Episode Transcript
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Speaker 1 (00:00):
Good morning, and welcome to the Capital District's Money and
Investment Program. You're listening to the Fagan Financial Report. I'm
Dennis Fagan sitting here with my son Aaron, as we
do every as you listen to us every Sunday, but
right now it's Friday at around eleven o'clock. So we're
gonna talk about a lot of different things this week.
I'll touch base on what we're going to talk and
then I'll say, lookie, are ECB cuts rates, Germany willing
(00:21):
to take the cap off any type of spending, both
infrastructure and defensive spending, plug power to cut jobs after
losing more than two billion dollars last year, Costco's earnings,
broadcoms earnings, crowdstrikes earnings, and in a broader sense, what
does it mean for the market those types of earnings
and how the market's responding. President Trump talks about short
term pain versus long term gain. Certainly got to talk
(00:44):
about tariffs. We're going to talk about our take on it,
and a lot of different things today on a broader topic.
During the second half ten, Peter Lynch quotes anyone hoping
the retire needs to hear and we did not get
to that last week there, so start off with that
next week and then some broader eye ideas like passive investing,
this and that. So got a good show planned for
(01:05):
you today. But first and foremost thereon how are you
doing today?
Speaker 2 (01:09):
I'm doing good?
Speaker 1 (01:09):
How are you good? Good? Good? So Mom and I
baby sad last night? Yeah?
Speaker 2 (01:14):
So yeah, we.
Speaker 1 (01:15):
Baby said last night you have two kids for the
first time listeners of the show. Jude, who's almost three
three on May third, Yeah, and esme it was eight months, right,
H'll be eight months on the fifteenth. Right, So you
come in, you and Lauren had gone out to you
come in with a half gallon of ice cream.
Speaker 2 (01:33):
I did. You're flashing it, Alley, half gallon of ice
cream like.
Speaker 1 (01:37):
You'd be carrying a football. We have to get into
the end zone, you know, up high. Jude, who's gonna
be three, looks at it, Daddy, ice cream is like
his eyes lit up, his face lit up. What did
you say?
Speaker 3 (01:48):
It's for tomorrow? It's for tomorrow, for tomorrow? So you know,
well earlier in the day like can we making pancakes?
Reading or something like sure you can make in pancakes.
So I not only got the stuff for to make
pan cakes. I got stuff to make chocolate chip pancakes.
So I walk in the door. He has chocolate all
over his face. I'm like, does he really need ice
cream on top of chocolate chip pancakes for dinner?
Speaker 1 (02:10):
Dancwers? No, Mom gave it the dancers.
Speaker 3 (02:12):
No, So you know, tonight will be the night that
we can have some ice cream. We usually watch Friday nights.
We you know, have a bowl of ice cream in
bed and watch like a Disney movie. That sounds and
it's nice. So I didn't want to give him, you know,
fource feed him. RFK would be proud of me.
Speaker 1 (02:29):
You know, yeah, God forbid you gave him ice cream.
Speaker 2 (02:34):
Yeah, the kid, he's like, start looking like me.
Speaker 1 (02:37):
We had a lot of fun. We had a lot
of fun. He likes to fly around. I can still
pick him up flat, you know, and fly him around
and fly him around your house. So anyway, so you know,
well let's let's you know, I came up with a
couple of things this week that that you know, and
I guess I want to preface what we do every
week with with the fact that you know, managing in
(02:59):
and around one hundred million dollars, you know, twenty five
million dollars on either side, depending upon the market. The
market's down four or five percent this week, down two
or three percent, Nazeks down six percent year to day.
So we are paid and we to to you know,
if you look think of us as if money, if
money is like a ship going down a river. Each
(03:20):
one of our clients we are the captain of that ship.
You know, certainly the client. You know, we have deep
you know, meetings with the client and we outline what
their objectives are. But you know, we have to come
up with with with this decision. Sometimes they're not politically popular,
but but hey, we're not. But they're not political decisions.
(03:42):
They're basically decisions that we think that the administ policies
of the administration, how they're going to impact the market.
And right now, I think I came up with something.
