The Fagan Financial Report

August 10th, 2025.

Episode Transcript

Speaker 1 (00:00):
Good morning, and welcome to the Capital District's Money and
Investment program. You were listening to the Fagan Financial Report.
I'm Dennis Fagan, sitting here with my son Aaron, as
we do every Sunday right here in News Talk A
ten one oh three one w g WIS is being
recorded as quite often it is. It's Friday morning, about
ten o'clock. The market's opened up positively.

Speaker 2 (00:18):
It's been a decent week for the markets.

Speaker 1 (00:20):
On pitfalls on individual stocks, I think, and that seems
trade desk down twenty eight points, ELI Lillyot's worst staying
in twenty five years. I met at great earnings last week,
Microsoft's great earnings, and seems like a bifurcated market. And
the key is to really staying diverse, staying on track
with your goals is diversification. But first, how you doing air?

Speaker 3 (00:43):
Good?

Speaker 2 (00:44):
Yeah?

Speaker 3 (00:44):
Good, can't complain nice. You know we were talking a
little bit about that before the show. Is you know,
there's just been you know, ten fifteen to twenty percent
moves and a lot you know, mid cap stocks, large
cap stocks. But I was not trying to figure out
what it was with these quite major moves. But you know,

(01:05):
I guess the reasoning behind him. I know, we can
only speculate, but you know, I don't know. It seems
like maybe some retail trader, retail trading going on playing
earnings earnings aren't as good. Maybe some you know, algorithmic
trading behind it, but you know, not saying a lot
of these earnings have been great. But like Eli lillies,
weren't that bad, right, you know, down twelve thirteen percent,

(01:31):
So you know, I just think it's a kind of
sign of the times. Maybe some lighter volume in the
in the summer as well.

Speaker 2 (01:37):
You know.

Speaker 1 (01:37):
The other thing too, is I think if you look
at like a lily, you know, down you know, quite
precipitously from from its all time high, down sixteen percent
over the trailing year, and a year to day basis
the stocks down just about the same amount. Yeah, I
think it was latter GLP yes, you know, came out

(01:58):
decent earnings. And I don't want to get into individual securities.
We're trying to, uh, you know, kind of broaden that
out a little bit. But I think you know, what
can the investor do? You can' and what does what
does the investor do? When you know, something like an
Eli Lilly, which you know it uh came out with
with good earnings, good results from its uh it's.

Speaker 2 (02:22):
Weight loss drug.

Speaker 1 (02:24):
And I think that uh, they're they're looking at an
oral g LP drug. I think just maybe the lackluster forward. Look,
we don't own any any Eli Lilly of note anybody
any of it do we? We do own it was
brought in by clients with a very low cost basis.
But what do you what do you you know, what

(02:44):
do you when we have we do own fortnite? Fortnite
was down a big earlier in the week, you know
we but but you know, we rap pacing the market
this week with our common stocks, which shows up aid
the power of diversification.

Speaker 2 (02:55):
But b.

Speaker 1 (02:57):
You don't want to make and then it goes along
with the verse three. But with a company that you
know is volatile, you don't want to put too big
a percentage of your portfolio there.

Speaker 3 (03:07):
Yeah, And I think that for the majority of us,
you know, us included that you have you know, even
literally dropped on clinical results trial for you know, I
think it was phase three of one of their weight
loss drugs. I don't recall the name. It was one
of those GOP drugs and I think it was down
what fourteen percent on Wednesday, And I think that you know,

(03:28):
it comes and I don't know who said it, maybe
it was Peter Lynch, but like, yeah, I do think
you know, you have to you have to be diversified.
But I think you also have if you're in picking
individual stocks, you need to really invest in things that
you know, you know, and I don't think the majority
of us have have really the ability, especially in biotech.

(03:49):
Biotech is a hard, hard field in sector to value
if you're not you know, a biotech analyst. So I
think a good way to do that is, you know,
maybe use some ETFs and sectors that you like so
you don't get I guess thumped by uh by like
in Eli Lily that was a twelve or thirteen percent miss.

(04:12):
You know, I think there are some other you know,
uh you know, more larger pharmaceutical stocks. You know that
that might be a little bit you know, easy to
easier to value, like a Johnson and Johnson. But yeah,
biotech can be really tough if you don't know what you're.

Speaker 2 (04:25):
Doing exactly and volatile.

Speaker 1 (04:28):
Yeah, and you look at it, you look at a
company like Eli Lilly which is which is you know,
probably on the more aggressive of the pharmaceuticals. But but
it's been a tough go all across the board. You
look at Regeneron down substantially from its all time hie.
You look at Pfizer, you look at Merk. A lot
of it is due to President Trump and then putting
some pressure on the pricing of of of these companies.

Speaker 2 (04:51):
UH.

Speaker 1 (04:52):
Some do if you if you have like a Santo fee,
UH do to to proposed tariffs with foreign drug makers
bringing a pharmaceuticals into the United States. So there's a
variety of reasons why why Farmers down. We do have
a few former companies that we own, and we do
have a pharm of ETF the XLV that we own,

(05:15):
and I think by and large they have struggled. We
are underweighted in the pharma sector healthcare. We have seven
point eight eight percent of our common stock in healthcare.
SMP waiting as of the end of June is nine
point three two percent, So we have been underweighted there
and I think it's somewhat disappointing because I think also
I think when when you know getting into pharma stocks,

(05:38):
you know there we we and we still believe that
they do provide some insulation against what even at the
end of the year could have been considered a frauthy market.
But the tech, the tech juggernaut continues to roll on.
Tech communication services really and consumer discretion scenary continue to

(06:01):
roll on. And I think that's the that's been the
the the theme thus far this year in this market,
and there's no reason to believe it will change. So
so today and I know we're getting it into a
little late, we're already five or six minutes into the show.
I'm going to talk about, you know, some of our
largest sectors at the end of the the last quarter,
and also pallunteers earnings. Bank of England cut rates. That's

(06:23):
going to put a little pressure on chair Powell.

