The Fagan Financial Report

October 5th, 2025.

Episode Transcript

Speaker 1 (00:01):
Good morning, and welcome to the Capital District's Money and
Investment program. You're listen 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 O three one w g y we are
it's actually recording this Friday morning at about eight o'clock.
But what the heck? Who cares?

Speaker 2 (00:19):
The government shut down?

Speaker 1 (00:20):
Who cares? There's no no news coming out. The art
of compromise has been replaced by the art of complaining,
the art of the art of doing nothing.

Speaker 2 (00:28):
You know.

Speaker 1 (00:30):
Yeah, and let's go the art of compromise. I just
punched this up, getting to a yes, help me understand
why you're inflexible area is so important to you? What
are your core feelings, beliefs or values about this issue?
And then now hear this just I just punched up.
It's just not I just googled it, the art of
compromise politically right, right? You know, what do we you

(00:53):
know then kind kind of find common ground? Help me
understand your your flexible areas. What do we agree about?
What are common goals? Do the Republicans or Democrats have
common goals. No, No, they're not there, right, they don't
think they're common, you know, go ahead.

Speaker 2 (01:10):
No, I think, yeah, I'm in a bad mood too,
to be honest, you know, I tell you I've been
reading that book Sapiens. It's kind of a famous book.
It's you know, it's kind of like the history of humans,
you know, and it's written by a brief history of humankind,
and it's just kind of about humans in general. And
you know, I'm at a part where, you know, it
talks about like the Incas, and Inca actually means people,

(01:33):
and they had a word for just their there's their own,
you know, just their own people. The Incas, and then
everyone else were other people, and the word was, you know,
them sub human. And you know, I think we've kind
of gone from a you know, US us versus them
is now Democrats versus Republicans, and Republicans versus democrats. Right,

(01:53):
We're just we're just so there's just so much hatred
out there, but between the two, and it's really sad
to see. And I think you know, you're seeing it
during this government shutdown, all the you know AI videos
that you know, Trump's you know, putting up with a
keen Jefferies, and it's just, you know, it's just ugly
and it's I don't know, there's it's it's kind of
it's really sad. You know, it's sad that I have

(02:16):
a three and a one year old and thinking that,
you know, this is kind of the going to be
the norm for the foreseeable future. It's just like a
lack of decency, and it's it's embarrassing. It's embarrassing to
be American right now.

Speaker 1 (02:28):
Social media driven, you know, I think politically driven, and
here we are, you know, I mean, but I mean
that's our job is to say, okay, what happens to
the stock market during government shutdowns? And you know what,
not a heck of a lot. You know, there's been
twenty shutdowns over the past fifty years or so. And
it's kind of like the and you know, bad mood.

(02:50):
I said, why would you be in a bad mood?
Why would we be in a bad mood? Yes, it's
your birthday, an all time high. It's my birthday weekend,
I'll be sixty four. The market's at in all time high.
It's not that it's just frustrating that people just can't
do their job and their job is to compromise. But
you know, I don't, you know, I just don't can't
just blame this on the Democrats or the Republicans, are

(03:10):
you know? I mean, I'm sure Republicans are saying to
Democrats and vice versa. This has been going on forever
under all the administrations against since nineteen seventy six. There's
been twenty of them. Well the less there was a
sixteen day shutdown in twenty thirteen, and by the way,
the S and P five point it was up three
point one percent. So I just think that and you know,

(03:30):
you can blame both parties for losing the ability to kind
of come to a consensus that will benefit the American people,
you know, And.

Speaker 2 (03:38):
As Trump said in twenty thirteen, you have to get
everyone in a room, and you have to be a leader.
And I think that we need leaders involved to get
this this government shutdown.

Speaker 1 (03:46):
And you think about your own marriage, You think about
if you, if we arrive, if you and Lauren or
myself and your mother arrive at a position of impass,
someone's got to give. And I'm not saying it's Republicans
or Democrats here, And someone's got to say Okay, you
know we we are we are, Yes, I think we're
I'm right, but you know, we've got to give a
little bit this area. Now. The Republicans would say we

(04:07):
always given. The Democratic Democrats would say, we always given.
That's half the problem. And you know, the divorce that
we're probably going through and right now politically, you know,
is the fault of both parties. And yet you know,
and here we are, but the market really doesn't care.
The futures are up right now. I think we are
assuming as investors that the that the we will come
to some sort of agreement to stave off the shutdown.

(04:31):
I think it's ninety days, and they they'll supposedly get
to the core issues that are that are you know,
kind of leading to this, to the to the position
that we're in, and then we'll go from there, you know,
But I don't think they're going to get to the
core issues over next nine days, ninety days. We're just
kicking the can down their own. In ninety days, we
will be where we are.

Speaker 2 (04:50):
Yeah, you know, you know, and you know it's we're
we're taking some historical contact. You know. It's funny. I
have two things in front of me I have history
of government shutdowns, and I have something next next to me.
It's his Government cutdowns usually have little economic impact. This
time could be different, So I think to start, we
go over. You know what what has happened historically during
government shutdowns.

Speaker 1 (05:08):
So that was good.

Speaker 2 (05:09):
So a few There was a thirty five days shutdown
December twenty second, twenty eighteen to January twenty fifth. It
was the longest in US history. I think this one
could rival that. But we'll see during which the S
and P rally ten point three percent from the shutdown
start to its conclusion. That's a little bit misleading in
my opinion. Do you remember what did you call it?

(05:29):
The was that the Christmas Eve massacre?

Speaker 1 (05:32):
Or was that twenty nineteen? Oh that was twenty That
was not twenty nineteen.