I thought it made a lot of sense to why
the market is is in it is isy. A couple
of things. Is one is that you know, the thecou
enemy did not need the paddles, did not need the
(04:02):
heart paddle, just need a change of diet, to change
our diet. And I think that's what is going on
with the market right now, the Trump administration is hitting
the market with paddles and the economy of paddles. And
yet yes, we needed, we need to cut down the
bloating and the federal government in fact that non form
payils were port came out today. Federal gunment shed ten
(04:22):
thousand jobs, private public sector in general added eleven. Uh So, yeah,
we need, we needed a change in direction. But I
think the market is wondering, you know, you know, the
abruptness of the change. Is it too much to handle?
Is the pain going to be too much over the
short term that you know? Or when do we get
(04:43):
to the other side? That's the uncertainty of it, you know,
you know, yeah, yeah, I think that you think it's
this is kind of fair value, don't you hear?
Speaker 3 (04:52):
No? I do you know barring uh you know, a
major recession. I think that you know, a temp percent correction,
uh is and I think we're getting there with the
with the triple ques is warranted and you know, is
fair barring.
Speaker 1 (05:09):
A major recession? What would? But what does that mean? Though?
You know I'm saying, or do you think then you
don't think we're gonna get into you You're gonna think
we're gonna be get into one.
Speaker 3 (05:18):
I think it's possible we get into a recession from
GDP numbers, but I do still think a lot. You know,
if if forty percent of the S and P is
is technology, let's say, I do still think that large
cap technology stocks could do well even if we do
go into a technical recession, you know, and I think
we're getting around fair value for those companies.
Speaker 1 (05:39):
Right, Yeah, I don't. I don't disagree with you know,
I don't. Just I think just to we have to
begin to get some certainty into the policies. And I
think President Trump is making and look, people would say, well,
what do you know? That's fine, you can say what
you want, but we have to try to know something because,
like I said at the top of this, we're managing money.
And I think, what but President Trump is making mistaken
(06:02):
the inconsistency with a parent, perceived inconsistency with with with
with the foreign policy and tariff policies. That's making people wonder,
how is this going to end up? If you're an
automobile maker, what do you do now? Nothing? You're now
sitting wait for another month.
Speaker 3 (06:20):
And I think that's the biggest threat to the United
States right now is let's say Donald Trump's policies do work,
and he says, oh, this takes time. This takes time.
People aren't going to be waiting around for two or
three years. So let's say his policies are more economically
or or you know, company friendly in three years, Well,
if they if people don't know what's going to go
on for the next three years, you could see a
(06:41):
stall in production, you could see a stall in spending
and capac spending, and you could potentially see a flight
of capital to you know, I know Europe or emerging
markets isn't more friendly, especially to corporations. But at the
same time, if they at least know what to expect,
they can plan around that exactly. So if company can't
know what to expect, how do you plan for? How
(07:04):
do you plan it all?
Speaker 1 (07:05):
Well, is this going it's just going to be attack
that that's being going to be continuously deployed throughout his
throughout his administration. If so, I think that, you know,
it's going to be a difficult time, I really do,
you know. So that's why there's got to be some
certainty for the markets, you know, and I use you know,
and you you always make fun of me. I use
a lot of different analogies, but I don't make fun
(07:25):
of you.
Speaker 2 (07:27):
That's not true.
Speaker 1 (07:27):
We joke a hard time, yes, so, but you know,
you know, if if I was, we are. Our official
policy or our stance on the Trump administration is, you know,
the the his the tactics. You know that he has
taken or unprecedented and as such, there's going to be
a wider range of potential returns outcomes as opposed to
(07:51):
a traditional politician. Now, given that because some of these
changes are unprecedented or or the tariff's not really to
utilize broadly, you know, Trump did a little bit in
his first administration over the past hundred years. Let's call
them unprecedented then and say that. You know, it's like
taking a shortcut. You know, at some point in time,
(08:13):
even though it ends up being a shortcut, you're gonna wonder, hey,
am I going the right way? I think that's what
the market's feeling right now. And President Trump came out
this week and said, you know, it might be during
his address before Congress, you know, to the farmers, Hey,
there could be some pain before we get to the
other side. Well, you know, I don't think anybody knows
how much and how long?
Speaker 3 (08:34):
And just trust me, Just trust me, Just trust me. Eventually,
you know, you'll lose trust if someone keeps ontil you
needed to just try not.
Speaker 1 (08:41):
Is he going to be the typical guy who doesn't
ask for directions at some point time alone that shortcut
you know, or checks the map, you know. And I
think that's what the market's feeling right now. So even
though today you had and look, the market might turn
around today, and I'm not you know, I don't want to.
