The Fagan Financial Report

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. We're here with my son Aaron, as
we do every Sunday right here in News Talk ten
one O three one w G. Y uh. It's Friday
morning at around you know, seven point thirty. We're recording
the show as SMP sits at a record high, in

(00:21):
Nasdaq sits at a record high. We'll talk about that
huge bounce off the April eighth low, and the early
morning April ninth, President Trump pivot. You know, how we
got here, what problems remain, and where we go. We
just got news China confirms details of a US trade deal.
China will review approved export applications, US will cancel a

(00:41):
range of existing restrictive measures. And this and comes after
President Trump basically said, uh uh, you know that they
had just.

Speaker 2 (00:50):
Signed a trade deal with China. So futures are up.

Speaker 1 (00:53):
It's been a good week, yet there are some things
that remain of concern for the market. We are at
all time record high, clients are at all time record highs,
and generally speaking, and and then we've got a reprieve
from the weather.

Speaker 2 (01:07):
Yeah, the heat actually was stifling. It was stifling. You're
young enough to run outside.

Speaker 3 (01:15):
You just call me dumb. I did I Oh, I
said dumb enough. H Yeah, it was hot. But yeah,
you know, I think we're gonna continue to bounce from
you know, inflation, tariff worries, to artificial intelligence beginning of
a you know, of that artificial intelligence revolution. You know,

(01:38):
depending on the day and the week, we see what
the news decides to talk about.

Speaker 1 (01:43):
Really, you know, you know, we were we were talking
off the air before. You know, you've got to give
President Trump his due for for Iran. I think, you know,
and and obviously you know, and as the president and said,
you know, the problem is not with the Iranian people,

(02:04):
but you got to give him his due for taking
a bold step there.

Speaker 2 (02:08):
I think you've got to give.

Speaker 1 (02:09):
His him his due for coming off the tariff war path,
pushing some of the more hawkish members of his administration
to the side.

Speaker 2 (02:20):
Even Levitt.

Speaker 3 (02:20):
You know, I came out this week and said that,
you know that April ninth is a soft deadline. Really
July ninth, I'm sorry to get things done. So, you know,
I think we're seeing some progress in the markets.

Speaker 2 (02:33):
I'm still skeptical, still.

Speaker 3 (02:35):
A little bit skeptical. You know, valuations are you know,
historically a little bit high.

Speaker 2 (02:41):
But you know, as.

Speaker 3 (02:44):
As we progress, as you know, a stock market, you know,
a society to more of a you know, technological based society.
You know, I don't love looking at historical metrics for
evaluating today economy and today's stock market. You know, you
could say the S and P usually trades around what

(03:06):
sixteen times earnings, sixteen seventeen times earnings, and I think
we're up in the twenty ish time three years, so
you know that is that is historically high. But you know,
we haven't had companies in the history of the United
States have margins like our largest companies in the world
do as well as you know, the revenue growth that

(03:30):
we're seeing in these companies. So I think that's kind
of what got us here is you know, the winners
keep on winning.

Speaker 1 (03:37):
Well, right and and without kind of you know, spoiling
what we were talking about earlier. You know, I think
if you if you as far as what we're going
to talk about, you know a little bit later, was
that you know, corporate earnings growth here over you were
supposed to commit a six percent, it came into twelve.
So and because all the companies that are reporting great
earnings A are large yeah, and B are part of

(04:01):
of the AI revolution so to speak. That's super cycle.
So you've got that. But so here we are sitting
at a record high for the S and P five hundred.
Again it's Friday morning. The last well for the NASDAK
for the Nasdaq composite also sits at a record So
those two major innosees and makes sense because the S
and P is a market cap weighted index and I

(04:24):
just mentioned the larger stocks are driving the market, the
AI type stocks, and they're also a large component of
the Nasdaq. So the NAZAK composite set a record high
for the first time since December sixteenth of twenty twenty four.
It sits right now, I'm sorry, it's just below a
record high. It's point three percent below a record high,

(04:45):
so about six points or so below a record high
before the market opens on Friday, So perhaps it did
set a record high on Friday.

Speaker 2 (04:54):
The S and P five hundred has set a record high.

Speaker 1 (04:57):
So let me restate that the SMP set of records,
all time record high for the first time since February
twentieth at sixty one thirty four to fifty was the
close on the February twentieth, the close at sixty one
forty one oh two before all the tariff talk got
out of the way. And I think what happened too
is you have you had the theory of deregulation, of
the potential for deregulation as President Trump was elected, and

(05:20):
that was kind of turned upside down on the inauguration.
And since the April eighth pivot low, you have the
S and P five hundred up twenty three point twenty
five percent, the Nazek up thirty two percent, the Dow
up fifteen percent, the Russell twenty up twenty three percent,
and the US Total Market Index up twenty three point
seven two percent.

Speaker 2 (05:41):
Any comments on all that air like, you know, not.

Speaker 3 (05:43):
Really, you know, And now I think that what we've
seen is, you know, yeah, as you was talking about
the winners that just keep on winning, you're seeing large
cap tech, do you know, continue to do really well.

Speaker 2 (05:56):
And you know, when you.

Speaker 3 (05:57):
Have the SMP, you know, I think a year or
two ago was you know, thirty one percent technology. Now
it's thirty four point thirty nine percent technology. So you're
seeing technology just you know, do better and better. As
you know, it's a market cap rate index, the better
companies become also become a larger percentage of of of
that index.

Speaker 2 (06:18):
So you know, it's great to see.

Speaker 3 (06:20):
You know, it's great that the market's up, but you know,
I think that's something you know, I'm just kind of
thinking off the top of it, I think that's something
that you really need to keep an eye on if
you're in retirement in that you know, if you if
you see yourself as a passive investor, Okay, you know,
I'm just gonna put my money in the S and
P five hundred.

Speaker 2 (06:35):
Done, so good.

Speaker 3 (06:37):
You know, the winners, you know, become a larger percentage
of that ETF. But you know that also creates more
volatility as the technology sector is historically more volatile. So
you know, if I'm if I'm managing my own money
and I'm retired, I'm taking a look at that and
looking at some other funds that can you know supplement.

