The Fagan Financial Report

May 18th, 2025.

Episode Transcript

Speaker 1 (00:01):
Good morning, and welcome to the Capital District's Money and
Investment Program. You're listening to the Fagan Financial Report on
Dennis Fagan. Sitting here with my son Aaron, as we
do every Sunday right here in News Talk News Talk
A ten.

Speaker 2 (00:12):
And one O three one w G y uh.

Speaker 1 (00:14):
I'm gonna take the first half hour and recap the
week on Wall Street from an economic perspective, from a
data perspective as it pertains to the market movements. I
want to take a look at interest rates, and then
you know, how things have done since President Trump was elected.

Speaker 2 (00:34):
It's been almost like.

Speaker 1 (00:35):
A seasons for President Trump. You know, he's had some
good seasons and some bad seasons, but overall markets up
a little bit. So we'll talk a little bit about that,
and then you know, a couple of quotes from Charlie
Munger and how to kind of tune out the news,
some of the news that kind of results in you know,

(00:57):
perhaps you're doing the wrong thing at the wrong time.

Speaker 2 (01:00):
But how are you? How good? How are you doing well?

Speaker 3 (01:02):
Nice week? Nice this week which was nice.

Speaker 2 (01:06):
Yea decent week. I got the gardening last weekend. I
got it.

Speaker 1 (01:10):
Yeah, we're doing it tomorrow. Yeah, it's Friday morning.

Speaker 3 (01:13):
It's Friday morning, so hopefully Saturday, you know, I'll get
all my plants and my planting.

Speaker 2 (01:17):
Yeah, what do you got?

Speaker 3 (01:20):
Egg plants? Three peppers? You got me sasheto peppers. They
come in. We had to order those onlines. They were
hard to find. Yes, they were a lot. A couple
of different tomatoes.

Speaker 2 (01:32):
Sashatos are good and they.

Speaker 3 (01:35):
You know, my my theme for this year is edibly raw.
That's our home house theme, you know, because last year
we did a lot and we got more zucchinies things
like that, but you know, things that you can just
eat raw and snack on, you know, with hummus or
something like that, because we had a lot of things
go bad and you know, you feel you feel bad.

Speaker 2 (01:53):
So you a lot of kale too, a lot too much.

Speaker 3 (01:56):
Kree, But I did. I got more kale. I like
me too.

Speaker 2 (02:00):
Kale salad in the summertime.

Speaker 3 (02:01):
And it's easy to grow. It grows like firm, like
lettuce is tough, it's very it's it just kind of
grosses me out, you know, I'd rather let us have this.

Speaker 2 (02:10):
I got Brussels sprouts.

Speaker 3 (02:11):
I didn't you know, by the time my Brussels sprouts
last year became a harvestable. They were just attacked by
beetles too, right like so like the leaves were all attacked.

Speaker 1 (02:23):
And then I put them in. I put mine in
the boxes. I got a box the box I put
green peppers. I got six green peppers. I got six
Brussels sprout.

Speaker 3 (02:34):
Six green peppers.

Speaker 1 (02:36):
Yeah, but you didn't get any green peppers, did you.
I forgot giving something use on the sam. And then
I've got got twelve tomato plants. I put them in
the back and I planted out. You trim yours tomato plants? Yeah,
right up right when you And then I put hay
the first day you got them, you trimmed.

Speaker 2 (02:53):
Them before you can put them in. And then I
put them out.

Speaker 3 (02:56):
I mean, I guess you can.

Speaker 2 (02:57):
There's nothing. There's nothing on the ground.

Speaker 1 (02:59):
There's yeah that no leaves are on the ground, and
maybe three or four inches above the ground. I put
him in, put some composts in, and then put some
hay on top, just to kind of absorb.

Speaker 3 (03:08):
The I planted strawberries late last year, and they look
good this year. You know, you're always nervous, but Kelsey
our cousin says, they get really big, huge bushy bushes,
enough strawberries for the entire year.

Speaker 2 (03:20):
You should get excite some hay down.

Speaker 3 (03:22):
I know, I told you I got those like things.

Speaker 1 (03:24):
Oh that's right to support them. So if you have
any questions on gardening, please give us a call. And anyways,
so let's get let's get to it. You know, inflation
is subdued, the economy is subdued. I think we're kind
of like in that holding pattern to see how the
whole tariff thing plays out. The market's rebounded quite a

(03:47):
bit from the lows, and it all kind of goes together.
President Trump's concluding a trip to the Middle East where
he made some you know, talked about lifting sanctions off Syria.
I think he did, which somewhat of a surprise. The
airplane with Cutter, I think, you know some is somewhat
of a surprise as well. The big Boeing sale. We'll

(04:08):
talk about that a little bit more in the second half.
But there's a lot going on in the market. But
as it's almost like as the world turns, you know,
the market has recovered and I think now we're somewhat
of a holding tank. But looking at the economic data
that came out, and I think it's important every once
in a while to really get into this because it

(04:31):
does impact how what the FED does and how you
manage your portfolio. But prices at the wholesale level, if
you look at as represented by the producer price in
that's down to half a percent during April after being
unchanged in March, and that's pretty much.

Speaker 2 (04:49):
Huge drop.

Speaker 1 (04:51):
Over the past year, the PPI has risen just two
point four percent, down from three point two percent in
February and from a peak of eleven point seven percent
in April. Energy prices account for a good chunk of that.
Energy prices down four tenths of a percent, down eight
point one percent in your over year. UH, they were
down three point eight percent in March. Finished food prices
down one percent in April after filling two point one

(05:11):
percent in March. If you take out food and energy,
the core PPI down four tens of a percent dur
in April after rising, UH, you know, four tenths of
a percent in March.

Speaker 2 (05:22):
A lot of a lot of a lot of decent news.

Speaker 1 (05:24):
Really if you look at that, most of the you know,
the the UH, what accounted for most of the drop
and the producer price index was a drop in a
final demand for goods, and I think that's not surprising.
So so we have that so pretty much benign inflation.

