, And we'll see if that's
the case. I also think the ultimate put under the
market is Congress, and if the tariffs go the wrong
way and the market reverts, it goes back to a

(04:57):
bearish bent or course, then I think ultimately Congress will
will step in because you saw.

Speaker 4 (05:02):
Ram Paul already say hey, we think we have enough
votes to on this side of the aisle to repeal
these terraffs.

Speaker 2 (05:10):
So you know, so who knows how this is going
to go.

Speaker 1 (05:13):
President Trump set a new deal with the UK, or
the basis for a new deal there were no tariffs.
He applied to tariffs and basically said, hey, we're going
to keep the tariffs at ten percent. They're giving a
break on Rolls Royce engines. And for people think, well,
what's a Rolls Royce? As far as I'm never going
to own one, Rose Royce engines are used in a
lot of airplanes as well, So you know, we'll see.

Speaker 2 (05:36):
How it plays out.

Speaker 1 (05:37):
I think for now we're comfortable with the twelve or
thirteen percent cash. We're comfortable with our position. I think
our overall position sixty percent in the stock market, thirty
percent in the bond market. Excuse me, twenty some percent
in the bond market in thirteen or fourteen percent cash.
That's our overall position. Next show, we'll give our positions
per per objective, Okay, as far as what we have

(05:58):
in the market for growth objection and.

Speaker 3 (06:01):
Yeah, I don't know.

Speaker 2 (06:02):
The FED held the Fed, let's get right to it.
Then the Fed held rates steady, a key.

Speaker 1 (06:07):
Interest rate unchanged and arrange between four and a quarter
and four and five percent. Within the policy statement released
after uh that announcement on Wednesday this past Wednesday two
o'clock statements said uncertainty about the economic has increased further.
The Committee is attentive to the risk to both sides
of its dual mandate, which is inflation at two percent

(06:29):
and uh pre extremely price stability and and also the
stability in the labor market, and judges that the risks
of higher employment and higher inflation have risen. While the
statement did not specifically address the tempts shared Jerne Pile Dress,
the issue that it's post basic me.

Speaker 2 (06:44):
You know, I think.

Speaker 4 (06:48):
I think that it's it's it's the right call. You know,
the consumer is still strong, inflation has subsided a little bit.
There's just really no reason to cut rates right now
with the uncertain uncertainty that we have going into the future.
Let's say Powell does cut rates, and he cut rates today,
then all of a sudden, we see tariffs, you know,
and we see, you know, tariffs slow down the economy.

Speaker 3 (07:09):
Then we see, you know, the consumer not in good shape.

Speaker 4 (07:11):
Then what you know, you want to keep some dry
powder essentially for different things that you can do to
stimulate the economy. The economy is already stimulated enough in
my opinion that I don't think that rate cuts are necessary.
And then you have the other fear, which is, okay,
let's say there was a lot of back ordering coming in.

(07:32):
Let's say these tariffs do create some inflation, then we're
gonna have inflation on top of maybe some inflation if
we cut rates as well.

Speaker 3 (07:42):
So, you know, I think he made the right call.
So just to Trump called him a.

Speaker 2 (07:47):
Fool, Right, So just to kind of.

Speaker 1 (07:51):
Put that, you know, in my terms for the audience,
inflation tariffs are inflation reductions, and interest rates can be
inflationary if they stimulate the economy beyond what we what
what is a sustainable pace where you have to supply

(08:13):
outstripping or demand outstripping supply. We saw that really in
twenty and twenty and twenty one when Treasury, through you know,
the Trump administration and the Biden administration puts so much
money into the economy. There was too much money tasing
too few goods, and the Fed left interest rates too low.

Speaker 2 (08:33):
So when you have interest rates that are that are.

Speaker 1 (08:39):
That are not in line with the pace of economic growth,
you either get an inflationary environment or a disinflationary environment.

Speaker 2 (08:46):
Where and right now, what you're.

Speaker 1 (08:48):
Saying, Aaron, is with the potential of inflation due to
the tariffs, whether it's transitory or more permanent, you think
interest rates are at the right level and at cutting
interest rates would stimulate economic growth, when when you really
we really don't know how this is all going to
play out.

Speaker 4 (09:08):
Yeah, right, and you know, I think the there's there's
two types of inflation really it's like, you know, demand inflation,
you know, people wanting and wanting and wanting, and then
cost push inflation, which is more you know, the cost
of things rising, you know, and so wages, raw materials, components, tariffs,
things like that. And I think what the fear would
be would be, you know, there would be this cost

(09:30):
push inflation.

Speaker 3 (09:34):
Because of these tariffs.

Speaker 4 (09:36):
And then when that can happen, you could see maybe
some stagflation.

Speaker 2 (09:40):
So I think I think we said that in our
charts talk that's the.

Speaker 4 (09:42):
Most nervous thing right now that this is that's the
most I don't know. That's kind of what I'm a
little bit worried about right now, is yes, stagflation.

Speaker 1 (09:51):
Well, the policy statement said, uh, the Committee is attentive
to the risk of both sides of its dual mandate
again price stability and stable employment, and is that the
risks of higher unemployment and higher inflation have risen. Higher
unemployment and higher inflation indicates stagflation. So that's basically what
Powell is worried about. Now, there's the cost push inflation,

(10:13):
but there's wage pull inflation, and we don't know also
if really the dramatic, mostly welcome reduction in immigration coming
into the United States, at least temporarily is going what
that's going to do to the lower end of the
labor market either, Yeah, and I think and there could
be some wage put wage pull inflation there.