(06:58):
Let's say that if you have your benchmark for the
S and P five hundred, as you're something you want
to be correlated to. You know, I think that you should,
you know, really maybe diversify your portfolio, you know, to
reduce that you know, that downside, that downside risk that
you know, technology historically has because in retirement, let's say

(07:19):
you have one hundred percent of your money your equities
in the S and P five hundred. You know, I'm
not sure that you really want almost seven thirty five
percent of your equities in technology.

Speaker 1 (07:31):
And now's the time to do that, you know, and
I don't. So I also think, like, what are some
alternatives to the S and P five fundy thing?

Speaker 2 (07:41):
Jeby is a good one, Morgan Equity.

Speaker 3 (07:43):
And Income Fund, you know, d g T is a
great one. It's Spider Global, Dow ETF. I think that's
a fifty percent in the United States. You know, if
you give me a moment, I will tell you it's
one second. I just want to get the exact fifty
three percent North America, fifty four twenty eight percent Greater

(08:05):
Europe uh and then seventeen percent Greater Asia. So you know,
it gives you that mix of you know, the United States,
maybe some emerging markets that could do well going into
the future, as well as you know, Greater Europe that
historically has uh, you know, more industrial companies, maybe more
cyclical companies, but it also brings that dividend that the

(08:26):
S and P five hundred has of I think it's
one point one to two point five three, So that
dividendio is two point five three on the Dow Global ETF.
So you know, JP Morgan has a has a value
fund JAVA that I think would pair really well with
the S and P five hundred. So I think those
are just some things that you could, you know, introduce

(08:46):
into your portfolio to you know, yeah, reduce the volatility
of the S and P five but.

Speaker 1 (08:51):
You don't give up the core, you know, don't give up.
Don't give up the core of your portfolio. You know,
don't don't And and meaning that trim your portfolio, trim
your ETFs that are heavily weighted or overweighted. It's easy,
you know, you punch up the symbol on Google and
it'll tell you the largest holdings any type of financial website.

(09:13):
Then it'll break it down as the different sectors. And
the three sectors that kind of have driven the market
would be communication services, information technology, and to a lesser extent,
it just has come off the mat as consumer discretionary.
So that's that's kind of how you would go about,
you know, figuring out where you're, where you're weighted. And

(09:33):
what Aaron's saying is, you know, take take a piece
of that percentage and move it out of the hot sector.
You know, if you were if you were scared to
death on the morning of April ninth, prior to President
Trump's pivot, you know, now you've got a reprieve. Now
you've got a time to do it now. Now the
S and P five hundred is twenty three percent off
its bottom. Now, the SMP is sitting at an all
time high, and now's the time to maybe trim positions.

(09:57):
Now as I look at our positions there are and
how they've bounced off that April eighth, Cloths and Low
and uh. These are just our ten largest common stock holdings.
You know, Alphabet is up twenty percent and please stop
me in comment alone the way. Microsoft is up sixty percent,
I'm sorry, forty percent. Apple our third largest holding, and

(10:18):
that's lagged a bit. It's up sixteen percent. Yeah, and
you know, you know, if thirty we have one hundred
and seventy eight thousand shares of Apple for the benefit
of our clients. It's hard to trim it to a
great extent because of our unit cost of It's forty
five bucks a share, and it's sitting in It's Friday
morning at two oh one.

Speaker 2 (10:36):
Look at look at Microsoft, the same thing.

Speaker 1 (10:38):
It's going to our unit cost as our price per
shares one tenants sitting at almost five hundred alphabet sixty
five to one seventy three. And Apple we have been
trimming in qualified accounts.

Speaker 3 (10:50):
And you know right now it's about eight percent of
our equity holdings. And again, you know, what we try
to do is have correlation to the market. And yeah,
we are a little bit overweight, but you know, Apple
six percent of the s and P five hundred, so
I guess we're overweight by you know, thirty percent, right right,
But taking that.

Speaker 1 (11:08):
Inquest in the consideration, yeah, and I think you got
to be careful about like Mark Twain, the the I
don't know the what we call it. My death has
been overstated or whatever, the news of it.

Speaker 3 (11:21):
I'm worried about it, though I'm worried about you know
a little bit about China. You know, I think they
invest about fifty billion dollars a year into China, and
you know, I think they're almost relying too reliant on Chinese,
Chinese and Chinese manufacturing right now. Someone just wrote a
book about it a little bit. But you know, we've
really kind of taught a lot of workers in China

(11:42):
to become experts in this. You know, although we you know,
Apple has benefited greatly from having that Chinese labor force
what China is also you know, that labor force has
also allowed other Chinese companies like Hiwai to build their
own things and you know kind of have that second
move or advantage by learning from Apple. So I'm a

(12:03):
little bit nervous about you know, Apple's reliance on China
and also their innovative innovation.

Speaker 2 (12:08):
You know, if we're in a if we're in a.

Speaker 3 (12:12):
This you know Ai revolution or that that that people
are saying, and you know, I think we have to
take a step back a little bit there. And you know,
I think it's going to be a little bit you know,
I think we're on the really beginning stages.

Speaker 2 (12:24):
But you know, Apple really hasn't.

Speaker 3 (12:25):
Done much lately, uh to participate in that in this
new technology.

Speaker 1 (12:32):
Well a couple of things one is that there's the
potential that hot money or or money that.

Speaker 2 (12:43):
People are people are people are bored.

Speaker 1 (12:44):
With Apple yea as an investment. When the market has
started to move there, they've moved. They've moved to Palanteer,
they moved to Nvidia, they moved to you know, Core
we they moved to you know, Kupang, they moved to whatever,
you know.

Speaker 2 (12:56):
And I think you've got fomo trade onmo trade.

Speaker 1 (12:59):
Where you get money from circle, you get money from
kind of your your larger holdings, you get money from
things that aren't moving, and that could be Apple.