Speaker 2 (05:36):
This was twenty eighteen into twenty nineteen. So however, the
game that was it? Yeah, a sharp rebound from the
December twenty eighth oversold conditions driven by the FED rate
hikes rather than a positive reaction to the shutdown itself.
So then you had October first to the seventeenth to
twenty thirteen, sixteen days the market was up two point
four percent, you had two and nineteen ninety five, in

(06:00):
nineteen ninety six, In nineteen ninety five or is five days,
the market gained point one percent. And in nineteen ninety
five to nineteen ninety six, twenty one days in the
market was up three point three percent. So you know,
we've seen you know, all the most recent references. You know,
the market has done done fairly well, you know, onto
the sector analysis impact.

Speaker 1 (06:21):
This was just let me just before you get it,
before you get into that. So so basically, and let's
say the last one you said, uh, December sixteenth, nineteen
ninety five through January sixth, nineteen ninety six, twenty one days,
the SMP gaining three point three percent. You know how
much of that three point three percent? You know you think,

(06:42):
oh wow, that's good. The government shutdown doesn't matter. Maybe
it does. Maybe the sm P would have gained six
point three percent of seven point three percent. You know,
who really knows of that gain or loss's attributable to
a government.

Speaker 2 (06:53):
Cost to right, the opportunity cost of shadowing of that.

Speaker 1 (06:57):
But so, but suffice that the say that nowhere other
than December eighteenth to January twenty fifth and nineteen with
the SMP rally ten point three percent. Has there been
anything that you could conclusively say, Wow, I lost money
because I did this or that. I think it basically
generally speaking, you stay the course. If I would say

(07:18):
if the market's down ten percent, I think it's a
buying opportunity if it's due to the shutdown. But generally speaking,
you hit your horse to the S and P five
hundred or US market. Over the longer term, on the
core of your portfolio, you make certain tactical moves to
the to the periphery, and you ignore this noise that's

(07:39):
coming out of Washington. Yeah, because it's going to keep coming.

Speaker 2 (07:42):
And it's interesting that the VIX, you know, the short
term volatility index is basically unchanged since the government shut down. So,
you know, I think what we're saying and what's kind
of we're seeing. I think the marks up point three
four percent actually the day after to the market the
government shutdown. At midnight. The next day, the mark is
up point three four percent, volatility increase, the VICS increased

(08:04):
point four five percent, So there's really government contracts surge
two point two eight percent, while the defense manufacturers remained unchanged.
So I think you know, we're seeing that. You know,
the market's not really taking this into the consideration from
a from a from a stock market standpoint just yet.

Speaker 1 (08:23):
No, And I think you look at pullbacks, you know,
areas that we would like on pullbacks, certainly inform information technology,
communication services, the three biggest biggest areas that we hold
for advisors, information technology, communication services, and consumer discretionary. I
think I think you continue to buy them financials.

Speaker 2 (08:45):
Financials could be impacted by this a little bit of
the short term, but I think over the long term
we're still going to see the positive impacts of deregulation,
maybe a rate cut. So I think, you know, if
if if financials do pull back, it's a it's a
good sector to to start picking up.

Speaker 1 (08:59):
Some now, I will you know, I will say, and
it's dangerous to say this time it's different. But the
Democrats kind of have their back and this is this
is pertaining to the market. The Democrats kind of have
their backup against the wall. Things have not been going
their way. Trump's getting what he wants for good, you know,

(09:21):
let's say, you know, for good or for bad. And
you know, the markets at it's all time high, so
you know, dur any conclusion that you want there. So
do they you know, they've got you got the midterms
coming up in about a year. They've got to make
headway there. If Trump you know, crushes them, or you know,
if the Republicans hold the House and Senate during the

(09:43):
mid terms, you know, then then the Democrats are are
basically you know, have lost two more years of you
know control. Uh that's an issue. So so they've got
there there, they could potentially lay their cards on the
table here or and kind of you know, hold the
hold the stance for you know, I think that'd be

(10:05):
difficult because a lot of Democrats and Republicans come from
what you'd call like a purple district. They're not they're
not red, they're not blue, and that they could be
in play next year, and you don't know, you don't
know the reaction of the average American voters as he
shut downs playout. You also don't know. President Trump's a wildcard.
And we said it before the election that President Trump

(10:27):
is and and I haven't said it in eleven months now,
but President Trump is is uh not your typical politician.
So so you don't know what what you can what
to expect from him. And I think that's something that
maybe you know, may be welcome, may may not be
welcome by the markets. But the Democrats got to kind of,
you know, weigh that and determine, you know, what do

(10:50):
what do we do here? And then again you've got
your rank and file members, uh that are closer to
their constituents, you know, that are gonna say, hey, you know,
I'm gonna go with the Republicans because I want to
be re elected and my constituents are saying, you better,
you better not shut down for a long period of time,
you know.

Speaker 2 (11:08):
Yeah, And you know, I think that what I'm most
nervous about the government. The government shut down. And this
is you know who is this Jeff cox On on CNBC,
And you know, basically the late the Labor Department said Friday,
it's virtually shutting down the BLS, which releases key economic reports.
You know, you have monthly job count, you have jobs,

(11:30):
you have you know a lot of unemployment in the
labor market.

Speaker 1 (11:34):
So initial places unemployment supposed to yesterday, they had not
come out.

Speaker 2 (11:37):
Yes So you know, if we continue to not see
you know, economic data to come out, how does the
market react to so many unknowns and how the economy
is actually doing. So, you know, I think it's that
deterioration of you know, the statistics that the market relies
on over the you know, even you know, the firing
of the Bureau Labor Statistics. You know, I think Torst
and Slock came out, He's and economists and said basically,

(11:59):
thirty percent of all numbers that we're guessing in the
CPI now our guesses. So you know, it's just this
deterioration of statistics that makes me, I guess, the most
nervous about the market. And let's say we have deterioration statistics,
then you know, what does the FED do in in
return to you know, how do they forecast, how do
they decide when to cut rates? If they cut rates

(12:20):
and they shouldn't, what happens to inflation? So you know,
the market doesn't like uncertainty. So I think the biggest
concern I would have for you know, the this government
shutdown is the increase in certainty in you know, economic
data and economic numbers and you know, what happens to
the stock market two three, four months from now, and
what happens to inflation? And they'll like.