Speaker 2 (06:25):
Rates are falling. It's time.

Speaker 1 (06:26):
Is it's time to rethink your bond strategy. An article
by Amy Stone and we don't know if it is
credit card debt at an ear and all time high.
And then three or four articles and you touched on
something there. Maybe we can get into there. Iron Laws
of the Stock Market by Ben Carlson. When investing becomes
a gambling addiction. Four ways advisors can help advice pays
in peace of mind and time, Vanguard survey reveals, And

(06:50):
you brought up something that was a Ben Carlson article
a couple of years ago.

Speaker 3 (06:54):
Yeah, everyone is irrational, So you know, it's it's a
kind of a study done by this Chris Dawson. A
new research paper, while not that new, concluded that the
higher levels of financial optimism are associated with lower cognitive ability.
So I don't know how to how to really take that,
but you know, I mean the idea here is that
unrealistic optimism can lead to reckless behavior when it comes

(07:17):
to your finances. So you know, I think that's kind
of something you always have to be aware of, especially
when you're in a bull market, right, don'tfuse a bull
market with you know, being smart, I think is the
old adage on Wall Street. So you know, always kind
of being self aware and you know where we are,
where we think we're at in the market cycle, and
you know the level of optimism that you have, and
you know how that can be I guess swayed by uh,

(07:39):
you know, whatever you're watching on TV or reading.

Speaker 1 (07:43):
And I think you and why do we bring that
up now? Because I do think as as we as
we move higher and higher, and even in Pallenteer, which
is one of our largest holdings, which is up you know,
four or five points today right now, sits at you know,
over one eighty year to date, that stock is you know,
what's it up. It's up one hundred and it is.

Speaker 3 (08:04):
Up one hundred and forty three percent going into yesterday.
And you know they did have I mean, we can
just get right into their earnings. But you know, they
have revenue of over a billion dollars last quarter, you know,
forty eight percent year over year increase. You know, US
commercial revenue was up ninety three percent. US government revenue
grew fifty three percent. So on one hand, you could say, oh,

(08:25):
you know, do you really want to is it a
little bit nerve wrecking that I guess, you know, a
con of the company would be its dependency on government contracts,
but they're really building their commercial side as well. Their
technology is amazing. I've gone through it, and you know,
it's it just seems like one of those companies that
can kind of do no wrong. Evaluations are extremely stretched

(08:48):
here if you just look at you know, some some
historical metrics that we try to look at with companies.
You know, it's pd ratio is astronomics astronomical let's say. So, Yeah,
I think you have to be careful in around here.
And I think that's kind of what we've been telling clients, like,
you know, it's great that some people own it, you know,

(09:10):
some people you know don't for us because it is
such a risky stock. But you know, trading at six
hundred and twenty three times earning with price to sales
at one hundred and thirty seven times earning. So you know,
it's it's it's quite it is very expensive right now
on you know, on historic and.

Speaker 2 (09:31):
It's a competitive landscape. Yeah, yeah, you know, it's it's
it's uh, but.

Speaker 3 (09:34):
You know, I do. I would think on one hand,
you know, it's a I would say it's a good
thing that they have this recurring revenue with the Department
of Defense in the United States as well. And they
also have some you know, pretty strong leaders in like
Peter Teale and Alex Krp that have really you know,
quite quite the amount of connections with important people that
I think, you know, they they it's trading at a

(09:57):
premium for multiple reasons. You know, their technology, their lead
ship and they're you know, close affiliation with the US government.

Speaker 1 (10:05):
And the environment that we're in. I think four or
five years ago, this wouldn't have traded as such. It's
almost like an Amazon esque type stock that the earnings
aren't really mattering as much as much as the revenue
and the projected revenue, the forward guidance, and you know,
it's and also there's there's a silver bullet really seems
like with being closely related with the Trump administration almost

(10:28):
like and we saw that this week with the Apple Computer,
which is one of our largest holdings as well, I
think paleteers within the fourth or five fifth largest holdings,
but Apple Computer also cozying up related to the Trump
administration with Tim Cook, and it's paid off for the stock.
Just over the past you know, five trading days, the
stock is up eight percent as compared to a flat market.

(10:49):
And I think that's you know, it's you know a
little bit as a result of you know, Tim Cook
being at the White House, you know recently.

Speaker 2 (10:56):
But what do you broadening that out there?

Speaker 1 (10:58):
I mean bronning that out for for the show, you know,
and I want to get back to that the cognitive
of you know, you know, being people being overly optimistic
and what that really and how you have to be
careful of that, and then why we're bringing that up today.
You know, we do own I don't know, one hundred
and eighty three thousand shares of Palenteer, you know, Okay,

(11:20):
I think they have that.

Speaker 2 (11:20):
But at the end of at the end of June,
this is.

Speaker 1 (11:26):
Let me see here, at the end of June, for
the benefit of our clients, we owned one hundred and
ninety one thousand shares of Palenteer, and that's about probably
what we own now. I don't think we've been laid enough,
but I don't we haven't been buying a lot at
these levels.

Speaker 3 (11:41):
Either, No, And I think that's it's and I think
it kind of cut between a rock and a hard
place with this company, because when we did start start
buying it, you know, it was like, Okay, you know,
I do think that this can be in a trillion
dollar company one day, but I also didn't think that
you know, one year from now, out from then or
whenever we start.

Speaker 2 (12:02):
You were talking one day one day that.