Speaker 4 (10:36):
Yeah, And I think, you know, and I think the
best example of this that I think a lot of
our listeners can relate to would be in the early
seventies when OPEC imposed an oil embargo on countries that
supported Israel.

Speaker 3 (10:49):
And I remember that happened to oil prices. They quadrupled
in a matter of.

Speaker 2 (10:52):
Months alternate filling days. Yeah.

Speaker 4 (10:55):
So, you know, an embargo, a you know, a series
of terrorists that really dry prices up could be you know,
stagflation could be a concern theoretically.

Speaker 1 (11:06):
And President Trump responded, too late. Jerome Powell is a
fool who doesn't have a clue other than that. I
like him very much. Oil and energy way down, almost
all costs, grocery and eggs down, virtually, no inflation, tariff
money pouring into the US.

Speaker 2 (11:19):
The exact opposite of too late. Enjoy.

Speaker 1 (11:22):
Yeah, so I think you're gonna have a constant battle.
Powell's term comes up next year. President Trump had stated
that he doesn't plan on replacing Jerome Powell can't replace
him legally. We'll see how that plays out. But that
also flies, you know. Powell's stance also flies in the
face Bank of England cut. Remember what we just said

(11:44):
about the US and the policy statement that the Federal
Open Market Committee put out. The Bank of England said Thursday,
and I'm quoting from an article by Holly Elliott, the
BOE said Thursday, uncertainty surrounding global trade policies had intensified
since the imposition of US tariffs and subsequent retaliatory measures.

(12:06):
The prospects for global growth have weakened as a result
of this uncertainty and new tariff announcements although negative, although
the negative impacts in the UK growth and inflation are
likely to be smaller. But basically that they cut rates
in order to ward off the slowing economy coming from tariffs.
From from their perspective, it's going to slow their their economy,

(12:30):
you know, and it should slow ours as well. Again,
FED chair is just not sure how much and whether
he'll be cutting into an inflationary environment. That's definitely what
the FED does not want to get involved in any thoughts.

Speaker 2 (12:45):
On that before we move on.

Speaker 3 (12:47):
No, Aaron covered it.

Speaker 2 (12:49):
We did cover it.

Speaker 1 (12:51):
We got We're talking a little bit about the market
and the whipsaw nature of the market and how to
not be victimized by by what's going on on the
day to day basis of the market. It's just the
disciplined approaches which you really need, what's necessary now to

(13:14):
avoid that. You know, even intelligent, intelligently constructed your portfolio.
And you know, there are bear markets every once in
a while, and I know you say this quite often, Aaron.
We look back on every one of them and say, hey,
this was the catalyst, that was the catalyst, But very
very frequently can we can we see one coming? I
think the clearest one that we did see coming was
the pandemic, just because of the fact that the government

(13:36):
took steps to shut down the economy. If you feel
the need to make changes within your asset allocation, you
want to do so incrementally. We talk about that over
and over again. But by and large, relatively quiet week
on Wall Street up or down, you know, with fractionally
some of the areas. Let me ask you a couple
of questions about the week, the performance this week, and

(13:59):
you're almost going back and forth. Technology, consumer discretionary and
communication services, which were the leaders in twenty four, have
been the laggards in twenty five. They took it on
the chin for for quite a leading up to the

(14:20):
April second, and they've recovered nicely.

Speaker 2 (14:24):
Where where do you see these these these.

Speaker 1 (14:26):
Companies, the Apples, the Googles, the Microsoft's, the Tesla's, the
well those some of the Mags seven, the Metas.

Speaker 2 (14:35):
Going going from here, they're thirty percent of the SMP.

Speaker 4 (14:38):
You think that we could see just you know, them
being ranged bound essentially for the remainder of the year
due to the uncertainty that you know, this this new
global economic environment that we're in. So you know, I
think we're going to continue to see you know, volatility
in the market, you know, especially in these names.

Speaker 3 (14:57):
Uh.

Speaker 4 (14:58):
You know, through the end of last week you had
the exact amount of companies that reported earnings that did
not give forward guidance as we did in Q at
the end of Q one of the twenty twenty Oh really, yeah,
you know, I think when you have so much uncertainty,
you know, you have people not having saying therefore guidance.

(15:20):
You know, even we were at the There was the
Renster County Chamber event that we went to on Thursday night.
Just talking to a few people that owned construction construction
esque businesses, industrial businesses. They a couple of them were like, hey,
you know, we're going to wait to see how this
plays out until we order more trucks, for instance, was
one of them. So, you know, I think that you know,
uncertainty brings a little bit of pause I think in

(15:43):
capac spending. So you know, you're seeing a lot of
companies like Meta and Artificial Intelligence Broadcom saying hey, you know,
we're still spending on AI. But then you have other
companies and other sectors that are saying, you know what,
I think we're gonna wait to see how this plays
out a little bit.

Speaker 2 (15:58):
And that makes sense to date.

Speaker 1 (16:04):
Really, you know, you you can you can you can
parse through some of the numbers and find areas where
there's some weakness in the economy. But generally speaking, I
know GDP first quarter of GDP was down point three percent. However,
non form payrolls are one hundred and seventy seven thousand.