Speaker 1 (12:40):
You know, yes, I mean the market climbs a walla worried.
I think that right now we're nine percent cash in
general of the money that we manage, which is little
over nine hundred million dollars. So you're talking ninety million
dollars or eighty one million dollars in cash. Sounds like
a lot or turning three of most of it. The

(13:01):
vast majority of it's earning four percenter. So we have
some in cash cash just to reposition and the repositioning mode.
So I think that, yeah, you hold, you hold a
little bit cash through here at market peaks. And the
other thing I've come to realize a long time ago
that it's a stock market, but it's a market of stocks, right,
it's a market of ETFs. It's a market of mutual

(13:23):
fund so meaning that you know they're there, you pick
and choose where you invest and where we invest in.
You know, if we have time in the second half,
we'll certainly talk about, uh, where we were at the
at the you know, relative at the you know, close
of Q three. But you know, we like what we own,
and we like what we own to overcome this and
and uh and you know, if the if the market

(13:45):
pulls back, we probably deploy some of that cash, all
things being equal, but we are as we move into
the so you know, I guess right now I would
go with the uh uh the line from Macbeth, you know,
full of sound and fury signifying nothing. That's kind of
how I would would uh what Macbeth said, and that's
kind of high would would would would play that one out.

(14:07):
But so as we go into the fourth quarter, you know,
I think that you have it's the strongest and most
consistently positive quarter of the year for stocks. According to
data from mfs UH since nineteen twenty eight, the S
and P five hundred is averaged the gain of two
point nine percent and Q four with positive returns seventy
four percent of the time. In comparison with Q one, two,

(14:29):
Q and Q three Q three have all seen positive
returns sixty point two percent of the time. So you've
got roughia twenty five percent chance greater than the average
to produce a positive return seventy four versus sixty point two,
and you get two point nine percent. You annualize that
out of you know, almost twelve percent. You get roughly
above average returns and above the above average number of

(14:53):
times percentage of times. So I think that's that's that's
that's positive. You know, what are some areas really that
that you know could be just a little bit bubblicious?
Do you have any bubblicious quantum quantity?

Speaker 2 (15:10):
You know, I think, I think, I think quantum is
up relatively big Friday before the bell, you know, I
saw IO and Q up. You know, it was up
ten percent on Thursday, have another two percent before the bell,
you know, but the four biggest quantum names IO, n
q R, G T, I, q U b T, qbts
are up an average of two thousand, se fifty percent
your year with a market cap of forty six billion dollars.

(15:32):
So I think, you know, and we would we talk
about this. We were talking about this Friday, you know,
Friday morning. Is you know, do you know a bubble
can last for a while, and you know, do you
have I guess enough juice in your portfolio if this
does last for a while. And we came to the conclusion, yes,
you know, I think that you know, as I guess,
professional investors, you know, our job is to help people retire,

(15:56):
stay retired, and get to retirement. So I think that,
you know, large cap tech names, mid cap tech names
can do that for you. Right, open AI, for example,
as a valuation of five hundred billion dollars, it has
twelve billion dollars in revenue. So it's like, I think
a lot of these when these companies do pull back,
they will pull back significantly. They'll like thirty, forty, fifty,

(16:18):
sixty percent. I guess you could say.

Speaker 1 (16:19):
From what the open A I have in revenue twelve
million dollars twelve billion, yeah, billion, a million billion. That's
a sizeable all right.

Speaker 2 (16:26):
For half a trillion dollar company.

Speaker 1 (16:28):
Not really, Yeah, you're talking about you know, fifty times revenue.

Speaker 2 (16:33):
Yeah, you know, so they're expensive, you know, yeah, you
if you have one, two, three, four percent based on
your your your your unique situation, I don't think that's
you know, a big deal because it won't affect your
you know, future for the most part. But these names,
when they pull back, they'll pull back.

Speaker 1 (16:52):
You know.

Speaker 2 (16:52):
Even those four names that I mentioned in quantum Computing
have a combined sales of one hundred and twenty four
million dollars.

Speaker 1 (16:59):
Well, I think you know, so we were talking about
this before, and I was I was happy with your
response not happy, but you responded pretty definitively. And we
were talking about, you know, earlier this morning that you know,
basically I came into this business in eighty three. I
kind of worked for an insurance company till eighty nine.

(17:19):
You know, I had my own all my licenses by
six and sixty three, which were basically variable nudies and
mutual funds. There were no ETFs at that point in time,
and stocks were pretty much traded by people specifically in
this industry, you know, and there were stockbrokers, and then
we're the people that did most, uh, you know, more

(17:39):
financial planning and this and that, and that's what I did,
and that included you know, mutual funds pretty much, you know,
and some and variable annuities and the like. So then
when I went on our own and founded this company
in nineteen eighty nine, I picked up my Series seven,
which was which was individual securities, and that was nineteen
eighty nine, and I so kind of missed the crash

(18:01):
of eighty seven as far as being intimately involved with that.
And I mean, I'm telling this story for a reason.
So started company eighty nine when fee Basis in nineteen
ninety one. So we've been feed driven since for thirty
five years. Yeah, I didn't know that for a two years.
About you, we did some commissioning the like, and then
like you know, a lot a lot of different reasons,

(18:22):
but I thought for sure it was the right way
to go, and it was proved correct. So then you
had the period of the nineties, which was probably the
I think it's like the best decade ever for the
stock market. Maybe maybe you know second, Yeah, Peter Lance,
Bill Clinton, the great job we got out of the
nineteen nineties with no debt, right. But along the way

(18:43):
you had three or four events. You had Iraq invader
and Iran, you had the eight you know in ninety
or ninety one, you had you know, the Asian currency crisis.
You had the irrational exuberant statement by chair green Span
at that time. So you had pullbacks in the market.
I think it was nineteen ninety eight at the Asian
currency crisis. You had the California Orange County crisis with

(19:08):
their bonds sometime in the nineties. So what I'm saying
is the bubble in nineteen ninety that existed during the
nineteen nineties, that it kind of existed with the NASAC
was pretty much when I cut my teeth and basically
learned how to invest money. Really, so fast forward to today,
and I said to you, I said, you know, sometimes

(19:29):
I think that you know what you what I learned
in the nineteen nineties kind of works as a detriment
now for performance. You know, you're not you're not reaping
all the benefits of this a AI. And you said,
I disagree, definitely, You didn't hesitate. You said, I disagree.
And then what did you say after that?

