The Fagan Financial Report

July 6th, 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. IM
Dennis Fagan, sitting here with my son Aaron, as we
do every Sunday right here in news to K ten
on one O three one w g Y.

Speaker 2 (00:12):
I got a little bit of a change in.

Speaker 1 (00:14):
The in the process, and it's kind of like letting
your your teenager drive the ship.

Speaker 2 (00:19):
Usually I say the good mornings and this and uh.

Speaker 3 (00:22):
Thirty five years old, soon to be thirty six.

Speaker 1 (00:26):
I know, but you're gonna you're gonna control the whole show.
I don't even know what's gonna go on, and you know,
and you're right, you know. I should be uneasy. I
should I shouldn't be uneasy.

Speaker 3 (00:34):
Are you uneasy? No?

Speaker 2 (00:36):
Not easy.

Speaker 3 (00:37):
I all have surprises. I mean, my mom tried to
have a surprise birthday party for you one time, and
you were very very not happy. You were not happy,
not happy, So that never happened. I think you know
you'd be happy, but yeah, you're you'd like you'd like
to be prepared, which makes sense. But you know when
we were, when we were, when I when I was
getting ready for the show, now, it's all things that

(00:59):
I think with you're what thirty five forty.

Speaker 2 (01:02):
Years nineteen eighty three, I started in his business forty
forty three years.

Speaker 3 (01:06):
Forty three years of experience. It's a lot of things
that I know that I think are just ingrained in
your mind, you know, being a financial advisor.

Speaker 2 (01:15):
Go mets, let's go blue, stuff like that. Yeah, exact gardening.

Speaker 3 (01:21):
I got fun the uncle Chris, Chris wouldn't say if
you know, if your stock was a first baseman, what
would he be go to? Uh, you know, if he
needed something to talk about, he would compare the super one?
Really yeah?

Speaker 1 (01:35):
Right?

Speaker 3 (01:35):
Who would be your quarterback? If you were? If you were,
if the stock was right?

Speaker 2 (01:40):
Who can you not do without? Who can you not
do without?

Speaker 3 (01:42):
So it would be who would be our uh stock quarterback?
Right now? If we had a stock in our portfolio
that we think is our quarterback?

Speaker 2 (01:53):
What meaning? What meaning? Something we can't do without? The star?

Speaker 3 (01:57):
The Yeah, the consistence, see, you know, not the ups
and downs of the things you want in a quarterback.
What do you want to you want you want big
playmaking ability, but.

Speaker 2 (02:08):
You want consistency.

Speaker 1 (02:09):
Yeah, you know, you don't want someone's going to turn
the ball over the time, like Jameis Winston.

Speaker 3 (02:13):
But I do like I would have liked it, you know,
I do like Jameis Winston.

Speaker 1 (02:17):
I think for me, you know, it would it would
have to be you know, and again not our star performer.
I mean, I'm looking for somebody I would think like
Amazon or Alphabet.

Speaker 2 (02:29):
I think would be.

Speaker 1 (02:30):
You know, our one of our star performers. You know,
two people that I think are quarterbacks. I think, yeah,
you know, you know a quarterback who can who can
run and throw the ball, doesn't have a lot of turnovers,
you know. I think Amazon is that it's well diversified,
you know, with aws, they got their traditional line of businesses.

(02:50):
So so that would be mine. How about you?

Speaker 3 (02:53):
I was gonna say Microsoft, Microsoft. I think Amazon and
Google are are great sat Amazon and Alphabet, Yeah, like Amazon,
you know, the Amazon's had a lot of downturns in
historically Amazon doesn't earn as much money. But I was
gonna say Microsoft that I already say that. Yeah, it's
gonna say Microsoft. You know, twenty three percent of their
their revenue is is office seven percent, LinkedIn thirty four percent,

(03:16):
Cloud twelve percent, Windows six percent, Search eight percent gaming,
et cetera. You know, they do pay a small dividend.
I think I feel like, uh, you know, they they'd
be a better quarterback in that and I think you
could choose any large cap tech really other than Nvidia
to be your quarterback.

Speaker 2 (03:33):
But well, you know what they don't.

Speaker 3 (03:35):
Microsoft doesn't have the the pullback ability. In my opinion
that Google and Amazon both do the.

Speaker 2 (03:42):
Pull mean the pullback ability.

Speaker 3 (03:44):
I mean, Amazon is what pull in in the early
two thousands, pulled back like, you know, seventy eighty ninety percent.
I feel like right now Microsoft has the revenue diverse
diversity that they need to be a quarterback. You know,
I think Microsoft trading, I don't know, do you have
you have your my charts up right now, a little

(04:05):
plug to white charts. I guess yeah, you know it
thirty eight times.

Speaker 2 (04:10):
Thirty six times. Well, and they're and they're all.

Speaker 1 (04:12):
Gonna be they're all gonna be pretty high. You know,
I don't think that alphabets ratios are that high. Alphabets
trading at twenty eight times earnings.

Speaker 2 (04:20):
You know.

Speaker 1 (04:21):
One of the things that you know, if you asked
me that question two years ago, what do you think
I would have said.

Speaker 3 (04:26):
Apple to yeah, Apple, but you know they don't have
they don't have the big playmaking ability right now. I
don't know.

Speaker 2 (04:32):
Is Apple your Kirk cousins.

Speaker 1 (04:34):
Yeah, is Apple kind of like an an aging quarterback,
you know that that that isn't getting the job done?
You know our basis, and Apple's got to be you know,
well under the triple digits. Yeah, it's probably around you know,
thirty bucks A share was still trading at two hundred,
but it's down nineteen percent for the year. It's got
a wide range of business. I think they I think
the whole dust up, the economic tariff dust up with

(04:58):
China is a cousin Apple issues, as is the fact
they're pretty they're pretty richly valued, and they haven't really
gotten the AI mojo that or the the really the
the tools and the products in the AI like some
other countries companies. So I think people think they might
be behind the eight ball a little bit.

Speaker 3 (05:18):
Yeah, you know, I think that we're seeing AI play
a role already in software. But you know, Apple being
such a hardware company in a lower margin company than
a lot of other these other companies that are more
you know, ads and the like. I think you know,
Apple could continue to struggle until they've come out with
something that's innovative. You know. I think I heard someone
call it a utility, and it kind of is a

(05:39):
utility a little bit.