(05:44):
Retail sales, you want to take a look at that
down increased one tens percent just after jumping one point
seven percent March. The one point seven percent in March increase.
You know, if you look at you know, let's not
get too excited about that, and let's not get too
you know, I guess acious about the one tenth of
a percent, but the one point seven percent, most people
attribute that to kind of buying ahead of the tariffs.

(06:07):
President Trump and pose the tariffs on March or April second,
and you know, since then, the you know, there's been
tepid retail sales, as is evidenced by that number. Spending
on motor vehicle and parts down one tens of a percent.
Excluding motor vehicles and parts, retail sales up one tens
of a percent, So again not much going on. Restaurant

(06:28):
drinking place sales rose one point two percent during April
after rising three percent in March, and I think that's
kind of indicative of the of the of the world
we live in. There at least Americans.

Speaker 3 (06:40):
As you know, you could say this isn't a you know,
a major data point, but it kind of is to me.
It says a lot about the world that we live
in now. Well, I think a lot about the economy
in the stock market right now. And you know, on
one hand, you know, in my opinion, you have you
have some fear think and a lot of these companies,

(07:02):
especially that that that that are international companies DOMSOUD in
the United States. But on the other hand, you know,
so you know, on one hand, you're like, oh, you know,
I could see the you know, economy and stock markets
stalling out a little bit because you know, you could
have some slowing cap expending and uncertainty. But on the
other hand, it's like, you know, how much can it
stall out when you have people still going out, people
people in the consumers in my opinion, in really good

(07:24):
shapestiale So you know, people talk about is there going
to be a recession? Isn't there? Is there not going
to be a recession? And you know, as the data
looks right now, it's hard to believe that there will
be a major recession as long as the consumer and
you know, people who are living in America on the
whole are doing relatively well. Yeah, we have unemployment low,

(07:48):
you have you know, wages pretty so. Yeah, it's it's
almost like a tale of two uh, you know economies.

Speaker 1 (07:57):
Well, I think I think, I think that's what you're
going to see. You know, I do think we're in
a lull. I don't want to I don't want the
listeners to think that that we think you were out
of the woods. I think that I think we're kind
of in a lull with with the market. I think
that we've gotten a snap back. We are in between
almost like the eye of a hurricane, where you have

(08:19):
April and April, April eighth or April ninth, April ninth,
president Trump announcing a ninety day stay or a ninety
day pause, just announce another pause last weekend with China
in ninety day pause with them as far as implementing tariffs.

Speaker 2 (08:34):
Ninety days from April ninth is obviously July ninth.

Speaker 1 (08:36):
So I think we're in that period like almost like
a honeymoon period or the eye of the hurricane before
we again to focus on that. But I think President
Trump hits hard and then pulls back or pivots. I
think that I think the more the more that he
does that, the more the market gets used to that.
But I agree with you, I mean, and I think

(08:57):
the one word I was looking for was unemployment, and
unemployment said remains remain slow.

Speaker 2 (09:01):
And it does. And I think so that that.

Speaker 1 (09:04):
With unemployment low, we mentioned prices coming down at the
wholesale level, you have a restaurant drinking place sales up.
That that means consumers are still relatively confident that they're
going out to eat and they're doing and experiencing life
a couple other And so.

Speaker 2 (09:24):
If you listen to us all the time.

Speaker 3 (09:25):
You even consumer credit as a percentage of disposable income
has has fallen a little bit. So you know, you
could say, hey, you know, there's never been any higher
balances on credit cards, but you know that is accounting
for inflation as well. And people are again, it's still
in really good shape. Forty percent of people who own
homes do not have mortgage don't have mortgages on these

(09:46):
homes too, So there's a lot of I guess amo
that people have if the economy does weaken a little bit,
or the or the consumer does weak and that. You know,
it makes me, I guess, pretty optimistic on if if
we did go into a session, it wouldn't be major
that said, you know, and then you see, you know
the other side of the equation would be everything that's

(10:06):
going on with this administration, in the in the economy.
And you know, never before in my career have I
actually asked people how their businesses are doing.

Speaker 2 (10:16):
You know.

Speaker 3 (10:17):
It's uh, you know, and you know, I met with
a client, a client son who does does work for agriculture,
feed and agriculture and the like, and I ask him,
you know what, what's what's this? Like, how are you
guys navigating this? They're out of the Midwest, they do
sixty percent of their business overseas, And he's like, everything
in the pipeline that's been in the pipeline, we're doing.

(10:37):
But it's after that that we're kind of like, all right,
we're in the wait and see mode. I saw stalling
KAPAC spending with Microsoft. I talked to, you know, someone
who owns construction construction company insuring and said, you know, again,
you know, we have the orders for a few cars,
a few trucks that you know, we're obviously going to
go through with but we have a couple orders that

(10:58):
we're supposed to, you know, order a few more trucks
at the end of the year, and you know, we
do have the ability to back out of that, and
you know, we're actually thinking about that because we just
don't know and I think you know that don't know
wait and see attitude that might trickle into you know,
the data and economic data. That is what's making me

(11:19):
a little bit nervous, let's say, for the for the
second half of this year and next year.

Speaker 1 (11:25):
I agree, you know, so I agree, you know, and
and we mark April second, I know we were on
this show not Happy Negative.

Speaker 3 (11:36):
Uh.

Speaker 1 (11:37):
President Trump pivoted on April ninth in the morning, and
the market has pretty much rallied since then. When President
Trump pivoted and basically took you know, granted the ninety
day pause, you know, then you know that you know,
he was listening to the bond market and it moved.
But certainly I'm sure it was that the post that

(12:00):
that's the show that we did in between the second
and the ninth that we were and I maybe you
might have been out that day. I think you might
have been on vacation. You know, it was pretty negative
on the market. And uh, but like I said, that
Pivot has changed things, given us this grace period which
allows for us to kind of, you know, reconfigure portfolios

(12:23):
to a certain extent.

Speaker 2 (12:24):
Uh, it also allows.

