The Fagan Financial Report

June 22nd, 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 on News Talk eight ten
and one oh three and one WGY. Got a few
things to talk about today that I think you will
find of interest. When is a letter or an email
that we receive from a client talking about the losses

(00:23):
an overall portfolio of gains, but some losses in three
exchange traded funds that he had, and it turns out
that those three exchange traded funds are in the bond market.
So talk a little bit about really what diversification really means,
the benefits of diversification, and I think the bottom line
is the diversification means that you know, you do have

(00:45):
losses in your portfolio, or you do have and losses
there can be referred to on a number of fronts.
You know, things have losses relative to other investments, meaning
that if one investments up twenty percent and another's up
ten you know, well then that's a relative loss. So
we'll talk about exactly what that means to diversify your

(01:08):
portfolio and what the benefits are really when it comes
to diversification for long term peace of mind and long
term portfolio growth.

Speaker 2 (01:18):
So that's one thing we're going to talk about today.

Speaker 1 (01:19):
The second thing we're going to talk about really is
a a letter from Larry Fink, the CEO of Blackrock.
And I know Blackrock makes everybody a little bit upset
these days with the with the really esg posture, and
let's forget about that and talk about really what he
has to say relative to retirement, and we'll dovetail that
into what JP Morgan's the CEO, Jamie Diamond, has to say,

(01:43):
and then on from a tax perspective, some ideas to
help you reduce your taxes. So that's so one, and
why don't we take that route one at a time and.

Speaker 2 (01:56):
Go from there.

Speaker 1 (01:57):
So the email that I received, you know, basically said
ninety two percent of the losses on the ETF's result
from three funds, would it makes sense to dump them
and reserve the cash balance for other future investments. So
talk a little bit about that and I think we'll
talk yes, the second thing. But I said to him,
I then responded, the ETFs represent the bond or stable

(02:20):
side of your portfolio. Selling those will increase volatility as
well as risk, but do provide more potential to the upside.
If you think you would like to still consider liquidating these,
we should speak. Let me know then then you know.

Speaker 3 (02:30):
He is it in a taxable portfolio?

Speaker 1 (02:33):
Yes, he responded, I'm tempting to understand why the reduction
of value is actually a good part of the portfolio,
and that's where really the crux of this matter lies.

Speaker 4 (02:43):
Yeah, you know, and I guess that's a hard part
of managing your own portfolio or portfolio management in and
of itself, is you know, ay, you know, sometimes things
are hard to understand, and you know, as Uncle Chris
would say, sometimes some times it allows you, which isn't
good to well watch right, to only go into things

(03:06):
that are working.

Speaker 3 (03:07):
And you know, in market cycles.

Speaker 4 (03:09):
You see a lot of you know, you see a
lot of different things that work at different times. You know,
if you have it, you know, let's say you have
growth work at one point, then you have industrials and
you have X.

Speaker 3 (03:20):
Then you have X, then you have X.

Speaker 4 (03:21):
But you know, let's say in you know, two thousand, uh,
you know, let's say two thousand and one happens and
you have you know, growth did really well, right, So
what do you do?

Speaker 3 (03:33):
Put all of your stuff in major cap tech? Look
how that would have worked out? Right?

Speaker 4 (03:37):
Not major major cap tech, let's say even tech technology
in and of itself, and how would that work out? So,
you know, it is so important to have things in
your portfolio that you know don't have the correlation or
I guess the.

Speaker 3 (03:52):
Covariance would be a better word.

Speaker 4 (03:54):
You know that has that doesn't move in lockstep with
you know, the core holdings in your portfolio. So like,
let's say if you do have a good amount of
portfolio in your s and p. Five hundred and you say, okay,
a lot of my portfolio then is in Microsoft, Google, Apple,
things like that. So you want to build a portfolio
that has things outside of that for when those stocks

(04:17):
and sectors don't work. Uh, you know you're still participating
in in in in what's in what's working. Well.

Speaker 2 (04:26):
That's a good all good points. And I think that
if you.

Speaker 1 (04:31):
Think about diversification in general and take it, take it
into its to its simplest form. Let's just have one stock,
then let's just have Apple, Let's just have Amazon, oh no, no,
I would never do that. Well, then you're setting yourself
up for disappointment if you consider diversification or something that's
not performing well relative that now now relative to other

(04:55):
a waste of capital. So so then you say, okay, well, no,
I would never just have one security. Now, you could
certainly have an S and P five hundred fund if
you want to just large cap, but then then you'd
be not having exposure internationally. You not have exposure to
mid cap or small cap. If this individual in particular
is seventy plus years old, you would not have exposure

(05:16):
to the bond market.

Speaker 3 (05:17):
Yeah, and I think that's important.

Speaker 2 (05:18):
You know, just.

Speaker 4 (05:20):
When I think about things like this, you know, there's
two people that come to mind. One is warm Buffett.
You know, he said basically like diversification is protection against ignorance,
which I think is very true. But also diversification preserves wealth,
but concentration builds wealth. So you know, if you're talking
from you know, a personal standpoint, what do I think is,
you know, I see a lot of clients who are

(05:40):
sixty seventy years old, where that you know, build that
wealth building stage of your life is over, and you
know the preservation of your wealth is just as important.
It's more important than the building of wealth, you know,
as the United States specifically goes, you know, away from
the tension system that you know we're obviously seeing. So

(06:03):
you know, if you need four or five percent distributions,
you're from your portfolio. Diversification is key to getting to
hitting that number and making sure that you know you
have money to enjoy your life and live. The next
person I think of is uh is Ray Dalio, who
is the founder of the largest hedge fudge in the world,

(06:23):
one of the largest, and that's Bridgewater. And you know,
if you look at someone ask me, uh, you know, wow.
You know, Bridgewater only performs at x percent per year,
and that's all well and good. But what he's developed
is this quote unquote all weather portfolio that you know,
maybe if the S and P five hundred is up
twenty percent in a year, and it might only be

(06:45):
down nine but if that S and P's down twenty
percent in a year, it's still up too, you know.
So that's just as important for his client tele as
as outperforming the S and P five hundred is consistent
returns that protect you, again against the downside because you know,
a lot of his clients are pension funds, governments, things
like that that you know, care more about consistent returns.