Speaker 1 (05:40):
And that's a lot of recurring revenue from the service
as side that's growing, you know, well into the single digit.

Speaker 3 (05:46):
If you look at if you look at businesses that
you think are going to be transformative in the next
five to ten years. Though Apple really doesn't have much
going with it right now. I think they said their
new iPhone will have integration of their AI platform, So
it'll be interesting to see. But you know, as we
always talk about, I want to see, you know, and

(06:07):
I think they're talking about on CNBC the other day,
you know, there is a risk of AI being as
sun cost for the for the near future. So I
think until.

Speaker 1 (06:15):
They're never a first mover, I will say that that's true,
that they are, and they do a good job of
not being a first.

Speaker 2 (06:22):
Right they do.

Speaker 1 (06:22):
So here's another Now it's like a nod to Uncle
Chris too that uh it is, so who would be
your if you're not a sports fan, you know, and
so we'll describe that.

Speaker 2 (06:30):
Who's gonna be your Molik Neighbors, you know, you're you're.

Speaker 1 (06:33):
Flashy, speedy, dropped a few balls last year, got a
lot of potential. Who's gonna be your and he's a
wide receiver for the giants. Who's gonna Who's gonna be
that person for you?

Speaker 3 (06:47):
His fingers right now? It has to be like a
Palanteer technologies I do like we do like so far,
we just took a smaller position in so far.

Speaker 2 (06:56):
We'll be adding to that.

Speaker 3 (06:57):
I would be adding to that. But I think Palentier
has to be it, you know, just with its I
guess big playmaking ability like Neighbors has. I think it will.
It could continue to do well right in the near future,
especially in the artificial intelligence, you know, even could go
with like an in Vidia. I think in Vidia is

(07:17):
kind of like a core of everyone's portfolio of it.
But it still has you know, the margins of seventy
percent you know year over year revenue growth of in
the past five years. Is it was one hundred and
thirteen percent last year two years ago, you know, on
twenty fourteen. So and Nvidia kind of still has that
big playmaking ability, but maybe like like an older wide receiver,

(07:37):
like a DeAndre Hopkins.

Speaker 1 (07:39):
That would be who in video, yeah, you know, and
so so you've got that and we we we You've
got that consistent star quarterback in like a Microsoft or
an Alphabet or Amazon.

Speaker 2 (07:55):
You've got the flashy.

Speaker 1 (07:59):
Player and both in technology as well volunteering and the video,
you know.

Speaker 2 (08:05):
And some of the linemen.

Speaker 1 (08:08):
I think if you look at something I think is
or maybe somebody who's underappreciated, like hopefully Jackson cartis you know, yeah,
will turn out to be good. But I think you
look at like an IBM, a Boeing three Yeah.

Speaker 3 (08:21):
Like Jackson, companies that are turning themselves around. You know,
I think we own a lot of stocks in our
portfolio right now that you know, we're kind of like
the Titanic, a little bit too too big to turn quickly.
But our turning, you know, as you said, Boeing, Johnson,
and Johnson's a good one. Three AM, I'm three m
IBM even Oracle, like you know, five or six years

(08:43):
ago ago, Orca was kind of dead in the water.
Now in twenty twenty five, oorcles really starting to make
a turnaround to be that hybrid between software, hardware consulting
and you know, kind of one of the leaders in
artificial intelligence. Something else that came out, uh, that that
came out was YouTube and alphabet doesn't really report daily

(09:08):
average users, but a report came out that YouTube shorts
now has two billion.

Speaker 2 (09:14):
I'm not surprised.

Speaker 3 (09:16):
YouTube shorts of of of monthly average users. So I
didn't really know that much YouTube shorts. I I some
website I think CNBC reported, but I forget what website
I saw saw it on. But they you know, yeah,
two billion, that seems like, you know, kind of an
astronomical number, so you know, take it with the grain

(09:37):
and assault that guy. But I guess, you know, Doug
was saying our coworker that his son is nine and
he loves YouTube shorts. It's kind of like Instagram reels
a little bit. So I think Google is going to
continue to be one of those underappreciated companies. But every
time they have earnings, they come out and they're very good.

Speaker 1 (09:54):
They are good, I mean, but they but they some
companies just provide a little bit of like hesitancy in
their in their forward look that that pulls them back.
And I think, and that's that's that's typical, and they're
down a little bit year to day, year to date,
alphabets down nine percent or so.

Speaker 3 (10:09):
So so here's here's And you know, I think people
get nervous about their ads, right, so I think ads
are about six almost sixty percent of their revenue. So
I think when you have such a Google search, especially
so not even you know, Google clouds.

Speaker 1 (10:23):
About what's the difference YouTube YouTube shorts? I've seen YouTube shorts.
What's the difference between that and TikTok?

Speaker 3 (10:29):
Like what I think? I think it's just their version.

Speaker 2 (10:32):
I I I like I watch YouTube YouTube TV.

Speaker 3 (10:36):
You watch a lot of YouTube.

Speaker 2 (10:37):
I watch a lot of YouTube.

Speaker 1 (10:38):
It's got if anyone's got YouTube TV and they haven't
been turned on to like you can I like to
guard and like, what's the matter with my cucumbers?

Speaker 2 (10:48):
What's the matter with this?

Speaker 1 (10:48):
I'm not an expert card to believe me, you know,
and I'm looking thinking, okay, where am I going wrong here?

Speaker 2 (10:53):
And you can you.

Speaker 1 (10:54):
Could have a half hour YouTube on just that and
it's really really informative. So I've kind of been why
doing that too much?

Speaker 2 (11:03):
Actually? You know what I mean?

Speaker 3 (11:05):
But but like traveling ones, that's another good.

Speaker 2 (11:09):
I don't have to leave my couch. I don't have
to leave my couch. And I've been, I've been.

Speaker 1 (11:13):
I just just uh two nights ago was in mont
Negro is beautiful.

Speaker 2 (11:18):
You should go there.