Speaker 3 (13:07):
And you know, yeah, I think you have to you know,
as you were saying, take a step back, you know,
on May thirteenth, Apple was flat for their one year
our Microsoft was flat for their one year return. People
were kind of saying the same thing about Microsoft. They're
getting a little bit stale blah blah blah. And it's
up ten point eighty six percent since then. So yeah,

(13:28):
I think you have to, you know, take a step back.
And if you look at Apple from a from a
fundamental standpoint and you look at their financials, you know
they're very good.

Speaker 2 (13:38):
Oh. There was a sound of company as you'll ever
find its financially.

Speaker 3 (13:41):
It's just their growth isn't isn't you know where their
growth and innovation isn't you know where I guess isn't
where other of their their peers are.

Speaker 1 (13:53):
But they've been buying back shares. I think that supports
their you know, quote unquote earnings growth. It's not pure
earnings growth, but it's you know, earnings per share growth
because there's less shares outstanding. And I think you also, uh,
the the the issue that you could have is that
this next stage of the technological evolution, if you go

(14:13):
back to you know, forty years ago, to the computer,
you know, then the PC you know, then let's say
the Internet, you know, then wireless and you know whatever.
Then then you know, direct to direct to consumer DTC.
Then you get up to you know, let's say AI. Now,
I'm sure you've skipped two or three different minor evolutionary stages.

(14:34):
But that may not Apple. You know, Apple's product may
be more of a commodity in this cycle, just like
you know, like like Dell's computer is now basically a commodity.
You know, things start out as as a premium piece
of equipment and then it becomes commoditized. So unless Apple
can offer products and services that fit this part of

(14:58):
the evolutionary evolution of technology, you know, their their their growth,
earnings growth may be somewhat suppressed, the investor appetite for
that type of stock may be somewhat suppressed, and.

Speaker 2 (15:10):
Their their their their ratios.

Speaker 1 (15:13):
Fundamental ratios may may begin to contract, you know. And
it's not a really reflection on the company. The company
is a great company. It's just maybe off the cutting
edge of what people are looking for right now.

Speaker 2 (15:23):
Uh. But you know, moving on as as as what's.

Speaker 1 (15:26):
Led us back from this, and you can see Alphabet Microsoft, Apple,
or three largest holding Palenteers up eighty eighty six percent
off of those April late closing, those of one hundred
and ninety three thousand shares we own for our clients. Uh,
any comments and and then any comments in them there.

Speaker 3 (15:42):
No it h Palenteers one that you know kind of
keeps me up at night in that you know it's
done so well, but a part of me wishes it
hasn't done so well, because you know, we we've we
we bought Palenteer probably a little over a year ago
when we started to buy for people, And I think
our cost basis in it is is relatively low.

Speaker 2 (16:05):
It's twenty five bucks to share.

Speaker 3 (16:06):
Twenty three eighty one to share. Uh, so you're stuck
in that, you know. Ye you know if we bought
it sixteen year ago, a year and a little bit
over a year ago, it's done so well. Now it's
a significant part of our portfolio. So okay, you know,
we bought it thinking that it could be one of

(16:26):
the largest companies in the world one day.

Speaker 2 (16:29):
And what's its market cap right now?

Speaker 1 (16:30):
You know, I think I can I'll put your nose.
Market cap is threeing a forty million.

Speaker 3 (16:37):
Yeah, so you know it could have a waste to go,
but it's a forty billion, but it's already gone away,
so it has going you can't. I think it's like
the damned if you do, damned if you don't. A
lot of people have a little bit too much in it.

Speaker 1 (16:50):
I think, uh trimmed it, but still, I mean it's
going up eighty six percent, so people are overweighted again.
And that's one of the things that I digress only
for a second. That's why people say I review my
portfolio quarterly or you know, once a year.

Speaker 2 (17:09):
Or or whatever.

Speaker 1 (17:10):
I think it's like, you know, and this is this
past week with the heat is a testament to this.
You know, I'd like in portfolio review to water in
your garden, you know you basically from my perspective, you know,
this may I know for people don't garden a little bit.
Some plants are in the sun, some plants are in
the shade.

Speaker 2 (17:27):
You know.

Speaker 1 (17:28):
Some plants the soils draining, some plants of soils not
so sometimes you got to comp like paleteer, you got
to review that more often than a company like Low's
or JP Morgan or this or that.

Speaker 2 (17:38):
You know.

Speaker 1 (17:39):
So it all depends upon what type of animal, slash
plant whatever stupid men analogy that I use that you're
dealing with.

Speaker 2 (17:47):
So that's yeah, yeah, so thank you.

Speaker 1 (17:51):
So so I got raspberries too, by the way, you know,
I just planted those. You got blueberries, don't you.

Speaker 2 (17:56):
Yeah, they're actually starting to come to the garden. Looks good.
I was over there last night. The weach come up
so fast.

Speaker 1 (18:01):
Now, I know, sometimes a weed that's not a bad
idea or hey or something like that.

Speaker 2 (18:07):
You know, a goat that's where it's at.

Speaker 3 (18:10):
You need two goats, though, I kind of went down
that rabbit hole one night and they say, you can't
just have one goat.

Speaker 2 (18:16):
Yeah, Rude, he.

Speaker 1 (18:19):
Was over there baby sitting last night, Mom and I Right,
So Jude's toy animals are upstairs, right, so he wants
to bring them downstairs with his desk.

Speaker 2 (18:27):
Yeah, and he's got the really nice little little desk. Yeah.

Speaker 1 (18:32):
So he's I'm like, Jude, believe the animals up here
because Esme is on the move.

Speaker 2 (18:37):
Now.

Speaker 1 (18:38):
You know, your your your daughter who's turning one July fifteenth, right,
Sam's babies are two months already.

Speaker 2 (18:44):
You know, it's crazy crazy.

Speaker 1 (18:45):
But anyway, so he starts to cry, you know, you know,
because we've been downstairs all the time, and he's like, they're.

Speaker 2 (18:52):
Going to be lonely. They're going to be lonely. You know,
he's got this here. He's really crying.

