The Fagan Financial Report

September 28th, 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 FAG and Financial Report.
I'm Dennis Fagan, sitting here with my son Aaron, as
we do every Sunday right here in News Talk Gay
ten one oh three one w G Why this is
actually being recorded on a Thursday morning, A gloomy Thursday morning.
But we need the gloom. We need the gloom, we
need the rain.

Speaker 2 (00:18):
It feels folly it, which is nice.

Speaker 1 (00:20):
I like that you have got your pool open.

Speaker 3 (00:23):
I do.

Speaker 1 (00:24):
You said there's more water on top than there is.

Speaker 2 (00:26):
Under the tons of water on top right now. Nice,
but you know, closing it soon nice.

Speaker 1 (00:33):
I was thinking. I was thinking a couple of things,
and a couple of things that I was thinking. One
is it's Sunday morning, so we know kind of where
the Mets stand. We don't need to right now. We
don't know now, but this is airing Sunday morning. I
wonder where we're gonna be right now.

Speaker 2 (00:46):
We're one out to my stomach like it's it's so
stressful because it's been stressful for the past month. And
you know, I know it's just a sport. But like
every night, I almost a sport. I almost just dread
the game. I was talking to my friends about It's
like like coincidentally, like three of my best friends are
Mets fans. Uh, so you know, we go to Mets games,

(01:06):
you talk about the Mets a lot. But like it's
it's bad because it's stressful, but it's good because it's
something to care about every night. It almost feels like
playoff Baseball already, you know, So that's kind of the
fun part about it.

Speaker 1 (01:17):
But then I don't think.

Speaker 2 (01:19):
I was like, you must be kidding me.

Speaker 1 (01:22):
Even if we get in, and I'm sure right now
we don't know if we're going to get in, like
we don't because it's this is recorded Thursday. But even
Sunday morning, you know, we're one game up on the
Reds and the Diamondbacks. We we did not have the tiebreaker,
you know, so what are you gonna do?

Speaker 2 (01:39):
Pirates? So it's Thursday, Pirates, Reds play at twelve forty today,
which is which is nice. So you get that out
of the way.

Speaker 1 (01:45):
But you've got a got a good some good things
going on. Eleven eleven butternut squash this year probably that's it. Well,
I gave a couple of I gave a couple of
why your son ruined one sitting on it and carrying
it around. You didn't make anything with it, though, Like
I'm letting cure. Oh okay, let a cure for well,
kind of like get hardened. The longer that they sit

(02:07):
the winter squash, the sweeter that they get. That's that's
this thing. And they can last up to a year
oh before you before you have to eat them. But
I've got to. I was, I was watching some YouTube
and I got to get my garlic in too. But
I'm running at me too. It hasn't come. But we're
getting late in the year. Yeah, I ordered some.

Speaker 2 (02:27):
I wanted to seed my lawn too. That's probably too late,
isn't it.

Speaker 1 (02:31):
No, no, no, you could see your lawn. I mean
just throw a seat on top of what takes takes
and a dozen, doesn't you know what I mean? And
you go from there. But anyways, so let's let's get
at a couple of things going on. We're gonna talk
about uh uh and did investors just witnessed FED chair
Jerome Powell's Alan Greenspan moment? Uh fed's interest rate cut
future outlook AI investment. Talk a little about gold this morning.

(02:55):
We haven't talked about gold and what are some other
options for gold? Old Talk a little bit about some
new housing. Our housing starts came out very positive, and
asking one question can help you know who to trust
with financial advice. A good article by any Nova a
couple of days ago. We'll talk a little bit about that.

(03:17):
But let's in in Vidia's investment and open AI. You
got Intel supposedly reaching out to Apple for an and
I'm surprised that that. Let's let's start off. Let's kick
off the show with that. You know, let me just
frame it for you, so to speak. You had, uh,
the federal government. Let's let's even go further back than that.

(03:40):
You had the Biden administration with the Chips Act going
to give billions of dollars to promote the chip industry home,
which we're on board with.

Speaker 3 (03:50):
Uh.

Speaker 1 (03:51):
We had after the President Trump was elected. We then
had a little bit of a change of tune, and
a couple months go, President Trump, the Trump administration said
we'll give Intel fifty ten billion dollars, but we're going
to take a ten percent stake in Intel. We're not
gonna have voting rights and we're not gonna be on

(04:12):
the board of directors. It's not common in the US.
The President said that why not, you know, why shouldn't
we get something back for this if it works. I
think the longer term issue is that it kind of
clouds the government's relationship with Intel. Clouds perhaps legislation that's

(04:33):
put forward it could could potentially favor Intel. Other countries
do it. Most other countries that do it are are
our right of center. So that's a very right of center.
So that's a bit of an issue.

Speaker 2 (04:48):
Yeah, and you know, it's it's just you know, I
would say it's kind of un American, right, and I
think that it I think what's going on a little
bit is is not doing the best for capitalism. You know,
in Brazil in the in the early twentieth century, you know,

(05:08):
they imported most of their cars in the twenty and thirty,
twenty and thirties, and then in you know, the thirties,
they had a new president come in and said, hey,
you know, we're not going to import any more cars.
They had high tariffs, high quotas, and what happened was
they pushed this you know, national program to create this
domestic car industry and what happened to what happened to
the cars. They became crap really in Brazil. In Brazil,

(05:30):
and then eventually, you know, they had this hyperinflation they had,
they reduced protectionism, and then you know, they start importing
cars again. And then consequently, you know, the Brazilian car
makers started to make better cars because they had to
compete with better cars. So you know, kind of what
I'm saying in a roundabout way is you know, propping
up businesses that you know, really haven't succeeded the way

(05:55):
they should, especially in this you know, technological economy that
we've had in the past ten years isn't good for
the future. Really, it's not good for innovation. It doesn't
spur innovation, it it I think it limits our our companies.
And I guess especially at a time when you see

(06:18):
you know, Ali Baba reporting fifty billion dollar investment in
AI and you know how many artificial intelligence engineers are
in China half of the world, right, So you know,
those are things that make me nervous for the United
States that's kind of built upon innovation in capitalism, but.