Speaker 3 (11:18):
Sun loves just watching rides. Yeah, it's like going like
a Disney ride. Like he just likes watching like a
first person point of view of rides. He doesn't he
didn't even had even been on any of these rides.
And he likes to watch.

Speaker 1 (11:29):
You pick him up and put him close to the
TV and like he's like poppy probably like dude, I'm sweating,
I'm tired. But you know, I think that who's your
Daniel Jones, Bristol Myers, Johnson and Johnson regeneron into They've
they've stumbled intel, They've stumbled a little bit lately. Yeah, yeah,
and can they get can they get their rack back together?

Speaker 3 (11:49):
Even a year later? Kind of you know, busting his
chi Who do you sign with sound with the Vikings?

Speaker 2 (11:55):
Oh, I don't know, I don't know. It was with
the Vikings.

Speaker 3 (11:57):
Yeah, you know that said what I think this is
a good conversation of And we wrote a piece this
past week or you know, basically just about diversification. I think,
you know, although it might sound silly. You can tell
I have a three year old by using the word silly.

(12:18):
But you do want to build a portfolio like you're
building a football team more than any other or in
my opinion, you know, you don't want all wide receivers.
You know, you don't want all running backs, you don't
want all alignemen. You want a little bit of each.
And I think, you know, I think that football isn't
in a football roster is really a great analogy for

(12:38):
how you should build a portfolio. And you know, when
I look at my portfolio, it's you know, my personal
portfolio is definitely a little bit riskier than the average
person and especially our clients. But I do always look
at my portfolio to make sure that it's not full
of it's not full of you know, the Palenteers of
the world. There was a there was a there was

(13:00):
a team in Real Madrid. It was called the Galacticos.
It was in early two thousands and when they signed
they signed David Beckham, and they thought they were going
to be the best team in the world. They had
all these good players, they had, you know, probably five
of the top ten to fifteen players in the world,

(13:21):
and they really struggled. You know, they had Zadan, they
had Beckham, they had rinaldo you know they had Rabino,
all these great players, and it turns out that you know,
sometimes a team or you see these super teams. Now
you know Kevin Durant, Bradley Beal, Devin Booker, Oh they're
going to be great. But you know, I think you
need a team that mixes well together. I think that's
that's the same with a portfolio.

Speaker 2 (13:42):
You need someone in the trenches, you know what I mean.

Speaker 1 (13:44):
And and it is a good analogy. But then you say, well,
why it's totally different. Why can't I have all wide
receivers in my portfolio? Because your objective is to have
correlation to the underlying asset class. And generally speaking, when
you talk about the asset class, when you talk about stocks.

Speaker 2 (14:06):
You talk about equities. And I think, if you.

Speaker 1 (14:12):
If with relative confidence, if history is any guide whatsoever, whatsoever,
the S and P. Five hundred is not going to
lose money over the next twenty years. And yet the
majority of stocks are going to go down over those
twenty years. So what you want to do is have
a diversified portf you want to include index funds in
your portfolio, and you want to have a diversified portfolio

(14:35):
amongst different industries and different sized companies. So yes, we're
overweighted in information technology, overweighted in consumer discretionary, overweighted in
the communication services because those are basically technologically technological sectors.
But we are not overweighted to the extent that if

(14:59):
we're wrong, and obviously we have discretionary authority with our
clients accounts so we can make changes. We also are fiduciary,
so all those accounts are held at Charles Swabin Company
for the protection of our clients. But if we're wrong,
it's not going to compromise the client's financial picture. Yes,
we might underperform the S and P five hundred while

(15:19):
that period, while that period goes on, but over the
longer haul, it's not going to compromise their financial picture
because maybe it would be a you know, differentiation of
a couple points or whatever. But but if you are
in one section, I saw it. I saw it back
in the nineties, you know, and people tend to be
on the wrong side of a trade at the wrong time.

Speaker 2 (15:40):
You know. The people tend to have be way overweight.

Speaker 1 (15:42):
In technology, want of their way overweight in technology at
the top. Way are there when are people way underweighted
at the bottom because they get afraid. And I think
that's kind of what you want to why you need,
you know, to kind of continue with that same analogy.
Why you need a wide receiver, you need a quarterback,
you need you know, offensive line, defensive linemen, things like that.
You want to well round a portfolio to us to

(16:04):
construct an efficient, successful team.

Speaker 3 (16:08):
Yeah, and you know, I think that the the the
more techno technology evolves, you know, just from the time
I was working here to start to now, you know,
we have we have this Schwab alliance where you can
log on and you know, you can see your you
can see your you know account in real time. So
if the you know, if you see something happening like

(16:30):
you know whatever, you know, and now we're getting alerts
like for instance, sometimes my my mother in law will
get a notification that she uh that that something's happening
in the market, you know, and and she doesn't really
even file the market that closely.

Speaker 2 (16:47):
Yeah, you want that, you want that, she want that.

Speaker 3 (16:51):
But what I'm what I'm kind of getting at is,
you know, we're so in touch with how our portfolio
is doing that. You know, the more times you log
on when the market's not doing good, there's the more
chances you're gonna do the wrong thing at the wrong time. So,
like when we build a portfolio, there's this thing called
the sharp ratio, and it's a it's a measure to
you know, it's a metric to see how your returns are,

(17:14):
especially your risk risk adjusted returns, and what your standard
deviation is and what your volatility is. So let's say
your portfolio goes from you know, it is up one
hundred percent over five years, and you have two portfolios
up one hundred percent over five years. You know, you
wanna you wanna you want to invest in the portfolio
that has you know, the least amount of you know,

(17:37):
ups and downs. If this, if this was a graph,
you know, because those those major ups and downs, although
the return was the same over a long period of time,
are just instances that can make you do the wrong
thing at the wrong time. So you want that line
to be as as straight as possible, really up into
the up into the right obviously, But when you're building

(17:58):
a portfolio, especially in retire you know, it's really you
know it's not just even about that. It's not even
about returns. It's about you know, uh, you know, distributions
and and building a portfolio that you know, if the
market's down three percent in a day, you look, you
log under your account and you're happily surprised. Right, you know,
if the S and P is down three percent, right,
you log into your account. And if you have an

(18:19):
account that's just not all equities. You have alternative, alternative investments,
You have short term treasuries, you have you know, you
have bonds and the like. So you will you want
to log and and be happily surprised at that, you know.