Speaker 3 (12:05):
One hundred and forty three billion dollars. Now it's like, oh,
that's that's amazing, really you know, I was talking five
ten years from now. I was like, I think this
could be a great long term investment, and it's really
just gone parabolic and it's tough. I'm a financial management standpoint.
We did sell ten percent of people who owned it
who's owned it shares a few months ago because it's

(12:25):
just the right thing to do, right, you know, And
I think that's I guess kind of the theme of
this show really is, you know, talking about you know,
iron laws of the stock market and and you know,
when investing becomes gambling and all these things, and it's like,
you know, you try to take you try to do
the right thing even if it's not the most profitable
thing all the time, because it's just the right thing
to do. So what is the way he was trying

(12:46):
to do the most profitable thing, you know, that could
lead to you know, a disaster.

Speaker 1 (12:52):
So my opinion, the right thing to do, and pallunteer
and we to do it is look look at whether
it's a qualified or non quality fight account. Obviously, look
at the basis in a non qualified account, the percentage
of the account in I don't even know if.

Speaker 3 (13:05):
You do you really even look if it's a qualified
or non qualified account, right, ye, And I think that
went this parabolic. Do you think it's I don't know.
It's hard to say. You know, if you're over allocating
a stock and it's in a non qualified account, I'd
still pare it back.

Speaker 1 (13:24):
You know, but to the extent of which I guess
you would say, you know, and I'd want to know
the tax ramifications. I'm not going to take something with
a twenty you know, someone who's paid twenty dollars a
shaff of a penalteer and sell it at one to
eighty and generate a sixty or seventy thousand dollars. Although
you know, the other thing too is the capital gains
tax rates really don't change that much, you know, once
once you're over ninety some thousand dollars, they pretty much

(13:47):
stay at fifteen percent for quite some time, up to
about four or five hundred thousand dollars in in income.

Speaker 2 (13:55):
And I think that's one of the things that you
have to be aware of. It it's not as u
and it's not as.

Speaker 1 (14:01):
A steep of a scale as you'd have with personal
income taxes. Personal income taxes go from twelve to twenty
two about one hundred and thirty thousand filing jointly, and
then to twenty four percent of like one ninety six.
Then they go to thirty two percent. Capital gains tax
rates for all intents and purposes. Married filing jointly is
up to six hundred thousand dollars from nine From zero
to ninety six thousand dollars, you are to zero percent

(14:23):
capital gains tax rate, fifteen percent from ninety six thousand
to six hundred if you're married filing jointly, and forty
eight thousand to five hundred and thirty three thousand if
if you're filing single, and then they just go up
to twenty percent. So I understand, yeah, I agree to
a certain extent, but those are some consideration now if

(14:43):
it's a non qualified account too. I think if if
you sell Palnteer for one hundred and sixty dollars capital gain,
let's see you buy it for twenty and sell it
for oneint eighty, you're in the fifteen percent federal brack
and let's say five stages for for ease of matt
that leaves you with you will lose twenty eight percent
of your gain or twenty percent of one sixty or
thirty two dollars a share to the government. Those are

(15:04):
just some things that I would consider before I would
I would any amount of Palenteer I would buy or sell.

Speaker 2 (15:12):
You know, But I think you're right.

Speaker 1 (15:13):
I think, whether it's a qualified or non qualified account,
if it's time to trim, it's time to trim. It's
just I guess the amount I think I would take
taxes in the consideration for a non qualified account.

Speaker 3 (15:22):
And I think you always have to if you have comparisons.
You know, let's say if you look at the S
and P five hundred, for example, let's say put three
percent of your money in Palanteer at twenty right, I
can't do the math on top of my head. Maybe
maybe you can. But what would it be now treating
at you know, almost one ninety.

Speaker 2 (15:41):
You know, percentage the S and P per percentage.

Speaker 3 (15:43):
Of percentage of your account if it depends.

Speaker 1 (15:47):
So if you had three thousand dollars into it, and
now you have eighteen thousand dollars, it'd be eighteen percent
of your account if your accounts.

Speaker 3 (15:53):
Stayed constant, but point seven one percent of the SMP
five hundred.

Speaker 2 (15:57):
So on.

Speaker 3 (15:58):
What I'm getting at is, if you have four percent
of your money and Palenteer right now, you know you're
four hundred percent overweight, right right, right, So I think
you have to take into consideration, you know what.

Speaker 2 (16:09):
Four percent? No, you're right, I'm sorry.

Speaker 3 (16:11):
I think you have to take into account you know,
where you are at in regards to the to the
to the S and P as well. You know that's said.
It's kind of amazing that, you know, towards some slock
he's this chief economists of Hollow Asset Management is you
know again, you know, he came out with another chart

(16:32):
this week that there's just extreme concentration in the S
and P five hundred and it continues, and that makes
me a little bit nervous. You know, we have the
weight of so it looks like right now, yeah, yeah,
what you're saying, it looks like the weight of the

(16:52):
biggest stock of the SPF.

Speaker 1 (16:53):
The PE ratio it's about forty Yeah, you know, I
know I looked at the same thing, the same graph
you're looking at.

Speaker 2 (16:59):
You expected this the waiting.

Speaker 3 (17:00):
Of the Yeah, it's the PE ratio, right, but.

Speaker 1 (17:03):
It's not that the chart you're talking about. But it's
about forty percent, you know, and that's a lot. But
we could have had this conversation a year or two
years ago.

Speaker 3 (17:11):
Yeah, so it looks like fifty eight percent of it
looks like Nvidia's PE ratio makes up eight percent of
the PE ratios in the S and P five hundred,
which is the largest in a while, and it's it's
been Apple for a while, right, So yeah, you know,

(17:32):
I think, yeah, there's an extreme concentration. I think, you know,
when you have extreme concentration in the S and P
five hundred, like it's tough. You know, if you look
at some of these companies that came out with earnings.
McDonald's had good earnings, but you know, Meta, Microsoft, Apple, Google,
they all had great earnings and they're talking about spending

(17:54):
seventy five eighty five one hundred billion dollars a year
in CAPEC spending and artificial intelligence, and they're they're not
only the largest you know share of the S and
P five hundred, you know, top ten companies being about
forty percent, they're all having still great earnings opposed to expectations.
So it's like it's not easy as an investor. It's
like what to do, Like, you know, you don't want

(18:14):
to get fomo, but also like these companies are working
from a fundamental standpoint, so you know, it's it's it's
it's a tough situation to be in if you don't
own these companies and you're two diverse, like it's you
can probably feel the you know, feel them pulling you
in every single day if you're investing yourself and solidified portfolio.