(07:06):
And you know, I think you know, as an investor,
you know, investing money for other people, like that's what's
so important to me really is you know, making sure
that people can get the distributions that they want. And
in some portfolios that comes with maybe, uh not the
performance of the S and P.

Speaker 3 (07:24):
Five hundred.

Speaker 4 (07:25):
Sometimes that's not to say, you know, our our performance
isn't up there with the S and P.

Speaker 3 (07:28):
Five hundred when when.

Speaker 2 (07:29):
We want it to be objective.

Speaker 4 (07:31):
But you know, for a lot of people, that's not
the objective, and I think that's really important.

Speaker 3 (07:35):
You know, what our job is to do is to
help people sleep at night.

Speaker 2 (07:38):
Well, I think you brought that up a while back.

Speaker 1 (07:40):
And you know there's something that I mentioned quite often
the clients, and that is, you know, you're sixty, sixty five,
seventy years old, you're you know, let's let's say you've
saved up eight hundred thousand dollars of the course of
your life. Yeah, there's a not a good chance you're
going to wake up with three or four or five million.
You just don't don't want to wake up with three
or four or five dollars, you.

Speaker 2 (07:59):
Know what I mean.

Speaker 1 (08:00):
You've cemented your lot in life. You have a standard
of living and you want to stay there. So I
think people that and especially now with the market the
way it was up until just recently, you know, up
ten percent during the first quota. I know, we've given
back three or four percent during the month of April,
but you.

Speaker 2 (08:20):
Are talking.

Speaker 1 (08:23):
People have a sense of a feeling of a feeling
of high like, Okay, I'm not getting the returns I
need and coincidentally are ironically, that's precisely the time that
we feel kind of concerned about the market is when
people are feeling giddy about their returns and their dollar

(08:43):
amounts and the like.

Speaker 4 (08:44):
Yeah, wanting to take more risk and you know, and
you know, again, like I guess on to piggyback on that,
we do have different portfolio models. One of them would
be a growth and income. So you know, you have
you can have up to seventy five percent in the market.
You know, ten years ago you're hitting that seventy five
percent market because the bond funds, you know, over the
past ten years, I think that you were just saying
that agg has averaged one percent per year, So you know,

(09:07):
you had to be up on that limit of you know,
growth and income because you need, you know, you need
your distributions from your account. You know, now you have
bonds in the four to five percent range, and it's
not a bad time maybe to be like, Okay, you know,
maybe that's seventy five twenty five that I needed ten
years ago can really be sixty five thirty five. So

(09:31):
you know, going forward, you know, you know, if you
you know, if you look ten years from now, you know,
maybe you are sacrificing some returns by going down to
sixty forty, but you're also drastically reducing the risk in
your portfolio. And that's the goal of you know, a
retirement portfolio when you're taking distributions in retirement is to

(09:52):
is to get the most to seek out for all right,
you know, get the most bang for your buck and
you know, get the most returns for the least amount
of risk. And you know that might go with sacrificing
some performance, but again that'll help you sleep at night,
that'll help you hit your goals. And you know, the
the wealth the build the wealth building part of your

(10:12):
life is kind of over, you know, and I think
I think you should build a portfolio for that.

Speaker 1 (10:18):
Agree one hundred percent, because that downside is it's too grigorous.
So so by diversifying your your objective is to reduce
your risk, you know, you know, like buying an insurance
policy uh against downside risk.

Speaker 2 (10:33):
UH.

Speaker 1 (10:33):
And you do that by you know, spreading your assets
across you know, different sectors of the economy. UH, different
asset classes, stocks, bonds, cash, uh, different areas of the world.
Different So if you look at the stock side, just
let me let me stick on the On the equity side,
diversification includes UH market by market capitalization, by by industry actor,

(11:01):
by geographic region of the world, by some pay dividends
some don't, by you know, the type of business that
they're in. So that's that's kind of this that is
the the the equity side. On the fixed income you
diversify by credit quality, duration duration.

Speaker 2 (11:22):
You know, UH when when when when when the bond.

Speaker 1 (11:25):
Matures UH, geographic risk UH, United municipality municipal bonds perhaps
UH government bonds that are don't you're not exposed to
state tax uh around the world both developed and then
undeveloped economies. So you want to diversify across of course
that but you can you can see just from the

(11:47):
the the reduction of concentration in any one specific area.
You know, just kind of like to circle back to
what you know, you were saying according to Ray Dalio,
you can't you reduce your risk, but you also give
up turn, you also give up return. And you're you're
you're recognizing that by that reduction of risk, I'm guaranteeing.
I'm not guaranteeing, but I have my best shot at

(12:09):
maintaining my lifestyle.

Speaker 2 (12:11):
It comes with lower volatility.

Speaker 1 (12:14):
Uh, it comes with uh as I mentioned, lower potential returns,
smooths out the returns a little bit more. Uh and
and and you're you're better off while you're in that
phase of your life that that you're utilizing some of

(12:35):
the money that you're not going to have to utilize
it in a down down equity market, I think where
people are having I guess a bigger issue with with
the bond side of the equation, Aaron is you know we.

Speaker 4 (12:52):
Get back to the I guess the question, right, Yeah, well,
what what kind of it is?

Speaker 2 (12:56):
Why do we even have bonds, that's the question.