Speaker 1 (18:32):
But I think if you're looking at your portfolio all
the time, like you were saying, I think you end
up uh you know, making too many changes and you know, paying.

Speaker 2 (18:41):
That price over the over the long haul.

Speaker 1 (18:43):
And you know that when you when you look at
the tax implications of that, you look at the being
off side with the market, that the implications of that,
you know, you end up with not really with the
well divided, well designed the portfolio.

Speaker 3 (18:57):
Yeah.

Speaker 2 (18:58):
So anyways, and.

Speaker 3 (19:00):
So I guess that brings us into the next thing
I was going to talk about is I have the Vanguard.
Vanguard Advised is Alpha guide to proactive behavioral coaching, and
it's you know, I think, as we were saying, a
lot of our jobs is is behavioral. You know, we
try to give people perspectives on you know, how much
you can take in retirement, what you should what you
should be comfortable with, what type of portfolio allocation that

(19:21):
you have. But you know, it basically has four different
modules and you know the first one is cost effective implementation.
That's what we really try to do is we try
to have now it's free to trade stocks, so you know,
we we try to buy individual stocks for people as
long as as well as very low cost ETFs to
build like a customized portfolio for the for our clients.

(19:43):
So you know, there's no hidden fees that that people
don't see. And now you know, when I started at
this job, I think it was five ninety nine per
trade and if if you were if you weren't paperless,
it was twelve ninety nine to trade. And now it's
free to trade. So now with the software we have,
we really try to you know, use our wy charts,
use you know, our our portfolio management system to build

(20:04):
a portfolio with with a lot of stocks and low
cost ets to to reduce the cost in people's portfolio
as well as have correlation to the S and P.
Five hundred. I don't know if you have anything else
to say. You know, it's kind of just a.

Speaker 1 (20:16):
Little well, I think, you know, if you look at
if you look at expenses, if you think if you're
you look at it as friction to performance. You know,
a frictionless environment is the most efficient in general in science.
It's the same with the market. The more expenses that
you add, you know, there it's gonna it's gonna impact

(20:39):
your performance. Now there is one of the that's one
of the things that's going to impact your performance. Other
things that's going to impact your performance is your your
ability to manage your own portfolio if you're doing it
on your own. Quite often it's like me, I'd rather
pay a doctor to operate on myself or use my
healthcare that operate out uh uh that and operate on myself.

(21:00):
So I'd rather pay a doctor for an operation or fix.

Speaker 2 (21:03):
My car or whatever.

Speaker 3 (21:04):
Yeah, yeah, change your oil.

Speaker 2 (21:05):
Yeah. I tell people that.

Speaker 1 (21:09):
You're in a boat. You're you're going, you're going down
the river. Whether you like it or not. Right, you're
in the boat, you know or you need you need
to someone's got to be at that rudder, and someone
who knows what they're doing has to be at that brudder.

Speaker 2 (21:21):
And there's a lot of people who.

Speaker 1 (21:22):
Can, you know, who can pilot their own boat and
those that people can manage their own money. There's a
lot of people who think they can and can't, and
there's a lot of people who can't. But there's a
lot of people who can and don't don't don't have
the temperament. There's a lot of people can and don't.

Speaker 2 (21:35):
Have the time. There's a lot of people who.

Speaker 1 (21:37):
Can and and and would rather fare it off to
somebody else, like moment your lawn or whatever. Because because
you know, when you get to be retiring and you
know there's no going back and you've got x hundred
thousand dollars saved up, you know you want to make
sure whoever is at that till tell her tell knows

(21:58):
what he or she is doing.

Speaker 3 (22:00):
Risk is just far too great, and is that what
you want to spend your time doing.

Speaker 1 (22:03):
You know, you've worked your whole life to create flexibility
in your lifestyle and to get to get where you
want to be, so you and or your partner slash
spouse whatever can enjoy that time.

Speaker 2 (22:14):
You know, maybe you retired sixty two.

Speaker 1 (22:15):
You might have fifteen good years left, you know, and
after that maybe you slow down a little bit. Maybe
maybe your partner gets sick, or maybe he or she
slows down a little bit. But you know, so that's
kind of what we try to do. And the way
answer the social security questions. We have the money Guide
pro will take care of when should I take Social Security?
You have the ultimate decision, But you know, what should
my asset allocation be? You know, let's talk about towerans

(22:38):
to risk all those things you want to partner.

Speaker 3 (22:41):
With as you get to be balancing and rebalance and
rebalance things like that. You know, I think because you
have the traditional sixty to forty portfolio in you know,
if that goes up to seventy thirty js down performance
when to rebalance things like that? And I think those
are all things we can you know, obviously help out
with or someone can help out with.

Speaker 1 (22:58):
And we're always can't, did you know, We're always candid
inasmuch that I think as you get older, just like
your doctor, and as you get successful, just like your CPA,
you know, you want a partner, and that's like someone
like Fagan Associates. You know, you want to partner as
you get into these important stages of your life, not

(23:19):
that they're well that important financially, but they become more
critical and urgent as you get older and accumulate more money.
You can't afford those mistakes and that that's kind of
what we what we do, you know. But anyways, so
that nice job.

Speaker 3 (23:34):
Thanks.

Speaker 2 (23:34):
I just sat here and basically blah blah, Yeah.

Speaker 3 (23:36):
You did a great job.

Speaker 2 (23:37):
Thank you very much.

Speaker 3 (23:38):
So, you know, second half, some things that we have
to talk about. Five years of spending in retirement. If
that's a good amount of time, thirty best Howard Marx
quotes fourteen financial approser Media the number one cost ten
principles for investment success.

Speaker 1 (23:54):
By now it's ten thirty on the station you depend
upon for news, weather and information, news talk A ten
on one O three one w g HY. Good morning,
Welcome back to the second half hour of the Capitol
District's Money and Investment program. You're listening to the Fagan
Financial Report. Dennis Fagan sitting here with my son Aaron
as we do every Sunday right here in news to
K ten and one O three one W G y talking

(24:16):
in the first half about just you know, kind of
talking football actually, but the analogies of diversification with investing,
like who you know and uh, we appreciate people listening
and uh look forward to the second half. This is
Aaron has I have nothing with me?