Speaker 1 (18:56):
I'm like, all right, hey, Jude, I says, they weren't
lonely up here before. They were fine before we were
downstairs playing and doing other stuff. And it gets this
confused look on his face because I still think I'm
a little smarter than he is, not much a little
bright little kid, and but he did bring.

Speaker 2 (19:12):
Him down I brought him up this morning. I went
with you when you go in. But he can't bring
all of them. Why you gotta, you gotta, you gotta,
you got a car. I know we can't bring all
of them. Wow, can't always have everything that you want?
You know. It's just like my chocolate shake. You know.

Speaker 3 (19:28):
I bring a chocolate shake last night from Snowman's. I
bring one over to my mom, you know, because.

Speaker 2 (19:34):
We baby said, were there?

Speaker 3 (19:35):
You baby sat? And uh, you know, he thinks it's
his chocolate shake. Like I share my chocolate shake with him,
and then it becomes his chocate shake. Then he won't
share to not share with you.

Speaker 1 (19:47):
But you know when you when you ripped it out
of his hands and threw them to the crowd.

Speaker 2 (19:52):
Anything.

Speaker 1 (19:53):
It took a while, but I did say to Mom,
I said, why don't you give your chocolate shake to Aaron?
She was like she was, she was She was like, Jude, Yeah.

Speaker 2 (20:00):
No, no, no, that's not gonna happen either, you know.

Speaker 1 (20:04):
Anyway, So moving along, So our fifth largest holding is
in Vidia. Our cost per shares under twenty bucks to
shares trading in one fifty five. That is the darling
of Ai'm pretty much on the cutting edge with you know, GPUs.

Speaker 2 (20:14):
We own a.

Speaker 3 (20:15):
Lot of a m D two and you know a
m D has lags, so you know, not coming.

Speaker 2 (20:20):
Off the bottom. It's really quote a fir. It's the
ninth largest holding.

Speaker 3 (20:23):
Yeah, and it really has done a good job with
its rise in chips, and you know, it has this uh,
you know, a accelerator into data centers. It's M one
three thousand chips. So it competes within Vidia.

Speaker 2 (20:35):
It's great.

Speaker 3 (20:35):
It competes within video and span, it competes within video,
you know, and I think investors keep on going back
and forth. But you know, I think they have one
of the best CEOs in the country and Lisa Sue
and you know, I think it continue to make headwinds
and you know in video ways, headways, headways. Yeah, you know,
I think that in Vidia is another one. You know,
you kind it's like a palente. You go back and forth.

(20:57):
But you know, when you see revenue growth of I
don't know, seventy to one hundred and fifteen percent over
the past three or four years, you know, it's.

Speaker 2 (21:06):
Hard to it's hard to sell it.

Speaker 3 (21:10):
And again, you know, it's kind of like if you
think we're in the beginning stages of AI. It's all
about that building building out of data centers, which in
video and a m D both are the kind of
picks and shovels of this AI revolution. So you know,
they also have their they also have their cloud services.
They I think it's like dg X cloud or something

(21:31):
like that. And they have you know, their GPU, their
CPU data centers, so you know, they kind of have
their hand in the game.

Speaker 2 (21:40):
Foot in the game, what's that? What's that foot in
the game? Footing the foot in the door.

Speaker 3 (21:44):
Footing the door in a lot of different you know,
AI sectors.

Speaker 1 (21:48):
I think people are realizing that it's AI is it's
not a zero sum game, you know, it's not in
video and then nobody Yeah, you know, I think there's
lots of room for people to participate right down the
food chain, so to speak.

Speaker 2 (22:00):
So I think that that's a video is that like
luxury brand.

Speaker 3 (22:03):
You know, they're the most expensive, but they're also the
the best mate, I guess.

Speaker 2 (22:09):
And that's our everything needs that, No, not everything exactly.
Think that's what everyone is kind of thinking right now.

Speaker 3 (22:17):
There's that old like added or saying that you know,
everyone wants to everyone needs a rap for because they
go camping once a year, right, right, No, you don't
you know what I mean? You know, so I think
that you're seeing that now start to play out in
the chip sector and that everyone's like, Okay, maybe I
don't need the Nvidia chip for what I'm doing in
artificial intelligence. So you're seeing a lot more participation in

(22:38):
you know, even Marvel. We don't own it, but it's
done well.

Speaker 1 (22:40):
So we got about a minute ago, a couple of
things in the first half, So maybe revenue to the
second we can you know, why is the stock market
rallied off the lows? We can continue with looking at
our holdings in the second half. I think though too,
I think I don't want to. We just talked about diversifying,
you know, we mentioned out with that Microsoft, Apple pound

(23:01):
here Vidia. You know, when you get down to the
second largest holdings on the common stock side, the second ten.

Speaker 2 (23:06):
You'll see that we are diversified.

Speaker 1 (23:08):
Out of those the next ten, some holdings are Vertex Pharmaceuticals, MasterCard, Chevron, Berkshire,
Bank of America, Johnson and Johnson, Regeneron, you know, and
then the next ten Boeing, Schwab, exceon Mobile, Disney, Robinhood,
Nike which just reported earnings as stocks up around five
or six, Bristol Myers, next Era, and Oxy. So yeah,

(23:29):
we're overweighted in tech on our top ten holdings. But
as you filter down to the second, second block of ten,
the third block of ten, that's where we really have.

Speaker 3 (23:38):
In most of our ETFs. You know, we do own
some JP Morgan, you know, their technology fund, their Active
Technology Fund, but we do most. We'll talk about that
in the second half. But how we pair ETFs with
our largest hold And.

Speaker 1 (23:48):
I've got a cure for the heat in your house too.
Right now, it's after the break. Right now, it's ten
thirty on the station depend upon for news, weather and information,
Newstock A ten and one O three one w G. Y,
good morning, and welcome back to the second half out
of the Capitol District's Money and Investment Program. You're listening
to the Fagan Financial Reportum, Dennis Fagan's sitting here with
my son Aaron, as you do every Sunday right here

(24:09):
in news K ten and one O three one w G.
Why it is about eight o'clock on Friday morning as
we record this show. A couple of things. One is
we're talking in the first half about, you know, the
bounce in the market. We'll get into why is a
stock market rallied off the April eighth lows. We've been
talking about, you know, our largest holdings, what they've done
off the April eight lows. We'll talk a little bit
more about that second tier that I mentioned before the break.