Speaker 1 (12:58):
Yeah, you know, I look at this piece from Schwab
why diversification Matters and the S and P five hundred
over a thirty year period, and it was down, what
was up an average of ten percent? Why bonds averaged
six point one percent. However, if you look at the
last ten years, and I think this is what really
is getting UH to that question as well. Look, you know,

(13:19):
the Vanguard Total Bond Market ETF symbol b ND averaged
one point one eight percent per year trailing five years,
negative point zero three percent per year trailing three years,
and negative three fifty five a year. You know, if
you if you push that or marked that against the
S and P five hundred, you know you're looking at
average annual returns over the past ten years, and the

(13:42):
S and P five hundred, as represented by the index
fun spy much greater than that ten year, twelve forty seven,
five years, thirteen forty eight, three years, eight oh six.
So people say, well, why do I even have bonds?
I think we explained the bulk of that. You know,
we are alred to explain the bulk of that. But
I think that as interest rates go up, the value

(14:02):
bonds go down. So it's a mathematical equation to a
certain extent that the worst forget credit quality, forget the
fault ratio. So let's say with with uh A US treasuries,
the worst trailing performance is potentially the better it's going
to be going forward. And it's almost mathematical in the

(14:27):
calculation and as much that at some point in time
interest rates will peak and they'll head back down.

Speaker 4 (14:33):
Yeah, you know, and we're getting there, you know, be
patient hopefully, you know, I know inflation is still remaining sticky.
But you know the goal of the Fed rate really
right now is to cut rates as soon as possible.
I think, as we've seen with their rhetorics.

Speaker 3 (14:45):
So you know, hang in there.

Speaker 4 (14:47):
You know you'll not you'll not only get like the
agg now is north of five percent. You know, if
they do cut, they do cut rates, which you can
only get five percent. Microphonephone, feil, you know you'll not
only get the five percent, but you know you could
get some capital.

Speaker 2 (15:04):
Why don't you plug that back in and I'll talk
a little while.

Speaker 3 (15:06):
It is plugged in.

Speaker 2 (15:07):
All right, we'll hear me. Yeah, I can here, I
can hear you have to put that back onto the table.

Speaker 1 (15:11):
Let's take a little bit of a break, and then nope,
you're good, all right, all right, So I would say that,
so as we move forward, then you look like a
singer over man. Hold hold on the phone in your hand.
We'll fix that at the break. But so as interest
rates go up, the value of bonds go down. I
think that's what we've seen over the past ten years,

(15:32):
that interestrates have gone up, especially over the past five
and the bat the price of the bonds have going down.
Interest rates have now gotten up to about four sixty
four to seventy on the ten year, and I think
that they will be stabilizing. FED has come out recently,
there's there's still someone hawkish. I think the difference between
the real interest rate and relative to inflation is higher

(15:57):
than the FED would like, and that they really haven't
seeing inflation continue to decline. I don't think the FED
expected inflation to really go down in a straight line.

Speaker 3 (16:07):
And it's gonna be hard, you know. I think almost
forty percent of.

Speaker 4 (16:13):
Like CPI numbers are sheltered shelter, So you know, as
shelter remains sticky, these things are going to remain sticky.
And you know, I heard someone in CNBC also note that,
you know, China's economic data is starting to come in
a little better, which could also be inflation area as well.
So you know, it's gonna it's this this last you know,
what one and a half is percent is going to
be tough for the FED to achieve. But you know,

(16:36):
sometimes I think, you know, you have to. If everyone
didn't think about the Fed's goal of two percent, we
wouldn't be talking about this in that this is very manageable.
You know, at least we got inflation to a manageable area.
And as we've seen over the past year, you know,
a lot of companies can still do well in this
inflation area. In this type of inflation environment, it's gonna

(16:59):
be harder, obviously higher you go up, but you know,
I think you're still seeing, yeah, companies, you know, especially
S and P five hundred companies still performing pretty well
in you know, with three three and a half inflation environment.

Speaker 1 (17:12):
You know, and consumers can live in this environment as
well because it gives them, gives them options. When everything
is going up at the grocery store, you really don't
have a choice. But when when some things are going
up four or five percent in others, other items are
staying flight you have you have somewhat of a choice
as to as to you know, what to buy at
a grocery store. So a lower inflation rate, you know,

(17:35):
south of three is somewhat manageable. As you mentioned, it
also provides I think the FED with a glide path
that I think they can live with. They're never going
to say that, and I think you see I think
you see that this week with the Fed's rhetoric being
a little bit more hawkish than you would have expected.
But I think the market had already kind of discounted that.

(17:57):
The market had already pushed up to ten year to
four to sixty five from twenty five. So the Fed
is kind of getting in line with market sentiment right now.
I don't think you're seeing anything really new, you know,
out of the Fed this this this recently. So diversification
is gonna help you, whether there's strong the other thing, I.

Speaker 3 (18:16):
Yeah, you know.

Speaker 4 (18:16):
I think you always have to ask yourself a question
when you're investing is what if I'm wrong? Now, if
people come in here and say, you know you do
you lump some invest or? Do you you know you
work your money down and you know, seventy five percent
of the time it's smart to lump to lump some
invest because you know the market's up seventy five percent
of the time. But you always have to say, hey,

(18:37):
what if you're wrong? What if there's a black swan event?
What what if this? What if this? So you know, I think, yeah,
when you invest, always ask yourself what if you're wrong?
And never be too confident in one thing because that
usually doesn't end well and you know, could be disastrous
your portfolio. You know, Yeah, you don't want to, you know,
put all the hard work that you've done over the

(18:57):
past ten twenty thirty years at risk at risk.

Speaker 2 (19:01):
Yeah, you know.

Speaker 1 (19:02):
And I think what happens too when we we've been
in business thirty five years, will be thirty five years
in August. I think what happens to people is they
rather than Dila quest average if they if they invested
in the market in a lump sum.