Speaker 2 (16:24):
This was data released a week ago.

Speaker 1 (16:26):
You know, Housing affordability went up initial claims unemployment benefits,
although they've risen a little bit, really aren't aren't moving
at any any bit of an alarming rate. So I think,
you know, not to revert back to chair pole, but
I think that's kind of what he's saying. Hey, Hey,
we're gonna we're gonna take away and see attitude until
some of the data suggests.

Speaker 2 (16:44):
Sometimes that data wants to start suggesting.

Speaker 1 (16:46):
It, it's too late, and I think that's what you
saw in twenty one and twenty two. But even if
you look at the ten year treasure, it's sitting at
four thirty seven, four thirty five to four forty and
around there. You know, it's spiked up right after a
liberation Day, came back down and now it's sitting, you know,
kind of kind of in the mid range before three seven.

(17:07):
So it's not indicating any dire economic situation either. The
three month, the six month, the one year, two year,
three year, they're all kind of like range bound. I
think that's what you're going to see for a while
as this whole tear of things plays out. You know,
what do you do when a range bound market? You
basically you you you harvest capital, You realize some capital losses,

(17:27):
harvest capital losses, you allocate your portfolio.

Speaker 3 (17:31):
Two, I think you become a little bit more diverse in.

Speaker 2 (17:33):
Your diverse pick up international.

Speaker 4 (17:36):
And pick up some things that produce income maybe dividends,
you know, and you kind of bide your time. Don't
look at your portfolio every day right now, Garden, Garden,
You know, I think it's hard now to you know,
I don't know how many times or the knicks or
the nixt yes, now, you know, I think it's hard
in times like this. You know, we talk about this

(17:56):
all the time. The market's only up fifty three percent
of days. You're looking at your portfolio every single day,
and it's going nowhere. You get inpatient, especially after you know,
ten twelve years of you know, up up, up, really
so I think you be patient. You know, maybe you
sell some things that have done really well if they're
too large of a percentage of your portfolio, and just

(18:18):
you know, broaden out your uh, broaden out your allocation.

Speaker 1 (18:22):
And you wait for the scary days to deploy cash.
They're gonna come again. They're gonna come again. They're gonna
come again. Over the next two three four months, we're
gonna get some some some bearish economic data. We're gonna
get some bearish tariff news, We're gonna get some bearish rhetoric.
And look, we're gonna get some bearish information from individual companies.

(18:44):
Company may have great earnings and like Aaron was saying,
provide you know, limited visibility going forward, and man, I
like that. I think some of the pharmaceuticals right now
are probably a pretty good investment given the fact that
the rhetoric has been.

Speaker 4 (18:58):
Negative, and usually Trump starts with negative rhetoric and then
as a positive by the end of the whole conversation,
and then it's.

Speaker 2 (19:05):
A win win.

Speaker 3 (19:06):
It's a win. You know, it's a right, right.

Speaker 2 (19:08):
You know, it's a good point to you.

Speaker 4 (19:09):
The healthcare, Spider Healthcare going into you know, the eighth
it was down since you know, so their five day
trailing average was down four point three nine percent. So
you know, those companies are extremely fairly valued here, and
I think you could have vet you. I think then
we're going to see some positive come out. You know,
same thing with China and Trump. Now we're we're seeing
two hundred and fifty percent teriffs now we're seeing.

Speaker 3 (19:31):
You know, and I think they could be below eighty percent.

Speaker 4 (19:33):
You know, if if if it's on my terms, if
it's on the right term, So I think we're going
to continue to see that, you know, beat.

Speaker 3 (19:38):
Up sectors then recover, beat up sectors then recover.

Speaker 2 (19:42):
Right like a rolling rolling type of a bear market.

Speaker 1 (19:45):
Uh. Anyways, So but JP Morgan puts something out to
that suggests that as well, saying JP Morgan see signs
of Trump exhaustion, why that could keep stocks stuck in
a range.

Speaker 4 (19:56):
I think you could see that on both sides though,
like Trump exhaustion, but you know, even you know, Trump
exhaustion with Okay, we're gonna get.

Speaker 3 (20:04):
Over this, why not buy?

Speaker 4 (20:06):
Yeah, So it's like, you know, I think you could
see it, you know, on both that's a spectrum, you know,
like and I think we you know, we could And
that's kind of what I was saying at the beginning
of the show is you know, now we know that
Trump's watching the stock market, you know when he when
we when when he saw the.

Speaker 3 (20:24):
Ten year rise.

Speaker 4 (20:25):
So you know, I think that that could be another
thing that could put a little bit of a floor
in the market. I think it's really just ingrained in
everyone's head now that you buy the dips.

Speaker 3 (20:34):
You buy the dips, you know, so we'll see though, well.

Speaker 1 (20:38):
We talked, you know, we're gonna talk hopefully second half
about too.

Speaker 2 (20:42):
Of the biggest trends this decade.

Speaker 1 (20:44):
An article from Ben Carlson Consumers keep spending money, no
matter what.

Speaker 2 (20:48):
I think, You're gonna see that.

Speaker 1 (20:49):
You know, despite regardless of what consumer sentiment or consumer
confidences unemployments at four point two percent, consumers are going
to spend. They might pull in the reins on some
of their big ticket items. We probably some front running
from the tariffs, so might have bolstered them. So I
wouldn't be surprised that your big ticket items declined somewhat.