Speaker 1 (12:27):
For but I do I don't think it gives gives
the awe clear, Yeah, you know.

Speaker 2 (12:34):
But but but President Trump.

Speaker 1 (12:36):
Is he's cagy, he's you know, you never know what
to expect there, so I would not be And and
this is you know, goes to what we're going to
talk at the end of the show, Charlie Monger's comment
that you know, nobody knows over the short term, nobody knows.

Speaker 2 (12:50):
You buy good companies and you let these things ride through.

Speaker 3 (12:53):
And I think that's what you do during times like this.
And you know, let me, you know, pop up an
article that we wrote on Wednesday, and it's about you know,
the old adage of selling may and go away, and
you know, basically talks about how you know, there's three
months on three months between nineteen twenty eight and twenty
twenty three. This is from your Deny research that has

(13:17):
there's three months it's February, May and September where the
averages are down. So two of those months are between
May and September or April and October. You know, May
down point one one percent on average, September down one
point one seven percent. And you know, I think, you know,
talked about some things that you can do during your
during these months, and I think that's you know, a
big one. You can harvest some losses, but you can

(13:38):
we balance your asset allocation. You know, I think that
when you're managing your own portfolio, you always have to
make sure that you don't have one thing in your
portfolio that has you know, too much effect on your
portfolio really, So that's so that's what we've been doing lately.
You know, even Google, Amazon, Apple, Microsoft, some of our
largest holdings, and you know, it's worked out very well

(13:59):
for us, but you know, sometimes these holdings become you know, nine, ten,
eleven percent of someone's portfolio. And you know, if you
have Apple that's seven percent weighted on the S and
P five hundred and it's eleven percent of your portfolio're
fifty percent overweighted. So I think, you know, although it
has worked out, I think it's you know, kind of
prudent to just go through your portfolio when the market

(14:21):
is in a lull or you know, there's not as
much going on like in the summertime, and you know,
make sure that you know you're correctly allocating your portfolio
for what it's objective is.

Speaker 2 (14:33):
And you did that.

Speaker 1 (14:34):
You did a lot of work with that over the
past couple of weeks actually, you know. So, so we'll
see where that takes us other other economic datas it
comes out that it pertains to investing, that shows how
the economy is doing and inflation and the like. Initial
clans F un employment benefits unchanged at two hundred twenty
nine thousand. As we've mentioned here before. Once that number
gets to about two fifty, there's an issue trailing four week.

(14:57):
The average is a two thirty five hundred. You know,
Aaron used the word trickle. We do think some of
the information that comes in in the in the in
the next month or two is going to indicate, you know,
a slowing economy, unemployment moving upward. You also mentioned the
word in the pipeline. Business in the pipeline. You know,
jobs in the pipeline are going to be completed, and

(15:19):
we'll see whether companies tend to take more cautious tones
as we work through this tariff issue. Consumer prices up
two tenths of a percent during the month of April,
up two point three percent year over year. CPI has
falling from a year over year high of nine point
one percent in June twenty two, and it's basically at
a cycle low, going back to a February of twenty one, so.

Speaker 2 (15:38):
A little over four years.

Speaker 1 (15:39):
Energy prices up seven tens of percent during in April,
still done almost four percent year over year, Food and
beverages down one tens of a percent. Food and beverage
still up two point eight percent year. Rear shelter a
four percent year over year. And I cannot believe the
housing market's got to be fixed. It's how I don't know.
If it's inventory, I don't know, if it's different like

(16:00):
different tax credits, I don't know.

Speaker 2 (16:02):
You know it's got because.

Speaker 1 (16:04):
I mean, I'm just seeing apartment building up their apartment
building when and you don't get you just don't get
the wealth creation. Most a lot of people's wealth is
embedded in the value of their home.

Speaker 3 (16:13):
And I mean, is that the just the economy we're
going towards? You know, if you buy a movie on
Amazon right now, you're not actually buying it right now?
Are we just going to be? Is this going to
be an economy of subscription economy?

Speaker 2 (16:26):
Right?

Speaker 3 (16:26):
You know, you rent your home, you know, you rent
your phone, you run everything, and you know it's it's
a it's just you know, I think what we should
do is I think, you know, I think we need
to put some And it's tough because you know, I know,
I talked about this on the show multiple times. But
every single town, every single city, has their own rules

(16:48):
and regulations and objectives for what they want in the
house market. Right now, even in Brunswick where I live,
you're seeing signs, you know, pop up everywhere that say,
you know, it's like basically anti solar, anti souls. We
don't want solar farms. You want to remain residential, blah blah,
you know, and that's I think that's well and good.
But we also have an Aldi at tackle bell A,

(17:08):
Wendy's Hannaford, all that's been developed in uh you know,
a burger king, a burger King, you know it's been here.

Speaker 2 (17:14):
You know, Roma Joe's Roma Joe.

Speaker 3 (17:16):
So you know, it's it's it's all good, it's all good.

Speaker 2 (17:19):
In theory.

Speaker 3 (17:20):
But every single person, uh, and everyone has different objectives
to what they want of their local uh, which has
got to go and that's that's the way it's gonna
But how are we ever going to build if no
one wants you know, no one wants to build who's
already here? People want to build who don't have homes yet,
you know. So I think it's good. I think from
a from a federal standpoint, maybe they need to step

(17:40):
in and I think do something to increase the supply.

Speaker 1 (17:44):
Well, there there's obviously monetary policy, which is the Fed
and Treasury, and there's fiscal policy, which is which is
Congress and the president administration, which is like spending, you know,
you know, tax, tax policy, things like that. What do
you want to promote You want to promote you know, families.
Then then you know, give credits for you know, deductions

(18:06):
or exemptions on higher exemptions.

Speaker 2 (18:07):
You want to promote home building.

Speaker 1 (18:08):
But if they you know, bring back the salt tex,
bring back you know, do something you know where where
you promote that, loosen up the environment a little bit.

Speaker 2 (18:16):
We've got us in the trouble No. Seven or eight.
But those are some things you've got to do.