Speaker 1 (06:36):
We're basically a service economy. Those those those those services.
Really a lot of technology services. Communications services are not
driven by hardware, you know what I mean, They're driven
by engineering. They're driven by innovation in the lake and so.
But you can also you like in that too air
back in the UH back in the fifties and early

(06:58):
sixties when they're were most the vast majority of the
cars sold in America were made in America, but they
were not the quality of the then imports that started
coming in. Once the door opened to them, you know
that they got better. Gas mode competition.

Speaker 2 (07:17):
Breeds classic competition.

Speaker 3 (07:19):
You know.

Speaker 2 (07:19):
You it's even in sports. You know, sometimes you look
at you know, like a like a Class C team
or whatever, and you see a kidney's dominating. Then all
of a sudden, you know, he starts playing against the
bigger schools and it's like whoa, whoa wa. So, but
then after years and years, the kid gets better and
better and better because he's playing against better and better competitions. So,
you know, competition is healthy for you know, this this

(07:43):
global economy that way.

Speaker 1 (07:44):
But so is national security. And I think so is
national security. You know, I would have much rather have
seen this done through incentives, incentives, you know, tax abatements
whatever to bring this. Definitely, we have to bring this
industry home. You know, a huge chunk of the world
semi conductors are produced overseas right now and I think

(08:04):
it's seventy or eighty percent if not more, and a
lot of them by Taiwan Semiconductor. And you know, Taiwan.
You know who knows about regarding China's intentions with land,
the land, the country of Taiwan, the Taiwan. But so
we need to bring this home. It's just a matter

(08:25):
of how. And also like and you know, I think
the other thing too, is so if we bring this
back to Intel, so the government takes the stake in Intel,
and then you know, two or three weeks later in Vidia,
in Vidia is granted a license in China to do
business in China buy the US. It's still got to

(08:45):
be granted that license in China. But the government wants
fifteen percent of their revenue coming from China. So why
were they granted the license? Did they? Were they granted?
I thought we had security concerns, so they were granted.
And I know in Vidia's working around those concerns with
different types of chips in this and that. But it
just raises that question. And then in Nvidia takes and

(09:06):
we talked about this two weeks ago. I think, and
Vidia takes a five billion dollars, it gives Intel five
billion dollars who are closely with them for data center
and chip production. And now over the past couple of days,
Intel goes out to Apple and Apple doesn't even use
Intel chips, and he's looking for an investment from Apple,
and Tim Cook from Apple has seen is seen cozying
up to President trumple a bit. So I think the

(09:28):
mercantilistic type of arrangements are strictly transactional relationships between the
business and the administration just raises the specter of improprieties.
Not that the not that there are any, but it
just raises that specter. And I think that's not good
in the long run. And who knows if and one

(09:48):
that comes home through. Look, I'll be the first to
say that I thought the tariffs would come home to
roost by now President Trump seemed to have worked through
that up to date, you know, much more efficiently.

Speaker 3 (10:01):
Uh.

Speaker 1 (10:01):
And the and the stock markets reflective reflecting it. So
maybe this this concern will prove unfounded as well. But
that just as someone who you know, a company that
manages you know, nine hundred million dollars. You know, we
look at that what.

Speaker 2 (10:13):
You're looking at, and you know, I think and with history,
you look at things that you know, maybe it doesn't
repeat that, but it rhymes, isn't that they're Twain quotes.
So you know, we look at we try to look
at things that are going on now and things that
happened in the past and and drop parallels to them.
So you know, we're not saying that it can't work out.
We're just saying that it hasn't worked out in the
past historically.

Speaker 1 (10:33):
Right. So yeah, anyways, so we've got that. But but
getting back to to UH or not getting back that,
did investors just witnessed FED charge their own pals as
a rational xuberance moment and uh Edyard Denny is the
one who said something like that, And we use that
this past week for our chart talk and it is

(10:54):
interesting because there's been talking. I will go talk a
little bit about what FED chair Powell said. Fed Cherre
Powell said he was speaking before the Greater Providence Wrote
Island Chamber of Commerce this past earlier this week, and
he was saying by many measures. For example, equity prices
are fairly highly valued. And then people said, well, geez,

(11:16):
that that sounds a little bit like the December fifth,
nineteen ninety six quote from Alan Greenspan when he was
he had a speech entitled the Challenges of Central Banking
in a Democratic Society, and he posed the question, but
how do we know when irrational exuberance has unduly escalated

(11:38):
asset values? Now, even a bubble that you're blowing your
mouth is a bubble, so eventually it bursts. So keep
that in mind, and also keep in mind that even
after Chare green Span said this on December fifth and
nineteen ninety six, the Nasdaq went on to average forty

(12:01):
five percent a year through the close of nineteen ninety
nine before dropping from five thousand to one thousand and
then ultimately, you know, by the end of and then
it recovered a little bit by the but by the
end of two thousand and two, the Nasdaq had dropped
sixty seven percent. What do you make of any of that?

(12:21):
Or is there is there nothing to be made of that?
You know?

Speaker 2 (12:26):
What I think is that, you know, if most of
our clients that we're talking to are retired or nearing retirement.
I just don't think for the most part, you know, yeah,
I think that the market can can run up a
little bit more and a little bit more. I think
large cap tech is still I don't.

Speaker 3 (12:43):
I don't.

Speaker 2 (12:44):
I wouldn't consider it fairly overvalued. I think it's it's
fairly valued. Actually. But I think if you look at
companies like IOANQ that are in quantum computing, you have
twenty one billion dollar market cap companies with forty million
dollars of revenue. So you know, if you have a
portfolio that's full of those, you know, you could be
you could get in some trouble, right like Ochlow as

(13:06):
another one that is, you know, fission reactors, you know,
has a nineteen billion dollar market cap and it has
zero no revenue.

Speaker 3 (13:13):
You know.

Speaker 2 (13:13):
So I think those are some things that you really
have to, uh, you know, take a look at and essentially,
if you're buying those companies now, if you're buying those
companies now, and there's a significant part of your portfolio
and it's not just you know, play around money, that
it's essentially kind of gambling that you hope that this
goes up before it goes down, because it's going to
go down eventually, you know, I just don't think. I

(13:38):
I just think right now it's not the time to
invest in a lot of those companies.