(24:30):
But so here's my here's my here's my here's my
kind of cure for the heat. So let's say you
got to find the coolest spot.

Speaker 2 (24:42):
It's not even that my house isn't even that hot.
I'm saying, house, your house. Where do you go?

Speaker 1 (24:51):
No, no, a house, not your house, specifically, where do
you go if you want a really cool area?

Speaker 2 (24:57):
The basement? Right, so if you move the basement to
the first floor.

Speaker 3 (25:02):
You know, the whole break, I was thinking of what
you're gonna say right about that?

Speaker 2 (25:07):
What's he gonna say? It's you know, open both windows that.

Speaker 1 (25:11):
If you just move the basement to the first floor,
there you go. You don't even don't even worry about
moving into the second floor, just moving a lot.

Speaker 2 (25:21):
In my basement.

Speaker 3 (25:22):
Do you really know what I saw? I don't even
want to take to tell you this because it's embarrassing.
I saw a cockroach outside.

Speaker 2 (25:28):
You know, No, they're not cockroach. You're more they they're not.
I don't know.

Speaker 3 (25:31):
It looks like a I lived in Florida for a bit.
It looked like a cockroach. It was a cockroach. And
it's because the rain, that's what That's what the Internet
is telling me. It's because of the rain.

Speaker 1 (25:43):
That there there are june bugs outside. There are there
are beetles outside, like a black one?

Speaker 2 (25:48):
Is it black? Just last night?

Speaker 1 (25:51):
We're outside, you just like trounced on one.

Speaker 2 (25:55):
Oh yeah, yeah, I get a sociopath. He lifted his
foot about three feet off the ground.

Speaker 3 (26:01):
He's loving jumping lately. He loves jumping off of like
he loves on going higher and higher and higher. And
he's gonna get hurt. But I'm like, he's never gonna
learn if you if he doesn't care, there.

Speaker 2 (26:10):
You go so talking.

Speaker 1 (26:13):
Uh yeah, anyways, that's my that's my cure. Mom and
I are gonna try it. We're gonna move all their stuff
from the base.

Speaker 2 (26:20):
You're gonna wake up with, you know, in a puddle
water because that won't work, right. You got a nice basement.
Though it's cool. It's not bad, Yeah it is. It
is cool literally literally clearly cool. So it's below the ground.

Speaker 1 (26:34):
Anyways, So let's talk a little bit before the break about,
you know, our largest holdings, how they participate. We got
through the first five or you know, off the April eighth, Lows,
you know, and sixth largest holding is Amazon. Amazon is
going up twenty seven percent from the bottom. I think
Amazon still represents good opportunity. JP Morgan up thirty three percent.

(26:54):
Lows has lagged a little bit. Hang, you know, what
do you think about it?

Speaker 3 (26:57):
Like loads, Low's is a good company, It's well run
and go in and out of favor.

Speaker 2 (27:02):
But I'm I'm a fan. I think it's a must
hold really, you know, you know, forty.

Speaker 3 (27:08):
Percent of people don't have mortgages. People are staying where
they are.

Speaker 2 (27:11):
You know, so that'll lead to home improvement, you know.

Speaker 3 (27:14):
As you said, though, I think that, you know, sometimes
there's only so much money to go in the markets,
so much money to go around in the market. So
I think that'll be an issue with Low's as it's boring.
You know, sometimes it goes out of favor just because
it's boring. But you know, no part of me, in
my opinion, would ever sell a Lows, and I don't
think we ever have.

Speaker 1 (27:33):
Really well, we trim it from till you know, obviously
just portfolio adjustment will do that when it runs up.

Speaker 2 (27:37):
But I would say that I think you're right.

Speaker 1 (27:41):
You know, I think one of the reasons Lows is
lagged a bit is because of it's not quote unquote
AI generated. Can it benefit from AI, perhaps, but it's
still you know, construction is still a you know, you know,
a heavily labor intensive industry.

Speaker 2 (27:58):
Yeah, I also think the economics.

Speaker 3 (28:01):
To nine billion dollars a year and two percent dividend,
fifty consecutive years of a dividend increase and dividend pe
of twenty, so you know, you know, they've done a
very very good job in the DIY market as well
as partnering with local contractors to you know, in our
old house, we got a new countertop, and you know,

(28:25):
we went to Lows and then someone, a local contractor
showed up.

Speaker 2 (28:28):
And put it in.

Speaker 3 (28:28):
So you know, they're doing a good job being innovative
in an industry that's hard to be innovative.

Speaker 1 (28:34):
So right, I agree, I like clothes I like loth
They just you know, when it's up four percent in
the market's up twenty five you know, you know, if
i'm if I'm a shareholder and I want a reason
why we hold it, and I think that's one of
the ones. You know, those are all reasons why we
own it. And I think any you need core core
holdings in your portfolio, just like you know on the

(28:56):
ETF for mutual fund side we have index ones eighteen
eighteen nineth team. Well we'll talk a little bit about that,
hopefully at the end of the show. But in the
second block Vertex MasterCard, we o't own a lot of Uber.
Ubers up tons off the low. Uber is up forty
two percent. The autonomous driving is really going to benefit Uber,
just on a Tesla margins respect.

Speaker 3 (29:17):
A little bit with their rollout in Austin. So I
think it was about seven or eight percent since then. Yeah,
you could see them partnering with you know, technology companies,
but you know, and it's trading at like fifteen times earning.
So Uber, yeah, I think it is. I could be wrong,
but I think I think they're you know, their pe

(29:38):
ratio is quite low.

Speaker 2 (29:39):
Yeah, you're right.

Speaker 3 (29:40):
Yeah, So I think what I think what people are
quite nervous about is and now I think this company
should be could be twenty or thirty or forty percent higher.
There's just a lot of competition from a lot of
really big companies, you know, Tesla and Google in general,
and then you have the Google.