Speaker 1 (18:34):
Yeah, well, I think you know one of the things
is that let me, let's try to find some companies
in ETFs and I think you know that are out
of technology, but that benefit from the AI, benefit from
the continued technological revolution, and but don't have the MAC seven,

(18:54):
don't have like the First Trust, the American Industrial Renaissance Fund.

Speaker 2 (18:58):
Right, you're to date. Now it's come on like a
house of fire.

Speaker 1 (19:01):
Up fourteen point ninety four percent the symbol and if
I just mentioned it as air, it's ep.

Speaker 3 (19:06):
Eleven percent over the six months. So it was kind
of flat tread and water for a bid the first
two months and then it really is kind of storn back.
At one point it was down.

Speaker 1 (19:15):
But they're in a lot of infrastructure bwx H. Robinson
aon Sterling infrastructure DI Coon companies like that rather than
and I think that's a good way to play through
Trump administration's intentions. It's a good way to get out
of technology. You know, our largest sectors that we own
are information technology, of financials, consumer discretionary, communication services. Those

(19:40):
are four largest weightings on individual stocks and they've worked
out well, almost forty percent in it versus thirty three
percent of the SMP, seventeen in financials versus fourteen in
the SMP, consumer discretionary eleven over ten, and communication services
fourteen over ten. So we are overweighted in the areas
that working. Some of the areas that were underrated in

(20:02):
but aren't working. Healthcare, healthcare industrials are working. We're underweighted there.
We've got to get more money there. Consumer stables are
underweighted doing not working. Energy we're a little overweight to
four percent of our assets versus threes S and P.
I don't know, I don't know about that sector, you know, Yeah,
it seems to be dead healthcare and energy seem to
be dead money both. I think we bought to try

(20:22):
to get to try to get adequate diversification. Would have
done much better in utilities and industrials over the first
six months. What do you think about the next six
months as far as as an allocasion.

Speaker 3 (20:33):
I still like energy, you know, I think it always
deserves a place in someone's portfolio. You know, the x
Ley which is I think fifty percent Chevron and Xcent
has a three point four percent dividend. You know, it
hasn't performed as well as as a lot of other sectors.
But I think these companies are you know, they're cash
cows and they have a lot of and they have

(20:57):
they have quite a large dividend in our very fairly priced.
So you know, I don't know. I think, especially even
with this administration, I think it's a I think it's
a good I think it's a good sector to own.

Speaker 2 (21:06):
Flat year to date, the SMP is probably up except
eight percent or so.

Speaker 3 (21:10):
Yeah, and you know that back around five percent in
the past month as well too, so and that's the
hard the past month, in the past week and a half,
so you know, it was just up five percent, you know.
So I don't know.

Speaker 1 (21:23):
I guess you know, there's one of you going to
say that that's the hard part. You know, how do
you get adequate diversification when you know you're kind of seating, well,
you hope you're seating some returns. Look, you know, if
you if your favorite stock is whatever it is, let's
say it's Apple, well anything other than Apple. Really you're saying,

(21:44):
I'm doing this for diversification. Yeah, you know what I mean,
which is smart, but it's all it's difficult to do.
And then when you get out of a sector that
you like, or any sectors that you like, you know,
you know, I think if you have four or five
overweights and four or five severe underweights and that's what
we have, I think you're doing the right thing. But
but you're always going to wake up a with some

(22:05):
issues and be with some disappointments.

Speaker 2 (22:08):
I think we were talking about that a.

Speaker 1 (22:09):
Little bit yesterday is we taped the radio show for
Down the Road with Doug and we were talking about that.
I remember you talking about that's you know, theverisfication is
always kind of being disappointed.

Speaker 3 (22:20):
Yeah, and you know, I think it's hard if you're
managing your own portfolio and looking at your own portfolio
every day to not sell the things that aren't working
and going to things that are working.

Speaker 2 (22:30):
Yeah.

Speaker 1 (22:32):
So yeah, So those are some of our overweights and
they've been working pretty well for us this year. On
the individual stock side, through the end of June, we had.

Speaker 2 (22:42):
About half of our assets there, so about.

Speaker 1 (22:44):
A little over four hundred million bucks that that is
on that side, and you know, we only got about
a minute left. And we don't want to get into
individual securities really, but you know, our largest larger largest
holdings of energy is Chevron Industrials, it's Boeing Consumer Discretionary, Amazon,
Low's consumer Staples. We really don't have a really big
allocation there, so we'll mention our largest healthcare Vertexts and

(23:06):
Jay and J And if you.

Speaker 3 (23:07):
Look at our largest stock allocation, it is, you know, technology,
our largest our largest holdings on the ETF side that
we've been buying our you know, we we'll actually we'll
talk about a little bit after the break, you know,
I know, we talk a lot about this, so you.

Speaker 1 (23:22):
Know, technology as well though on the on the got
some value on that side, So.

Speaker 2 (23:28):
We'll talk a little bit about.

Speaker 1 (23:29):
With the Bank of England cutting and I don't I
don't think is inflation dead, the job market was as
represented by last week's report, July came in below expectations,
and June and May were severely revised downward. And you
know that's usually one of the later shoes to drop.
But right now it's ten thirty on the station depend

(23:49):
upon for news, weather and information, News Talk A ten
on one o three one.

Speaker 2 (23:53):
W g Y.