Speaker 1 (13:44):
It's purely momentum.

Speaker 2 (13:45):
Yeah, I think the problem to know when to get in,
you got to know when to get out, or know
whe to hold them, or know when you know, Okay,
this is one percent of my portfolio and I'm going
to keep this in here for ten years and if
it doesn't work out, my life won't change.

Speaker 1 (13:58):
Well, even like ten percent of someone's portfolio, you just
can't you know what I mean, having having a ten
percent and ten percent elett And.

Speaker 2 (14:07):
It all depends on I think, how much money you have,
how much money you need. You know, if you have
if you have a million bucks and you need fifty
grand a year from your portfolio, then I wouldn't say
put five percent. But if you have a million bucks
and you need twenty grand from your portfolio at two
percent distribution rate, yeah, maybe you know five percent wouldn't hurt.

Speaker 3 (14:27):
Well.

Speaker 1 (14:27):
The other thing, too, is the more the stock market
goes up, the more people take time and consider it
a hobby, you know what I mean. And the problem
with that is is that those people tend to like
there are points in time then excuse me it maybe
this year where I fad someone say to me, you know,

(14:49):
this is not about money that we manage. But I
did better than my advisor, you know what I mean. Yeah,
And perhaps there's people out there that have their own
portfolio that have done better than us. But that is
that in lots of times, that's not an indication of
what the job we've done. It's an indication of that
it's a retail driven environment right now, and it's getting frothy.

(15:09):
And I think when you see you mentioned Iowa and
q you could you could uh list a slate of
other companies. When you see these things, you know, take
off without the supporting type of fundamentals, it does remind
me of the late nineties.

Speaker 2 (15:26):
Really, Yeah, and I think that, you know, I think
that you can be right, so like, you know, we
can be an artificial intelligence revolution. Like if you were
if it was nineteen ninety seven, in nineteen ninety six
and you're like the Internet's going to take over the world,
you were right, you were right, But that doesn't mean
that you know, the qqqs weren't down Essentially, eighty percent, right,

(15:47):
you know, So if you have too much of your
portfolio in that, and you know, and it took Microsoft
sixteen years to get back to where it was. Let's
say you're sixty, so it took you from sixty to
seventy six, you know, to get your mind with no dibat,
you know. So you know, you just have to structure
a portfolio correctly, so you know, if you're wrong, you know,

(16:07):
you don't got to go back to work.

Speaker 3 (16:09):
Now.

Speaker 1 (16:09):
The only stock I guess I would be worried about
in that that we have would really would be Palenteer,
very very richly valued, you know.

Speaker 2 (16:15):
Oracle a little bit. I think Oracle is a little
bit priced for perfection right now.

Speaker 1 (16:19):
It is, But there's a difference in in that stock
versus a versus a Palenteer, or even versus the stocks
coming out of the nineties, many of which don't exist anymore.
You know, a vertical net and CMGI and I can
name Nortel Networks, and there was an even like a Corning,
which is, you know, come back this year. But I

(16:42):
think Corning is probably just approaching it's it's a maybe
it's a twenty year high or whatever. Corning right now
is what it's seventy nine or so, you know Corning. Yeah,
Corning is just right now approaching its high set in
two thousand and They did the fiber optics for the Internet,
you know, back in the late nineties and early two

(17:03):
thousand and now they're doing glass for other things. But
my point is that those were those weren't even real companies.
Those are the ion q's that really suffered Amazon was
the ion q. Amazon was earning little money and trading
at very very lofty valuations, and it did turn into something.
There's a lot of companies that that basically went bankrupt.

(17:25):
So I don't think the Microsoft's in the Oracle. Yeah,
they may go down, Oracle may go down twenty or
thirty percent, but it's not It's gonna be around and
it's gonna be part of the AI revolution.

Speaker 2 (17:36):
And I do believe that like a company like core
Weave is going to be around. Yes, you know, but
it's just where you know, with a sixty six billion
dollar market cap and uh, you know, one point nine
billion dollars in revenue. What I'm saying. What I'm saying
more is, you know, these companies can pull back a
lot more than like the Microsoft's and Apples of the world.
And if you have too many of your portfolios in those,

(17:58):
you know, know, just be cognizant of that.

Speaker 1 (18:01):
And for full disclosure, I own a little bit of
core Weave for myself and mom, And I think, so,
what's my approach with Kreweve? You nibble at it if
it goes down. I agree it's gonna be around, so
you nibble at it. If it goes down, you nibble
at it again, nibble out again. Why don't we own
any for clients because we don't need that volatility and
portfolios at this point because of other other investments that

(18:21):
we have in those portfolios. So so share a green spin.
We concluded that article by many, like in these comments
by Pole with the comments that we mentioned fairly highly
valued to green Span, who said unduly escalated asset value
is irrational exuberance the irrational exuberance comment. At this time,
like green Span, we also believe that eventually Powell's call

(18:44):
will be correct but premature. It's premature as well. And
I think that's the thing. I think the call, you know,
it's probably gonna be premature, like like the bubble piece
of gum. You blow a bubble in your mouth, it's
always a bubble, but I don't think it's at a
point where it's kind of burst. And we had corrections.
In nineteen ninety eight, I think there was an Asian

(19:06):
currency crisis. We were on vacation. You probably don't remember it,
the Asian currency crisis all, do you remember vacation? And
the market went down. I think it was twenty percent
in a month. Maybe it was ninety nine that we
were on vacation. But so and and then these stocks
will get hit.

Speaker 3 (19:21):
But I look at.

Speaker 2 (19:22):
Like the you know, the there's a a mag seventy
T m ags. It has a four P ratio of thirty.
That's high historically to the S and P five hundred,
but that's not astronomically high. So you know, what I'm
kind of saying is like, you know, the companies that
are the biggest parts of the S and P five hundred,
you know, it might be a little bit overvalue, but
they're not grossly overvalued. And they and they're they're earning

(19:44):
revenue in these sect they're earning revenue, you know, in
sectors that might be a little bit frothy, but they
have revue, they have current revenue already as well. You know,
they have advertisement revenue, they have YouTube revenue, they have
you know, they have their date, their cloud revenue. So
you know, yeah, I think that you can always be
in for a five ten percent pullback, but I just

(20:04):
don't think we're there yet when it comes to the
bubble bursting, right, you know, there was.