Speaker 2 (29:57):
So have a bet you're right.

Speaker 3 (29:59):
So sorry and Tom, and you know you could, you know,
you could continue to see you know, innovation in that sector,
just even the most you know, traditional car companies for GM.

Speaker 2 (30:10):
And the like. I agree, all right, let's move on.
Let's move on to a couple of things.

Speaker 1 (30:16):
Why has a stock market rallied off the April olds There's.

Speaker 2 (30:19):
Many, many different reasons.

Speaker 1 (30:21):
And you know, from from basically from the inauguration to
the to the to the morning of April ninth, President
Trump was really on the war path regarding tariffs. I
mean he was, you know, talking very hawkishly about tariffs,
and that drove the market down just under twenty percent.

(30:43):
I think the nas deck or the S and P
fIF when it was down like nineteen point nine percent
off of it's February twentieth high. But the morning of
April ninth, before the market opened in the Oval office,
all of a sudden, President Trump pivot it and cooled
his rhetoric, put a ninety day moratorium on on tariff's

(31:07):
time for negotiations. We just saw this morning the coming
to a trade deal with China, and and that pivot
has really led the market to the rebound. That softening
of the tone. I think on top of that, you
saw you know, Peter Navarro, which had been you know,
probably the staunchest tariff hawk, pushed to the sidelines, Howard

(31:27):
Lutnick toning down his rhetoric as the Commerce Secretary became
more of a cheerleader, if that's possible, and Scott Besson
really taking the reins of like kind of the I guess,
the moderate, more fiscally responsible official in President Trump's administration
regarding the tariff. So I think that that's all helped

(31:49):
quite a bit.

Speaker 2 (31:51):
You know.

Speaker 1 (31:51):
I also think that the bond market has stabilized. You
had an initial rise in interest rates, and I think
they've come down a bit, where the ten years now
sitting closer to four than much much closer to four
than five percent. Your microphone just fell off the hold
it for the rest. You've got the singer like Wayne
Newton or Tom Jones.

Speaker 2 (32:10):
Uh, you know, and.

Speaker 3 (32:13):
I lost my train of thought, but I think that
you know, the consumer continues to remain resilient, and inflation
isn't anything concerning yet, so you know, I think it's
a culmination of things that the market continues to uh.

Speaker 1 (32:25):
You know, rally, so the inflation isn't concerned yet. I think,
you know, when you talk about what do you want
to put that back on? When you talk about the
FED and Jerome Powell, I think they're waiting.

Speaker 2 (32:38):
They're waiting for is it waiting for good? Oh? I
don't know.

Speaker 3 (32:41):
I don't I don't know why they wouldn't wait either though.
You know, I know Trump wants them to cut. You
want them to cut, like we're doing good right now.
You know, you want that, you want something in you know,
you want that in your back pocket in case you
have to cut. You know, let's say, let's say we
you know, you know, I just don't see, you know,
why why we would.

Speaker 2 (33:01):
Cut now when the economy is doing pretty well. The
economy is doing.

Speaker 1 (33:05):
Well, I think, you know, and I think what the
FED does not want and I don't think they're in
danger of it, But I guess when you know, you
talk about the.

Speaker 2 (33:12):
Ghosts of.

Speaker 1 (33:14):
Bear markets past with this with the stock market, that's
usually what you talk about, but when you talk about
the ghosts of bond market bear markets, you know, I
think the seventies frightens all and.

Speaker 3 (33:27):
It should, you know, and I think we I didn't mean,
I'm sorry, I don't mean to cut you off, but
you know what the risk of is one of the
worst things that can happen to an economy, and that's stagflation.
You know, So if if if Powell gets this wrong
and starts to cut, and we continue to see and
we and we see, you know, a revamp up of

(33:48):
inflation as well as stagnan GDP growth, that's kind of
the worst thing that can happen to the economy or the.

Speaker 2 (33:53):
Economy accelerates, and he's got to raise right away.

Speaker 3 (33:55):
So you know, I think what I think the a
lot of the issue is that, you know, the threat
is such a big threat that it just doesn't pay
to cut.

Speaker 2 (34:06):
That ways the benefits. Yeah.

Speaker 1 (34:07):
The other thing I think is that look, I think
they're gonna cut. I think they're gonna cut once or
twice before the end of the year, maybe once or
twice next year if inflation. But I agree with you
that they shouldn't cut now, right because of a few
things that you just mentioned, and like I said, also
the potential for you know, cutting and then having to

(34:28):
raise what's the and the other thing. I don't think.
I don't think interest rates will go down. I don't
think mortgage rates are going down even if the FED cuts,
because if the FED cuts, it's gonna spur economic growth.

Speaker 2 (34:41):
So that that I guess that.

Speaker 1 (34:44):
Additional economic growth compared to where we are now is
going to cause interest rates to kind of firm up
a bit, you know. So, so I don't think you're
gonna get that. And I'll use an example. I think
I might have used it on last week's show. Okay,
if cuts are good, let's cut to zero.

Speaker 2 (34:59):
Well, why not?

Speaker 1 (34:59):
That's it inflationary? I think that's what If you cut
to zero and mortgage rates go to one or two percent, Man,
there would be too much money chasing too few goods,
and then housing prices will go crazy and again even crazier,
and this and that. So using that, you know, extreme
examples as a foundation for it, you want to make

(35:19):
sure that interest rates are appropriate for the economic environment.
And also I think there is a potential. I mean,
we haven't seen the kind of the ramifications of tariffs,
you know yet, and you know, and we also this
is normal. That's and that's I think one of the
foundations of my argument for not cutting or taking it easy,

(35:41):
cutting rather than cutting as President Trump suggested a full
percentage point right now. You know, this is the normal
economic environment that we're sitting in this and I'm not
sorry that economic environment, interest rate environment that we're sitting
in right now. For those of us you know over
forty thirty five or whatever that can remember pre two

(36:01):
thousand and eight, this is normal. Money market rates at
three or four, mortgage rates at six or seven, you know,
CD rates at four four percent.