Speaker 2 (19:50):
I think we're having a good year. I think that
you know, we have we I think I don't really
remember what.

Speaker 1 (19:57):
Well you said, our clients and our clients where they.

Speaker 2 (19:58):
Were made a lot of money doing good we've made
We've we've had a really good year. We do have
you know what, thirty nine percent in tech as opposed
to our our our common stock, which is you know,
about seven percent more than the than the than the
S and P. Five hundred. You know, we are we
have we do have, you know, leaders of today as
well as leader of tomorrow. We have a lot of

(20:19):
palent heer. You know, we start buying it and around
twenty nineteen, so I think that you know, you have
to our job is to make clients money. Our job
is to make clients money with the least amount of risk, right.

Speaker 1 (20:33):
And to secure their lifestyle.

Speaker 2 (20:35):
And also I don't know like some companies you can value. Yes,
you can make money in ion Q. I've owned it
for myself in the past, but I don't know what
they do. How do you value an I How do
you value a quantum computing company?

Speaker 1 (20:48):
You know? So I think to how do you have
the monetization? You know?

Speaker 2 (20:52):
And when is the monetization of it? And I think again,
you can make money in these companies, but you have
to know when they get out, right.

Speaker 1 (21:01):
Like Kenny Rodgers said, you got to no one to
hold them and no one to fold them.

Speaker 2 (21:04):
So I just don't think it's I just don't think
they're prudent as I guess, like a professional investor to
to put our clients and I don't feel responsible, I
guess putting our clients in these things. And this is
a problem if people open brokerage accounts and put a
few in, putting put a reasonable amount.

Speaker 1 (21:20):
I do it myself a little bit, yeah, but not
as a fiducia for sixty year old people. Yeah, sixty
seventy eighty year old people. Yeah, so yeah, so I'm
happy with that, yes to say we're having you know,
you know, I don't want to quantify that great year
quote unquote that you use, but you know, we're our
individual stocks are outperforming the S and P five hundred
well O accounts are managed individually, so so every account

(21:42):
has different performance. But yeah, it's.

Speaker 2 (21:45):
Different goals and objectives.

Speaker 1 (21:46):
Yeah, and we've we've benefited from that type of acid alcation.
You know, uh, you know, Microsoft, Apple, Alphabet, Amazon, Pollunteer,
and Video. Those are all some of our largest holdings.
But you know, certainly we're not head over heels or
over our skis in AI because a fiduciary b our
type of client. But I think see, you know, you

(22:08):
and I provide a nice combination and now dug aboard
a combination of you know, myself experience, having been through
a lot, yourself, knowledge of what your generation is is
knowledgeable about more and the more I t and the
like and and enthusiasm you know, and you had whoa.
I tempered that enthusiasm from time to time, so it

(22:29):
was good to hear. And I always believe that that
mix is positive but it was it's good to hear
that when you said, no, we are fine, and I
think we are fine, and uh, and so you know,
we got about a minute ago before the break. But
you know, there was a good article for a good
blog from Ben Carlson that appeared yesterday and it's the

(22:49):
last page that that that I'll read after the break.
You know. He says, how do you invest during a bubble?
And I'll give the four the four You could go
all in, you could hedge, you can diversify, which is
kind of what we do. We diversify. And then he says,
you can do nothing. And that's what I want to
talk about coming out of the break, because it's not

(23:10):
just nothing but but but you know, a further explanation
of really what nothing is. And I think you know,
you'll you'll be very interested in knowing that. And then
got a lot of other stuff and US investors are
flushed with cash and happy to keep it there. An
article in the Wall Street Journal a couple of days
ago by Hannah Lang ETFs. You know, more money is

(23:31):
coming into ETFs and mutual funds. Talk a little bit
about that. Anything that touches your tickles your fancy air
after that.

Speaker 2 (23:37):
Oh, you know, I think it's I wanted to talk
about and I think we have the past few weeks
about you know, artificial intelligence and you know, the correct allocation. Yeah,
we kind of hit that on that.

Speaker 1 (23:49):
So right now we'll take a break. It's ten thirty
on the station for News, Weather and Information News Talk
A ten and one O three one w g Y,
Good morning, and welcome back to the second half hour
of the Capitol District's Money and an Investment program. You're
listening to the Fagan Financial Report on Dennis Fagan sitting
here with my son Aaron, as we do every Sunday.
This is being recorded at eight thirty on Friday. As

(24:09):
we mentioned in the first half the government shutdown, we
talked a bit about that, talked a bit about historically
the fourth quarter is good, talk a little bit about
you know, there are some little bubble bubble type things
propping up in the market. And then and then and
we closed out with how do you invest during a bubble?
A blog from Ben Carlson, and wanted to talk about

(24:31):
what he said. He said, how do you invest during
a bubble? Four different options. You could go all in,
you could hedge. You can diversify or you could do nothing.
And that's kind of what we wanted to start the
second half with. But I will say that, you know,
I don't think that your typical AI is in a bubble.
I do you know, I think let me before we

(24:53):
phrase that. I don't think like your your, your, your,
your alphabets. I don't think AI. I think AI is
in the early stages of the If you li liken
it to a baseball game, you know, maybe we're in
the third inning right now. Some stocks like we mentioned
Io and Q may certainly be in they may be

(25:14):
in the eighth inning. And let's say, you know, just
talk about the progress of AI. Let's say we're in
the second inning or a third inning of where we
end up as far as this AI cycle, Like the Internet,
you know, we've kind of we had an Internet cycle,
which you know is over and now there's there's a
new cycle which is leveraging the Internet and leveraging computing

(25:39):
for artificial intelligence.