Speaker 1 (20:14):
One thing I guess raised, not costs for concern, but
was you know, I heard some naysayers and off is
in Vidia's investment in open ai. I think it's one
hundred billion dollars in cash. Jamie's Zakalik, she's an analyst
at Newberg. Berman raised the point that I think we've

(20:34):
heard a lot and then we will raise the circular
nature of this deal. Goosing up everyone's earnings and everyone's
numbers is a cost for concern. So you know in
Vidia's investment in open ai, you know, it is almost
like giving them a bump, and maybe that bump will
be you know, before really they before the demand is there, right, Yeah,

(20:56):
And also you know it's kind of like, you know,
why does an open AI go out in the open market?
And and kind of so so is Nvidia kind of
propping up demand artificially by this by this by it's
almost like a you know, a loan. It's not alone,
but it's it's it's an investment, but it's so it's uh,

(21:18):
you know, it's almost like circular as as Jamie says
in Nature, And I.

Speaker 2 (21:23):
Think it's something similar happened with Cisco. Cisco was investing
in companies like this in the dot com bubble, and
I forget the name of the companies, but something similar
happened that they were investing in companies they were seeing
it's something that's so good, and now these companies aren't
around anymore. I'm not saying that's going to happen to
open AI, but right yeah, that was my phone.

Speaker 1 (21:44):
Sam's calling me and can't do that right now doing
the doing the radio show. So anyways, what else we
got going on? Gold? You know, we we we don't
touch on gold that often. Gold's at a record. We
haven't really owned gold. We've we've youually invest and we
haven't even know gold miners or our investments in that

(22:04):
area have to a certain STENTP and crypto and they've
done very well. The second component of that would be
commodity based investments, and we've opted more for reshoring and
on shoring than gold, and that's done well. And I
think at this level, you know, thirty eight thirty nine
hundred bucks an ounce, it still keeps going up despite

(22:27):
pretty much the lackluster environment, economic environment that we're in,
an inflationary environment, and you know, you kind of wonder
if it's it's still going to continue to perform. Yeah,
and you know, I I don't.

Speaker 2 (22:42):
Think it's I still don't think it would be a
bad investment here.

Speaker 1 (22:45):
Yeah, you know, what do you think in you know,
in in in moderation, I think I think if we
take a look at it, you know, I don't know,
if it pulls back, I would say, you know, I
don't you know, at all time highs, I think you know,
you know, you know it's it's run up is you know,
it's based upon lower interest rates, value of the dollars,

(23:07):
in the value of the dollars, So I think, you know,
that story is kind of still intact with you know,
the government debt and the dollar.

Speaker 2 (23:13):
I think great Dalla would just called wa Dalla has
been calling for gold for a long long time. But
you know, I think that story is still intact, and
I think, yeah, five percent allocation to gold is isn't
a bad idea. If there's something you invest in.

Speaker 1 (23:26):
With the Spider gold Shares g l d's a symbol,
it's got expense ratio of point four percent. It's got
no dividend. You know. You can also play it with
and how we have played it with our clients. We
have had clients who called in. We have purchased from
the Van neck O U n Z, you know, and
that's has an expense ratio of point two five percent.
There's a couple of things going on right now. It's

(23:47):
ten thirty. Dug Keynotes will be joining us in the
second half hour and uh Doug's been with us a
year and we'll talk to him a little bit. But
it's ten thirty on the station depend upon for news,
weather and information News ten on one O three one
w G Y. Good morning, Welcome back to the second
half hour of the Capital District's Money and an Investment program.
You're listening to the Fagan financial report of Dennis Fagan.

(24:08):
Sitting here with my son Aaron, and got Doug Keyenholtz
is sitting in with us. Doug's been with us about
a year. He's got ten years of investment experience. Uh
does a lot of planning work for us. And Uh,
given the nature of the topics the second half, oire,
we thought we'd we would include Doug. He gave each
Airon and I one hundred bucks to be on. He
thinks he's a popular edition. So appreciate that.

Speaker 4 (24:29):
There's been a there's been a clamor in the community,
Bush clamor in the community. For for my reappearance on
this this.

Speaker 1 (24:35):
Program, Keyenholts Famley sitting around the fireplace.

Speaker 3 (24:39):
Got to give the people what they want.

Speaker 1 (24:40):
Ellie, sit down.

Speaker 2 (24:43):
Thank Thank Gott Conner in the other day he was
he was investing, right, your son, he does.

Speaker 3 (24:50):
Yeah, he has Uh, he's shown an interest.

Speaker 4 (24:52):
He's a he's a fifth grader and he has shown
an interest in in the stock market and investing.

Speaker 3 (24:56):
So you know, we've got a little uh little him.

Speaker 4 (25:00):
Yeah, we we we We gave him somewhat of a
hypothetical amount of money.

Speaker 3 (25:05):
He picked five stocks. But he did it. He really
took it seriously. He did. He sat down, he made
a chart, he had some choices.

Speaker 4 (25:10):
He it was a good math exercise for him to
figure out what one share of each.

Speaker 1 (25:14):
Stock important stock city going?

Speaker 4 (25:17):
Uh, so we have we have one share where Tesla
and some Tesla was killing Yeah, some rollblocks, which is
very big in the in the fifth fifth or fifth
grade set.

Speaker 3 (25:29):
New York Times, good year.

Speaker 4 (25:32):
I think we have one share of Amazon, I mean
one share at Google as well.

Speaker 1 (25:35):
So he didn't go with didn't go with Dell and
sold it.

Speaker 4 (25:39):
Maybe he has dellan not Amazon. I forget now because
he had he had three different, three different he's done
well with Tesla.

Speaker 2 (25:47):
Does he know it's too because he bought Google before?

Speaker 1 (25:50):
Uh? Yeah, I don't think kind of knows.

Speaker 5 (25:52):
It's hypothetical though, I think so what our deal with
him is, so we we actually bought the stocks, and
our deal is is that I said, well, reevaluate after
three months and whatever profit is there, I'll share with
him fifty to fifty since I put up the money
for him and he but I will give him half
the half the profits.