Speaker 2 (19:15):
And sometimes it's not a bad ideas. It's a lateral move.

Speaker 1 (19:18):
If you're let's say you're eighty twenty and you're four
to one K and you roll it over to your IRA.
Let's say with Fagan associates we clear through Schwab. You know,
we'll get to eighty twenty pretty quickly, so we don't
have a problem with that. But if you've been in
fixed income for your whole life and now or you
inherited money and now you've got one hundred or two hundred,
three hundred thousand dollars or whatever, you know, it's best
served to kind of work that in the market at

(19:39):
at we would see opportunistically rather than in a lump sum,
because if you decide to put it into alump sum,
transfer it over and get in to eighty twenty ratio,
let's say too quickly, and the market goes down, you know,
that could definitely compromise your confidence in the market and
you may not be around for are the rebound when

(20:02):
it comes.

Speaker 4 (20:03):
Yeah, and you know we also try and take I
guess like our expertise and how fast we get cash invested.
You know, the more bullish we are on the market,
the faster we'll get invested in. The more bars we are,
the slower we'll get invested. You know, especially with rates
at money market rates at five percent, you know that's
our hurdle rate right now. So you know, we try
and strategically find things that we think we'll do better

(20:23):
than that over the next year and get it invested.
And if you know there's not as many options right
now out there, you know, we're happy with the five
percent sitting on the sidelines until we find something that
we think could do a little bit better.

Speaker 2 (20:36):
And I think that in our right now, we are
looking at for growth and income.

Speaker 1 (20:43):
Investor someone approaching retirement into retirement, you're looking at roughly
sixty to seventy percent of your account in the stock
mark with the balance and bonds and cash, and we
invest a good chunk of money of the cash into
money market funds that are paying about from a cash
position or BIL which is a short three month in check,

(21:05):
which is one to three month treasuries that pays over
five percent as well. So that's the areas that we're
looking at for cash liquidity needs. And I would think too,
like I've heard a lot of the sixty to thirty
ten portfolio because of the what is the ten cash
or all ten cass a tense cash well, people are saying, look,
if interestrates continue to go up, let's kind of look

(21:28):
at at at at holding some cash just in case
certainly you're not going to benefit if interest rates head
back down.

Speaker 2 (21:35):
But you know, I can live with that sixty.

Speaker 1 (21:37):
Percent in the stock market and forty and fixed incoming cash.
I think that works for the vast majority of investors,
and I think investors feel more comfortable with that as well,
given the run up we've seen in the market. You know,
for growth investors, it would be at least seventy five
percent in the market in the balance.

Speaker 2 (21:54):
In cash, waiting to get cash.

Speaker 1 (21:56):
In that short term one to three month treasure bill,
looking to get into the stock market at some point
in time. Because as a growth investor, you are saying, hey,
you're in it for the long term, and you're going
to accept the volatility as a from the excuse me,
the income side. For us, it's less than fifty percent
in the stock market. So but going back to that
one comment, you know, I don't believe you're setting yourself

(22:19):
up for failure with having a diversified portfolio. You're always
going to have if failure is measured by things that
are either up less than others or might be down,
because there it's appropriately allocated for your needs, and we'll
accept that all the time.

Speaker 2 (22:33):
It kind of have a spare tire.

Speaker 1 (22:36):
I can't remember not gonna win the last time I
had a flat and yet I'm not taking that spare
tire because the cost of doing so should I have
a flat tire.

Speaker 4 (22:43):
And it's also your needs and also what you're comfortable with.
You know, you don't want to get outside your comfort
zone and then make the wrong decision because you're outside
your comfort zone.

Speaker 2 (22:52):
Now it's possible.

Speaker 1 (22:53):
I'll speak with this individual and he'll say, well, I've
got this in the bank and that in the bank.
And I think other people that that's the mistake people
make too, is they look at their investment it's like
slivers of pie. Okay, this needs to be in the market,
you know what I mean, rather than taking their whole
investment portfolio and then calculating the ratio of the let's
if you have four hundred and fifty thousand dollars, strip

(23:15):
out what you don't want, what's not long term, and
the balance should conform to your longer term objectives. And
that's kind of what we do. So that'll just about
wrap up the first half of the hour. Honey Bees
US population join the Samantha fay dowd Are right an
all time high, and I'm happy about that.

Speaker 2 (23:34):
A lot of a lot of individual.

Speaker 1 (23:36):
What are they called beekeepers, I forget what they call them,
they're not beekeeper aparis.

Speaker 2 (23:40):
They have APIs.

Speaker 1 (23:41):
I'll mention it when I get back, but right now,
it's ten thirty on the station dependent on for news,
weather and information news Talk A ten and one O
three one WGY.

Speaker 2 (23:50):
Good morning, and.

Speaker 1 (23:51):
Welcome back to the second half hour of the Capitol
District's Money and Investment program.

Speaker 2 (23:54):
You're listening to the Fague and financial.

Speaker 1 (23:56):
Report that the Trials, Tribulations and Perils of life radio
is the microphone. Yeah, I know, but we we I
did that once myself, remember I remember that.

Speaker 4 (24:06):
Yeah, it's tough because it's it's uh, the side of
the table, side of the table, and the side of
the table is not just like you know, I don't know,
it's not flat, so you can't really attach well onto it.

Speaker 3 (24:17):
But we got through it.

Speaker 2 (24:19):
It's just an old table.

Speaker 3 (24:20):
I forget heavy. I think I think you won that
like an auction or something like.

Speaker 2 (24:25):
I think I did get this. I forget where I
got it.

Speaker 4 (24:27):
Down to old Misselli's I think it might have been.
It's a nice table. It's it's you know, nice and hard.

Speaker 1 (24:33):
It is a nice table, solid but anyways, it has
like a side that's the word beveled side.