Speaker 1 (18:21):
Uh, So shelter costs still remain somewhat of an issue
and probably will continue to be an issue for quite
some time. Other than that, you know, that's pretty much
the news that came out this week on the economic front.
I think if you take a look at the market,
the other thing I wanted to do and we'll get
we'll finish up probably the first the half hour with

(18:42):
this air.

Speaker 2 (18:44):
Is interest rates.

Speaker 1 (18:46):
Interest rates are very interesting right now. You know, we've
had the ten year go from the high threes to
where it sits now, which is four forty five, close
Thursday at four forty five, closed Wednesday at four point
fifty three, and so it's.

Speaker 2 (19:04):
Trending up a little bit. I think, you know a
couple of things.

Speaker 1 (19:09):
What what what is it in a response to when
initially with the tariffs, I think it was the dollar
was dropping, the dollar was dropping, uh and the the
American exceptionalism was in question.

Speaker 2 (19:24):
I think that's eased a little bit.

Speaker 1 (19:26):
I think now what the sellers of treasuries are focused on,
which is causing the interest rates to go up a
little bit, are you know, the budget and the budget
deficit and extending the the tax package that was in
I forget what number of years ago it was supposed
to sunset this year, and that that adds an extra
two or three trillion dollars onto the debt as opposed

(19:47):
to you know, a different tax package. So I think
there's there's a little concern in there about the level
of debt and you know obviously the budget deficit, and
then what what's gonna what's it going to cost a
service that debt. So I think we've done it, you know,
to kind of like, you know, please jump in. But
I think I think we've done a good job, you know,

(20:10):
having you know, shorter term bonds in our portfolio as
represented by the B I L B I L E
T F.

Speaker 2 (20:19):
And and and and and.

Speaker 1 (20:20):
If you and if you, if you look at that,
this has little little in Nobel to just Spider Bloomberg
one to three month t bill. Uh, you know it's
up about what is up here today maybe you know.
So it's got to give it a yield to four
point six percent probably four and a quarters what it's
what it's going to what it's going to pay. It's
up one point five percent year to date, so you're
gonna end up with four and a half if interest
rates stay where they are, and I think that's you know,

(20:42):
we're we're looking over the next month or two to
extend that depending upon where interest rates go.

Speaker 2 (20:47):
But I you know, you know, I think when.

Speaker 3 (20:49):
It's certainty, it's hard to extend it too much in
my opinion right now, especially with the debt. We just
bought a little bit of f l x R. It's
a TCW's flexible income et F and they have a
duration of about you know, three to four years, So
you know, I think that that's still a good duration
to have in your portfolio.

Speaker 2 (21:08):
You know.

Speaker 3 (21:09):
Yeah, we have some some ETFs that bond ETFs where
the maturity is and you know, twenty twenty thirty one
thirty three, so we do have some exposure there. But
I would continue to remain shorter on the duration side
the aggs. What about four to five years is the
average duration of the agg So you know, we're we're
I think a little bit more optimistic on a little

(21:31):
bit shorter duration than that. But you know, I think
for the time being, until we see something substantial pass
uh to to make I guess interest rate's a little
bit more predictable, you know, I'm still comfortable with that,
you know, three to four years.

Speaker 1 (21:48):
Three to four years, yeah, I don't think you want
one year? No, you know, and like guess you know,
if you're sixty.

Speaker 3 (21:54):
Yeah, what you don't want to do is get caught
in like a money market or a really short term
And I think that's our biggest you know, fear for
h investors and our investors is you know, we're trying
not to get too caught in you know, the bils
of the world, the zero to one year duration where
all of a sudden that yield is down to the

(22:15):
mid threes and you're like, uh, oh, I did not
extend my duration.

Speaker 1 (22:19):
Well what what What could happen is the economic data
trickles into the economy and then that's it's the economic
data shows the economy slowing, that cuts the BIL comes
down in interest rates, and then you're stanching, you're done,
and then you're then you're chasing or you're kind of
hoping that interest rates go back up. So now it's
probably a good time, you know. You know, personally, I
don't have a problem extending that to six or seven years,

(22:41):
depending upon the age of the person. If I'm sixty
five and I can guarantee for four and a half
percent to seventy two that's half of my active retirement life. Yeah,
that's not a bad thing, you know what I mean. So,
but but in general, I think if you're waited three
or four or five years, I don't think you're going
to get that hurt. That hurt if interest rates go
up ladder, you're bonds, and I think you'll, uh, you know,

(23:02):
you'll you'll do you'll do well from that period of time.
And it's pretty flat yield curve. The one years at
four eleven, the two years at four I'm sorry, the
one years at four ten, the two years at three
ninety six, three ninety five series, you're getting four right around,
you know, through the almost the entire yield curve four
four to five percent to thirty years at four ninety one.

Speaker 2 (23:23):
You're not gonna go out that far.

Speaker 1 (23:24):
The ten years at four forty five, So we we
look at going out the five years at four oh
seven looking looking look.

Speaker 2 (23:29):
Up to that air.

Speaker 3 (23:32):
Is what you model around on a bond side. So
you know, if if you can pick up that four percent,
that's obviously makes the other side of your portfolio not
have to work as.

Speaker 2 (23:41):
Hard, so that'll just about do it.

Speaker 1 (23:42):
The second fil we are gonna, you know, we are gonna,
you know, focus on returns since the inauguration and how
it's it's almost like a year of seasons. But right now,
it's ten thirty on the station you depend upon for news,
weather and information, News Talk ten and one O three
one W G Y, Good morning, Welcome back to the
second half five of the Capital District's Money and Investment program.

(24:04):
You're listening to the Fagan Financial Report. Aaron and Dennis
Fagan sitting here on It's a midday Friday. We're recording
this show, so don't bother calling in, but please bother
listening because we've got some good second half information for you.
One is, you know, how has the market done since
President Trump has been elected? How has the market done

(24:24):
since the inauguration day? How has the market done since
Liberation Day? And I think I think we found out
a bit and I think you'll you'll also find out
some client who's been with us for thirty years.