Speaker 2 (25:42):
I think most bubbles also are signs of innovation happening,
right so it's still forward progress. You know, you could
say Microsoft was in a bubble. It took them sixteen
years to get back to where they are, and that's
a long time. But look where we are now. Well
that was the beginning stages of the Internet. Right now
you kind of look where the Internet is now.

Speaker 1 (26:00):
So but also what I'm what I think, what I think,
we're saying the same thing, and that a stock, a
stock price may be in a bubble, but the industry
may not. Oh that I'm saying. Yeah, so I O
n Q may be in a bubble. You know those
stocks that you mentioned from MFS R G T, I, Righetti, QBT,

(26:20):
QUBT and QBT so and and again was the Internet
a bubble? No? And that's kind of what you just said.
Did Amazon go from one hundred to five? Yes, did
a lot of companies go in a business now?

Speaker 2 (26:33):
But like even Corning, you know they lead however much
uh fiber fiber out the cable and eighty percent of
that is still not in use today, you know.

Speaker 1 (26:41):
So and that stock got crushed. Yeah, so you know,
so you got you know so, so was was Corning
in a bubble? Yes? Was the Internet a bubble in itself?
I don't think so.

Speaker 2 (26:52):
I do think also that as long as you have
you know, M A G. S is you know the
mag seven et F with you know a way did
pee ratio of thirty like that's not bubbly in my
astronomic Yeah yet, you know so, I think as long
as you have these companies, you know, Google, Microsoft, Amazon,

(27:14):
that continue to spend meta in this infrastructure, I think, well,
the market will continue to rise. As we spend on
this infrastructure. There will be a time that investors want
to see an ROI, right, They want to see a
return on this investment that these big companies are spending.
And I think that's when you're going to see maybe
a little bit of a pullback and a lot of
these stocks is when eventually, you know, year, a year

(27:36):
from now, two years from now, who knows when the
when investors are going to be like, Okay, you spent
seventy five billion dollars the past two years, let me
see some let me see what.

Speaker 1 (27:44):
Show me the money. Where's the beef? Maybe the old
Wendy's commercial, where's the beef? Remember that?

Speaker 2 (27:49):
Now?

Speaker 1 (27:49):
I don't know, Well you forgot you didn't do you
were thirteen? Ethan al in the anniversary of the ethan.

Speaker 2 (27:55):
Out I know I was sixteen, remember it?

Speaker 1 (27:58):
Well, twenty people were killed late Georgie. I remember, I
remember that pretty cool? Yeah, first, very clearly. You know
it was a tragedy. Most of those people were older,
you know, some confine the wheelchairs and it was overloaded
or whatever. You know, But what's that sound? It's anyways,

(28:23):
so what we talking about? So Ben? When when you
talk about Ben Carlson, he had said you can do nothing.
Doing nothing is a choice too. As long as you
have an investment plan in place that suits your risk
profile and time horizon, the best move here might be
to just follow your plan, and that's what I think
you do. Do nothing is a choice. As long as

(28:43):
your investment plan is in place that suits your risk
profile and time horizon, which we work hard on with
our clients, the best move here might be to just
follow your plan, stay the course, come up ay. You
just have to be sure you have an asset allocation
investment strategy you can stick with, come hell or high water.
You need to be comfortable sitting through draw downs and
valet and avoiding FOMO because you're not changing your portfolio
all the time like some investors. Doing nothing as a

(29:05):
simple strategy, but it's not easy by any mean. Dieting
is a simple strategy, but it's not easy by any means.
I'm putting on my own.

Speaker 2 (29:13):
You know.

Speaker 1 (29:13):
Exercising is a simple strategy, but it's not easy by
any means. It's filing that that's hard. So he says,
I'm doing nothing with my for them. I'm not making
any change. I'm staying diversified, rebouncing on occasion, and continuing
to make contributions into my various accounts, whether it's a
bubble or something else. I know that having an e
equity heavy portfolio occasionally means being uncomfortable and seeing a
portion of my portfolio get vaporized. To me, the long run,
long term returns are worth that risk. You know, obviously

(29:36):
life would be easier if you could just ride the
A wave higher and step off right when it's about
to crest. But that's not a realistic strategy. Experiences taught me.
Nobody has the ability to predict the turns in these
cycles and consistently, so I'm not going to try. And
I think that's what we're doing. And although maybe like
to deviate a little bit a we are overweighted in

(29:57):
certain areas and that's led to that performance, but we
are not You know, a going all in, you know,
you know, we are basically overweighting in areas that we like,
and having been in business since nineteen eighty nine is
kind of what we've always done. But I think, and
I also think, and this is not condescending, but I
think when you know, retail, I hear that once in

(30:20):
a while, well, my portfolio is doing better than the
one that I have with my four oh one K.
You know, when you have seven hundred thousand dollars in
your four one K and twenty thousand you know, in
a in a brokerage account, and you're doing better than
your four one K, that's kind of a question. When
the retail investor is doing better than like the market,
the S and P five hundred, like by a broad margin,

(30:42):
or the NASAC by a broad margin like two to one,
three to one. You know, it's kind of like driving
the North Way in ninety five. You know, you know,
you better be careful and you may you know, you
better hope. You know, maybe you should go seventy or
seventy five.

Speaker 2 (30:52):
But I do think that a good strategy for something
like that is you know, as as we talk, like,
you know, we wrote an article how investing is different
from gambling a few weeks ago. And you know, the
longer you invest, the better chances you have at our success.