Speaker 2 (24:38):
So that uh, and your microphone went off.

Speaker 1 (24:40):
So we apologize to the to the listeners out there
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Speaker 2 (24:50):
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Expressed their stated the fact that we were experts about
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Speaker 3 (24:57):
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Speaker 1 (25:01):
I think that people would people would not be surprised.

Speaker 4 (25:05):
I think it's I think it looks you know, it's
in one of our old offices. There's stuff everywhere, you know,
there's some poppy stuff. Yeah, you know, but we got
we got some soundproving thing up here. We got the
technology to work.

Speaker 2 (25:16):
Technology works great.

Speaker 3 (25:17):
We do miss Zach at the you know Zach every day.

Speaker 1 (25:20):
But they said we didn't have to come over anymore
during COVID, and they said don't bother.

Speaker 3 (25:24):
So if your setup is so good, you don't need
to come.

Speaker 1 (25:26):
And they don't let you drink coffee in the studio.
But I will say so, you know, talking in the
first half. We talked a bit about diversification and what
it means, what the benefit is. You know, it's always diversification.
I read this somewhere. It's always having to say you're
sorry about something. Yeah, right, you know, why don't you
have more of this? Why do you have any bonds?

Speaker 2 (25:45):
You know? Why do you sell this?

Speaker 1 (25:46):
You know, why do you why you know you sold
A and went to B and A is still going
higher and b's going on. People pay more attention to
the things we sell than what they own.

Speaker 4 (25:56):
It's things that are going down also. But yeah, you know,
you pick some things outside of the sect. Like you know,
we try. We're growthier investors, growth at a reasonable price
correlation to the S and P. Five hundred, try and
use some expertise to you know, outperform the S and P.
Five hundred by you know, a few percentage points per year.
But you know, I think what's important that we do

(26:18):
and you know that, you know that I try and
do is you know, you pick five or six really
good companies in sectors that you know kind of are
outside your you know, maybe investment philosophy, of your scope
of investments, and you know you stick with them, you know,
and whatever those companies may be or sectors may be,
know that, hey, you know, they might underperform at times,

(26:38):
but these are great companies that will do well over time,
you know.

Speaker 1 (26:42):
And right, but you know we're I'm talking more of
the risk side too, that we talked about and I
know you talk about all the time, and I learned
a lot from that that, you know. And I was
met with somebody this morning about they're well into their sixties,
they don't have children, They've got a great chunk of money.
And I think sometimes and at the risk of insulting

(27:03):
people out there, and I find myself doing it sometimes.

Speaker 2 (27:06):
You know.

Speaker 1 (27:07):
Yeah, when you're in your thirties, forties, fifties, fifty five, whatever,
thinking about retirement, it's about accumulation, accumulation of money, you know.
You know, you obviously you have parts to your life
that are not about finances, but this is a financial show,
you know, you know. So it's about accumulating assets within
your tolerance to risk, so that you can retire and

(27:30):
do the things you want to do. I think sometimes
when people flip over to the retirement stage, understandably so
they have a hard time moving to that they're still
in the accumulation stage in their mind, or oh my gosh,
my portfolio is worth you know, eight hundred thousand and
last year was worth seven hundred, whatever the case may be.

(27:51):
And really that becomes the objective rather than you know,
this eight hundred thousands can kick off forty grand year
income for you and your spouse to do the things,
or you and your partner, or you to do the
things that you want to do, you and your kids,
you and you and you and nobody, and I think
we end up.

Speaker 3 (28:08):
It's hard, though, like I under but I understand it.

Speaker 4 (28:12):
You know, it's hard watching your assets go down, especially
when you don't have income, right, you know, it takes
years of getting used to Some people are never used
to it.

Speaker 2 (28:20):
You know.

Speaker 4 (28:20):
You got to be comfortable with being uncomfortable, and that's hard,
you know, especially after like programming yourself for five decades,
four decades of work to do.

Speaker 3 (28:30):
It's hard.

Speaker 4 (28:31):
It is hard, you know, but you have to just
put systems in place, on procedures in place, knowing that
it'll go up and down.

Speaker 3 (28:38):
But it's the right, you know. You try and do
what's right for you and for your portfolio.

Speaker 4 (28:44):
And it's hard when you know you see a twenty
percent pullback or when COVID happens.

Speaker 2 (28:47):
You know.

Speaker 4 (28:48):
So you know, I feel for people, and you know,
just try and make their life a little bit easier
by providing some historical contexts, some statistical historical context to,
you know, tell them, hey, this time isn't different.

Speaker 3 (29:02):
That that has.

Speaker 2 (29:03):
Worked, that has worked, you know. And and I think
that you look at like to kind of go to
the article.

Speaker 1 (29:11):
It's perfect timing for it that we read Larry Fink's
annual Chairman's Letter to investors from Blackrock, and I mentioned
in the first half that you know, we've had some
clients calls and say, don't buy any black Rock funds
because of their.

Speaker 3 (29:24):
What are they doing?

Speaker 1 (29:26):
Just the social governance they were they were they were
kind of on the other side of oil and the
like and using their proxy, their their share power for
for green and the like. And you you know, whether
you agree with it or not, and I disagree with it,
I don't think it's I think the first of all,
if you're a shareholder, you should vote your own proxy,

(29:47):
you know, because that's going to reflect what you believe
rather than somebody like even us or or.

Speaker 4 (29:51):
Yeah, yeah, people are getting more involved than you know
that that type of investing, and yeah, we try and
stay out of that, you know as a whole.

Speaker 3 (30:00):
And just you know, just kind of like people.

Speaker 4 (30:02):
We think people should do what's best for their shareholders.
We try and do what's best, you know, as for
douce shares for our clients.

Speaker 2 (30:08):
True.