Speaker 3 (24:40):
Thirty years, thirty.

Speaker 2 (24:42):
Years, the spouse has passed away.

Speaker 3 (24:44):
Yes, eleven two of nineteen ninety four is when they
opened the account. And crazy we're just doing some work
with their with their children, and it's just a it's
a it's an kind of like an interesting you know,
I guess case study, and you know what a portfolio
should do and typically does during lots of different financial

(25:06):
you know, do someone's retirement.

Speaker 1 (25:08):
Lots of different time frames. You look at the internet
boom of the nineties. You look at dead money for
ten years with Microsoft's having going nowhere from two thousand
to twenty thirteen or fourteen. Yeah, you've got nine to
eleven in there. You've got y two k that came
across right before nine to eleven when we turned the
clocks and everyone's worried about the planes were gonna fall

(25:29):
out of the sky.

Speaker 3 (25:29):
You had I remember that. I was only like, yeah,
you know twelve, but I do, But I do remember
waiting till it hit twelve and thinking.

Speaker 2 (25:39):
What's gonna happen here?

Speaker 1 (25:40):
Yeah, we had then you had the financial meltdown in
seven oh eight oh nine. Obviously we had rise out
of that. The pandemic you know you've had. We started
out with they started out with President Clinton in office,
and then moved to Bush one and two Obama and
then now President Trump, Biden, Trump back to Trump and

(26:04):
then so we'll talk a bit about that if we
don't waste time talking about what happened during it.

Speaker 2 (26:09):
And then I got a surprise for you too.

Speaker 1 (26:10):
JP Morgan studied five million US retires and named three
spending trends you need to factor.

Speaker 2 (26:15):
In the retirement. Let's start off with the let's start
off with some numbers.

Speaker 1 (26:18):
So year year to date, Okay, the S and P
five hundred is up point six percent.

Speaker 2 (26:26):
The.

Speaker 1 (26:27):
Since when I'm sorry, year to date from twelve thirty
one of twenty four the nas that composits down one
percent to dows down less than a half a percent.
So we've i mean, think of all the volatility that's
occurred year to date, you know, from the inauguration, from
Liberation Day, from Trump's pivot when the bond market pressured
them to now and all the noise and mechinations and

(26:51):
fretting and wringing of hands, and you've got the S
and P five hundred up less than a half a percent,
not including dividends.

Speaker 2 (26:58):
Okay, you go.

Speaker 1 (27:00):
So then you go to from the beginning of the
year to inauguration day, and this is what we've been
saying for quite some time that the market was happy
with what President Trump was doing, what's what he said
he was going to do, until he was inaugurated, and
the S and P five hunter was up one point
ninety six percent from the end of the year to

(27:20):
inauguration day. You flip that from inauguration day to the
bottom of the market, the S and P five hundred
was down seventeen percent, then Nazdak down twenty two percent,
the Dow down thirteen, the broader market down seventeen point eight.
So President Trump came on the scene, people were encouraged
about deregulation, encourage about, you know, his immigration policy to

(27:44):
a certain extent, and the market respond favorably. He gets
in office and kind of changes his path and just
focuses a lot on tariff, certainly on immigration, and the
market really rebelled and in fact down to it's slow
and four to eight. When President Trump pivoted a little
bit and said, Okay, you know, we've got to do
something a little.

Speaker 2 (28:04):
Bit different here.

Speaker 1 (28:04):
The market has since rallied sharply from four to eight
through the close of business on Thursday. Nas Deck up
twenty five percent, SMP up eighteen percent, Dow up twelve
and a half, but it hadn't been down as much
from four eight to from about a month ago. Yeah,
uh to the close of business on Thursday. So then
now you take a look from his election day eleven

(28:27):
to five through Thursday, the nasdek's up three point sixty
five percent, the SMP's up two thirty two US total
market that makes up one to eighty seven, and the
Dow is basically flat up.

Speaker 2 (28:37):
A quarter of a PERCENTID. What would do you add?

Speaker 1 (28:39):
And you doing some other stuff, you can you join
anything any conclusion from that or no?

Speaker 3 (28:45):
Not really? Uh? What I you know, when when you
talk about all these things that happened in the market,
you know, I think that the you know, the most
important takeaway that I have from this is, you know,
I think what people were very nervous about during the
pullback in April and March. You know, people were really

(29:08):
nervous about I guess, you know, obviously the terrorists, but
also that Trump really didn't you know, there was narrative
that Trump doesn't care about the stock market this time,
he doesn't care about the stock market. He wants to
get these things accomplished. But I think what we saw
around April ninth or so, was you know, Trump is
listening to the financial markets, to the to the tent.
We saw the ten year treasury spike drastically, and I

(29:31):
think he showed us that, you know, he is listening
to these things. And I think that's the most important
thing with the market. And I think it does put
a floor in the market, knowing that he is actually
paying attention to the stock market, to the bond market,
and as long as as we talked about in the
first half, the consumer remained strong, I do think now
there's a floor in the market, whether it be five

(29:52):
or ten percent lower from here. But I don't think,
you know, we've seen a lot of things lately. I
think Paul Tudor Jones came out and said, hey, we're
going to retest those loads. We're going to retest those loads.
And I don't, I don't. I don't necessarily agree with that,
because I do think now that if we do see
a pullback from in the stock market because of some

(30:13):
of these policies, I think that there will be a
floor and that people will uh, you know, wait and
see that hey, you know, Trump will respond to.

Speaker 1 (30:20):
This backpedal from Yeah, I think he probably tests the
water test, tests the response of the of the market,
and go I don't think he did that the first time.
To be honest with you, I don't think he tested
the response to the market. I don't think he thought
he would get the response of the market that he did,
especially on the fixed income side. When you said earlier
that you know, the ten year spiked.

Speaker 3 (30:39):
You know, you see the ten year spike. If you
if you saw bond rates continue to spike five six
seven percent, there would have been major issues with reissuance
of debt and the like. So you know, I hope
to not see that again, and I don't think he will.