Speaker 1 (31:08):
You know.

Speaker 2 (31:08):
On the opposite side, I'll say, you know, I think
at times when you when you when you're someone who
managed your own portfolio or want to invest for yourself,
it's smart to treat that portion of your portfolio like gambling.
If you go to Las Vegas, you bring as much
money as you're okay with losing and not coming back with.

Speaker 1 (31:26):
Right. Right.

Speaker 2 (31:27):
So if you have you know, a million bucks in
your full one K and you know ten grand in
a brokerage account that you are buying these companies with,
I don't I think that's fine.

Speaker 1 (31:36):
I agree with you. I agree that you speculative money.

Speaker 2 (31:39):
Yeah, you take you take a portion of money that
you of your investable assets that you're saying, Okay, if
I lost this, my financial situation wouldn't change, and yeah, speculate,
go for it.

Speaker 1 (31:51):
Right, It's I mean, yes, I know, I agree one
hundred percent. I agree. You know, any even with our
accounts that we have, you know, we have some crypto accounts.
We have Palenteer, which is which is our fourth or
fifth largest holdings. So we have what are you said
it earlier in the show, You know, you have some
the names of tomorrow, and we certainly have them in
the portfolio hoping that they'll become names of tomorrow rather

(32:14):
than you know, also rams uh so. But what you're
saying is when you look at let's say, let's say Head,
you know, four hundred thousand dollars and then twenty grant,
that's your speculative money, four hundred thousand and four o K.
You're basically talking five percent of your money. That's fine
to speculate with it. I think it's gonna be I
think it's difficult for the average investor to just get

(32:35):
off that horse, you know, because greed is a pretty
strong motivator. There is a confirmation bias as you move forward.
There's also that confirmation like on news networks that you
know that hey, you know, the more popular those stocks become,
the more news they're going to get. I think I

(32:56):
think it's difficult. You know, eventually this is probably going
to end up. But at what point, you know, I
don't know. And so maybe Cornings, which is at eighty two,
goes to one hundred and fifty two and then back
to eighty two. You know, I don't know, I don't know.
I just think that maintaining and diversified, diversified overall portfolio
is a good idea. I think the other thing you
brought up, playing.

Speaker 2 (33:16):
You know, the picks and shovels of this, of artificial
intelligence through large cap tech, is a way to do
it as well.

Speaker 1 (33:22):
Oh yeah, I agree, that's that is what we're doing,
you know, so I'm happy with that.

Speaker 2 (33:27):
What do you got?

Speaker 1 (33:28):
I got investors are flushed with cash and happy to
keep it there. Seven point seven trillion, a record seven
point seven trillion dollars in cash. I think some of
the positives of having money in cash, and we have
nine percent of our accounting cash. I think if you

(33:48):
take a look at let's say you take a you know,
I don't think there's the risk that you holding cash
on the stock side has lost opportunity. The risk on
the on site his interest rates go down pretty much,
you know what I mean?

Speaker 2 (34:03):
You know, I think cash is a strategy on a
on a client by client, situation by situation basis. You know, yeah,
what do you think? I mean? I think when you
have four.

Speaker 1 (34:16):
We got fifteen minutes. You can't say. You can't just
say what.

Speaker 2 (34:19):
We're sitting at four percent. I think some people are
happy with that rate of return. You know, if some people,
you know, expect a five to seven percent rate of
return on their investments in general, and you can guarantee
four I think some people are happy sitting in four percent.
I think there's a lot of risks out there in
the market. I think there's a lot of risks out
there in the economy.

Speaker 1 (34:39):
So yeah, I do think though that I think people
don't understand a lot of clients. And this is not
just this is not just out out there. I'm saying
this side of the blue, having met having been in
this business forty years. The bond market is very difficult
to understand. I think people sometimes people think, well, I'm
gonna sit at four percent, and I had somebody in

(35:00):
the other day. They're getting short term yields are higher
than long term yields because you know, the the overall
bond market is expecting the economy to slow down, uh
and and and it's also expecting the Fed to cut rates.

(35:21):
So I think eventually you have Well, my point is one,
I think people think I'm gonna say it. I'm gonna
take four and a half on a money market or
from four and a half on a two month to
three month CD rather than four percent on a two
year CD because I'm getting a higher rate. It's that
reinvestment risk that I think a lot of people ignore.

(35:43):
They think, Okay, when it matures, then i'll go. Then
maybe I'll do. But if the FED cuts rates more,
those short term rates are gonna come down. And but
I mean short term, I mean one year and two
year CDs and the like in three year CDs. Yeah,
you've got to with a bond portfolio right now, I
would structure it so you know your average your average
duration is probably four or five years. It's what they

(36:06):
call the belly of the curve. You have some interest
rate risk.

Speaker 2 (36:10):
I still think short I think short term rates. You know, yeah,
I think they have. I think you should we started
going out a little bit more on the risk spectrum
as well as on duration. But you know, I do
still think that you know, a portion in short term
rates isn't is a strategy, You're right, like, you know
that reinvestment risks. So so for instance, we bought we
bought a little bit of E mt L emerging markets

(36:32):
fixed income. I think they could still do well in
the future. You know, you talk about the dollar, you
talk about you know, different countries you know, having having
you know, competitive esque rates against US, and you talk
about capital appreciation of emerging market funds as well. I
think they could do They could do pretty well. And
you know they have about you know, four point eight

(36:52):
to five percent you know, yields. So yeah, I don't know,
you know, I wouldn't go too far out on the
duration scale either. Again, like you know, we talk about
this a lot, what Trump's doing is an experiment, right,
so I think when you have something like this going
on in the economy, an experiment like this, it's it's

(37:14):
really risky to go out ten seven, eight, nine, ten,
twenty years on on duration on bonds because who knows,
you know what. I think people will start to get
very cautious on you know, what we're doing now and
will how will this affect our economy in five ten
years from now?