Speaker 1 (30:09):
And so if you if you want a copy of
this letter or just you could just google Larry Finks
twenty twenty four, Anneal Chairman's Letter to Investors, or give
us a call or at five two seven nine ten
forty four, send us a message at investment at Figan
Associates dot com.

Speaker 2 (30:23):
But it's asset dot com.

Speaker 4 (30:24):
You know, like a company like black Rock, when you
become so big, you're just gonna tick everyone off somehow.
You know, you have one side being mad about the essuy,
you have the other side being mad at them because
they're buying up, you know, residential property and we're all
going to be renters.

Speaker 3 (30:38):
So you know, they're kind of in a no win
situation win situation. But just what do you just say
about the retiring age of sixty five?

Speaker 1 (30:46):
Well, you're saying that in the year twenty and fifty three,
the United States will see more people leaving the worst
workforce than coming in. And you also said basically that
retirement age at sixty five is forget about it. It's
it's it's it's it's silly, you know, for a variety
of reasons. But he starts out with.

Speaker 4 (31:09):
Having, what how do you think about that? Do you
think I think silly? Is almost defensive?

Speaker 2 (31:14):
Well, yeah, he didn't say it's silly. Don't get me wrong.
He did not say it's silly.

Speaker 1 (31:18):
Basically said that it was anachronistic.

Speaker 2 (31:22):
It's it's it's it's old way of thinking.

Speaker 1 (31:24):
It's uh, it's it's not uh the right way to
look at things now.

Speaker 4 (31:30):
Uh. Yeah, it's almost like a new phenomena. You used
to work to your dad type thing. You know, this
is something that we've yeah, we've developed me aspired to.

Speaker 1 (31:42):
R SO and now in the twenty first century, that
has to change. And what he what he had mentioned
is is that is that as as a as a
as a country, we spend a lot of time and
energy helping people live longer lives through medicine. This is
a new OBCD drug he mentions, for example, can take

(32:04):
more than ten years off more can take more than
ten years off of somebody's life expectancy, can add ten
years more, can add ten more than ten years to
someone's life expectancy. And we focus a lot of time
on the on the on the financial side, but very
little time excuse me, a lot of time on the
healthcare side, but very little time on the financial side.

(32:26):
And he says today in America, the retirement message at
the government companies to their work workers is effectively you're.

Speaker 2 (32:32):
On your own.

Speaker 1 (32:33):
You know, we've moved from a country of defined benefit
plan to define contribution plan.

Speaker 2 (32:40):
And he goes on to say.

Speaker 1 (32:42):
That that is a big problem and that he, you know,
he and Blackbrec don't have the answer, but there's a.

Speaker 2 (32:49):
Lot of data to suggest that that.

Speaker 1 (32:54):
The demographics of our country, which more people leaving the
workforce and coming in in about thirty years, is going
to put a burden on first of all, the workforce
to take care of all and that maybe AI is
a good thing in that respect, but it's going to
put a burden on social security and something's got to

(33:17):
change there, and that the United States, the average worker
does not have the confidence really and the optimism that
is going to be taken care of. He also goes
on to say that in nineteen fifty two, most people
were not preparing for retirement because more than half of
them passed away before they got to retirement, so they

(33:39):
never really lived into the.

Speaker 2 (33:40):
System until that.

Speaker 1 (33:42):
So, you know, I know, we talk a lot about
social security, we talk a lot about our clients and
social security, but there's nothing like saving on your own.

Speaker 2 (33:56):
What does your generation think about social security?

Speaker 3 (33:59):
I don't know.

Speaker 4 (34:00):
I think everyone thinks it's just not happening. And you know,
rightfully so right now, in my opinion, you know, you'd say, hey,
what the Winston Churchill quote? The United States is the
right thing at the wrong at the very last moment,
right so I think you always have that hope. But yeah,
you know, I don't think our generation, in those younger

(34:21):
than me, are as optimistic about about the future as.

Speaker 3 (34:27):
As others. You know, and I you know, you don't
want to say things.

Speaker 4 (34:31):
You know on the radio, it's like, oh, classic kids
think you know, blah blah blah. But you know, yeah,
you know, homes are less affordable. You know, the pension
system is is not what it used to be. I
was just reading an article in nineteen fifty, over ninety
percent of people made more than their parents. By the
time nineteen eighty hit, it was about fifty percent. So,
you know, I think this, I think that's kind of

(34:52):
what people are, you know, frustrated about, you know, the
affordability of housing, things like that of life today and
you know, rent forever type of type of you know,
people don't think that they're ever going to be able
to afford a house. And yeah, well that's just what
you know, I think people are. You know, you know,

(35:14):
you get nervous about, you know, being on the radio,
people like the lazy millennials and things like that. But
you know, it's, uh, it's I think it's tougher out
there to get a middle income job where you can
afford a house, you can where you can afford to
go on vacation, where you can.

Speaker 3 (35:29):
Live a happy life.

Speaker 4 (35:30):
You know, I think, and you know I don't it's
not people, you know, I think, Yeah, I think it's
this uh development of yeah, of putting the putting the
weight of your retirement on on on your shoulders and
having to contribute. Not only now you have to contribute,
you don't get a pension, you have to contribute, even

(35:50):
like we have a lot of people that come in
here with pensions that don't need the savings that people. Yeah,
so I think a lot of people in my generation
are like, let's scrore money, Let's scrow money away, Let's
scrow money away, because hey, you know, I'm not going
to have the five thousand dollars a month come in
that that was once.

Speaker 1 (36:07):
Well, I think probably you know, you would know more
than I would about your generation in that respect, but
I would say that, you know, I think that I
think your generation perhaps has a more i'm going to
call a laissez fair attitude towards retirement. But they're gonna enjoy,
They're gonna enjoy the journey more. Maybe they're going to

(36:28):
you know, not maybe that maybe you know, and I'm
not suggesting that the millennials don't work as hard, but
you need to. You need that, you need that carot there,
You need the ability to move ahead, you need that
belief that the system will allow you to move ahead
before you're going to really, you know, go with Gusto
down there.