Speaker 4 (26:11):
Yeah, but he's already talking about reinvesting. He's like, I
don't think I want I think I want to sell
this and buy that. So, you know, give him another
By six grade, he's gonna be a detriator. We're gonna
be he's gonna be me calling every morning being like
give her to this, do that.

Speaker 2 (26:23):
You know, well, stock broker.

Speaker 1 (26:25):
It's a good lesson for him, it's a great lesson,
and and for the for the listeners out there, you know,
it's it's a it's a good lesson if you have
children now fifteen, fourteen, ten five, you know.

Speaker 4 (26:35):
Yeah, I don't know, did you Aaron when you I
don't think that our school had like an investment club,
but I know now we didn't do that where that
you can get like the hypothetical pickstocks and stuff like that.
I think that would be they can just he can
start that out the elementary school level, and you know,
I wait till high school, in middle school.

Speaker 2 (26:49):
And you know, it's funny that you say that because
I remember I went to I was in college between
two thousand and seven and twenty eleven, so during the
good the Great Financial Crisis really, so I remember finance
becoming cool around that time. Like there's a lot of
finance majors, as stock market is becoming cool bitcoin. So

(27:10):
it's interesting that like I grew I didn't grow up
with like the stock market in your face, Like I
think a lot of kids are much more you know, bitcoin,
they know about stocks now, So I think it's a
I think it's a you know, great lesson for Connor
to have, because like the most powerful thing you can
do is compound your money. Right, So it's like, you know,

(27:30):
performance matters to a certain extent, but you know, dollar
cost savaging and saving and realizing the earliest you can
to have good habits, you know, without really you know,
when we have clients come in here and their kids
come in here, and you know, some are obsessed with
saving and some don't like to save it all, it's like,
all right, you're only twenty once. How do you bounce
only being twenty once with getting in good habits? Like

(27:51):
you know, put an x amount in your rowth iry every.

Speaker 1 (27:54):
Month or so if you think of about it, if
you if money doubles once every seven years a ten percent,
and if you're let's say you graduate from college at
twenty two, if you don't do anything till you're twenty nine,
you you're missing out in that last double. Yeah, so
maybe from five hundred thousand dollars to a million or
whatever the case may be, so that that's that's what
you're missing out on you know, so there's a big yeah.

Speaker 2 (28:15):
So I think that's the way when you meet with
when we meet with you know, clients, kids especially, that's
kind of what you try to tell them. It's like,
all right, you know, stocks are cool. Stocks are cool,
but it's really about getting good habits at the earliest
stage possible.

Speaker 3 (28:29):
It is.

Speaker 4 (28:29):
I think I think there can be some powerful conversations
to show that, like, look, you know, over time, this
is what It doesn't seem like a lot of money now,
but compound interest and compound returns and everything along those lines.
I think to me one of the hardest things when
you when kids are just starting on. I have older
kids won in college and one in high school that
haven't shown this interest in don't don't seem to have

(28:49):
the same interest in saving at this point in their
lives based on what I see.

Speaker 3 (28:54):
In their their venmos.

Speaker 4 (28:55):
But is the idea that you know, once you do
start working, having come, it's trying to you know, live
off of ten or fifteen percent less than what you
take in, Like if you can just from the day one,
whether or not that you're making you know, twenty bucks
an hour as a babysitter, or whatever, Like if you
can just say, okay, I'm gonna I'm gonna keep eighty
five percent of that, but take fifteen percent of that

(29:17):
and I'm just gonna put it away for something later.
I'm not even talking about investing at this point. It's
just like saving a little bit for for later on
in life, and that that lesson earlier. I think that
kids can kind of understand that that even though you
get done babysitting, you got sixty dollars, well, all right,
take forty five of it and go to the movies,
or go buy yourself shirt or Starbucks or whatever you want,
but take fifteen put it in your piggyback and save

(29:37):
it for a day. I think that that habit is
something that you know will lead into investing and you know,
contributing to formal k's and all that as people get
get older. But you know, that's a that's a lesson
that kids that you know, any age can can start
to probably recognize there.

Speaker 1 (29:54):
You know, as you get older, there's a you know,
I get the question a lot, you know with newer clients,
you know, with the younger clients, you know, you know,
can can investing really make you rich? And I think,
you know, investing in the equity markets over time with
the compounding, We've seen it happen. You know, I've been
in this business forty years and with Fagan obviously started

(30:15):
taking associates in nineteen eighty nine, so thirty six years,
and it does I think the biggest pitfalls that I see.
So you basically, you know, kind of correlate yourself to
the market. You mentioned Doug and Aaron invests regularly. You know,
give it time, you know, don't come in and out
of the market, don't try to time the market. But
I think one of the bigger things that I've seen

(30:36):
crush people's portfolios and people who come here. There's probably
got a handful of people who kind of ended up
kind of doing their own thing with their portfolio and
a they ride the momentum train and they don't know
how to get off, and generally speaking, they're in speculative issues.
So you know, avoiding speculation aeron and I think that's

(30:58):
a avoid speculation in your portfolio maybe with a piece
of it or yeah, and.

Speaker 2 (31:02):
No knowing if you have like you know, and there's
people that have different personality traits, like if you have
a personal reality trait that likes to you know, maybe
gamble or speculate, just know that and know, Okay, I'm
gonna put X amount of dollars towards that, knowing that, Okay,
this won't affect my uh, you know, my life in
thirty years from now. And it's like, you know, when

(31:22):
you said, you said, you know, can investing make me rich?
And you know, I think rich is really subjective obviously,
but like what can investing can do is can you
know we talk about with clients all the times, I
can give you financial freedom and that you know that
creates wealth in a number of ways, like lifestyle wealth. Uh,
you know stress, you know, peace of mind, reduce stress.

(31:43):
So yeah, it can make you wealthy, but rich is subjective,
you know.

Speaker 4 (31:48):
Yeah, I just add that to I think one of
the one of the problems that people write in sometimes
is you know, life is a winding road. Obviously, You've
got ups and downs and peaks and valleys and everything,
and and at various points in your life you're gonna
want access to some of what you've saved to that point,
whether it be for an emergency, something happens you know,
on you know, unforeseen and you need access to that money,

(32:11):
or there's an opportunity you can buy into a business,
or there's a piece of real estate you want to
buy or whatever.