Speaker 1 (37:29):
And I think, you know, you often say that that
FED policy or central bank policies relatively doesn't have the
longest of history maybe one hundred years or so. So
but you know, em emerging market debt specifically, you know,
usually does better. You know, when when the ore fed
our central bank is easing, meaning cutting rates, it does better.

(37:53):
When there's a weakening dollar, the dollars come down a bit.
The dollars strengthened for the past twenty five years. Uh,
there's no reason to believe. I think, I think the
I'm not going to call it the liquidation of US dollars,
but the you know, repositioning of global assets, you know,
rebalancing of global assets elsewhere is probably has a lot

(38:14):
more room to run, you know, you have.

Speaker 2 (38:17):
And you see a lot of diversity in an emerging
market bond fund. Actually it has no one country that's
more than fifteen percent. Mexico is fifteen point twenty seven,
Brazil twelve point four to seven. You have India at
fourteen percent. So it's a pretty diversified fund in all
emerging market countries that I do believe are emerging on
a global scale economically as well.

Speaker 1 (38:38):
And they also have a lot of merging markets have
our commodity based economies or larger percentage of their economies
are commodity based, and you know, commodities have just begun.
Really what you would consider like a super cycle. You
look at goal that ultim high silver, you know, multi
multi decade high. So you know, we're going to take

(38:58):
a shot with that. What's the yield on that five
five percent or so?

Speaker 2 (39:02):
It's done really well this year. You know, it's total return,
it's about I would say eight ish percent, you know,
eight point eight percent.

Speaker 1 (39:10):
So we I mean, so yeah, but the whole ten
percent in cash eight percent in cash something like that,
no big deal on either side. I think if if
you have a portfolio waiting of let's say a growth
and income portfolio which is three to one stocks to bonds,
will say, you know, and you have ten percent out
of the market, you know in cash, that two and

(39:32):
a half percent or one quarter of the ten that
would have been allocated to the bond market. I don't
see much risk there. I think your risk is you
have seven and a half percent that should should be
allocated to the stock market not there, and that's where
the stock market could go up. But I think you know,
you know, And the other thing I think you know
if you say, and when you work incrementally with your
portfolio having ten percent cash, eight percent cash, twelve percent,

(39:56):
let's say you had five, you wanted to raise three
or four because you were nervous. Fine, I have about it,
you know, I think when you the problem is when
you go from when you have a long term growth
objective and you say, you know, I don't like President Trump,
I'm going to go to fifty percent rather than eighty
or ninety. That's where you make big mistakes because history
has shown that our economy, which is diversified, you know,

(40:17):
well will will basically you know, supersede or whatever, you know,
whoever's in the White House.

Speaker 2 (40:23):
Yeah, you know, And yeah, I think that, you know,
I have a lot of faith that these companies can
continue to make lots of money in in this in
this economy.

Speaker 1 (40:32):
Right.

Speaker 2 (40:33):
You know something that came out this week that I
you know, found interesting, not interesting, but Nike jumped significantly
after ours is up what seven eight percent on really
strong earning Tuesday. Yeah, yeah, what do you think about Nike?

Speaker 1 (40:50):
I am mixed emotions, you know, we do hold some Nike.
I think that, you know, and those mixed emotions come
a little bit from you, you know. Ka Kramer called
it the second best UH Dove stock, you know, as
far as potential out potential behind Nvidia, and I'm surprised,
you know, I would not call it that for sure.
I think that's the evaluation is pretty rich. And some

(41:12):
of my feeling comes from you, you know, I mean,
and some of my feeling also from from listening to
you thinking there's a lot of different brands out there.
Look at on Holdings, look at Decker's Hoka. I mean,
all of a sudden, you have you have a lot
of companies, say.

Speaker 2 (41:23):
Two percent dividend, you know, one hundred and ten billion
dollars market cat pe ratio of thirty eight and a
Ford P ratio of forty four, price of sales of
two point three, So it's still a pretty expensive stock.
We own a little bit of it, not much. We
did own a lot at one point one Uncle Chris's
favorite companies. Yeah, you know, God rest his soul, God

(41:45):
rest his soul stocks companies. But you know, I think
it's going to continue to be a struggle for them.
I don't think that younger generations have brand the brand
loyalty that older generations do.

Speaker 1 (41:55):
There's much I have loyalty, period, right, that.

Speaker 2 (41:58):
Much more options out there, as you're saying, like even
on cloud, you know, and it's been it's a fifteen
year old company and it's a what fifteen sixteen billion
dollar company. So just the you know Shopify, you know Instagram,
you know, chatchypt is just making deals with Etsy and
Pinterest to get into shopping. So, you know, I think
that the barriers to Enshi of starting in apparel clothing

(42:19):
company are just way lower than they used to be.
And that'll that'll just kind of continue to to you know,
to poke at at at Nike's side. In my opinion,
Nike's my favorite brand in that On the other side,
you know, I only wear Nike sneakers. I you know,
I love Nike clothing. So but you have to separate
the stock from the business sometimes.

Speaker 1 (42:40):
And we have fifty eight thousand shares of Nike. We
bought it about forty four. It's worth seventy four. So
we have some you know, probably locked at recently a
little bit here and there. Yeah, you know, I I
think you can accumulate it down and through here.

Speaker 2 (42:55):
You know, I've always had a tough time investing from
a value standpoint, you know, is this under like like
value traps? Right, So I think, you know, I think
Nike got so undervalue that we're seeing a little bit
of pop now. But event I think investors eventually will
still will start to question, you know, it's price.

Speaker 1 (43:15):
I agree, yeah, you know, I agree. Well. One of
the things, I don't know how much time we got left.
We got about five minutes to ago. I saw an
article or was actually you know, I don't know. I
guess it's something I got on my inbox. I'm going
to go through these, and it's pretty easy, so I
know we both go through tons of papers, so let

(43:36):
me just find it here. I should have found it
before he's opened up. Basically, it's about a woman who
is eighty years old.