I want to get into that a little bit too
air because if I'm a listener to the sh know,
I'm saying, Okay, these guys are telling me things, but
(09:03):
I want to know. I want to know what do
I do now? So what you know, if you want
to start off, I can start off a little bit.
I know, we rebalanced, we got we got done with
three rebalancing last Friday. Yeah, so I'm happy about that.
You know, the markets were in the positive last friday,
or at least the S and P five hundred, So
what what do you do now? Where are the opportunities?
(09:24):
Are the opportunities? I'm asking a question I'm not going
to answer this, I'll let you answer, but you think
CAN tend to think and I tend to think that
some of these opportunities are more in the some of
the beaten down things. Are they in technology, are they
in Nvidia?
Speaker 3 (09:39):
You know, I think they're you know, quite frankly everywhere.
And I'm not saying the opportunities aren't everywhere, but you know,
we had a client come in on Thursday, and I
think the I think that right now you have a
well diversified portfolio because I think what you're seeing in international,
I'm in emerging markets is people really really do want
to be invested. You know, if you just look at
(10:01):
you know, NBL, which is the diven end Aristocrat ETF,
that's up a year to date, that's up three point
three three and a half percent year to date. You know,
you have the SCCHF International up nine percent year to date.
You know emerging emerging markets are up significantly or up
you know, five percent year to date. So you know,
I think you're seeing people want wanting to be invested.
(10:24):
It's just not in the things that have really pulled
the market along for the past fifteen years. So I
think people are really trying to diversify as much as possible.
You'll see you're even seeing gold up forty five percent
year over year over year, so ten percent year to date.
So you know, I think what is key is to
have a diversified portfolio because you know, if let's say, hey,
(10:47):
this does take a long time, you know, we could
we could we're down about let's say ten percent. We
could just be down ten percent for the next six
months to a year. But I do still think there
are pockets of this market that you can get a
yield from a dividend yield, you can get interest from
and with four percent on the AGG about over four
(11:08):
percent closer to four and a half percent on the
AGG and then international. So you know, I think you
could have that like all weather diverse portfolio that you know,
even if the market goes nowhere, you can still yield,
you know, two three four percent on a diversified portfolio
until you know, we have some of these policies that
the administration is putting in place into until we see some.
Speaker 2 (11:32):
I guess outcomes from it.
Speaker 1 (11:33):
Right, you know, as I look at as I look
at our largest ETF and mutual fundholdings, you know, I
think they they they do represent some good opportunity. You know,
you mentioned the n OBL S and P five hundred
dividend Aristocrat Fund. It's our largest ETF holding. On the
equity side, uh and is up three point you know,
(11:57):
let's say a little over three percent as we speak.
Speaker 2 (11:59):
J didend as well, j T E.
Speaker 1 (12:02):
K UH is down five percent, and that's the JP
Morgan Us Tech Equity Leaders when that's our second largest.
Our third largest is the x l E Energy Energy
Select uh AND and that you know, totally diversification, good dividends.
Speaker 3 (12:19):
That's down point three point three senior to date, it's
up point three five.
Speaker 1 (12:23):
Percent, okay, x l E Yes, x l E is
it's one.
Speaker 2 (12:28):
And a half percent as of you know, eleven o'clock on.
Speaker 1 (12:32):
Okay, So that that's flat the markets down two or three.
Then you go to the schwab Us broad s Hbcential
Yeah with with but it's it's down two point seven three.
And then the final one is the schwab Us Dividend
Fund SHD and what's that doing this year?
Speaker 3 (12:51):
It's up two point seventy five percent with you know,
three and a half percent dividends.
Speaker 1 (12:55):
So our fifth third and first, third and fifth largest
etf are up this year, US tech leaders and broad
market down a bit this year. And that's kind of
go ahead, you talk about it bit now.
Speaker 3 (13:07):
And that's kind of how we construct portfolios is we
do still believe in the long term innovation advantage America has,
and that's you know, large cap growth companies. So you know,
we do trim those companies when they become an outsized
percentage of your portfolio. We did that this year with
(13:27):
a couple of large cap tech stocks as well as Palenteers.