Speaker 4 (21:07):
We're such a service based industry now still, so people.
I think people are going to still spend on services.
I mean, look at the Knicks game. The first game
in Madison Square Garden was eight hundred dollars. People are
paying for that still, you know, you know, I think
you're still going to see people spend on services, you know,
in the l like so.

Speaker 1 (21:24):
See it's the edges of the peripheries. I think you
have to worry about that. I would say, like, what
would I be worried about? And This is just off
the top of my head, big ticket items. Worried about
the incremental addition to our economy from foreign tourists coming in.
They said that slowed down a little bit, you know,
even travel things like foreign spending.

Speaker 4 (21:42):
How much the foreigners are investing in our stock market,
it's about twenty percent of S and P five hundred
ownership is about twenty percent foreign. So you know, if
we do reduce that, I guess, say, you know, international
trade in balance, that means we're putting less and less
money into the hands of Ford investors too. So you know,

(22:02):
I think this. You know, we've been saying it for
a while. You know, this is an experiment, you know,
so you know, play it day by day to see
how this works out.

Speaker 1 (22:10):
I guess probably the final thing before we, you know,
take a break for the news is, you know, from
beyond the news from MFS puts out summer and this
is kind of how I feel too, summer dultrum. Since
nineteen twenty eight, the S and P five hundred has
averaged the modest two point three percent gain from May
to October, so May first to the end of October,

(22:33):
compared to a much stronger five point two percent average
gain from November to April, so total of seven point five,
two thirds of which come November first to April thirtieth.

Speaker 2 (22:44):
We've just exited.

Speaker 1 (22:46):
Obviously that more the more bullish block and now we're
into a you know, a less a less bullish block.

Speaker 4 (22:56):
Uh.

Speaker 1 (22:56):
There's an old old Wall Street adage, sell in May
and go away way right when everybody has heard that
old street adage. Any adage, generally speaking, they don't work.
We'll see, but I think if it's this is an
opportune time I think for that to work, given given
a lot of the issues with the market, given the
fact we're in the first year of a presidential cycle,

(23:19):
generally speaking, that's not really that bullish for the market
and that type of thing.

Speaker 2 (23:22):
So so I think we're.

Speaker 1 (23:25):
Stuck, as JP Morgan would say, and we would agree
in somewhat of a you know, arrange range by market,
and we gave you some ideas. In the second half,
we'll expanding those a little bit and then go from there.
Congratulations to Fagan Insurance one hundred years in the years
and New York State Historic Company was down at a
presentation to Bill and Paul Fagan, who are they're not relatives,

(23:48):
distant relatives with good friends of ours, and congratulations for
them as well.

Speaker 2 (23:52):
Yeah.

Speaker 1 (23:52):
Anyways, it's ten thirty on the station depend upon for news,
weather and information. News Talk rate A ten and one
o three one WGY. Happy Mother's Day, Good morning, and
welcome back to the second half hour of the Capital
District's Money and Investment program. You are listening to the
Fagan Financial Report. I'm Dennis Fagan, sitting here with my
son Aaron, as we do every Sunday. Great here in

(24:13):
News Talk A ten and one oh three one WGY.
Some news that we didn't cover in the first half.
We'll talk a little bit about Berkshire Hathaway Warren Buffett
stepping down, will still be chairman, but appointing Greg Abel
as the CEO chief executive officer is part of the

(24:33):
insurance operations now vice president of non insurance operations. So
we'll talk a little bit about that and some buffet
isms and then get you know, just some this and
that that we've meant to talk about for quite some time,
and then some other pertinent news. So a good half hour.
When does housing become the issue? By Ben Carlson and

(24:57):
also another article by Ben Carlson's biggest t ends of
the decade, and.

Speaker 2 (25:01):
We're not gonna talk about the article. Uh.

Speaker 1 (25:03):
He makes two points consumers keep spending no matter what,
an investors keep buying the dip no matter what. And
finally Susie Orman says, you should have five years of cash.
I know, I think it's for retirees. We'll talk a
bit about you know what Aaron and I think about that. So, uh,
let's get the show on the road, right Aaron Brookshire
Hathaway operating earnings drop. You know that the famed CEO

(25:26):
Warren Buffet at the Helm, ninety four year old Warren
Buffet operating earnings down fourteen percent to nine point sixty
four billion from eleven point two two billion. That's four
dollars and forty seven cents a quarter. The company has
three hundred and somewhat billion dollars in cash, and I

(25:46):
think that is and they're and they're happy three hundred
and forty seven billion dollars in cash from three hundred
and thirty four billion.

Speaker 3 (25:53):
You know, it's thinking.

Speaker 4 (25:55):
You know he's been saying even in the even in
depress character, so he can kind of wait for a
big fat pitch. You know, he owns so much of
so many good companies that you know, he can collect.
I think I was reading that he can just from
Coca Cola dividend. The dividends he now receives are more
than the price he paid for all the stock.

Speaker 2 (26:15):
That's greazy, I know.

Speaker 4 (26:16):
So I think he's just kind of sitting and waiting
until this uncertainty plays out.

Speaker 3 (26:21):
And I think that he could be sitting for a
little bit, especially.

Speaker 4 (26:26):
With his his his investment philosophy, let's say.