Speaker 3 (24:32):
And Aaron is uh, yeah, you know, this is a
So I think you want to just start or do
you know, is there anything that you want to talk about?

Speaker 2 (24:40):
How's your family?

Speaker 3 (24:40):
Pretty good?

Speaker 2 (24:41):
You good?

Speaker 1 (24:42):
Can't complain, you know at the two uh two lovely children.
Got twins in the family now, yeah, Sam's got twins, Yeah,
Finley and Milo.

Speaker 3 (24:51):
Yeah, great kids. They are good kids. And so are
the earth.

Speaker 2 (24:54):
It's all to the earth.

Speaker 3 (24:55):
Yeah, they are great kids.

Speaker 2 (24:57):
April twenty fifth, so.

Speaker 1 (25:00):
Yeah, of twenty twenty five, two months old today, yeah,
not two months old anyways.

Speaker 3 (25:07):
Yeah, So this was an interesting article by JP Morgan
Asset Management. It was three new spending surprises in retirement,
So it was just basically.

Speaker 2 (25:16):
Three new spending surprises in retirement.

Speaker 3 (25:18):
And how people spend their money. So you know, they
did a survey from two hundred and eighty thousand Chase
households and to expanded the twenty nineteen research that they did,
and it was three spending surprises, and it wasn't just
in retirement, but it was it was it was near retirement.
But you know, some things that stuck at when you know,

(25:39):
I just kind of want your your thought on this.
And then we uncovered a surprising new finding. More than
half of American households do not retire all that once,
if you count individuals working in retirement and spouse retiring
at different times. I thought that was interesting in that,
you know, it's always nice, especially the more or America

(26:01):
goes to the four to one K plan as opposed
to this pension plan, to like ease yourself into retirement.
And I think that can be done by not everyone
retiring all that once. You know, although it said it's
a surprise, I'm more surprised that half of people all
retire at once.

Speaker 1 (26:17):
I am too, you know, I am too, Yeah, because
I would think the vast majority of clients that we
meet with one retires at one time and another retires
at another for whatever reason, age differences.

Speaker 3 (26:32):
State workers, maybe they have to get to a certain
age to get benefits things like that.

Speaker 1 (26:36):
The other might be a non state worker, yeah, you know,
and state workers. You know, for those who have been
with the state a long time, they can retire a lot.
Younger teachers can retire fifty five. So maybe have one
spouse who was a teacher.

Speaker 3 (26:51):
Yeah, right, depending on how But what I thought it
was interesting is partially retired households tend to spend more
in the years preceding retirement and continue to spend more
host retirement then they're fully retired. Peers.

Speaker 2 (27:02):
I talk about that all the time.

Speaker 1 (27:04):
Yeah, you know that when you retire, if you can
keep your hand in the in the workforce, No, what
are you looking to do. You're looking to have the
money to do what you want to do, have the
time to do what you want to do, and have
the flexibility in your schedule.

Speaker 2 (27:19):
And those are the things.

Speaker 1 (27:20):
And obviously you want to be physically capable to do
what you want to do in retirement. So really, what
you're trying to do as you get older and I'm
sixty three, is carve out time for yourself to spend
doing the things you want to do and with the
people that you want to do that with that's the goal.

Speaker 2 (27:35):
I think.

Speaker 1 (27:35):
I think the cold Turkey, I think the retiring completely
for those of us that don't have a defined benefit
pension plan, you know, are probably a thing of the past,
and probably should be a thing of the past, because
I think a lot of studies show that those that
are kind of keep their hand in an active lifestyle,
including work, you know, tend tend to do better.

Speaker 3 (27:57):
Yeah, you know, I don't necessarcessarily disagree with that, but
you know, I do what I like about this job,
and you know, I think I think kind of what
you're saying too is a little bit by keeping your
hand in the workforce, it allows you to do other things,
spend more of your money. You know, there's a study

(28:19):
that says, you know, people with annuities tend to spend
more of their money with pensions, pensions spend more of
their monthly monthly money because they know what's coming. So
having that, you know, guaranteed income helps them spend more.
But I always, like, you know, I sometimes I feel
like the part I love about this job is giving
people the independence that they haven't had for thirty or
forty years.

Speaker 2 (28:39):
You know, what do you mean by that?

Speaker 3 (28:41):
Like having people retire and be able to do what
they want to do with their own time. You know,
you only get to live for, you know, statistically eighty years.
You know, I think that I look forward to, you know,
maybe you know, ten or fifteen years of my life
of doing, you know, kind of what I want to
do and finding finding yourself again after forty years of.

Speaker 1 (28:59):
You know, yeah, well you know also I would strong
and for the for this is just again. Sometimes you
just kind of ruminate about yeah, I know you like
that word, or think about the pond, ponder things, and
you know, I think people, yeah, you need a hobby, Yeah, work,
I don't. I don't know if you know, work can
be your hobby. I love working. I love what I do.

(29:20):
But I have other hobbies. I like the hike, I
like the garden. I like the cast. I never catch
any fish, like I started calling your casting now like
the cast.

Speaker 2 (29:30):
You know, like I like to have about putter around
like the real Like you have.

Speaker 3 (29:34):
A lot of hobbies.

Speaker 2 (29:35):
I spend time. I love spending time with my grandkids.
You know.

Speaker 3 (29:39):
When financial planning, a lot we meet with clients. And
there's that documentary it's about the five Blue Zones in
the world that have like an abnormal amount of super centurians,
and that's people for uh for a living, for living.

Speaker 2 (29:55):
People, animals, one hundred legs, the people that live to.