Speaker 2 (36:09):
Or so, this is normal.

Speaker 1 (36:10):
I think President excuse me, fed share POW realizes this is.

Speaker 2 (36:14):
The normal economics.

Speaker 1 (36:17):
I keep saying the interest rate environment, the abnormal environment
was two thousand and eight to two thousand to right
before the pandemic. So I think that and that's why
I think the bond market is stabilized because the fed
share has been and the FMC has been relatively consistent
with their approach. I think other thing too, is the

(36:38):
market can begin to focus on why it rallied in
the first place.

Speaker 2 (36:41):
Coming off the election.

Speaker 3 (36:42):
You know, we're just seeing some deregulation within the you know,
in the financial sector. You know that didn't lead to
anything good in two thousand and eight, but you know
it should be good for the stock market. So you know, yeah,
I think that's you know, a solid reason why why
the market started to really rally.

Speaker 2 (36:57):
I think, you know, the other things too.

Speaker 1 (36:59):
I think we're you know, the strong stand on Iran,
that that as of now has been kind of toned
and toned down. The geopolitical tension there. I think NATO,
you know, if you're looking at like a more money
of freedom, freeing up some of the federal budget, or
with NATO picking up a larger cost of defense, I
think focusing on domestic issues, President Trump has begun to

(37:22):
do that. I think that's that's a positive. The inflation
has cooled, perhaps it's temporary, but at least it's cooled
a bit. We mentioned in the first half better than
expected corporate earnings. Yeah, you mentioned earlier resilient economy and
that AI theme.

Speaker 3 (37:38):
You know, I think that we've talked a lot about
at the first half of the show. What inning are
we in in that it has to be the first couple,
don't you think? Yeah, there could be a rain delay though,
I think there could be quite the rain delay in
you know, the monetization of this artificial intelligence. We're still
in the build out phase, which could you know, have
the market go higher. But at some point people will

(37:59):
want to see like a ritur on equity of all
these investments. So that's I think that's where you could
see maybe a little bit of a downturn in the
market in these companies and when when we when people
want to start seeing that return?

Speaker 2 (38:12):
Right? What could go wrong?

Speaker 1 (38:14):
On a broader and a broader perspective with where we
are now, We've rallied a lot, We've rallied for all
of those reasons we just mentioned over the past ten
or twelve minutes.

Speaker 3 (38:23):
I think geopolitical tensions are a little high still, you know,
we're getting into earning season. Those could those could, uh,
those could derail the market a little bit. And Trump
is a wild card, you know, so I think that
you know, he could you know, I think what recently,
you know, it's it's it's helped the market, but you know,

(38:44):
you just never know really so, but again, you know,
the economy remains very resilient. You know, the consumer remains strong,
Inflation remains muted, muted ish in corporate earnings, you know,
or what is what better than expected corporatings twelve percent
year over year versus six percent expected, that's double. So
you're still seeing the extremely strong economy. And you could

(39:08):
see terraffs start to take effect in the second half
of the year. Maybe we saw some some front loading
of ordering goods in the first half of this year
and the later half of last year, and maybe you
could see, you know, inflation pick up a little bit.
So I think those are the biggest threats to the
economy right now.

Speaker 2 (39:23):
You know, I think that.

Speaker 1 (39:26):
I think that the you know, from a technical perspective,
with the market right now, you have you could have
a double top, you know, where the market hit a
new high in February or December, depending upon where you
look at d S people NASDAK it's hit a new
high again. From a from a technical perspective, I think
you got to wait and see do we do we

(39:47):
bull up so this top if we've gotten to this
same level again, do we pull back from here. Is
it a pullback for just a little bit of a
rest bit or arrest? Or do we pushed through here
by four or five percent so that the the old
top becomes now the Florida the market, you know what
I mean? So I think that remains to be seen.

(40:08):
Are are we just kind of like, did we cause
our own problem?

Speaker 2 (40:11):
Like where are we?

Speaker 1 (40:12):
You know, if we're basically where we were three or
four months ago, did we cause ourselves a lot of
angst and anxiety for no reasons? Or is what President
Trump's doing really going to benefit the economy over the
longer haul. I think that does remain to be seen.
And I think people listen to our show in early
April before the pivot, they know our concerns and our
concerns are you know, our allies aren't as strong as

(40:34):
they used to be. We've changed to be more of
a mercantilistic type of country rather than something that's you know, uh,
more ambivalent and and more not ambivalent, more I guess, gracious,
and more concerned about the rest of the world. Uh
and and maybe we shouldn't be. But you know, where
does that lead us? I think that that that still

(40:56):
remains to be seen and sometimes that can take a
year or two to play out. Maybe the maybe maybe
the AI overcomes everything. And just because despite the fact
that you know, we still have the best companies in
the world when you talk about what the world needs
as far as as far as technology. So that's that's
kind of what we're seeing. But but now I think

(41:17):
with with so many with a big move in the market,
now you can take a look at your portfolio, you know,
and rebalance. And I think as we sit here, you know,
we're sitting if you look at Fagan Associates and all
of our clients pooled together, we have fifty one percent
of our accounts in common stock. We have seventeen point

(41:40):
six percent in domestic equity funds, another couple percent in
international equity, So equities together sitting at about uh seventy
percent of our total accounts, twenty one percent in fixed income,
and about little under nine percent in cash.

Speaker 3 (42:01):
Yeah, and I think we do have a lot of people.
You know, if you're if you are in cash and
you're in that classic sixty forty portfolio, you know, we
do have a significant amount in short term money markets
and the like. As you know, people are taking distributions
from their accounts. So you know, I think two or
three years of of of your money in short term,

(42:25):
you know, bonds or money market funds is the appropriate
allocation for retirement because you can draw draw from those funds.

Speaker 2 (42:35):
To you know, to.

Speaker 1 (42:36):
Support anything else you want to go over. I know
we've got a few minutes left and we've touched on
you know, in.