Speaker 1 (26:30):
I also think it's a testament to his patients really,
and his testament to not having to be on the
cutting edge all the time.

Speaker 2 (26:39):
I forgot to start my watch, too, so.

Speaker 1 (26:41):
Let me know when we get in toward the unbribably minute,
a half a minute behind yourself. Just the testament to
his patience, his staying out of the noise, his you know,
ability to wait for that fat pitch. We often say.
One of the things he said, you know in the past,
is there all are no balls and strikes really in
this you know, you wait for a pitch that you

(27:03):
want to hit, and you take it. I was listening
to had a shareholder meeting last week in Omaha, Nebraska,
thousands of people there, and I was listening to it
on the radio, and you know, he was talking about
that cash hoard may sit for a year or two
or three. He doesn't know, you know, he's not in

(27:24):
any real big.

Speaker 2 (27:24):
Hurry to put it to work. He does obviously doesn't
see anything right now.

Speaker 3 (27:28):
I was reading that.

Speaker 4 (27:28):
I think he owns five percent of the Treasury outstanding
treasures in the United States, So you know, he can
it pays to wait, especially on such a gigantic cash
pile that he has, and I think he could be waiting,
you know, yeah, for another six months to a year
until a lot of this plays out.

Speaker 1 (27:45):
Funny he does say, though, you know, and I mean
to interrupt you, he does say that. But it's just
on that cash issue that really cash isn't a long
term investment option, and it isn't. But when you think
about the value that he would add if he could
buy something at a twenty or twenty five percent discount
to where it is, let's say cash, shit's at four
and he sees that.

Speaker 2 (28:05):
Not a as a.

Speaker 1 (28:06):
Long term opportunity, and I would agree with this, But
he can buy something that let's say that he perceives
as a twenty percent discount to its inherent value, to
its fair market value. If he's right, then he's going
to recoup that twenty you know, shortly after he buys,
let's say, within a year or two. So if you
if you avertise and add that to the what he's
getting in the in the in in cash, it's really

(28:29):
a strategic position that that he that he has. Yeah,
but I think some of the things that were coming
out of the meeting, uh, you know, one is the
huge definitely that cash shoard remains at above three hundred
billion again swelling to three hundred and forty seven billion
from three hundred and thirty four billion. You mentioned the
cash hoard of excuse me, the percent that's in treasuries

(28:52):
doesn't seem to play really.

Speaker 2 (28:54):
The seems to.

Speaker 1 (28:55):
Go for as we do, high quality h on the
fixed income side where you don't have to worry about
you know.

Speaker 2 (29:05):
I know.

Speaker 1 (29:05):
It's one point in time, he bought the Bank of
America Preferred coming out of OWA, and he did a
lot of work with ge Preferred. I took a position
in G bonds I believe coming out of O aight,
so he does take take positions in I guess you
would call a lower quality fixed income. But it seems
like right now, especially looking at their their you know,

(29:25):
their list of investments. You know, he has a lot
in treasury, so not taking a lot of risk there.
What else did you see anything coming out of that
doesn't like tariffs?

Speaker 4 (29:34):
Yeah, I mean I don't think that's that surprising that
he doesn't like TIFFs. He goes on to say, you know,
they can be an act of war. Trade should not
be a weapon. Buffett said, I do think that the
most the more prosperous the rest of the world becomes,
it won't be at our expense. The more prosperous will become,
and the safer will feel and your children's will feel someday.
So and he doesn't like tariffs, but he also says,

(29:55):
you know, he sees this turbulence has a blip on
the radar. You know, what has happened in the last
fifty thirty forty five days is really nothing. And he
would not characterize the market's turbines as huge moves, he said,
you know, and if he saw his shares tumble fifty percent,
he would see it as a fantastic opportunity.

Speaker 2 (30:13):
It would not bother me in the least.

Speaker 4 (30:15):
Yeah, you know, what I think is the most impressive
thing about Berkshire hat the way, is if you look
at the Triple cues over the ten year period, you know,
they're up three hundred and eighty five percent Large obviously
mostly tech NASTAC one hundred. The S and P's up
two hundred and seventeen. Berkshire's ten year performance is two
forty six, so up you know, almost thirty percent on

(30:37):
the S and P five hundred. That's pretty amazing. Given
his investment philosophy and his investment approach. You know, you
see the last ten years as really characterized as you know,
large cat deck doing so good. And I know he
does own Apple, he has a very very tiny bit
of Amazon. But you know, with just his investment philosophy
and how he does, you know, try to value companies intrinsically,

(31:00):
just how he tries to value companies overall, it's really
been such an impressive ten year period for him.

Speaker 1 (31:07):
Yeah, we'll probably get into it later in the show,
and let's let's let's let's move back. You know, we
have all our what we want to talk about in
order let's talk about Palenteer just a little bit here
in that same vein. And I don't want I don't
want to focus on Palenteer the you know, what the
company does and what we think of the future, but

(31:28):
more importantly that you know, he doesn't get caught up
in what Pollunteer announced earnings. The shares were down abound
ten or twelve percent and have have.

Speaker 2 (31:37):
This was on.

Speaker 1 (31:39):
Monday and Tuesday, Wednesday, Thursday, and into Friday. The stock
recovered most of what they had lost on Monday, even
though it was down, like I said, about ten or
twelve percent on Monday. As you know, retail investors stepped
in and there's a lot more retail. It seems like
an institutional ownership of this stock. We own, you know,
over two hundred just about two hundred thousand shares of
it for the benefit of our clients, and.