So you know, what we do is try to use
individual stocks and that we're going to hold on to
for a long, long period of time, and then we
do use ets to counterbalance the volatility. Let's say that
large cap tech stocks has you know, kind of like
the QQQ essentially, so you know, we use yeah again,
(13:49):
you know, I guess you know, I just said it,
but you know, we use it. We kind of still
believe that the long term trend in you know, American
innovation is still there. In artificial intelligence, we do believe
it could all out a little bit. We do believe
that they are relative, they are fairly valued, and you know,
we try to use ets that are more you know,
(14:10):
value oriented, dividend oriented, less volatile to counterbalance that when
you know, they do go down or go nowhere.
Speaker 1 (14:19):
Right, Yeah, you know, I was just thinking that, you know,
I don't even know whether to say it on the
air whatever. But I guess what bothers me most about
right now, you know, is I do believe in American exceptionalism.
You know, it's sixty three years old. You know, I
don't want to give up that belief that we are
the greatest country in the world and that we have
something to offer other countries and not just transactional. Now,
(14:42):
some may say and I agree with that to a
certain extent, and you say it all the time, and
I agree that the middle middleman's you know, the middle
income middle America has been left out of the whole
equation and that's totally wrong. We've got to do something
about that. But I go back to what I first
said at the top of the show, is that I
think a change in direction, rather than the heart attack paddles,
(15:02):
you know, the way to go, you know.
Speaker 3 (15:04):
Yeah, you know, And I just find it a little
odd that, you know, we're we're really trying to build
it the middle class. And then the people that you
know helped, you know, and I'm not saying destroyed the
middle class. Who was behind Trump? It is an inauguration
Elon Musk, Jeff Bezos, Mark Zuckerberg. You know, companies that
(15:25):
are worth billions of billions of dollars, trillions of dollars
and you know, employee far less people than let's say,
like US Steele did when it was the largest company
in the nineteen field.
Speaker 1 (15:37):
You know, it's I don't know, Yeah, well we'll see,
you know, I just could to continue to say what
to do here? So you know, we mentioned some of
our largest ETFs will go on and then that's the domestic.
Our largest international ETF is a global Dow the DGT,
and that's of seven or eight percent this year. It's
followed by the Ice Shows Global one hundred. That's the
(15:59):
largest hundred company he's in the world, and that's about
flatted down a little bit this year. And why is
it flatted down a little bit this year? Because it's
it's the largest company and a lot of it is America,
right states. So I think that's it. And then what
do we have? What else we have in there?
Speaker 2 (16:16):
You know, let's I know it's going a little bit.
Speaker 1 (16:20):
Let me just say what what we got there? So
we have the Vanguard International High Yield Dividend and the
I Shares more Morgan Stanley or World E t F.
All right, so those are FUR four or five international
funding go within there. Our largest balanced fund or fixed
income fun is the JP Morgan Premium Equity Income fun
and by far it's our largest fund in that category.
(16:43):
And you know J E. P I is the symbol
there and I think you you're gonna want some of that.
Speaker 3 (16:48):
So yeah, and you know, I do think there's still
an opportunity in international, huge, huge opportunity. You know, I
know I'm scuffling around here, but you know, there's an
Our article this week about Germany loosen's fiscal change to
transform European defense, so they will emit its constitution to
exempt defense and security allies for fiscal spending limits, allowing
(17:10):
for hundreds of billion dollars of euros and investment. And
you know, I think this is a I think we
talked about last week on the show, how all the
companies in the EU that are worth ten plus billion
dollars that have been founded in the last fifty years,
you add all those companies up and it's still and
home Depot is still worth more than all those companies. So,
(17:32):
you know, if you look for a place that has
an opportunity here, and you know, maybe that opportunity for
them is.
Speaker 2 (17:41):
Anti American.
Speaker 3 (17:42):
Essentially, the EU has an opportunity and they probably have
more support from their constituents now than ever to really
embrace innovation and embrace creativity within you know, the technology
sector and all sector. So I do think that the
(18:03):
SCHF Schwab International still has you know, a ways to run. Also,
you know, you look at International, SCHF has a point
zero six expense ratio and it's diving in you know
this two point ninety seven percent, so you know, you
get two point nine percent on your money even it
goes nowhere. So I do think International will continue to
(18:25):
be an opportunity. And you know, if they don't take
advantage of this, I don't think there'll be that many
more chances for them.