Speaker 3 (29:59):
A hundred in one hundred and ten or something. Centarians
are one hundred. So I think it's just centarians. But
there's one in California and it's it's actually retirement community
and they it's a community that one's community. But the
one that I find interesting and I think kind of
you're talking about is in Japan. There's this the community

(30:20):
that has this I think it's on Oaky now with
the island, but it's this concept of ekey guy and
it's this Japanese concept and it's it translates to a
reason for being and a reason to live. And I
think that's you know, important whether it be and you
see it sometimes in Italian communities where there's a lot
of shepherds, you know, they have this reason to tend
to other people, you know, and it kind of keeps

(30:42):
them alive. And you know, in Japan it's you know,
ikey reason, you know, a reason for being and this
can be you know, you know, gardening and keeping your
garden alive even work. You know, if you enjoy your work,
you know, keeping your you know, I think for us
a little bit, it would you know, being you know,
this duty we have to our clients, and you know,
I think the that we have to our clients, and

(31:02):
you know, there is a goal. You know, maybe there's
not there's not a hard end game, but there is this,
you know, you know, a soft finish line I guess
of retiring and be you know, being able to be
a little bit more free. And I think, you know,
just handling people's finances is you know, pretty it's a
pretty intimate, uh, you know job really and you know,
we really take it seriously obviously, and and we want to,

(31:24):
you know, help help these and I and I find it,
you know, you know, fun and rewarding helping people do
what they've wanted to do their whole life, whether it
be going to cruise to Alaska or spend more time
with their grandkids, or you know, we had a client
just by a camper and he's always wanted a camper
and it's kind of you know, it's it's fun to
live vicariously a little bit through people who have wanted
to do things for the last ten or fifteen years

(31:46):
that they finally get to do.

Speaker 1 (31:47):
And it's so satisfying that you help them get there. Yeah,
and take some of the worry and the burden off
their shoulder just because of our experience. I mean, you
help them through the tough times as well, you know,
help through the tough times financially, because the market obviously
goes down, you know, every three and a half years
or so, there's a bear market. You know, you know,

(32:08):
you helped try to help them through tough times with
you know, health of family members, a loss of a
loved one. What's the financial impact of that, Uh, you know,
in those things, and you know, you know, and from
my perspective, my plan. You know, I'm sixty three, I
get this question all the time. I plan on being
there for the rest of my life for the people

(32:30):
that I told them I would be there, you know,
not taking on many new clients.

Speaker 2 (32:35):
We have we have you for that.

Speaker 1 (32:36):
And then you know, Doug, you know eventually and uh
we'll keep building the team. But uh make sure that
you know that you know we're there, We're there for
the people. Then you said it that you know that uh,
you know, we we you know, kind of made a
commitment to.

Speaker 3 (32:51):
Yeah, and I think that you know, yeah, just going
on top of that, I guess not really, but you know,
continuing to talk about retirement and retire time and spending
and you I thought this was interesting, and this is
still the JP Morgan highlight in that you know, there's
a spending curve. Overall. Spending does not remain constant. It
peaks at midlife in declines with age, but spending categories

(33:13):
shift in relative importance over time. And I think that's
a really interesting concept. And we make a lot of
financial plans for people. You know, they say, what about inflation?
What about inflation retirement? What about inflation retirement? And you know,
you know, the bulk of your of your spending in
retirement is you're housing, including mortgage and taxes and the like.

(33:35):
And that's not really inflationary. No, No, it's actually deflationary,
you know, because your mortgage is actually the same, you know,
taxes can go up. Yeah, but I think it's important
to you know, if in this chart, you know, housing
and this is you know, I think we sent it

(33:55):
out in a chart of the week, No housing remains
constant from sixty to ninety five plus in a percentage
of your spending of your household. You know when I
thought that was actually really interesting in that you know,
a very very large percentage of your spending and household
being that.

Speaker 2 (34:15):
What do you mean like, what do you mean like a.

Speaker 3 (34:18):
Large percentage of your I guess monthly expenses is housing.

Speaker 1 (34:21):
Household housing even in retirement, because a lot of people
would have their house paid. Well, it would be your
largest anyways, because you.

Speaker 3 (34:28):
Have it's annual average household spending by age with estimated
assets of two hundred and fifty thousand, seven hundred and
fifty thousand.

Speaker 2 (34:35):
Does that have a number or a percentage?

Speaker 3 (34:37):
It has It has a percentage, and it looks like
thirty about thirty percent.

Speaker 2 (34:43):
That makes sense.

Speaker 3 (34:44):
Yeah, but it's still the largest chunk, followed by food
and beverage.

Speaker 2 (34:48):
That makes that makes that mine would be beverage, and
then but.

Speaker 3 (34:51):
That actually goes down and it's the only one that
actually remains constant. Well, that makes sense throughout your retirement
from sixty to tonight.

Speaker 2 (34:58):
Well, you got a figure.

Speaker 1 (34:59):
In general, most people who get into retirement don't have mortgages,
so that everything else would kind of remain constant as
a percentage of your income.

Speaker 2 (35:08):
Your utilities, school and property taxes.

Speaker 1 (35:11):
I mean they go up a bit, but so does
your income potentially with your Social Security bump of cost
a living adjustment, So that makes sense.

Speaker 3 (35:19):
In healthcare, you know, health care is out there. But
you know, what I was saying more is that in
retirement inflation is not as big of a worry. It
shouldn't worry as it is. You know, we see people
coming here and worry a lot about inflation, and you know,

(35:40):
in retirement, I think again, you know, as you said,
not as you said, but you know, there's it's almost
like a you know, an opposite of you know, maybe
inflation will go up, but as I was just saying,
you know, spending peaks at mid lifing goes down, so
they kind of cancel each other out. Spending goes down,
but inflation goes up. So you know, maybe you're watched.

Speaker 1 (36:02):
Yeah, and I think when you when you retire and
you have let's say you don't have a mortgage, meaning
that most of your income coming in is discretionary to
spend it where you want, as opposed to as you're
growing up, your kids need clothes, your you educate your children,
all the things that are kind of embedded into your lifestyle,

(36:23):
are inflationary And when you get to be retired, look
if chicken's expensive, you go to something else, you know,
and you.

Speaker 2 (36:30):
Live a little bit differently.

Speaker 1 (36:31):
And I think you and and and I think i's
either that article because they've seen that that we're study
actually that says average inflation in retirements about a percentage
lower than average inflation.

Speaker 3 (36:44):
You just took my next bullet point I was supposed
to leave with.

Speaker 2 (36:47):
How am I supposed to know?

Speaker 3 (36:48):
You just saw this?

Speaker 2 (36:49):
I didn't see.

Speaker 3 (36:51):
I'm sitting ten feet away from you and shaking my
head at you right now.