Speaker 2 (32:03):
It is very, very richly valued.

Speaker 1 (32:07):
My point with bringing up Pollenteer in conjunction with Buffett
is not that Buffett has a position in Palentteer, because
certainly Berkshire doesn't, but the fact that he doesn't get
caught up in the noise of the market in things
long term.

Speaker 4 (32:21):
Yeah, and you know, I think we see that a
lot with clients. You know, you have a handful of
clients and you know, we do all the portfolio management
stock choices for them. But you know, if the market's
doing well, you know, we'll have a client call and
I and if it's a specific client, I can tell
you the three stocks or whatever that they'll not be
happy about. And it's the stocks that aren't doing well,

(32:41):
you know, the stocks that don't really necessarily do well
during you know, let's say, if tech starts to take off.
And I think it's the sign of a you know,
a well balanced portfolio to really always have some stocks
that aren't doing as well as others, you know, definitely
let's say down or up. So you know, I think
I think that you know what Warren Buffett really did,

(33:02):
you know, extraordinaries stick to what he knew and followed
that philosophy. You know, not he didn't he didn't whale watch,
he didn't get caught in recent trends. You know, he
continued to value companies the way he wanted to value them.
And it's still worked out even when you had you know,
let's say, more risky assets do so well over the

(33:23):
past ten years.

Speaker 1 (33:24):
Right, and we're spending time on this because I think
it's a first of all, it's similar. You know, we
are our average portfolio and we keep track of this
as a five year average investment has about a five
year holding period. We turn over about twenty percent of
our portfolio year, which that again implies if it's it
takes five years to turn over entire portfolio.

Speaker 2 (33:44):
So you know that of you know, that's what.

Speaker 1 (33:49):
You should think of if you're an investor on your
own or expect if you're an investor US and you're
listening to the show, is that you know, we are
going to try to unless it's substantive, longer term substantive.
Generally speaking, we're going to ignore the noise in the market.
You know, our cash position is fourteen percent because we

(34:10):
do think, and we've said this that you know, President
Trump is not a traditional politician and with that comes,
you know, a more violatile market. And I think we've
certainly seen that. You know, Buffett does say, you know
that the recent turbulence is uplip and you know, over
the long term, American exceptionalism reigns Supreme also says, as

(34:34):
you mentioned earlier, this one just summarizing doesn't like tariffs.
But again, you know, we took this stance, you know,
before everything hit the fan or so with the market,
and the market's rebounded nicely from from those lows that
you know, like I said, just have about thirteen or
fourteen percent cash up from seven or eight. That we

(34:55):
continue to and also you continue to balance rebalanced portfolios
as more news comes out over you know, how this
whole thing is going to play out. So that is
anything more in Berkshire era, you know, you.

Speaker 4 (35:08):
Know, and you know, I think what he's continued to
believe in, what made him so wealthy is his belief
in American exceptionalism. You know, he says, we've gone through
great recessions, We've gone through world wars, We've gone through
the development of the atomic bomb that we never dreamt
of at the time I was born.

Speaker 3 (35:24):
So I would not.

Speaker 4 (35:24):
Get discouraged about the fact that it doesn't look like
we've solved every problem that's come along. Buffett said, if
I were being born today, I would just keep negotiating
in the womb until they said you can be in
the United States. And you know I do agree with that,
you know, I know, we talk about it kind of
a lot even with clients. Is you know, what does this,
you know, all the recent events mean for you know,
American exceptionalism, but also where companies decide to spend their money.

Speaker 3 (35:48):
But you know, I do it's.

Speaker 4 (35:50):
Hard to not believe that in the near future we're
not going to continue to have the most innovative companies
in the world and you know, the most capitalistic company
at the Latin most capitalistic countries country in the world.
So now, I still I still do believe in the
American exceptionalism from a from an innovation standpoint.

Speaker 2 (36:10):
Right to it.

Speaker 1 (36:11):
And I think some some of diversifying more internationally, I think,
which makes sense for investors. You know, I did hear something.
It was an interview with somebody on CNBC and this
individual managed funds, and she says, we've been advocating international

(36:35):
diversification for years.

Speaker 2 (36:38):
Yeah, did you. I don' know if you heard this.

Speaker 1 (36:39):
We've been advocating the international diversification for years and it's
working out now.

Speaker 2 (36:46):
Well.

Speaker 1 (36:46):
To me, that implies you underperformed for the years that
you've been doing it. Up until this year, we have
we are still underway. International probably got two or three
percent in underway.

Speaker 4 (36:58):
If you look at the total you know, world world economy, right,
the total world stock market, or even let's say like
a you know, a sixty to forty fund.

Speaker 1 (37:07):
That thirty percent, right, yeah, thirty, So that would have
If you look at the Vanguard Fund, it might have
twenty five or thirty percent of its assets Internationally. We
believe in like individual companies, most of them are domiciled
in the United States, a lot of them have you know,
substantial percentage of the revenue forty fifty sixty percent of

(37:29):
the revenue coming out of the United States. And over
the past two three four months, we have begun to
consequentially substantially bolster our international on the ETF side with DGT.

Speaker 4 (37:44):
I and I think that, you know, if you have
the uncertainty that you know we have in the economy
right now, I think that.