Speaker 3 (32:16):
And I think a lot of.

Speaker 4 (32:17):
People, you know, early in life just maybe overload on
saving within their qualified plans with their forum case.

Speaker 3 (32:23):
That's where people start, and.

Speaker 4 (32:24):
The idea of also having you know, not even necessarily
rainy day fund.

Speaker 3 (32:29):
I'm not necessarily saying like cash or you know.

Speaker 4 (32:31):
Just super conservative, but just having money in an after
tax account that there aren't penalties when you're younger.

Speaker 3 (32:38):
Things on those lines.

Speaker 4 (32:38):
I think it's important for young people who are starting
out investing is to realize that there's you know, it's
it's great to save in those qualified plans, and people
should and certainly if there's matches, you know, you don't
want to give away free money, but you also should
try to figure out a way to balance that savings
to also have some money that you can have access
to before it becomes in this state where there's penalties
and things along those lines, because things are gonna happen,

(33:00):
things are going to happen throughout your life that you
know you're gonna either want that money for an opportunity.

Speaker 3 (33:04):
Or for going to college. Yes, well yeah, just.

Speaker 4 (33:10):
You know, even even you know, I think a lot
about people, you know, trying to start businesses and stuff
and if you can you know, better on yourself versus
necessarily having to borrow at rates you know you can,
you know at least blend that out. It just gives
you a lot more flexibility through your life. And I
think that's an important right talk to talk about what
makes you rich like that also makes you rich, that
flexibility and not having to rely on other people.

Speaker 1 (33:32):
So I think the first step really with an investing
and this is for younger people. Most of our clients
are sixty and above. We do a lot of retirement planning,
but you know, it's good with the first I guess
block of questions that we wanted to talk about today
was kind of addresses younger people, is you know, what
do you what do you what do you do? First?

(33:53):
You're saving it you save emergency money. And I think
how much emergency money you need for emergencies you know,
should be in the bank or money market, something guaranteed.
How much should be there generally speaking, you know, and
advisor to say three to six months of your portfolio
and generally, you know, I would agree with that, although

(34:15):
that window there, that that parameters there would depend upon,
you know, your job security. You know, if you work
for the state, it's different than if you work for
yourself or work for private industry a little bit. So
how secure your job.

Speaker 2 (34:28):
Is, Yeah, I'd say three to six months is fair,
you know, and stuff comes up, a flat tire, things
like that too, And you know, I do think that's
what emergency account is for, is when something happens in
your life that is unforeseen. You know, you can also
get at money pretty stressed for you it's you know,
obviously never fund to pay for a flat tire, but
it's a little bit less stressful if you don't have

(34:49):
to take it out of your next paycheck, you know,
knowing that a lot of Americans can't do that too.

Speaker 1 (34:53):
Good question we get a lot and I'll ask you
this Aaron too, is should I pay off debt or
invest first?

Speaker 2 (35:00):
Like should they pay off debt? Usually you know consumer debt, i'd.

Speaker 3 (35:03):
Consumer, Yeah, I think it depends on the debt.

Speaker 4 (35:05):
I mean I think, yeah, credit card debt, you know,
consumer debt certainly, But you know, you see this question
I get this question a lot is people with mortgages.
While he's like, I'm every extra dollar I have, I
want to I want my house paid off. I want
to have every you know, every extra dollar that I have,
I'm putting towards my house because I want to be debt.

Speaker 3 (35:22):
I don't want to have that house.

Speaker 4 (35:23):
And and I don't know that that would be the
best advice given you know, depends on when when you
took your mortgage out and whatnot, and and what the
rates were.

Speaker 3 (35:30):
But I wouldn't.

Speaker 4 (35:32):
Necessarily say that would be great advice for someone if
who didn't have any liquidity, who didn't have that emergency fund,
who didn't have other other access to capital, because you know,
there's there's definitely you know, good debt and bad debt,
or better debt and worse debt, and and you know,
certainly your home is something that you know is as
an asset that you'll hopefully have for a long time,
and and there are tax advantages and that's potentially for

(35:54):
you know, that mortgage interest. So I I don't think
that you know, rushing to pay that off over saving
to have you know, flexible.

Speaker 2 (36:01):
Especially if you're you know, like ten five ten years
of retirement. I do think, like, you know, you have
that right, Like if if your mortgage is below four percent,
you know, you never pay it off and it's you
know above. You know, that's what kind of people historically say.
But like I do think that, you know, if you're
nearing retirement, you have you know, twenty thirty grand left
on your mortgage and you have a significant amount of

(36:23):
your brokerage account. Like, I don't think it's a you know,
I think there's you know, the objective answer, But I
think you also have to take in like people's personalities too, right, Like,
so let's say you know you're about to go, you know,
quit your job cold Turkey. You don't have an income
stream like you used to. You're a little bit more nervous,
and by paying off your mortgage, you can free up
twelve twelve hundred bucks a month. You know, maybe that

(36:45):
will help you not make the wrong move at the
wrong time too, if you know, it increases your free
cash flow really in retirement, right, so it reduces your
balance sheet, your personal balance sheet, but you know, it
also increases your free cash flow. So you know, maybe
if the market's going down, you're not you know, panicking
as much as you would because you don't need as
much you know, money.

Speaker 4 (37:02):
Yeah, there's a lot of psychology involved in that, as
especially as you get near retirement and the idea of
having that mortgage over your head versus debt free and
not having to worry about it. It's you know, it's
definitely a personal choice for a lot of people that
take it to.

Speaker 1 (37:16):
That it is, you know, but you just mentioned Doug,
there's a lot of psychology involved. And what what I
always say to people is like it works life usually
is works better if you do things incrementally, you know
what I mean. So and myself and we have a
mortgage Carrell, myself, my wife and I and we pay
a little bit extra every month. I don't want to
have debt either, but I'm not gonna you know, the

(37:37):
mortgage is two and three eighths or something like that,
so I shouldn't even pay the extra. But my personality
lends itself to not wanting a debt. But I'm not
going to topple and you know, cave to my personality.
What I'm going to do is like, you know, given
a little bit to my personality, but not not go crazy.
And I think it's the same with purchases even you know,
if you like if you like nice cars, Yeah, I

(37:57):
just don't go crazy with you. You know, you know everything,
so which you know, it does lead a lot to
temperament you Now. One of the things too, is is UH,
as far as uh you know how to get started
with investing, you know, if you want to tackle that
first there, well, you know, let's let's say you're twenty

(38:18):
five years old, you're right out of college, you got
your first job, you know, maybe you don't have any debt, Like, where.