Speaker 1 (23:54):
Good morning, and welcome back to the second half hour
of the Capital District's Money and Investment program. You're listening
to the Fagan financial report. I'm done Fagan, sitting here
with my son Aaron, as we do every Sunday right
here in news Talk Gate ten and one oh three
one w G Y.

Speaker 2 (24:05):
Talking a bit about.

Speaker 1 (24:07):
Uh, you know, I I guess so I would call
it a restraint with your portfolio, appropriate acid allocation, uh,
the ramifications of selling something from a tax perspective, you know,
you know, I don't know. I think also discipline, you
know you Aaron. And we haven't talked about gardening yet either.

Speaker 3 (24:28):
No, I don't have much to talk about. I'm in
the dog days of summer. I will like to say, though,
so a good friend of mine, Nick mahar and his
and his girlfriend Rachel Inglis. You know we we we
hired them and to help us build a garden next doore.
We talk about gardening all the time. We don't talk

(24:49):
about that garden next store. Yes, so they they you know,
they've been doing it all spring and summer, and you know,
they they bring the produce down to I think it's
oak awkward Punic Community Center, you know, and they donate
the vegetables. But he sent me, you know, he sent
me their their haul from yesterday. And I mean it's

(25:09):
a it's a good haul. It is a good peppers,
cherry tomatoes, regular tomatoes, heirloom tomatoes, cucumbers, zucchini, butternut squash, onions,
green garlic. So it's a it was a nice haul.
But what I what made me think of this is
I was gonna start talking about onions.

Speaker 1 (25:27):
I want to do onions next year. You know anything
about that? Yeah, I mean it's kind of like garlic,
you know. But onions you put into the spring in
the spring. Garlic you put it in the in the
in the fall.

Speaker 2 (25:38):
Oh yeah, they got some nice stuff. I don't I
have this stuff in my garden.

Speaker 3 (25:41):
You try to look you don't let nature take over.

Speaker 1 (25:46):
Oh my gosh, look at they got tons of stuff
in it and they don't even have the size. But
you know what I've done, it's just not big enough,
you know, not big enough. Put too much stuff in
my garden, like you know what I mean?

Speaker 3 (25:56):
I got you got so much stuff back there you
were away.

Speaker 2 (25:59):
I got more. I got more wado. Doesn't they do though.

Speaker 3 (26:03):
You're away, water your stuff. I was there for like
three hours and I'm trying to get to every plant.

Speaker 2 (26:07):
I don't see butternut squash, that's those are.

Speaker 3 (26:09):
Summer squash summers. I'm sorry, summer squatch thing. I see
some celery too, Yeah yeah, celery, Yeah, nice job. They
picked the celery to see how it was going because
you can't really sing, and it they like. It came
out well.

Speaker 1 (26:24):
So our intention is to continue to grow that garden
into a bigger, bigger garden, bigger, and try to continue
to give that food away, yeah you know, and go
from there because we like gardening.

Speaker 2 (26:39):
Yeah you know.

Speaker 1 (26:39):
And then you know, I don't know, but you're right.
How big was my butternut squash?

Speaker 3 (26:45):
Hugely? One of the should just take it on the
Scata Cooke Fair they have like the big vegetable. I
would win way off and.

Speaker 1 (26:52):
This was a big butter nut squash. I got a
few more back there. I'd have a few more.

Speaker 3 (26:56):
Have you e been eaten one yet?

Speaker 2 (26:57):
No?

Speaker 1 (26:57):
I think I might have picked it a little prematurely.
That one prematurely well, probably two feet tall, right.

Speaker 2 (27:03):
It's got to turn. Jude was trying to carry it around.
He can barely.

Speaker 1 (27:09):
It was almost it was two thirds of his height.
Oh it was probably up here, you know, but uh so,
you know. And then I got some tomatoes that aren't turning.
But you need cooler nights for tomatoes, like your pumpkins
are huge.

Speaker 2 (27:20):
I got the kids names and that which I love
to do.

Speaker 1 (27:23):
I've been doing it since Jude was born. His name
scabs over and his is already orange. But I'm not
going to give it a pake. I don't know if
I give it to you now, you know, before you.

Speaker 3 (27:31):
Go, And it makes me nervous, as if they do
sit in dirt when they're I don't. Yeah, I put
h you're a season pro.

Speaker 1 (27:40):
So anyways, I'm talking before the break a little bit.
You know about our asset allocation, so you know, I'm
comfortable if you're a client of ours. They're the all
of our clients council managed individually. So you know, some
people have Pound here, some people have Microsoft, Amazon, so
it's you know it all, but I think, yeah, most

(28:01):
of our clients are overweighting technology depending upon their objective.
We'll talk about the bond side and a little bit there.
But but I know I wanted you wanted to correct
something too. I said our largest holding was in ETFs
were technology, and that's not the case because we use
the use ETFs to kind of offset technology waiting. So
our largest domestic equity holdings on the ETF side, or

(28:23):
the S and P Dividend Aristocrat Fund, the symbols n OBL.

Speaker 3 (28:26):
One of our largest yeah.

Speaker 2 (28:28):
You know domestic equity is the IS Yeah.

Speaker 1 (28:32):
And then and then on the international side, what's our
largest holding there.

Speaker 3 (28:37):
I mean it's global, but Dow Global ets so it's
about fifty two forty eight USA to non USA. You
know some other ones that are up there, Schwab Broad Market,
jp I with JP Morgan Equity Income Fund. You know,
it's a great fund for people that are retired or

(28:58):
people that are just a little bit skeptical about the market.
Gives you a little bit of protection on the downside,
limitation on the upside, of protection on the downside. That's
actually our largest ETF on on the on the equity side.
You know some other ETFs that we do own, you
know a s CHD SCHWAB Dividend Equity E T F
C O w Z, PACER cash Cows JP Morgan US

(29:21):
Tech Leaders J T e K at five point seven million.

Speaker 2 (29:26):
Pacer cash Cows is down a little bit.