Speaker 3 (42:41):
A good minute, a good few minutes left. You know,
you know, i'd love to beyond the news by MFS.
You you got the good job, but you know, some
interesting things that that that I thought were interesting. IBM
is the top performing stock in the Dow Jones on
the year, with the gain of twenty eight percent. You know,
the next closest is Microsoft, Visa, then Bank of America,

(43:03):
and they're just they're all up about thirteen percent. But
IBM has not finished the year as the best performing
dovestock since nineteen ninety six when it rose sixty six percent.
And you know, I think you're going to continue to
see those legacy technology names, IBM, Oracle, Cisco continue to
do well in this market. We do own IBM, We

(43:25):
do not own Oracle, We don't own any Cisco.

Speaker 2 (43:27):
For some reference.

Speaker 3 (43:29):
But I think you're going to continue to see these
companies and as you were saying earlier, it's not you
know what was the word you used, you know, not
one company. It's going to come. Oh it's not a
zero something, not a zero some game. And I think
you're going to start to see a lot of these
companies participate in this, you know, new these new technologies

(43:49):
that could continue to do well. IBM also has a
significant dividend, which is obviously very attractive to two investors
as well.

Speaker 2 (43:57):
Their dividend is right here. Dividend is uh six points.

Speaker 3 (44:05):
Two point three percent, so you know, it's kind of
gotten cut in half as the has it's done so
well over the past couple of years, but that's still
you know, almost double where the sm P is. So
you know, I think IBM will continue to do well,
as I do think Oracle will continue to.

Speaker 1 (44:19):
Like Cisco, we don't own any now we're going to
try toccumulate it maybe if for polls back a bit
right now.

Speaker 3 (44:24):
A lot of technology too, we do. I'm just looking
at our our holdings. We're about forty one percent in
technology as opposed to the S and P, which is
about thirty five, so we're about six percent overweight, which
wasn't that much overweight on a percentage scale. But you know,
I think the fundamentals in technology are still extremely strong,
and I think price earnings ratio is is is a

(44:46):
great indicator, is you know, one thing that we look at,
but we look at a lot of things. We look
at revenue growth, we look at dividendial, we look at
return on equity, return on sales, what their margins are,
cash flow, So there's a lot of things that you.

Speaker 2 (44:57):
Price earnings overgrowth. You know, yeah, they's got the growth
to justify that, you know.

Speaker 3 (45:02):
So you know, these companies you know, might look expensive
on one metric but cheap on on plenty of others.
So I think that's uh, you know, important to you know,
you try to take a lot of different calculations and
come up with a you know what what what you
actually think, you know, the stock should be priced that.

Speaker 1 (45:21):
So I think as as we as you know, I
think what you have to do now, and I can't
stress it enough, is make sure you've got the reprieve.
Maybe the market keeps going up fine, but now you
know you can look at your portfolio and say this
is where I am.

Speaker 2 (45:38):
You can look at it objectively.

Speaker 1 (45:40):
It's not an emotional stress emotionally stressful time.

Speaker 2 (45:43):
What do you like?

Speaker 1 (45:45):
You know you're getting You're getting stocks that have bounced
hard off the bottom, and maybe maybe some of that
bounce isn't justified, and so you say, Okay, I wanted
to get out of that. Maybe now I can get
out of that one stock that has uh, you know,
had had news last night. There is Nike, and Nike's
earnings were you know, not what the street anticipated. But

(46:05):
people think it's kind of an inflection point for the
company as as they move forward and it kind of
regain their mojo. It's it's one of our larger holdings.
I don't know where it sits at twenty seven we
have about fifty eight thousand shares for clients, and it's.

Speaker 2 (46:21):
A legacy holding with a very low cost basis.

Speaker 1 (46:24):
But I do think at some point in time, the
Nike to Starbucks, I think people kind of come back
to those.

Speaker 2 (46:29):
Yeah, you know, and I think the worst is behind them.

Speaker 3 (46:31):
You've seen a lot of different companies accelerate and and
and be formed in the last five years. You know,
a couple that I can think of is are on
on cloud. I guess that's the only way I can
think of right now. But you know, I think I
got that goes with Hoka, Yeah, Hoka. You know, even Brooks,
You're you're seeing, you know, more competition, but I think that,
you know, the peak of competition is over. They got

(46:53):
a new CEO, and I think and he was has
been with the company for a while, Elliott Hill, And
I think, yeah, I think that their.

Speaker 2 (47:00):
Financials are going to remain strong.

Speaker 3 (47:01):
And yeah, I think it's one of those companies that
it's the beginning of a turnaround.

Speaker 1 (47:05):
Revenue was a little better than expected, although down about
twelve percent year over year, and like I said, a
lot of a lot of analysts see this as somewhat
of an inflection point. Yeah, so we're moving into the
month of July.

Speaker 3 (47:20):
On Tuesday, we already have next week's show recorded. I
will be out of the office this week, yes you will,
but I will be answering emails and working a little bit.
So if you need anything, email me.

Speaker 1 (47:33):
I will be in the office. You will be in
the as well as all our other people. So we're
in good shape as far as that goes. So just
kind of like, uh, we'll see what comes up with
a quarterly earning season. We'll kick off in July. We
have the labor report this coming Friday. We'll see what
goes on as far as is that resilient economy that

(47:55):
Aaron and I were talking about, you know, perhaps weakening
a little bit, and then we just go from there.
If you need to get a hold of us five
one eight, if you're a client or non client five
one eight, two seven nine ten forty four. If you're
looking for a second kind of opinion on your on
your portfolio, if you're fifty eight, fifty seven, fifty five, whatever,
or fifty eight years old and lucky enough to be retiring,

(48:18):
or or you're you're kind of thinking about retiring, we
can do a financial projection for you that will detail
you know, whether or not, given past scenarios, how you
will be in retirement. We income you can project from
your retirement or expect from your retirement will take inflation
and taxes and the consideration and work at that. But anyways,
two seven nine ten forty four, or check us out

(48:38):
and have a Fagan Asset dot com, like us on
Facebook and contact through either way you want right now
thanks for listening and have a good day.

Speaker 2 (48:45):
Take care