Speaker 2 (38:24):
Do you go?

Speaker 3 (38:25):
What do you do?

Speaker 1 (38:25):
It's qualified money. I think, Doug, you touched on you know,
some non qualified money with some qualified money, you know,
matching the match of your your your your company. But
I guess my point my question is is that you
know a company like something like Schwab. Let's say you
want to start a you start with.

Speaker 2 (38:42):
An S and P spy fund. Wouldn't you just like
a broad market ETF you know, dollar cost average average
into it every single.

Speaker 1 (38:49):
Month, hundred bucks?

Speaker 2 (38:50):
But whatever, yeah, whatever you can really afford. I don't
think it's I don't think it really matters that much
to get too creative. I think it matters about you know,
setting up that auto payment every month into your brokerage
account or you know auto transfer, so as you know,
as Doug was saying, so like you don't even count
it as a paycheck. You know, your paycheck comes in,
the one fifty or one hundred bucks comes out right,

(39:11):
until you get used to living.

Speaker 3 (39:12):
Like that, Yeah, I think.

Speaker 4 (39:13):
I think starting out for people, that really is the
rate they should be more concerned with. Is the rate
of savings versus the rate of return. That should be
you know, what your focus is as you're starting out
is Okay, I can you know I'm making forty thousand
dollars a year that to me thirty you know, I
can I can reasonably save five thousand dollars a year. Well,
if I put twenty five hundred dollars in my four

(39:34):
I one K, that's gonna get me my company match.
Let me take the other twenty five hundred dollars, you know,
maybe a little bit just in that emergency fund cash,
and then start a brokerage account and invest in like
you said, brought mgtfs just to get started. But the
most important thing is that five thousand dollars every year
and then you know, incrementally, as you go up, you
get a raise from forty thousand to fifty thousand, well

(39:55):
then your savings goes from five thousand to seven thousand
or the matter.

Speaker 3 (39:59):
You're not doing the math probably.

Speaker 4 (40:00):
Ahead probably, but you know, and just getting to that
habit of living off of fifteen percent less than what
you make and that other fifteen You said, the whole
concept to pay yourself first, right, that's essentially what you're
doing there as you're paying yourself first. And I think
just you know, that strategy for young people get starting out.
And then also the idea of you know, diverse diversification.

(40:21):
I think a lot of times people hear diversification they
think between stocks, bonds, individual stocks, ETFs, all the stuff
that we do here for our clients. But diversification to
me also should mean a little bit of diversification of
the tax treatment of the.

Speaker 3 (40:33):
Money that you're seeing.

Speaker 4 (40:34):
So you've got you know, qualified money, you know, pre
tax money. You should also have some after tax investment
money and then some you know, just some cash and
cash equivalents. I think, you know, having that balance between
the Denis's point in everything incrementally, you know, most things
in life are better with balance anyway, you know, balance, diet, balance.

Speaker 3 (40:52):
The work, home life.

Speaker 4 (40:53):
You know, same thing with investments, balance between you know,
kind of where your money is tax treatment wise, so
it gives you more flex ability as you grow.

Speaker 1 (41:01):
What about but isn't the market high? Isn't the market high?

Speaker 3 (41:04):
Right now?

Speaker 1 (41:04):
Maybe I should wait.

Speaker 2 (41:05):
There's some crazy stats about what like seventy five percent
of the time the market is within five percent of
all time highs or something like that, or maybe even
higher than that ninety percent. I don't know the exact percentage,
so you know, yeah, I mean, I think again, it's
about canning good habits.

Speaker 1 (41:21):
And you don't have any money. So if you have
five thousand dollars, the market goes down twenty percent, you're
twenty thousand dollars.

Speaker 2 (41:26):
But also like if you're twenty five, you know, I
know it's probably psychologically hard, but you should welcome pullbacks
in the market, right if your dollar car stavaging in
every single day, right.

Speaker 3 (41:36):
That's what I was gonna say.

Speaker 4 (41:37):
That's the idea of dollar cost averaging is that as
the you know, certainly as the market goes down, you're
if you keep putting the same amount and it's going
to buy more and then the market, you know, traditionally
we'll we'll always eventually go back up and then you
want more and you know you'll grow faster.

Speaker 1 (41:52):
Well, it's funny thing because you often hear that that
same question at both ends of the market move like
right now you're here, and isn't the market too high?
You know, and you get that question, and then in
April we were getting the question in early April, oh
my gosh, isn't the market down twenty percent? You know
what I mean, I'm afraid it's gonna fall more?

Speaker 2 (42:11):
Yeah, yeah, right, you're afraid when it's sign and you're
afraid when it's low.

Speaker 1 (42:14):
But I think you just ignore that, think long term
count in the market to do what it's what it's
always done historically over full economic cycle, and that's your
best bet. Like any anybody, nobody knows when when the
market's going to sell off, but you know it does
and sometimes it comes out of the blue.

Speaker 2 (42:35):
You know, can I can we ask you a question
you've just been asking? Yes, you know, I think one
of the better questions asked asked on this, you know,
fifty frequently asked questions is you know what ist risk tolerance?

Speaker 3 (42:49):
Right?

Speaker 2 (42:49):
And like so when you meet with clients, what is
risk tolerance? And how does that fit into someone's portfolio?

Speaker 1 (42:55):
You know? So I would say, you know, you know, people,
I think because this was a sales industry for so long,
that's becoming like one of the most important questions. Was
one of the most important questions. But what's your risk tolerance?
It's kind of like going to the doctor and the
doctor to say, like this is what's gonna fix you.
Are you okay with that? Or you know what I mean?