Speaker 1 (36:54):
Yeah, so so yeah, it's like steal trap up there.
So but anyways, moving right along. Another thing too, is
like you know, if you're sixty two or sixty three,
you know I said it earlier and it's not a negative,
And I say it's uncle Bill all the time. He's
always like on his birthday, always says to that when
I say how many good summers do we have left?
He just turned sixty to himself, I probably have eighteen

(37:15):
good summers left, you know what I mean? And that's true,
you know, so you know this this money people think
it's gotta last forever. It's gotta last for the rest
of your life. But sometimes I think people think it's forever.
Now you have charitable bequest, you stay planning, you have
money we want to leave to your kids. Perhaps, but
you know, I don't know. I just think it too

(37:38):
much is made of it. I can say this, and
I'm ninety nine point nine percent sure this is that good.
Anyone who we did plans for and started off taking
four or five percent a year from their account never
ran out of money, and they always ended up with
a lot more like if you start out with ten
or twelve percent, yeah, you could run out of money.
But historically, and we've been in business since nineteen eighty nine,

(38:01):
I can't ever remember anyone starting out with Okay, I'm
going to take four percent adjusted for inflation, because that's
the rule of thumb. It's been moving out of four
point seven percent. You know, you're you're bound to end
up with more money at eighty than when you retired
at sixty whatever. And my biggest fear for our clients
is that they end up at eighty they look back
with all this money. They lost a partner, they lost

(38:22):
the spouse, they lost their ability to do the things
they want to do, and they have this pile of
money that they can't do anything with.

Speaker 2 (38:28):
So it's your next bulleup.

Speaker 3 (38:29):
You know, I'll just read what you just said. But
it's as in fact, for partially and fully retired households
with investable assets of two hundred and fifty to seven
hundred and fifty grand, the annualized inflation adjusted change in
spending is just.

Speaker 2 (38:44):
How much is it?

Speaker 3 (38:45):
One point sixty five percent?

Speaker 2 (38:47):
Now I'm doing a dance. I'm doing a dance over here.

Speaker 3 (38:49):
This shift may be as much as one percentage point
lower for retirees in the overall inflation rate, even after
taking to account the increased inflation rate for healthcare increased
uses for healthcare at older ages. So I think that's
always important too, you know. I think that's just a
good statistic. This is a great study. It's done by
JP Morgan, you know, talks about volatility. But the but

(39:13):
the the what is the title three new spending Surprises
by Sharing Carson Retirement Strategies For JP Morgan, I.

Speaker 1 (39:20):
Think you've got a healthcare is a big nut. I mean,
I think that's one of the big fears. I hear
healthcare and I might need a new roof, but you
see healthcare quite often, and you've got to be able
to quantify those expenses to a certain extent. Know your
deductibles in your Medicare get the supplement. And then the

(39:40):
big issue really is long term care a custodia, long
term care, nursing home. You pay, you're on your own
after after one hundred days. Medicare picks up the first
hundred days. So that's the big fear when you go
into retirement. And if you can quantit. I think lots
of times when people cannot quantify the risk, they then
curtail their lifestyle well because they haven't been able to

(40:02):
quantify the risk, you know what I mean. But if
you can quantify it, if I say to you, okay,
even in a long term care these are the potential
scenarios for you die, become disabled, need long term care.
This is the downside risk to your portfolio, and this
is what you'll end up with, you know, potentially at
the end of your life, or this is what you'll

(40:23):
end up and at the end of your life or
passing along to your kids.

Speaker 2 (40:26):
If that's if that's a.

Speaker 1 (40:28):
Goal for you, so we are able to quantify that
for our clients so that so they feel more comfortable spending.

Speaker 2 (40:35):
I think that's a and you refer to it earlier.

Speaker 1 (40:37):
A lot of the reason people don't spend is fear
that they're going to run out of money in the future. Yeah,
and that you know, you know, absence, you know, and
you know, armageddon only comes once, and you've got to
be careful that you don't And what is what I
and the real armageddon people face is their own death.
Really push comes to shove at the end. That's your
arm ageddon. It's not going to be the end of

(40:59):
the world. You know.

Speaker 3 (41:00):
I think we you know, people also, you know, I'm
not trying to get our clients to spend all their
money either, but I think we live in a pretty
great area in that and we have great clients in that.
Just because they have the mind doesn't mean they're going
to spend the money.

Speaker 2 (41:14):
You cannot change your stripes.

Speaker 3 (41:15):
Yeah, exactly. And it's like, you know, just because.

Speaker 2 (41:19):
Look at what we're wearing.

Speaker 1 (41:20):
You know, I wear the same things pretty much every day,
you know, and so do you you know what I mean.
So it's like, you know, it's like you know, it's
all of a sudden, I'm not going to drive a big.

Speaker 3 (41:28):
Car or you know this Mercedes. You know that we
that we would never you know, buy anyway. And I
think a lot of people, I think a lot of
people you know around here, especially our clients, have you know,
that similar mindset and that you know, yeah, you know
I have X amount of dollars, but that doesn't mean,
you know, I can take four percent, but I don't
need it. Why would I take it? You know, I'd
rather save that and then every once in a while
spend ten grand on a big trip or something like.

Speaker 2 (41:49):
Well, that's that's the thing.

Speaker 1 (41:50):
That's you know, that is the thing though, because whatever
floats your boat, meaning that, yeah, I probably overspend going away.
Someone might say, it's listening to the show. Well I
don't go away. I like big cars. I like Mercedes.
That's then that's what where. I like a big house.
I love my house. I love entertaining. So whatever where

(42:11):
you should put your money is what makes you, what
adds incremental joy to your life?

Speaker 2 (42:17):
Your car?

Speaker 1 (42:18):
Fine, travel, fine, gardening, fine, big house?

Speaker 2 (42:22):
Fine?

Speaker 1 (42:23):
You know, but you know it did just read to
something from Ben Carlson said, keep it's the keeping up
with the Joneses that I think people at our age
kind of stop doing because they find that it doesn't
provide them happiness. What provides them happiness is putting money
where where it does provide happiness.

Speaker 2 (42:39):
Whatever.