Speaker 3 (29:28):
This ship it is, which is surprising.

Speaker 1 (29:30):
Well, cash cows to me, implies consumer staples to be candidates. Yeah,
to see the largest and Nike, Johnson and Johnson Forge
was not consumer stable chevron. I mean you're looking at
cash generators in.

Speaker 3 (29:41):
Its largest largest sector's healthcare, right, you know, nineteen point
nine percent, followed by consumer cyclicals and technology technology at
seven point five nine percent. But if you look at
their holdings, their largest technology company is Cisco Systems at
two percent. And you know, Cisco Systems this year is
having a pretty good year actually, you know, twenty percent.

(30:04):
So it's a little surprising, I guess.

Speaker 1 (30:05):
But it's a dividend payer. Yeah, you know, one of
our lowriders CTFs. On the fixed income side, you know,
we do a lot with laddering treasuries. We do some
individual treasuries, We do US aggregate bond. The next simple
agg TCW Flexible Income.

Speaker 3 (30:25):
Et TCW Flexible Income ETF. TCW is a great company.
I think they're at a Los Angeles but it is
a you know, medium quality UH bond ETF and it's
a five point seventy three percent this year. So where
you're taking where you are taking risk on the bond
side for the most part this year, you are getting rewarded.

(30:46):
It's up about over a percent on the a g G,
which is a US aggregate bond index. Another one that
I think is good to pair with that is j
M s i X. It's a mutual fund JP Morgan
Income Fund and again it's a it's a multisector bond
ETF and it's up four point nine to nine percent
this year as opposed to the agg which is up
four point sixty three percent, So you know, you really

(31:07):
are you know, it's yield as five point nine percent too,
so five point nine to six percent. So you know
where you're taking where you're going out on the risk
spectrum on the bond side of your portfolio, are getting
rewarded this year. I think that'll continue, do you yeah? Yeah.

Speaker 1 (31:24):
Interestates have come down a little bit, the tenures come
down from four to fifty to four to twenty or
so shorter terms have come down on the belief that
the FED will cut in September. And I at this
point in time, if we were in September right now,
and I forget the exact dates when the FED meets,
I think they're gonna cut.

Speaker 2 (31:41):
I think they're gonna cut a quarter.

Speaker 3 (31:43):
Yeah, I mean they yeah, me too, I mean I
could I could see them cutting half a percentage point,
so fifty basis points. But you know, we did write
an article for the Chart of the Week this year
and it's a chart from Capitol Group. So I thought
it was interesting though, But so it has the average
average annualized five year forward return for bonds.

Speaker 2 (32:03):
Oh, this was very interesting.

Speaker 3 (32:04):
He was right, So, you know, average annual turn for bonds.
And this was taken on so on one two of
twenty twenty five. So this is a little old, but
it's it's still relevant. You know, when yields are between
four and five percent, historically, the average annualized five year
forward return is five point three percent per year, so

(32:25):
annualize that. So that's how bonds do in your portfolio.
So if you're looking at if if you know, if
it's between three and four percent, it goes down to
two point five, so it's almost cut in half. So,
you know, I think it's important while we're in this
range to really lock in some intermediate term rates. And

(32:47):
I think that's important for your portfolio. So I know
a lot of people were really excited when money market
accounts got up to that four or five almost five
percent that I think, you know, you have to always
be cognizant that that's not forever right your short term
if you do have some you have some money sitting
in some money market accounts or really short term funds,
you know, I think it's important to know, maybe get

(33:08):
some of those, you know, extend the duration of your
bonds on the fixed income side of your portfolio.

Speaker 2 (33:17):
You know.

Speaker 1 (33:17):
And that's a hard thing to understand. I speak with
clients a lot about that, and you almost don't see
that that maybe I'm not explaining it well, but you
don't see that light go on in their head as
to the reason why. I mean, they're thinking, well, well,
my my my money market's paying four or four and
a quarter four and a half, or my treasury, my

(33:39):
six month treasure is paying four to twenty You know,
why should I buy a five year treasury at three eighty?
And because what you're doing is adding predictability into your
stream of income. You know, if that four twenty goes
to two twenty in a year, if let's say the
economy slows down in the FED cuts, well, now what
do you do? Well, you can't just jump on now
a five your It'll no longer be three eighty, It'll

(34:02):
be two eighty or one eighty. And then I think
that's so so as you as you as you age,
if you're let's say sixty three, and you've got an
active life left, and we'd separate a differentiate between active
and passive retirement. If you've had an active retirement life
left of fifteen years, you can lock in five years
of predictability to your portfolio or a third of it

(34:24):
by having a five year treasury AD three point eight
or so. So you do want to add duration Aaron
mention that where to your portfolio or lengthen out the
maturity U as you could wake up one day with
you know, stuck where you were back in twenty twenty,
with having a lot of bonds with you know, not
not a lot of not a lot of yield to them, right,
So that's what really you know. The other thing, however,

(34:46):
you know in your your one of your favorite uh
pieces of information that we get is through Tors and
Slock and the chief economists at Apollo and you know
he you know, IM service sector and the price is
paid ticked up from I think sixty seven and a
half to sixty nine and a half. Yeah, it is,
I just I don't know. I think this is the normal.

(35:09):
I think we're in like a normal range, which is
kind of which is.

Speaker 3 (35:11):
Exactly why seven numbers I'm sorry.

Speaker 1 (35:14):
On the price is paid component, we're from sixty seven
and a half percent to sixty nine and a half percent,
which is high now sixty seven point five to sixty
nine point five now, but that that flies in that
the it flies in the face of those who thinks
that that interest rates are going to continue to go down.
Interest rates have come down recently on weak job numbers,

(35:36):
you know, and also kind of weak economic data in general,
or not great economic data. But then you you know,
you put said something which when interest rates are four
to five percent, your return is four to five percent,
which implies no capital gainer loss and implies you get
the coupon, which then implies that that's where interest rates
usually are the vast the majority of history. They spend

(36:00):
their time between four and five percent, and I think
that's where they're gonna stay.