(43:16):
Or and and our job is to determine what the
people what the mix of their asset class should be stole,
let's call it. Let's take the three major ones, stocks, bonds,
and cash, all right, and then we can give them
an historical guideline as to if the market pulls back
thirty percent and you have seventy percent of your money
in the stock market, you're gonna lose twenty one percent.

(43:37):
Your five hundred thousand dollars gonna go to four hundred
thousand dollars. Are you comfortable? Not comfortable with that? But
will you be able to live through that? And nobody
really knows, you know, Mike Tyson one said, you don't
you know, you don't know. You don't have a plan.
Everyone's got a plan until they're punched in the face.
And I think so once you, once you lay out

(43:58):
the appropriate asset out location model for that individual and
kind of quantify the potential losses for them with that
recommended allocation, then they can kind of have a better
feel for what their risk tolerant should be. I'm not
going to ask them right out of the gate, Oh,
what's your risk tolerant's on a scale of one to ten?
Who really knows? Right? People don't know that, So that's

(44:20):
what I would say.

Speaker 2 (44:21):
Yeah, I think, you know, I guess on to your point.
You know, Doug does a lot with our financial planning
software and you can visualize and what do you work
with a client now with a substantial amount of one
individual stock?

Speaker 3 (44:33):
Right?

Speaker 2 (44:33):
So what would like a lot of people who work
for a generon or ge have, you know, maybe twenty
percent of their money in that one stock. So what
would happen if that stock got cut in half? But
what would happen to your entire portfolio if we went
through the same thing that happened in two thousand and nine.
So I think it helps to visualize and you know,
actually come up with real life scenarios that what would
happen if if this happened. So I think some people
be like, oh, oh that's not as bad, or oh

(44:56):
I need to reallocate elsewhere.

Speaker 4 (44:57):
Right to circle back to your question, what is risk time?
And so that's I think you can paint that picture
for someone, whether it's they they're you know, have a
lot in one individual stock because it's where they worked
or whatever, or just even if they have a well
divers fire portfolio, you can do. Part of that planning
software that we use for our clients has has what's
called a bear market test in it. It'll take the

(45:17):
you know, this is how you're currently invested. Here's the
worst bear markets of the last you know, twenty thirty
forty years. Here's what your here's what your portfolio would
have done in that market. It would have been down,
depending on how their invested, it would have been down
thirty eight percent, would have been down twenty seven percent, whatever.
Your assets will have gone from one million dollars to
six hundred and forty seven thousand.

Speaker 3 (45:37):
Dollars or whatever that number is. And it shows in
a nice chart, and then he asked a question, how
does that make you feel?

Speaker 2 (45:42):
Right?

Speaker 3 (45:43):
Right?

Speaker 4 (45:43):
And no one's gonna say, oh great, you know, but
but on a scale of one to ten, like would
you panic to the point that you wouldn't be able
to sleep at night? Or would you panic properly to
be like, well, this is makes me nervous, but I
can have confidence that will be going forward. And that's
where you can kind of if it's if it's question
number one on then maybe you should be a little
less you know, less risky to your portfolio so that

(46:05):
that bear market instead of being down thirty seven percent,
you pick a portfolio that's only going to have you
down twenty five.

Speaker 3 (46:10):
Percent or twenty eight percent or whatever.

Speaker 4 (46:12):
Right, that differences, and that if that helps you sleep
at night, then that's that's your risk off.

Speaker 1 (46:16):
But do you also part of that plan will take
past historical events? I think the like a Moni Carlos
simulation is called, and then on a percentage basis determined
will you be successful in retirement? I think that that
sits well also with plans.

Speaker 2 (46:33):
I think, right, like, you know, knowing that okay, yeah,
maybe my portfolio is down to six fifty. But I'm
only taking twenty five grand out of any year. I
can take it from my cash and my bonds and
allow that stock side to recover.

Speaker 3 (46:44):
Right.

Speaker 4 (46:45):
So that's some of the fun stuff that we do
with that planning is is it does?

Speaker 3 (46:48):
You know? It does? Do the mono?

Speaker 4 (46:49):
Carl will take a thousand different simulations and show you,
you know, based on where you currently are today, you're
gonna have a eighty five percent chance in a thousand
different market scenarios of success of your mind lasting through retirement?
Are you meeting all your needs, your wants, and your
goals in retirement? But what's interesting is if so say
that the first time you do it based on where
you are, it only comes up at thirty percent. Okay, Well,

(47:10):
how do we how do we improve our position? How
do we get there? Is that I'm five years from retirement?

Speaker 3 (47:14):
Okay? Well, if if you're able to.

Speaker 4 (47:16):
Save an extra ten to fifteen thousand dollars a year
over the next five years, where does that put you?

Speaker 3 (47:20):
Okay?

Speaker 4 (47:20):
It takes you from thirty percent to sixty percent, that's great,
Or you know, changing how you're invested or changing you know,
maybe you know how much spending you need to have
in retirement, maybe instead of you know, that's this many vacations.

Speaker 1 (47:33):
You work part time, work.

Speaker 4 (47:36):
Part time, all those different scenarios when you take some
security versus when you don't, all those things can be
kind of thrown together in the pot and come up with, Okay,
this is these By tweaking these few things as you're
entering or getting near retirement, you're going to up your
chances of success from fifty percent to eighty percent. And
that's that's a great you know, it's a great tool
for people and a great thing to help people feel

(47:57):
comfortable that they're as they're nearing retirement, they're they're you know,
going to be in a good position.

Speaker 2 (48:02):
You guys think add to that, No, I think we're
trying to you know, work with Doug especially, but we're
all trying to work with clients five ten years of
retirement to figure out, you know, little changes that can
make within their life to make their life easier and
less stressful. When they finally when you get that, you know.

Speaker 1 (48:16):
What I try to do is lop twenty percent off
the client's account now and say, okay, now, can you
retire right? Because you have that what's it called the
sequence of returns we have? Or if you have any
questions want to give us call five one eight two
seven ninety four. Check us out on the webit faganask
dot com, Like us on Facebook. You know we're reaching

(48:37):
out to our clients I think ten a week and
offering retirement updated retirement plans. If you're a client you
want that done, give us call one of those numbers,
or if you're you're thinking of becoming a client, please
feel free. Have a great day.

Speaker 2 (48:48):
Tak Care