Speaker 1 (18:33):
Well, I agree, So this is this is I mean,
if you look at the real opportunity, the opportunity right now,
and I look at you know, if you look at
International is lagged domestic probably by one hundred percent over
the past decade, meaning that there's been a two toor
rue ratio of the S and P five hundred versus
the Morgan Stanley composite Index. So if you were to
(18:57):
take a look at that, you would say to yourself
that either there's a regression to the mean that the
US slows down and and and foreign catches up, or
the US goes down and foreign stays flat. But I
think touching on what you you were saying, is that
there there's a from I was tors and Slock put
out something from Apollo that we are there's we're going
(19:20):
from globalization to segmentation. And when you go from segmentation,
if you think about that, just in terms of politics domestically,
if every little town has a town supervisor, they have
a you know, they have a mayor, they have or whatever,
they have a fire department, they have a police department,
the costs go up, but so does the potential to build.
You have to build police cars, you have to do this,
(19:41):
you have to that. So if if we're going from
to segmentation, what you were saying earlier, just to kind
of clarify in my own head, you know, you Europe's
gonna have to have their own defense. They're gonna and granted,
it might help us to a certain extent, you know,
and maybe it'll help us in the long run. But
you're saying there's real opportunity in in infrastructure. Germany's lifting
(20:02):
the cap on their own infrastructure, the deregulation, right, So
I think there's opportunity there a lot more than I
would have thought of, you know, five or six months ago.
And and you know, most of the outlook for twenty twenty
five was a decent US market and we think it'll
be okay. But we also think that the longer this
(20:23):
uncertainty goes on, the more difficult it's going to be
for it to be okay. But and I also think
that you know, once you take that, once people think
well the US is not exceptional, it's hard to get
that back. It's kind of like a reputation, you know,
it's going to be it's hard to get that back.
So we don't want to give you don't want to
(20:43):
give that up exceptional both from a from an economic
perspective and innovation perspective, and also from a certainly a
soft power perspective. So that's kind of. So, so you know,
we are in this churning phase. We're over sold on
a short term basis. Technical we are, you know, at
(21:03):
pretty much the height of uncertainty that we've seen in
probably since COVID.
Speaker 3 (21:09):
Yeah, and I think I think what the next step
really for major market movements?
Speaker 2 (21:14):
You know, who knows?
Speaker 3 (21:15):
But is you know, this week we finally saw a
little bit weaker numbers on the on the job front.
Speaker 1 (21:21):
Yeah, why don't you touching them? You got them in
front of you or no?
Speaker 3 (21:23):
Yeah, US payroll growth one hundred and fifty one thousand
in February, less than expected of one hundred and seventy thousand.
Federal government employment declined by ten thousand in February.
Speaker 1 (21:35):
And dose isn't really a full foreshit that you'll see
that in the in the March none, but.
Speaker 3 (21:39):
Average hourly earnings climbed to a point three percent, as expected,
though the annual increase of four percent was a bit
softer than four point two percent. So you're starting to
open the door to the FED possibly cutting rates. You know,
I think fed the Fed. The chances of the Fed
cutting three times this year just went up drastically, So,
(22:02):
you know, could you see a little bit of a
tailwind in the near future if we do see the
FED rate cut. So what I think the administration's goal
is to to you know, I do think it's possible.
I do think, like, so, what is the goal if
I were them? You know, I think we maybe talk
about it on the second half of the show. But right, so,
(22:24):
you get people to retire. You have thirteen thousand people
turn in sixty five every day. You have a lot
of those people retire. You have a lot of people
in the federal government retire. So then you see a
weakening job numbers, but you might not see a weakening
economy because those people will just get on Social Security,
just get on their pensions or the like. And then
(22:46):
you see a cut in interest rates, a deregulation to
be more business friendly, so those private sector companies can
start to pick up the people who lost their jobs hypothetically.
So and I think that's the end goal, and if
it works, I think it could be good for the
stock market. But again, you know, there's so much uncertainty
in the time being.
Speaker 1 (23:07):
And I would say this, you know that the whole
of Americans are working a lot longer, in part because
they feel uncertain about their financial situation. But if there
are government employees that are being laid off, they have
the potential to have pensions. So let's say you replace
some of them with lower cost employees, maybe a different
pension structure. Like So there are a lot of good
(23:28):
that There's a lot of good that can come out
of this economically, same with the tariffs. If we get
on equal playing field with some other countries, it's just
going to be watching this sausage made that is that
the market really doesn't like to see, you know what
I mean? But all right, right now, it's ten thirty
on the station depend upon for news, weather and information.