Speaker 2 (30:56):
Yeah, So that that's so. That's that's what you've had
so far.

Speaker 1 (30:59):
And and you know, we did say before President Trump
was elected and you know, and leading up to his inauguration,
as long as his policies are a rational and well
thought out, I really don't think that the stock market
is a really good gauge of what he's doing. For
the first year or two, I don't think that. You know, now, now,
I don't think the tariffs initially were well thought out,

(31:22):
well constructed, and the like. And you can't tell me
that this was his plan all along to rile. He
I'm sure he didn't want to rile the markets. I'm
sure that was a surprise to him. But that said,
you know, getting on the right path now. Who knows
the other thing I said, and I said in the
first half, this could be, you know, just the eye
of the storm. As we get closer to the ninety

(31:43):
day pause being over, which is July ninth or so,
you know, the market might get worried again. You have
the budget reconciliation process that's going to basically coincide in
around that same time. So you've got some stuff going
on with the market, you know. And I think you
said that, you know, just you know, we you know,
just this is a good time to really re evaluate
what you're doing, see what's going on with your portfolio,
and take it from there. Second second block of this show.

(32:06):
So what do you got? You got to do a
client that.

Speaker 3 (32:09):
Oh so it was interesting. It's you know, it was sad.
It's always sad to lose a lose a client, especially
when that had been your client since I was four
years old, which is amazing and they've been a client
since nineteen ninety four. And it was just a good
case study done on what correct portfolio management should do.
And you know what it should do is last. It

(32:32):
should have your account last you a lifetime, you know.
So so when they became a client in in nineteen
ninety four, we have total contributions of two hundred and
ninety three thousand dollars that they've contributed to their accounts.
They have withdrawn five hundred and seventeen thousand dollars and

(32:53):
their account valued when when he passed sadly, it was
worth three hundred and sixty two thousand dollars. So over
the course of thirty years, you know, withdrawing five hundred
and seventeen thousand dollars, it looks like there were that
you know, it's it's and they still have, you know,
almost seventy five thousand dollars more than when they contributed

(33:14):
with distributions along the way. So you know, if a
correct allocation, you know, having the stock market do what
it should do over time, you know, you try to
take the behavioral aspect of investing out of it for
clients so you don't get scared out of all the
things that you mentioned. You know, you had long term
capital management fail in nineteen ninety nine, you had two
thousand y two K. You had two thousand and one

(33:36):
with the stock market bubble, had two thousand and eight
with the Great Financial Crisis. You know, even you know,
you had the Great Greek debt crisis. At eleven, nine
to eleven, you had COVID. So, you know, I think,
you know, it's just a really good case study on
staying the course. I guess, you know, we hear it

(33:57):
all the time stated of course, day of the course,
day of the course.

Speaker 1 (33:59):
But well, it's it's also you know, it refutes I
think to a great extent.

Speaker 2 (34:05):
It's different this time.

Speaker 1 (34:07):
I mean, and there's there's there's situations where I could
say that, you know, in the back of my mind,
I thought it's different this time.

Speaker 2 (34:13):
Nine to eleven was one of them. You know, where
do we go from here?

Speaker 1 (34:16):
You know, and most people think about the Twin Towers, uh,
but I mean the the explosion of the attack on
the Pentagon was probably as for me as as unnerving,
given the fact that it was right in Washington. I
think they raiment for the Capitol maybe the one, no,
the one that was that was taken down in in Pennsylvania. Yeah,

(34:39):
was headed for the capitol. So yeah, it's different this time,
is is uh? If you follow that, if you follow
that course of action and say no, it's different this time.
So I'm going to change my portfolio directly. You better
be careful because you know can really so. So I
think it turns out to about six six and a

(35:00):
half percent a year on the average. I think, you know,
the stocks did about eight or nine, and you know,
bonds might have done two or three or four whatever,
and it worked out so they got more money than
they started with. I remember, I remember the case nineteen
ninety four, thirty thirty thirty one years ago.

Speaker 3 (35:19):
You're just child.

Speaker 1 (35:20):
I believe he was fifty eight or fifty nine, maybe not.
At that point he had tired from truck driver for
Grand Union. And those were difficult times for the truck
drivers for Grand Union because they closed a lot down.
I think they had a pension that they took away.
Grand Union was sold to an English from I forget
who it was they should and they ended up shutting
a lot.

Speaker 2 (35:39):
Of Grand Unions down.

Speaker 3 (35:40):
I remember Grand Union.

Speaker 2 (35:41):
I worked there in.

Speaker 1 (35:42):
High school down at the high school and college at
the bottom of the hill. Frozen food section Bottot what
Hill Oil Mill Hill, No, Northern Drive on the right
hand side of that mall there that was Grand Union.

Speaker 3 (35:53):
Right there where the price chopper was.

Speaker 1 (35:56):
No before that, before he get to before he get
you know where I'm talking about Crois Park is Yeah,
right after that there's a right right yeah, yeah yeah,
so yeah, so that was that was right there. Yeah.
The world keeps moving along. But I'm glad and I

(36:18):
and I spoke with his his widow after he passed
away within the past week or so, and uh, it
was nice to.

Speaker 2 (36:25):
Speak with her and they had a good life. All right.
So here here's what I got for you.

Speaker 1 (36:29):
JP Morgan studied five million US retirees and named three
spending trends you need to factor into your plan.

Speaker 2 (36:36):
This is who finance. If you want to look on,
it's up to you.

Speaker 3 (36:39):
So are you gonna quiz me on what you should
factor into?

Speaker 2 (36:41):
No quizzing? So what they found right a quiz all right?

Speaker 1 (36:48):
One thing they found out most financial planners make basic
assumptions about inflation. Put simply, they assume that you're spending
in retirement will probably increase every year in line with
the quest of living. In recent years, According to JP
Morgan's analysis, inflation has averaged two point nine percent from
eighty two to twenty twenty four. However, for retirees, they

(37:09):
tend to shift their spending patterns in retirement. So those
that have been in retirement for US retirees factored inflation
into their plan. And I say this, we say this
quite often, but inflation wasn't as scary for them in hindsight. Yes,
they spent more on healthcare, but other spending changed. They

(37:31):
changed their spending patterns as I mentioned, and also their
gradual their living expenses gradually declined over the course of
their retirement.