Speaker 2 (36:03):
They may go down a bit.

Speaker 3 (36:05):
Now, yeah, yeah, I agree, you know, you know, I
do think I But at the same time, you don't
want to be wrong in not extending your duration alone
and being caught in a money market account when you could,
you know, maybe maybe that'll go down to three percent
when you could extend the duration, you know, the duration
a little bit if it's money that you don't need
with uh, you know, with intermediate turn bonds. Now, another

(36:28):
thing I thought was is really interesting. It's more you know,
I guess it would be you know what, speculation a
little bit on the reasoning, but you know, it's it
is other tours and slack. In two thousand and one,
people aged fifty five and aboved own fifty percent of
all US household assets. Today they own seventy percent. So

(36:50):
you know what I think is so interesting about is like,
you know, does that put a little bit of a
floor on the economy and these people are just going
to continue to spend you know, you could you could
say a lot of this is probably their eyes and
due to housing prices. But you know, even Block came
out this week or Square was it Square? Yeah? Square,
you know it's a services app and said, you know,

(37:12):
the there's healthy signs and real encouragement around the product
and key drivers of growth that have as accelerated. Goes
on to say that, you know, helped by a resilient
consumer spending. You know, with with thirteen thousand people turn
sixty five every day, on pensions, on social security, you know,
we're just going to continue to see this spending trend

(37:34):
in the economy. You know, Yeah, savings rates might go down,
but is that just because so many people are turning
sixty five and don't need to save as much money
as they used to. But they'll they'll continue to spend,
continue to go on those trips, on those cruises, on
those trips to Europe or whatever. So I think it's
it's I think just with data in general. And I
don't think you can take you know, even last week,

(37:56):
like one piece of jobs numbers data and think that
is all in compassing with with you know, how the
stock market will react, and not only that, the stock
market is not the economy either, you know. So it's
just I just think it's going to be an interesting
trend that we're going to continue to see. And you know,
maybe this discourse between you know, jobs numbers and spending, you.

Speaker 1 (38:20):
Know, and you you so you don't think there's gonna continue,
do you think? And and Uncle Chris said this, you know,
never never and a lot of people who said it,
but never doubt the American never bet against the American consumer.

Speaker 3 (38:30):
And that's kind of what I think. It's it's going
to be even more examp. You know. It's I think
we're just going to see that happening. And you know,
we could see some weak job numbers, but I think
that we're gonna still I think the consumer will still spend,
you know, especially on the services sector.

Speaker 1 (38:48):
Yeah, you know, you know, I don't doubt it. I
also think that that the the younger generation will probably
continue to be more impacted by AI than the older generation.
I think unemployments ticked up a bit for I think

(39:10):
those forty and under a lot more than those forty
and over.

Speaker 2 (39:14):
I think the wealth that's.

Speaker 1 (39:16):
Going to pass from the older generation to the younger
generation that we older people have benefited from, you know,
good economy, a good stock market. Of the past ten
or twelve years, market's average twelve or thirteen percent a year.
I think it's benefited from relatively low inflation over the
past two and a half decades. Houses that were smaller,
you know what I mean, things like that that I
think that that will pass along to the next generation. Now,

(39:40):
I think, how do you benefit from that? I think
housing looks decent here, I really do.

Speaker 2 (39:45):
I think. I think the housing market. I think, you know,
if you.

Speaker 3 (39:47):
Look at housing market, housing stocks.

Speaker 1 (39:49):
Housing stocks, Yeah, I think you know, housing stocks look
decent down in here, you know, like a KB home lows.

Speaker 2 (39:57):
We have a lot of lows, you know.

Speaker 3 (39:58):
I do think one. I do think if rates do
trend lower, mortgage rates, I do think that, you know,
just with I guess Trump's you know, tactics. I think
he will try to tackle the housing market on a
federal level, and I think that's I think I think
we do need that, you know. I think I think
we need some I don't know, I think we need

(40:21):
some consistency among regions in towns and and zonings that
you know, allow for more housing.

Speaker 1 (40:31):
There's two ways the government can change things tax and spending,
fiscal and monetary policy generally speaking, the administration and uh,
you know they tackle they they can tackle the fiscal side,
spend it or and they and they can tackle the
tax side.

Speaker 2 (40:46):
Maybe you get it.

Speaker 1 (40:47):
Maybe there's different tax structure for for new home buyers,
tax credits, uh, lower the down payment assistance from the government. Uh,
you know whatever, taking money out of your qualified plan
for a first house, it's more tax preference with you
right now can take it out without penalty, is under
certain circumstances. So all the things that you can do
like that that might benefit might benefit home buyers. But

(41:10):
you know that that is probably the biggest chink in
the American economy's armor right now would be the the
you know, the cost of housing if you.

Speaker 3 (41:19):
Think of the building, and you know, the inventory.

Speaker 2 (41:22):
Very low inventory.

Speaker 1 (41:24):
So what else you got for me on on this front?
And I was like, you know, we can go back
to I want to go back to that. Remembery, you
know those three or four articles that and and you
had mentioned one's cognitive ability and uh, Brighton advice pays
in peace of mind in time of Vanguard survey reveals.

(41:47):
And then I want to talk about when investing becomes
an addiction, and you know, you know, I what do
you think about the the is the wall of where
we're still there for stocks?

Speaker 2 (41:58):
You know, is market climbs the wall of where we
don't have a lot we.

Speaker 3 (42:02):
Have, but I mean I think there might be almost
like a yeah, is the market climbing a little bit
of a wall of optimism I think more than anything
right now is you know, I think that and the
miming the markets added near all time eyes. We just
had good earnings, you know, but we're still in the
spending phase of this artificial intelligence. So I'm a little

(42:23):
I'm a little bit nervous that we're a little bit
too optimistic on you know, artificial intelligence and and and
what will bring in the next you know, three to
six months.