Speaker 3 (42:40):
So last thing I got is ten principles for investment
success by Franklin Templeton, and I don't think we'll get
too all long.

Speaker 2 (42:48):
And we got about six minutes to go.

Speaker 3 (42:50):
It's down. The first one is keep an open mind.
Never adapt permanently any type of asset or at any
selection method. Try to stay flexible, open mind, and skeptical.
Long term top results are achieved only by changing from
popular to unpopular the types of securities you favor in
your methods of selection. And I think that's very obviously,

(43:11):
very important when you're investing in your own money. And
I think what we see a lot is if a
lot of people come in here, you know, and I
hate to use the word because it's not really that,
but people have you know, PTSD in quotations of something
that happened in their past that whether it be the
Great financial crisis, you know, the dot com boom that

(43:32):
you know, then they stay away from a specific asset
class for the rest of their life just because it burnt,
you know, you put your hand on the hot stove once.

Speaker 1 (43:40):
Or they got burnt from an investment from an advisor
or salesperson that didn't know what he or she was doing,
and they stand, Yeah, don't fight the last battle.

Speaker 2 (43:51):
Don't fight the ghosts.

Speaker 1 (43:52):
Of the the the financial crisis in LA that's that's
the rest, because that you don't hit your you don't
hit your horse to the wagon that that is appropriate
for you because something happened in your.

Speaker 2 (44:04):
Past that that that you know, emotionally prevents you from doing.
They got to fight that.

Speaker 3 (44:09):
You get that bad sequence of returns once in a while,
and just statistically, you know, if there's a you know,
there's a you know, twenty five percent chance when you
retire you get a bad sequence of returns, or you know, whenever,
you know, you get a poor sequence of returns that
you don't want to you know, let that define your
portfolio for the next five or ten years, because if
you look at you know, just how the market has
done since you know, the day before the financial crisis,

(44:31):
it's probably two hundred percent higher. Next one. Never follow
the crowd. If you buy the same security as other people,
you will have the same results as other people. It
is impossible to produce a superior performance unless you do
some something different from the majority. You know, And I
think we see that a lot nowadays. You know, if
you see, you know, we have you know a number
of clients that you know, if you see something being

(44:52):
talked about on CNBC, they're going to you know, all
of a sudden you see a purchase in their portfolio
that they did that is the same exact security, right.

Speaker 2 (44:59):
You know. And I think.

Speaker 1 (45:02):
From a from a perspective of never file the crowd
that I think is, I think you and expect superior performance.
I think lots of times for a lot of your portfolio.
You know, you don't want We spent the first step
of the show talking about correlation to the S and
P five hundred, the broader market index, and I think
you want that. You know, if nine the S and

(45:25):
P five hundred, let's say, has averaged nine or ten
percent over the past thirty or forty years, for that's
what you want, you know, to get thirteen or fourteen.
It's kind of you know, going on the north wing
going eighty or eighty five. You know, you might want
you could go seventy or seventy two, and that's kind
of what we try to do for clients. You have
that those funds that are correlated to the underlying asset class,

(45:46):
and you try to add a little incremental return. So
that's what you want to do. You're not going to
get quote unquote superior performance, but you don't want that,
you really, you know, this is not a game, this
is this is your financial life.

Speaker 2 (46:00):
So you want to make sure you end up where
you want to be in the most efficient way with
the least.

Speaker 1 (46:05):
Amount of risk, you know. So I mean that's kind
of in the most predictable way. Yeah, and for most
of us, you know, that's having a majority of your
money in the equity markets, in the bounce and bonds
number four.

Speaker 3 (46:17):
Number four, Everything changes. Markets are constantly moving, with share
prices going up and down in value on a regular basis.
A particular industry or type of security can be popular
with investors one minute, but fall out of favor the
next kin.

Speaker 2 (46:31):
Of the weather. Yeah up here, you know, I.

Speaker 3 (46:33):
Don't I don't really know how much more we have
to say in that, but you know, yeah, if you're
investing for your own money. You have to have, you know,
eyes on your portfolio at all times, because that's what
we do. You have to know the things that are
changing every single day. You have to know price points
that you say, hey, you know this stock didn't work

(46:53):
out the way I was supposed to be, or hey,
you know this has done what it's supposed to do,
maybe it's time to pair this back a little bit.

Speaker 1 (46:59):
I think that's a miss that people make, for sure.
And I think the other mistake people make is, oh
my mom worked at GE, my dad worked at GE.
I'm going to hang on to it because it worked
for them.

Speaker 3 (47:09):
Or people that work for specific companies. You know Regeneron, Yeah,
you know Regeneron for example. It's a great company. I
love working there. They treat me well. But you know
that doesn't always correlate into a good stock price.

Speaker 1 (47:21):
Right, Or and you should not have so much of
your assets in one particular stock that if something happens
to that stock that it alters your financial future.

Speaker 2 (47:31):
Right what else you got in there?

Speaker 3 (47:34):
Learn from your mistakes? This time is different are among
the most costly forwards in market history.

Speaker 2 (47:40):
I think.

Speaker 1 (47:40):
So we saw it back in the dot com error.
The other thing too is I think people make a mistake.
Is they they look for where the circles intersect and
say this market is like the last one, and it
prevents them from doing things. Yes, we are probably in
the early state, early first third, maybe first half of

(48:01):
an it over purchase, a bubble so to speak. Okay,
But but just because people might say we're in a bubble,
everything starts out as a bubble that you know, right
when you blow a piece of bubble gumin in it.
But so you just got to be careful that you
take advantages of things and don't be wary of it.

Speaker 2 (48:21):
And go from there.

Speaker 3 (48:22):
Yeah. I always know your asset allocation, you know. I
think you know if you have too much in one thing,
and you know, and for most of our clients you
know that that's just not the.

Speaker 2 (48:32):
We help them with that, you know. But anyways, that
I'll just about do it.

Speaker 1 (48:35):
Feel free to give us a call during the week
at five Poe eight two seven ninety four, check us
out on the webitfigure as that dot com, or like
us on Facebook.

Speaker 2 (48:42):
Great job, Eric, Thanks, it was nice for me to
just sit here. You did that great job.

Speaker 3 (48:45):
Thank you. Take care of me,