I hope you come back for the second half hour
(23:48):
of the Capitol District's Money and Investment Program. You're listening
to the Faguan Financial Report. Good morning, Welcome back to
the second half hour of the Capitol District's Money an
Investment Program. You're listening to the Fague and Financial Report
and then fig and sitting here with my son Aaron,
as we do every Sunday. We're airing this on Sunday.
We're actually it's about what eleven twenty on a Friday,
market suffering or we're a rough week. I think it's
(24:10):
uh and I think it's you know, a few weeks
of this. I think President Trump come out of the
gate running and has added uncertainties to the market, not
the why, but the how on some of the issues.
Like I said in the first half hour, you know,
we need to change the direction, not the paddles I've
gone with that, you know it shortcuts, you know, and
the uncertainty. And I think and I think, I think
(24:33):
President Trump and there was a couple of his advisors
or member of his cabinet that said, I think the
Scott Beston Treasure secretary said I today President Trump isn't
really watching the stock market.
Speaker 3 (24:42):
And I think you saw that midday on Thursday in
the market and went down precipitously since then.
Speaker 1 (24:48):
And no one wants him to do better in America,
to do better than us. You know, we're big, you know,
proponents of America. One time, you know, and you know,
I always worry, you know, Karen said to me, yeah,
you're not out thimistic. Mom, you know, yeah you're not,
I said, ask the kids. And you probably don't remember this,
maybe maybe maybe it was in my dream, but I
think she did it. I'm an optimistic person.
Speaker 3 (25:08):
You're a very optimistic person. I think you are not
as much as you know when you're in your fifties.
Speaker 1 (25:14):
Well, yeah, I've seen a lot. I've seen a lot,
you know. Anyways, So so that's where we sit right now.
And and also some what's this guy?
Speaker 2 (25:26):
Now?
Speaker 1 (25:27):
Well that's fine, you know, but like I said, we
manage money and we've got to we've got to put
into gear what we think is going to protect our clients.
Speaker 2 (25:34):
And that's so try to take our personal opinions out
of it.
Speaker 1 (25:37):
And definitely, So there's two things I want to touch
on right off the rip air and then the first
one was going to be the one from Peter Lynch's.
Peter Lynch had ten We both got to find it,
let me find it. We had to break to find it,
and we did not. Peter Lynch, where is she just
(26:02):
lost our listeners?
Speaker 2 (26:04):
I don't think so I have it anymore?
Speaker 1 (26:09):
You do have it? Or I had it? Black rock
and of Mexico plug power cut vib.
Speaker 2 (26:14):
Plug power dollars. Usually that's that's a tough thing.
Speaker 1 (26:20):
If I tug plug power with a ten foot poll,
what happens in a recession, kind of Mexico's tariffs, black
rock bitcoin, you know.
Speaker 3 (26:31):
But you know, can I can I break this up
of not talking and talk a little bit.
Speaker 1 (26:35):
More about this.
Speaker 3 (26:37):
You know, we have a I have an article here
from First Trust. So first Trust, you know, is one
of the largest privately owned but largest ETF managers in
the entire country. And you know, they've been they haven't
been optimistic. So but I do think this is interesting.
(26:59):
And you know, they go on to say, talk about
the economy a little bit as US and our intercession.
Probably not, but as the first quarter real GDP is
very likely have a minus signed in front of it, Yes,
a negative reading for real growth. But then it goes
on to say at the end of it, you know,
but that still leaves the effect of what is likely
to be a consistent effort by the Trump administration to
bring down government spending. We think those efforts are positive
(27:21):
for future long term economic growth, but in the short
term could deliver some pain as the consumers and businesses
who have grown addicted to living off of government redistribution
need to adapt to a more free market environment. And
I think that is obviously the main goal of the
Trump administration.
Speaker 1 (27:42):
Very noble, very noble goal in as much that you
know we are we were out of sorts, out of balance,
are are spending and perhaps our tax structure from from
from a public perspective. So I think now he is
(28:02):
trying to get that back and he has hit the
ground running. See, I think he's hit the ground running too.