Speaker 1 (42:32):
President Trump was a campaign and really deregulation and uh immigration,
and I think that he got the he got side
tracked with tariffs. I hope he doesn't get sidetracked again
because of my opinion. Uh that's what and I think
is pretty evident that that's what led the market down
through the beginning of April. He pivoted the market is
rallied back and he's you know, on shoring, near shoring, deregulation,

(42:56):
things like that that I think the uh and and
I'm showing bringing bringing jobs back, and I think you know,
we've been in favor of that and there, and I
know you specifically have mentioned them many times in the
past two or three years that you know, to recreate
the middle class is very important. So I think we
have that optimism in the market. I think you know,

(43:18):
And I also think that the typical calls are so
we manage our clients accounts on a discretionary basis. We
clear through schwabs, so fiduciarily people are protective. But you
always have a handful of people that you know, just
like any other business, you have a handful of people
that you know, you know have It's like the guy
who's who's in the who's in the garage when they're
getting their car fixed, you know, standing there watching over

(43:39):
the person fixed their fixed their engine. Web that's not
me and that's not you er, But there's always people
like that. But so so here's the question that are
people getting more like that now or are just our
same clients just being themselves as they've always been.

Speaker 3 (43:54):
I think it's I think it's the same. I think
it's the same clients has always been and I would
even say less. You know, the longer you have a
relationship with clients, the more they do tend to trust you.
I'm just thinking, I went off the top of my head.
That was when they first retired, called a lot, called
a lot, called a lot. Then then when they settle

(44:14):
into retirement and trust and know you and trust you
a little bit more, they kind of let their guard
down a little bit, tend to not look at their
portfolio every day and like really kind of get into
the swings of retirement.

Speaker 1 (44:27):
I do too, and it helps that it helps that
we get two pieces of information about him every weekend.
That's kind of what Vanguard found that advise clients, those
clients that have advisors are less financially stressed, according to
a survey that they did a survey entitled Emotional and
Time Value Advice. Greater peace of mind. That's one of

(44:49):
the benefits of having an advisor, whether they work with
a human financial advisor digital only advisor. Eighty six percent
of advisor investors report having more peace of mind related
to their finances as relata is result of the advice
number two few were negative and more positive emotions.

Speaker 3 (45:05):
Yeah, you know, I can just self too. Think of
how much less anxiety we have here when the market's
going up as opposed to when it's going down. You know,
I think that happens with everybody. You're a little bit
on edge when you don't have as much money, or
you're a little bit nervous about your financial security.

Speaker 1 (45:24):
Right, So you have somebody who's disconnected with the emotional
part of you managing your money to make the right choices,
and someone obviously experience time back for what matters. And
I think that's a big one that I don't know. Yeah,
I think that, I think I don't know. Let me
say that, I think up until two or three years ago,
you were you were worried that you know, that we

(45:47):
need to be ahead of the curve of your generation
being more and more of their own investors.

Speaker 2 (45:54):
And I was always the type.

Speaker 1 (45:56):
I've always thought maybe that am older that you know
to me time and I think maybe since you've had
a family, time is very important to you, you know
what I mean? So do you want to spend time
managing your portfolio? And I think the older and older
you get do you want to feel the negative emotions
of the market going down or do you want the
peace of mind? And then and the final reason why

(46:16):
you hire an advisor is time back for what matters.

Speaker 3 (46:19):
And do you want to spend multiple hours a week
doing this? And I think I'm even finding that now
with you know, friends and you know, I guess some
peers that have kind of reached out to me for
help that they just don't want to do this, you know,
they don't want to go through the mental stress of
doing this, not only doing this, but with the positiveibility
of being wrong. Like I think when you work with
an advisor, that's good. They give you your best shot

(46:43):
of of something working out, you know, whatever plan working out.
Sometimes you get a bad sequence of events. That's really
you can't control that. But I think, you know, working
with an advisor, you know yet really takes that you know,
mental stress of your finances off of you and you
give your best shout of getting where you want to go,
where you should be going.

Speaker 1 (47:03):
And the market. The longer you invest, the better chance
you have of making money. Something like ninety eight ninety
nine percent over a ten year trail, one hundred percent
over a twenty year trail. So what you've got to
do is avoid those emotional pitfalls. You know, hit your
hits your market, hit your portfolio up to the appropriate
asset classes relative to your tolerance to risk and objectives

(47:26):
and financial situation, and let the short term play out.

Speaker 2 (47:30):
Nothing.

Speaker 1 (47:30):
You know, nothing's more damaging to your long term uh
financial security then you know, watching CNBC all day and
trading like you know, like a banshee. So and you
know the last article, we really don't have time to
get into it. But you know, when investing becomes a
gaming addition by Cheryl monk Uh, you know, I think

(47:52):
one of the things you got to be careful of
that in this day and age where then you know
we're pulling the trigger is is literally just a click away.

Speaker 3 (47:59):
And I mean stock prices are a click away things
like this, So you know, I know it's part of
our job getting up and checking the futures and all that.
But if you're getting up checking the price of a
stock at three am or four am, and you know
it's taking over your life mentally, you know, maybe it's
time to play golf.

Speaker 1 (48:16):
Yeah, gett offer, but do some garden, you know, so
that'll just about do it for this show. I hope
you're enjoying this nice hot summer that we're having been dry.

Speaker 2 (48:25):
Uh and uh, that'll just about it.

Speaker 1 (48:27):
If you want to give us a call during the
week five one four, check us out on the webefagan
Asset dot com. Like us on Facebook. We've been in
business since nineteen eighty nine. We are from the Capitol District,
so we we clear through Schwab, so feel free to
give us a call.

Speaker 2 (48:41):
Take care,