Speaker 4 (36:48):
Even like you know, the median salary in two thousand
and two was forty two thousand dollars a year, and
twenty twenty was fifty four thousand dollars a year. That's
a twenty seven percent increase. The median home went from
one hundred and eighty thousand to five hundred and fifty.
You know, that's I think these are you know, now
you need to make triple the median salary to afford
the median home, you know, And I think these are

(37:09):
things that you know, I think those are worried some
you know, forty percent of people don't have mortgages. When
are we going to have houses come back on the market,
you know, maybe when you have these ten thousand people
turn sixty five every day start to pass away. And
you know, I've yet to say my opinion on things.
I'm just saying what people think and why people are frustrated.
The cost of college is going up nine percent per

(37:30):
year since nineteen eighty.

Speaker 3 (37:32):
That's kind of.

Speaker 1 (37:36):
Right, you know, I think sometimes and people may, well, well,
if you look at the cost of college. The government
has their hand in what three major aspects of life.

Speaker 3 (37:50):
Though, really health, healthcare, housing, house, yeah, and education.

Speaker 1 (37:55):
And when there's not really constraints on that, when you know,
and if we're now for giving potentially college debt.

Speaker 4 (38:03):
I mean, it's just it's just so many moving parts
right right, who knows what's going to go on, you know,
who knows what's going to happen. And we were kind
of just talking about that this morning, about how you
know Biden's going to forgive student loans why because he
doesn't really have a chance not to, because people have
already gotten used to not paying them since COVID. So
what happens you start paying your student loan debt and

(38:25):
the economy tanks before the election, or you just throw
it on our balance sheet for later. What are you
going to do as a politician trying to get elected? Yeah,
you know all these people are trying to do is
get re elected. You know, nothing's happening really, And I
think that's what people are frustrated about.

Speaker 1 (38:38):
And I think you can it cuts across stages. But
there was a there was a Happiness type of a
poll that was done globally and the United States has
dropped from the top ten to maybe going off memory
to a lot lower than that, And a lot of
it is because of the responses of people in their thirties.
You know that they are not optimistic. They are not happen.

Speaker 4 (39:00):
People even younger than me are even more pessimistic. I've
just been finding this out by like researching on gen Z.
They're really not happy.

Speaker 1 (39:07):
But you know, but but I think sometimes it's you know,
when we talked about the education system, the upper education system,
we've gotten away from maybe the work ethic of America.

Speaker 4 (39:17):
Yeah, And I think people and I think we're electing
politicians that have fooled their constituents into doing things both
on the left and right, that are in the best
in the best interests of their constituents when they're not right,
you know. And I think that's uh, you know, people
are starting to get a little bit mad about that.

Speaker 3 (39:34):
People just want to be able to afford to live,
you know.

Speaker 4 (39:36):
And I think, you know, I think we've gotten away
from the important parts of uh, you know, America that
make you know, our country great, but also you know,
help put money in people's.

Speaker 1 (39:50):
Pockets, right, and also make sure that we take care
of people and also make and I think COVID was
a demarcation point of of that's that schism, so to speak,
if you want to call it, that rift between a
lot of different factions of America, Like, you know, the
people that don't have we're calling they're not working hard enough.

Speaker 2 (40:12):
The people that you know are you know, not here.

Speaker 1 (40:16):
The immigrants were calling terrists there were in reality America.
We need we need all types of people.

Speaker 2 (40:23):
In America if you want to.

Speaker 1 (40:24):
Certainly we need immigration that needs to be regulated, regulated.
But I think for the younger people, and this is
a global problem, you need opportunity for those people, and
you need something that they can say, well, I worked
for this, so I achieved this.

Speaker 3 (40:40):
Yeah, And I'm a little bit worried about that.

Speaker 4 (40:44):
Just with the rise of artificial intelligence, you know, you're
starting to see layoffs. Layoffs are on the rise, part
time jobs are on the rise. Full time jobs are
on the decline, but job numbers are going up in
unemployments going down because of part time jobs. Right, So
I'm a little bit worried in the future of you know,
the packed artificial intelligence and technology has on the middle income,
the middle class. So you know, you know, I think

(41:05):
we talk about this a lot on the show, and
that's what's most important to me politically is building up
the middle class. I agree economically, economically, politically for the
stock market, I think that is that is the biggest
cause for concern when talking about a black Swan event,
in my opinion, is the dying middle class.

Speaker 1 (41:26):
And I think President Trump and President Biden, I think
are working on that, maybe in different ways, but I
think both of them have realized that the shifting of
production to just from just in time, which was, Okay,
we're going to work down inventories. We're going to manufacture

(41:46):
everything overseas, you know, including some things that would be
in our national interest not to manufacture overseas. We're going
to bring them back. We're going to on shore them
or near shore them, you know. I think it will
help a lot, so that just in time is going
to well, just in case, just in case China cuts
us out, just in case we have another pandemic. We
want to bring things here so that we're not compromising

(42:08):
our national security, which in turn will most likely help
the middle class, which which in turn might will most
likely I'll say, keep inflation. It's gonna be hard to
get inflation down to two percent. And if you get
inflation down to two percent, I think.

Speaker 4 (42:28):
Is bringing inflation down to two percent the best thing
for the middle class in the long run.

Speaker 3 (42:32):
I don't think so.