I mean, they keep going with I think he's hit
the ground running because he knows he's got to get
the bad news out of the way first, because if
he doesn't and get it done and get it going
and then get some positive information.
Speaker 3 (28:17):
He needs positive information by summer of next year, right
before mid terms.
Speaker 1 (28:22):
Right, So that's what that's what he's got going. And
then so before we were talking about the churning in
the market and this and that and and there was
a post from Ben Carlson and what our clients really
want to know is am I going to be okay?
And that's you know, you know, will I be okay?
Will I be able to take a vacation? Will will
I be able to you know, will it be okay?
(28:43):
If we save a little less? Will be okay? Will
I be able to retire? And that's really what people
want to know, and I think the answer to that
is is that you know, we allocate assets according to uh,
your long term objectives, rebalance periodically. We balanced periodically and
then go from there. I pulled out, so we'll do
(29:07):
the ten Peter Lynch quotes anyone hoping to retire one
day needs to hear. We both ended up fine in
but I pulled out our first quarter newsletter. And the
title of that that newsletter, which was I wrote wrote
on the date written was January eleventh, is twenty twenty five.
Into the Unknown. That's the title of our cover letter
(29:28):
to our clients and starts. For obvious reasons, as we
slocked through the first month of twenty twenty five, we
were reminded of the song into the Unknown from the
Frozen two soundtrack.
Speaker 2 (29:38):
Have a three year old?
Speaker 1 (29:39):
Yeah, you have a three year older. In part is
in response to the frigid temperatures outside, but also due
to the onset of President Trump two point zero. Regular
readers to our Weekly Snapshot and listeners to our show
know that since the election, we have stated that a
Trump administration brings with it a much wider range of
potential economic outcomes than that of a traditional executive branch,
even though as a jename ultimately proof successful. The unorthodox
nature of his approach maybe company by uncertainty as he
(30:01):
bucks the system. As citizens of the United States, we
wish him nothing but the best, you know. So so
that's how we began the newsletter. We you know, we
close the newsletter with in closing, we believe that as
we extit twenty twenty five, investors will have experienced moderate gains,
(30:23):
but with shoppiness and volatility along the way. And I
guess I still think that, you know, I agree, you know,
I think things are gonna be okay.
Speaker 3 (30:30):
Yeah, my market cycles happen much quicker. I do think
that we could obviously it's better, that's this is the
beginning of the year, but you know, I think we
could see some short term pain until these things digest
themselves and then you know, we get all the data
out from you know, all the what doche has done
so far, you know, see what they do in the
next three months, and then I think you could see
(30:51):
some stabilization in the market. Because I don't think the
market is grossly overvalued here. I don't know their pockets
of the market that are valued, Yeah, there always are,
but right now. I don't think there's I think, you know,
on an S and P front, on a equal weighted front,
you know, you're seeing a lot of strength in the market.
You know, even we were talking about performance of everything
(31:16):
at the beginning of all of our equity funds at
the beginning of the show, But even the RSP is
down point one percent as of noon, as of eleven
thirty on Friday, So you know, I do think you're
seeing pockets of strength in the market because people do
want to stay invested. It's just a rotation out of
the things that have been working because they were the
most overvalued. And we're seeing a lot of uncertainty in
(31:38):
the market.
Speaker 1 (31:39):
Yeah, and i'd be careful about really for our clients.
You know, we know we're never We're never over our skis,
not never, but generally not over our skis and valuations
on specific securities, I think we're over our skis at all.
With Palenteer is probably the only one that I think,
you know, and we sold twenty percent of it for
the clients where we felt we where we should Palenteer
(32:02):
right now sitting down twenty seven cents. We sold uh,
twenty percent of it at one tenants at eighty Our
average cost on Palenteer for our for our portfolio, let
me just punch it up is twenty three twenty three
and change or something twenty four to ninety one. So
you know, it's still you know, more than a triple.
And I think I think, I think those those will
(32:24):
begin to stabilize. So be careful about throwing out the
baby with the bath water right now in videos as
we speak, down the market's down three hundred on the Dow,
two hundred on the Nasdak. So the nasdak's down one percent,
I think we've got to be. Nazdek's down one ninety
three one percent, So I think we've got to, you know,
just just be patient with these things. Uh, the market
(32:45):
craks ten percent most years. Nasdak was down about ten
percent coming in Nazek one hundred. You know, you've seen
a rotation to things that haven't that haven't been doing
that well. Uh, the consumer on durables and the like.