Speaker 3 (37:53):
It's a little bit easier.

Speaker 4 (37:55):
And you know, I think it's a good idea to
expand your portfolio to include some international just because it's cheaper.

Speaker 3 (38:03):
If you look at the.

Speaker 4 (38:04):
DGT, you know, the weighted PE ratio was sixteen as
opposed to the SMP which is about twenty four. So
you know, I think that you know, in times of uncertainty,
you know, it is a good idea to de risk
your portfolio a little bit. And I think you know,
D risk and diversification kind of go hand in hand.

Speaker 1 (38:23):
Well, that's a good point. D risk and diversification kind
of go hand in hand. Yeah, the second thing, but
that's that's gonna fly kind of.

Speaker 2 (38:34):
Does right, right.

Speaker 1 (38:35):
I want to I want to watch your two cents
on what Munger said about that. Charlie Munger, he just
passed away Warren Buffet's partner at at Berkshire. But I'm
also thinking about that. Oh I was I gonna say, Oh,
I do think so much money has flowed into the
United States over the past ten or fifteen years, you know,

(38:55):
by one measure, like twenty three twenty four trillion dollars
that even if there's a slow leak out for whatever reason,
I think it makes you take that and you also
take you know, evaluation, which you mentioned just a couple
of seconds ago. Those two things combined, I think make
international diversification very very make make a good case and

(39:19):
point for it. And you mentioned the d GT. We
have v y M I, we have the IOO SO
and just for for just make sure we're on the
same page. And for the listeners global if you see
something that says global ETF that includes the US, international
generally speaking excludes the US. So I think that makes sense.

(39:40):
A couple of things from Buffett and then we'll move on.
But you know, you don't get this chance for you
off him. Nobody knows what the market's going to do tomorrow,
next week, next month, but they spend all their time
talking about it because it's easy to talk about, but
it has no value.

Speaker 4 (39:54):
Yeah, you know, and and it's tough, you know, as
we sitting here on a weekly radio show broadcast. But
you know, I think that that is obviously important to know,
is you know, you have to weed out the noise
really of the day to day things that you that
you see in the market. I think it's easy for
Buffett to say that, because you know, he's basically an
expert on what he does. But you know, I don't

(40:16):
think it's as easy if you have you know, five
hundred thousand, a million dollars that you need. You need
income from this money, you know, So let's say you
need forty grand a year and you have a million dollars, you.

Speaker 2 (40:26):
Can afford the right. You can't afford when you're can't
afford to be wrong.

Speaker 4 (40:28):
Yeah, so when you're when your portfolio goes from a
million to eight hundred thousand, you know, it's that is
hard mentally. It's not just you know, I think, oh,
you just stay invested. It's like, that's not that's not
as easy to say if you're just you know, a
regular person let's say that doesn't have billions of dollars
and can afford to do that. So, on one hand, yeah,

(40:50):
I do agree with him. On another, I think it's
you know, everything's easier on paper, but when you're going
through it, it's really tough.

Speaker 1 (40:57):
Well, the other thing too, is and just to just
to put a pencil to paper on for numbers to
prove your point.

Speaker 2 (41:03):
There.

Speaker 1 (41:05):
In twenty and twenty two, if you had half a
million dollars and you had a sixty forty percent ratio
at the worst, the stock market was down twenty five percent.

Speaker 2 (41:15):
You know a little more than that. Let's let's use
twenty five percent.

Speaker 1 (41:18):
So if you had sixty percent of the five hundred
in the market, you had three hundred thousand in the market,
you were down twenty five percent. Of that, so you
lost seventy five thousand dollars in the stock market. The
bond market was down about ten percent. So if you
had the other two hundred thousand dollars in bonds now
you lost ten percent of that or twenty thousand dollars,
So you lost nearly one hundred thousand dollars twenty percent

(41:38):
of your money in a sixty forty portfolio. What happens,
and Warren Buffett said, you know, if the market went
down fifty percent, it's a tremendous buying opportunity. You're right
in as much that it would definitely be. But when
you see your you see your financial future flashing before
your eyes, man, you know you really can't take that chance.
You really can't take that chance lots of times, you know,

(42:00):
so you got to make sure you're adequately differs right.
I will also say that I think that a bear
market in bonds like we saw in twenty two is
probably a once in an investing lifetime bear market, because
we probably saw a once in a lifetime bull market.
If you look at the bull market that started in
bonds that began in you know, nineteen nineteen eighty two

(42:23):
or three, with Paul Volker, you know, getting inflation out
of the system. It ended really in twenty twenty two,
so almost a forty year bull market in bonds with
the ten year under one percent. You know, you know
that's just not gonna It's just not going to happen again. Mathematically,
it's nearly an impossibility. What do you want to move

(42:43):
to next there?

Speaker 2 (42:45):
Anything?

Speaker 5 (42:45):
Or you want to let me drive this shit. I
think that you know, how much time do we have?
We got about five minutes left. Google was down pretty substantially, and.

Speaker 2 (42:57):
What do you think about that on Wednesday?

Speaker 4 (42:58):
On Wednesday, and you know, it's trading at a pe
ratio of you know, which is amazing for a company
that's grown at twenty percent year over year in revenue.

Speaker 3 (43:10):
Let me just pop it up.