Speaker 1 (42:33):
Well, it's kind of like saying, well, if you can
do it, it's the well, it's it's a congressionally mandated
thing that goes back to that. Believe the seventies, you know,
full employment and inflation at two percent, you know, maximum
sustainable ployment, inflation at two percent, and at one point
in time that that that number was thought to be
you know, for you know, well they figured maximum employment

(42:56):
unemployment would be uh, you know, about four four and
a half percent, you know, so, and then inflation would
be about two. But maximum employment has come down. We
see excuse me, unemployment as unemployments now three point seven
percent below the four point five or four point six
that was we thought was maximum employment at one point
in time. So it's gonna be that. But I often say, too,

(43:19):
it's kind of like we are. It's like king of
the hell. You know, when they're when there's global production,
they're gonna be individuals and countries that are going to
be much cheaper, much much more able to produce things
cheaper than in America. Yeah, you know, and that's just
the way it goes. But Larry Fink addresses a lot
of things, and one is you know, and and I

(43:40):
think and now I said this to somebody, uh yesterday
or the day what it wasn't yesterday this past week
on the phone, that you know, people in their sixties
and above probably don't have to worry about their soci
Security benefits being there. People maybe forty forty to sixty
are going to get part.

Speaker 3 (43:57):
So it's just a tax for us, right, Well.

Speaker 2 (43:59):
No, I think you're gonna get it.

Speaker 1 (44:00):
I think it's got to be changed, and I do
think the age is probably gonna be changed for everybody.
I think it's gonna become much more means tested than
it is now right now, right maximum is eighty five
percent of Social Security benefits are taxable at a federal level.

Speaker 4 (44:14):
We could start losing benefits to deter people from taking
it earlier.

Speaker 2 (44:17):
Yeah, things like that.

Speaker 1 (44:19):
That or maybe one hundred percent of benefits are taxable
if you get above a certain income.

Speaker 2 (44:23):
Threshold or asset threshold.

Speaker 1 (44:25):
So those are some things that think you're seeing so
as it pertains to our show, and we don't digress.
I think doing this forty years, you've been here, twelve
ben in business thirty five. All these things go through
a mind that out of the bottom comes. Okay, these
are some areas that look good from an investment standpoint.
This is what this means to the bond market potentially
over time, and we invest our clients' money according to that.

(44:47):
But you know, as someone who is you know, helping
clients along the way, you know, we certainly you want
to make sure that you get into an investment, get
it to your four oh one k, you know, match
the employer's match, think about what journey you want through
life and go from there.

Speaker 2 (45:08):
Very think mentions.

Speaker 1 (45:09):
In the Netherlands, they decided to about ten years ago
to gradually raise the retirement age and now to adjust
to life expectancy. You know, so if life expectancy the
Netherland goes up by a year, so does the retirement age.

Speaker 2 (45:23):
And also talks about making it easier.

Speaker 1 (45:27):
You know, if someone's if someone's got to work an
hour to enroll in their company's four oh one k,
why you know, some people.

Speaker 4 (45:33):
Will say it should be an opt out out as
opposed to an opt in. That's a huge chapter of
Richard Taylor's book. I think it's I think it's Richard Taylor.

Speaker 1 (45:41):
But judge right, I don't I don't know if that's
the case. But I know the book, so I don't know.
So so, right, do do a lot of of maybe
your contemporaries do. But do a lot of people know
that your employer is going to match a lot of
them one hundred percent of your first three percent of
your contributions things like that that I don't think they realize.

Speaker 2 (46:03):
And I think that's what Larry thinks.

Speaker 1 (46:06):
It has to be made easier for for the average
worker before we can you know, kind of kind of
figure this thing out a little bit, you know. Yeah, anyways,
so that is that's what's going on here.

Speaker 2 (46:20):
I know, what else? What else did he have to
say within this within this article?

Speaker 1 (46:26):
So we live in a you know, And and I say,
I think a lot of I might say, in a lot,
I think we live in a we live in an
environment of fear rather than hope. And I think some
of that has to do with, well, it has to
do it in part because of the eradication more or
less of the defined benefit plan. It has to do
with you know, as you mentioned housing costs. I think

(46:47):
it has to do with social media. I think and
think the result is that it probably probably leads to uh,
the average person your age, investing them investing their portfolio
to conservative Yeah, you know where you have investors.

Speaker 2 (47:03):
Who concertainly let me see. So that's Larry Fink has
to say over the last.

Speaker 3 (47:10):
That was kind of the gist of it.

Speaker 4 (47:11):
You know, I think, you know, like a lot of things,
we read the headlines and don't read into you know,
you saw this all over the news of you know,
Larry Fank sixty five blah blah blah. But you know,
I think when you read into it, he has a
lot of good points to make, and I think everyone
should read it and not just read a headline and
make an assumption like you know, we can't do.

Speaker 2 (47:29):
All the time.

Speaker 1 (47:29):
Yeah, but you asked me that to start, Like what
do I think? I think people need to stay active
and engaged somehow for their entire life. I think you
need to stay engaged, and I think that yeah, yeah,
but statistic show you need to stay engaged.

Speaker 3 (47:45):
But what's engaged?

Speaker 4 (47:46):
You know, forced engagement because you have to because you
can't afford to live, or for your mental health.

Speaker 1 (47:51):
I think the recognition that life is a journey, and
that that journey, probably for a lot of people, includes work,
because if you are shouldering the risk of a portfolio
because you don't have a defined benefit plan, You'll feel
much more comfortable so doing if you're if you're engaged in.

Speaker 2 (48:07):
The workforce a little bit, at least part time.

Speaker 1 (48:10):
So I think if you don't have a pension, uh,
you know, you know, even if you can work two
or three days a week or something like that, or
a couple of days just to kind of ease your
mind when things hit the fan.

Speaker 2 (48:21):
That'll just about do it. Thanks for listening.

Speaker 1 (48:24):
We need to get us hold of us during the
week five one, seven four. Check us out on the webit,
fagatasset dot com, or like us on Facebook.

Speaker 3 (48:30):
Take care