Speaker 2 (43:42):
Yeah, yeah, I mean that right now. I'm eighty. I'm
partially retired with six hundred and fifty thousand dollars in investments.
I also have two hundred thousand dollars in home equity
and a two hundred and fifty thousand dollars life insurance policy.
I want to withdraw some from investments to remodel my bathroom,
but the economic and political climate make me like to
do So what should I do? Upgrade to tell me

(44:04):
the answer, But we don't need to. We can just
tell them our.

Speaker 1 (44:06):
Own answer, And what would that be?

Speaker 2 (44:09):
I would say, I mean, depending on the life insurance policy,
you could get at that tax free if it was
a whole life policy, depending on the cash value.

Speaker 1 (44:17):
I well, she's got it. She was even say she's
partially retired, so she's still.

Speaker 2 (44:22):
Working it for my investments, wouldn't you?

Speaker 1 (44:25):
Well, she just says, you know, I want to withdraw.
They dip into my retirement fund to remodel my bathroom.
She's got intment just as retirement fund. Does that mean
it's taxable?

Speaker 2 (44:36):
It's just six hundred and fifty investments, it's.

Speaker 1 (44:39):
A retirement fund. Let's just say it's let's say she's
got three hundred grand in an investment, like a non
qualified plan in three hundred fifty grand in an IRA.
I'm I'm not concerned about it.

Speaker 2 (44:49):
I would take from the non qualified.

Speaker 1 (44:50):
You know, I don't care, you know, yes, I mean
I was gonna blurt out something and I'll do it
and then clanify it. I don't care where you take
it from it. Just do it, you know, yeah? Right,
you know, saying and then we'll figure out Then then yes,
you then you want to dig down your job?

Speaker 2 (45:03):
Come, we have to figure out what the what the
best sources of that perspective are. But right now, I
just got a home equity line of credit on my home.
It's five point nine nine percent. Depending on the woman's
tax bracket you're looking at, you know, probably U a
non qualified account first, depending on the life insurance you
can probably may be able to get that some of

(45:24):
that cash value tax fra A. It's all a tax.

Speaker 1 (45:26):
This is a tax question, yeah right, taxes yeah, yeah, yeah, yeah, yes,
you want to take you want to take taxes in
the consideration, I'm both from the non qualified account. Let's
say you have to take an R and d uh,
maybe take some liver from there. But I think the
way that the title was phrased, the economic and political
climate makes me reluctant, not not, you know what I'm saying.
So yeah, so if she's reluctant because of that, just

(45:47):
do it. The other thing, too, is, you know, absent
parabolic nursing home costs. You know you want to you
know you basically you know when you get to be eighty,
statistically speaking, you know you actually have the deflation in
your life. You know when you think of you know,
you have a good shot on that. Well, think about me.
I'm sixty four, how do you thirty six? Right, So

(46:08):
by the time I'm eighty, you'll be fifty two. Your
sister will be fifty four. You can spring for dinner,
you can take my you can take me to Disney. No,
you can. You can take me to Disney. You know,
So you and then then you just slow down. You know,
we have we have clients who are aided. They're moving
back from Florida to be closer to their family, closer

(46:29):
to their doctors. So you know, don't take your situation
and consider it static. And you know everyone's everyone's kind
of arming for armageddon. Well, we know the armageddon that's
and I'm talking I'm not talking politically, I'm talking to
stock market. Oh my god, what if what if the
market goes down fifty or sixty percent? You know, we
know the armageddon that's coming, and that's your health. So
you know, have at it. You know, you saved enough
in your life now if you need nursing home, you know,

(46:51):
nursing home is gonna let you win with two hundred
and fifty or three hundred grand to do like an
actuarial calculation to then determine you know when you know
when you when you probably would pass and then uh
then or uh and then then if you have enough money, no,
then it's not an issue. Uh. And they figure out
when at some point in time they may be reimbursed
for medicaid. But certainly a couple hundred grand is enough

(47:13):
to get you into these places. So and then then
you think of think about your state plan. Do you
have kids you want to leave money to. Look, if
she wants to leave every dime to her children, well
then maybe she puts off her bathroom at at her
own discomfort, so to speak. But I think, uh, you know,
we're passing along so much money to our grandkids, our
kids and grandkids. Oh, I made a mistake. I just mom,
and I readd the well I said grandkids was freudy

(47:35):
and sleep or whatever. I'm not bypassing you and Sam,
it's okay.

Speaker 2 (47:40):
You've done enough for me.

Speaker 1 (47:42):
You've done enough for me. Anyways, About a minute ago,
Giant Saints Sunday, we cannot we got this game and
I'm not saying favorites.

Speaker 2 (47:52):
And now we're underdog, so.

Speaker 1 (47:54):
We' runner dogs from the leak neighbors is out? Is
that it?

Speaker 2 (47:56):
Yeah? I think so.

Speaker 1 (47:58):
Yeah, so he's our he's our white receiver. Jackson Dart,
he had you know, did you watch the game? You watch?
Did you watch any recap of the game? Or I
watched every thrill from Gidant watch the game, watch every
thrill from Jackson Dart. You did.

Speaker 2 (48:09):
You're you're a huge YouTuber. Now I go to your house,
You're watching you know, Scotland on YouTube, different You're touring
different countries on YouTube. You're watching you know highlights. You're you're, You're,
you're deep in.

Speaker 1 (48:21):
That's why I have deflation in my life. I don't
I don't have to buy an airplane ticket. I don't
get sick, I don't get a jet lag, I get nothing.
If you want to give us a call during the
week five one, seven four, check us out on the web,
but Faganasset dot com Like us on Facebook. Enjoy the day,
enjoy your life, love your kick, care bye bye