Speaker 2 (37:41):
And I think that was surprising to me.

Speaker 1 (37:45):
It wasn't surprising to me because you know, I think
a lot of your inflation in retirement is in the
first few years you do the things you want to do,
and then just from anecdotally, if just from having been
in business for you know, five years, I think you
do settle down and then you went to that passive
stage of retirement.

Speaker 2 (38:05):
Yeah.

Speaker 3 (38:05):
You know, I think when we meet with clients a lot,
I do reference my grandfather, your father, and you know
what his life was like throughout his retirement, because you know,
when when let's say, I was a kid, ten eleven,
twelve years old, he was really he was helping pitch
it in on our you know house to the outer banks.

Speaker 2 (38:23):
Yeah yeah, yeah, pay for whatever.

Speaker 3 (38:25):
You know, try to pay for half the house or
something like that. And then as he gradually grew older,
you know, we were doing a lot of that stuff.
You know, from probably nine to twenty one, we were
doing that. And then you know, my grandmother got sick,
and then he was traveling with you Yeah, I was.
I was in college. You know, his grandkids were all

(38:46):
kind of grown up. He was, you know, going to battlefields,
he was listening to the mets, he was watching the
US Open tennis. You know, so he wasn't doing as
many big ticket items and spending more time with his family,
you know, cost a little bit less, doing a little
bit less, and he was in that you know, passive
stage of retirement.

Speaker 2 (39:06):
I think that's a good point.

Speaker 1 (39:07):
Yeah, you know, and and then you know we would
chip in more as we got older and more set
in our set in our business.

Speaker 2 (39:13):
Yeah, you know what I mean. The JP the.

Speaker 1 (39:15):
Study goes on to say, still with that, inflation wasn't
as scary as they thought. In fact, for partially and
fully retired households with investible assets between two hundred and
fifty and seven hundred and fifty thousand, which is a
lot of our clients. Really, the annualized inflation adjusted change
in spending is one point sixty five percent.

Speaker 2 (39:34):
That makes sense.

Speaker 3 (39:35):
So if you're if your net worth or your retirement
accounts between two fifty and seven fifty.

Speaker 2 (39:40):
Yeah, you basically a really good study.

Speaker 3 (39:42):
Yeah, you know, just for.

Speaker 1 (39:43):
A moment to print some of that out and we'll
expand upon that maybe in one of the one of
our next reports too, our next Vake and financial reports,
uh number two. Big, you get it. Coming into retirement,
there's a big temporary bump in spending. J. Morgan's analysis
also uncovered a curious surgeon spending in the first few

(40:03):
years before and after years in the few years before
and a few years after persons retirement, and you could
see that I'm retiring, I wanna I want to I
want to pay off my house. I'm retiring, I want
to fix the driveway, I want to get a new
windows right after maybe.

Speaker 3 (40:19):
You're in before you're retiring, you know, and we I
actually say that a lot to clients, and you know,
I didn't mean to cut you off, but yeah, you know,
and I and I see that as if someone calls,
if we have people that came in. So I'm kind
of thinking off the top of my head. But I
was just talking to Doug about this, how this uh,
this is one of his his buddies, is really really

(40:40):
he really wants to pay off his mortgage. I want
to pay a my mortage. I want to pay a
my mortgage. I want to pay off my mortgaine. I
was to him. I was like, you know, yeah, I
think it's a good idea to pay off your mortgage fast,
but like you know, in my head, I want to
pay off my mortgage coinciding with retirement, you know what
I mean. So you want to reduce your free cash
flow in retirement like your house and increase your recash

(41:01):
row and retirement. So that means, you know, maybe not
having a mortgage in retirement. But up until then, I
don't think it's as big of a deal. And I
think a lot of people get to the end of
you know, paying off something a mortgage, a pool, whatever,
and they you know, put a lump sum on it
before retirement, which I think is a good idea to
you know, you increase your month to month's cash flow,

(41:22):
which in turn decreases the you know, strain you have
mentally on your portfolio when you know when the market
coin you know obviously will go down once in a
while in retirement.

Speaker 2 (41:32):
I agree.

Speaker 3 (41:33):
I think it's so you kind of you kind of
try to weed out that noise in retirement so you
don't do the wrong thing at the wrong time.

Speaker 1 (41:40):
And a totally another different article I forget where it was,
but the author suggested that only prepay your mortgage if
your interest rate is above five percent. Do you agree
or disagree with that in general? And do you disagree,
like pay down your mortgage generally disagree? How about the
number of five percent?

Speaker 2 (41:57):
Yeah?

Speaker 3 (41:57):
I think reason Yeah, But I again, as I was saying,
I think, you know, if you have thirty grand left
on your mortgage, I don't think it's a bad idea
if you're you know, one or two years from retirement,
even if it's two percent, I don't have a problem with.

Speaker 2 (42:11):
You know, not that amount.

Speaker 3 (42:13):
You know that, you know, you you wipe that silly clean,
so you go into retirement with you know, less again,
less noise, Yes.

Speaker 2 (42:21):
And assuming that thirty thousand isn't the only money you have.

Speaker 3 (42:24):
And you want to, you know, you want to, you
want to lessen the complications in retirement. I was someone
if I was near in retirement, i'd be I'd be
trying to, you know, make my simplify my life from
a financial aspect.

Speaker 1 (42:39):
Well, I think there's there's a number of reasons for that,
I think, and you're not there from an age perspective,
but even from an age perspective, you know, not not
just not just your money, but I think everything in life.
You kind of want it just a little simpler and
a little more peaceful, you know, so that you can.

Speaker 2 (42:56):
Enjoy other facets of your life.