Speaker 4 (43:11):
I want to say it's below sixteen. Now it's about sixteen,
but it's I can't pop it up right now.

Speaker 2 (43:19):
It's about sixteen.

Speaker 3 (43:20):
Yeah, And you know that.

Speaker 4 (43:21):
With some fears that there, they're search percentages dropping, and
you know, I think that Google has been under fire
for a long time, you know, about a year or
so with this, and you know, I just think it's
such a cheap company. Sixteen point It's revenue growth at
sixteen point six eight percent year over year, even excluding

(43:44):
their most profitable business, which is searched, They're still trading
have a forty PE, which you know isn't astronomically high.
It's high, yeah, but it's not you know, there's a
lot of companies that trade at that. I'm the Ford
pe of sixteen point one three. You know, it has
two hundred and fifty thousand driverless car rides a week
with Weaimo. It has YouTube, it has Search, It has

(44:07):
Google Cloud, which had I think around also around a
t twenty percent you over your revenue growth. So I
think you have to take a step back. And you know,
people don't really value tech companies from a fundamental basis,
but I think sometimes you should. And I think Google
is one of those companies that you you should. We

(44:27):
had you know it in here last week talking about
how you know, chat GPT is great, but it's really
a glorified search engine, you know, And I think, uh,
you know, I think there are some some you know,
concerns about you know, Apple moving into AI search, which
could really diminish Google's returns as it you know, contracts
out through Safari.

Speaker 3 (44:47):
But you know, I think that.

Speaker 4 (44:50):
I think you have to, you know, give Google a
little bit the benefit of the doubt here and you know,
trust that they are working on other things as we
as we see with Weimo, and you know, it's still
an amazingly run company. You know, it's uh, you know,
I know it's called Alphabet now, but Google is a
verb until here someone say hey, I'm gonna chat GPT

(45:11):
something I do. Still, you know, it is you know,
the place to go for a search. So you know,
I wouldn't be too concerned about this yet, but I
think there you know, I also think, you know, there's
a you have to it's something to monitor and.

Speaker 2 (45:29):
A couple of things to add to that.

Speaker 1 (45:30):
You know, I think what why the stock kind of
tumbled and it has partially recovered. Eddie q, Apple's senior
vice president of the Services, during testimony before the US
Justice Department in lawsuit against Alphabet, you know, estimated that
about twenty billion dollars a year Alphabet pays Apple for

(45:51):
the right to be their their default search. And he said,
for the first time ever, searches on Safari dipped. I
think that's what let people to believe okay, you know
AI is you know when you look at open Ai,
you look at Microsoft, you look at a lot of
other areas. Now Google has some competition here. I think

(46:12):
the thing you one, well, it's not a static environment.
And shame on Sunder Pachai and the rest of the
upper management of Alphabet if they're not trying to fix
this and look and look down the road at any
ramifications of this right and respond to it.

Speaker 2 (46:25):
So that's one thing.

Speaker 1 (46:26):
The second thing is all the other areas I think
leads me to believe that the company you know is going.

Speaker 2 (46:33):
To be Okay.

Speaker 1 (46:34):
That said, I think you know on strength, you know,
we'll probably look to balance rebalance off a little bit,
you know, make sure that people don't have too much
in it. We've made a ton of money in it,
so we've also got to be worried about the tax consequences.

Speaker 4 (46:46):
Also, if there is a shift in what people what
leads the market, I think you don't want to be
over allocated to large cap tech, especially if you're in
retirement or nearing retirement, uh, because you know, you're looking
for a portfolio that is geared for distributions as well
as performance. And you know, if you see large cap

(47:07):
text all a little bit, you know, I think you
want to have other things in your portfolio that can
get you some capital gains or some income.

Speaker 1 (47:12):
I agree, how much time we have above in a
minute and a half, I want to want to quickly
touch on the Susie orma in five years in cash
just in case.

Speaker 2 (47:19):
I don't think that's bad.

Speaker 1 (47:20):
You know, retiree should have five years just in case
at four percent, you know, that's okay.

Speaker 4 (47:28):
You know, I usually recommend two to three years in
cash or cash alternatives. I agree for multiple reasons, but
I think the main one is when it's as much
of a psychological thing as anything, you know, you try
to get people to not make the wrong move at
the wrong time, which is a lot of our job.
And by explaining, hey, you have two to three years
for this portfolio to recover, uh if we do go

(47:51):
into a you know, a bear market or a recession.
So I think it's uh, it's really good for you know, investors,
peace of mind too, to know, okay, and average bear
market is how many days, you know, about three hundred.

Speaker 3 (48:03):
I think I was gonna say to the average.

Speaker 4 (48:05):
Maybe not the median, but you know, and I think
we're going to see that number go down less and less,
to be honest, as technology evolves. So you know, I
think having two to three years in cash, cash, alternative,
short term, short term treasuries, t bals, things like that
is smart because it helps you not make the wrong
move at the wrong time.

Speaker 1 (48:25):
And the more you the more you depend upon that
for your total portfolio for income, the more of a shorter,
more of a less volatility acid, you should have a
larger percentage.

Speaker 2 (48:37):
All right, what's time.

Speaker 3 (48:38):
We got ten seconds.

Speaker 1 (48:39):
That'll just about do it. Thanks for listening. Give us
call during the weekend. Check us on on the webitfagan
asse that dot com. Happy Mother's Day, Big Mother's Day.