Speaker 3 (42:57):
You know what I mean, you know, yeah, you know,
I even just you know, I've become a parent recently,
and I know it's not the same as retirement, but
it's it has those similarities in that I don't want
as many Like I owned a place downtown, you know,
four or five four years ago, and I just didn't
want to have to deal with it mentally. So you know,
you want to spend your time on things that you enjoy.

Speaker 1 (43:19):
So number three, everyone doesn't spend the same way retirement
planning isn't a one size fits all endeavor.

Speaker 2 (43:24):
That's why the program that.

Speaker 1 (43:26):
We use takes your needs like the day to day living,
and then takes what do you want to do?

Speaker 2 (43:32):
Do you want to travel? Do you want to you.

Speaker 1 (43:34):
Know, get a second home, this and that, and then
then then it has another part of the financial The
retirement projection does that. If anyone wats one, I'll give
us a call at five one forty four. But everybody's
senior years look different. So that what they did is
they put these into different categories for retirement. And I'm

(43:57):
just scrolling down, I can find it. Let's see your
Oh they have six different type of spenders. Okay, they got.

Speaker 2 (44:12):
Let me see here.

Speaker 1 (44:17):
Yep, I'm not gonna I'm not gonna find this and
I'm not gonna find it to then talk about it.

Speaker 2 (44:20):
But no big deal. I'll get it on. We'll talk
about that next week. Yeah.

Speaker 3 (44:27):
It's like the financial personalities. Yeah, it's like five the savor,
the spender, the gambler.

Speaker 1 (44:34):
Right, the worrier, yeah, whatever, yeah, I'll touch but every
so everyone doesn't spend the same way. Yeah, and they
put them into the six different categories. So that's about
it when those are the three or the three things
that I think.

Speaker 2 (44:50):
Uh.

Speaker 1 (44:51):
And and and the article is on money Wise and
it's entitled JP Morgan studied five million US retirees and
named three spending trends you need to factor into your plan.

Speaker 2 (44:59):
UH.

Speaker 1 (44:59):
Get coming on to UH, I want to we have
about three or four minutes to go.

Speaker 2 (45:06):
Let's go.

Speaker 1 (45:06):
I think these titles say it all and things that
we can talk about just and just briefly.

Speaker 2 (45:10):
I want your take on these things.

Speaker 1 (45:12):
Microsoft laying off about six thousand people or three percent
of its workforce, what's your take on that?

Speaker 3 (45:18):
Yeah, what, I'm not much other than you know, I
think you're seeing companies become a little bit more cautious
than they were in previous years. And I think that's
what that signals. Microsoft's CAPAC spending has stalled. And you know,
I think that's the biggest worry, in my opinion, in
the economy is the stalling of cap BAC spanding. And
I know we talked a little bit about it at
the beginning of the show.

Speaker 1 (45:38):
In the first half, the implementation of AI. They don't
need many more people. Oh yeah, that's a big one.

Speaker 3 (45:43):
You see, you had a pretty good. Undella said something.

Speaker 1 (45:46):
Thirty percent of code is being written by AI and
now they're respecting that to be forty or fifty percent.
Jerry Powell cautious am D announces the six billion dollar buyback.

Speaker 2 (45:58):
We own some am D.

Speaker 3 (46:00):
Yeah, you know, a m D has been just you know,
it was very we were very happy with it. Then
it was disappointing it didn't really in this most recent
semiconductor I guess like bull market trend, it didn't hasn't
really participated as much. And you know, it was kind
of funny that, you know, a m D was kind

(46:20):
of eating you know, Intel's lunch, and then it turns
out that and videos eaten as lush a little bit.
You know. So I think it's a it's a great company.
It's Lisa SU's one of the best CEOs in the
world in my opinion. She was just here at RPI
given a speech, and I think she'll she'll get it right.
It's had a really nice week or so last couple
of weeks. I think it's up significantly, and I think

(46:42):
I think that that data center spend trend is gonna
is here to stay.

Speaker 2 (46:47):
I do too.

Speaker 1 (46:48):
Trump says he doesn't want apple building products in India.
I had a little problem with Tim Cook. He said
that when we found out that uh.

Speaker 3 (46:56):
Dave Chappelle, things like, we don't want to build, we
don't want to he was an iPhone, we don't want
to we don't want to make them. I think, you know,
that's just I think it's unrealistic to bring too much
chip not chip iPhone manufacturing to the United States. You know,
he did announce that they're going to spend five hundred
billion dollars in the unitiets. But do we even know
what that's on yet? Did he say what it's on? No?

Speaker 1 (47:17):
I think what the other thing too is you know,
we're five percent of the world's population and we want
to make sure it's it's it's The world is not
like a pie where someone if we don't get a
big piece, someone else is going to get a piece.
It's more like a balloon where it can get bigger
and bigger and bigger. The global economy. So I think,

(47:38):
you know, and and sometimes and look, I'm not saying
all the time, but one of the costs when you
when you're when you're calculating the overall cost of an item,
certainly want to take labor into consideration. That's probably one
of Tim Cook's considerations. But also you want to build
these products in proximity to where your customer is. So
it's not necessarily India, but it may maybe maybe Asia,

(48:01):
Southeast Asia, whatever. You want to build your product there
because it will reduce the cost. And again labor could
be part of it, but also just shipping and just
just hold the whole thing logistically has to work.

Speaker 3 (48:12):
And I think that's what you're the same, yeah, and
I think that makes sense.

Speaker 1 (48:14):
And then I guess I got some boeing in the
deal from Cutter.

Speaker 3 (48:19):
I don't. I don't see what you know. You can
people cancel plane orders all the time, so we'll see,
you know what comes to fruition.

Speaker 1 (48:27):
And then finally Walmart says they may have to raise
their prices. But so I think we're like a holding
pattern for the market.

Speaker 3 (48:32):
I think it's gonna be like a classic summer as
we talked about our charter the hopefully, I hope.

Speaker 1 (48:37):
So anyways, give us call during the week five one, two,
seven ninety four, check us out on the web, fag
and ask that dot com or like us on Facebook
air have a good rest of your day, take care,