So we're getting to the point where you don't want
to you don't want to, you know, sell in mass
if you haven't sold already, I'd be looking more at
(33:06):
the bargain side. Than I would at selling more. Do
you feel the same way I do? Yeah? You know,
you know, I think it's gonna be choppy. As we said,
I think the first half is gonna be very choppy,
you know, and most games will be in the in
the second half. So just bear with it. So what
do you want it? What do you want to do?
The ten peerter We gotta do the ten Peter Lynch quotes.
Speaker 2 (33:25):
Did you find it?
Speaker 1 (33:26):
Yeah? Did you?
Speaker 3 (33:26):
Yeah?
Speaker 2 (33:26):
I found it too, but then I lost it again.
Here we go.
Speaker 1 (33:29):
Yeah, So Peter Lynch, famous manager of the Magellan Fund.
I think you retired in I think the early nineties
maybe mid nineties. Nineties average twenty nine point two percent
return of Magellan and people hoping to retire. He has
ten different quotes, and why don't you start with number one? Aaron?
Speaker 3 (33:51):
The trick is not to learn to trust your gut feeling,
but rather to discipline yourself to ignore them. Stand by
your stocks as long as the fundamental story of the
company hasn't changed.
Speaker 1 (34:00):
Because I think the valuation is going to come up
and down. Like Reddit. You know, we don't own Reddit
for we haven't read it for three or four clients.
But by and large we've just been nibbling out a
little bit after it's pulled back a lot. Pollunteer is
another one. You know, the fundamental the story hasn't changed. Look,
if it's a great company but but overvalued a little bit,
you know, I think you kind of hanging there with
(34:21):
it if.
Speaker 3 (34:21):
The story of the company is still intact. And I
do think that's as important, you know, I think, uh,
you know, there's a lot of value investors that are
that have been you know, disciples, let's say of you know,
the Peter lind or Benjamin Graham Warren Buffett school where
value value, value, fundamental value. But I do think, uh,
the more we become a service based economy, a technology
(34:44):
based economy, I do think you have to you have
to see, hey, what is the story of this company,
and is the story still on the same path as
as it previously was.
Speaker 1 (34:53):
And does that story kind of is that story in
line with with the economy right now? You know? Is
that is that story? Like you don't and you don't
want every all the same story. It's like loading cargo
on a ship, you know, you don't want to load
all that cargo into the same ship.
Speaker 3 (35:10):
Yeah, And I do think, you know, you do have
to have disciplines, you know, he goes on to say,
but rather to discipline yourself to ignore them. And you know,
I do think that, you know, you know, people pay
us to have disciplines for them because they trust us
with their money. And I think that is one of
the most important things.
Speaker 2 (35:26):
And you know, we.
Speaker 3 (35:27):
Have thirty years, right, you know, thirty five years of
back testing since this company was formed to and have
disciplines in place, you know, kind of like Palenteer. You know,
when things become too much of a percentage your portfolio,
even if you still believe in the story, it's prudent
to trim that. You know, hopefully it's a mistake, right,
you know, but it's still the right thing to do,
(35:48):
because you know, you always have to invest with the
possibility that you're wrong, right. You know, you'd never want
to be too confident in yourself because that leaves arrogant,
and you know you can always be wrong.
Speaker 2 (35:58):
Obviously.
Speaker 1 (36:00):
Number two, the stock market's the best place to be
over the last ten years, thirty years, one hundred years,
and that would hold true here for sure. The last
ten years. As a people, I've put average over ten percent.
But if you need money in one or two years,
you shouldn't be in stocks. And I would even extend that,
you know, you know, if you need money in three
four five years, the sooner you need money, it's an
(36:22):
inverse relationship correlation the larger percentage that you would want
out of the stock market, you know, so if it's
three four five years, depending upon your tolerance to risk,
the classic retirement portfolio is like a sixty forty ratio,
So sixty forty, seventy thirty and around there, you know,
is what you want to be when you retire. If
you're ten fifteen years for retirement, you know, eighty or
ninety percent in the market. If you're twenty or twenty
(36:43):
five years old, hey, you know one hundred percent in
the market.
Speaker 3 (36:46):
So yeah, and that's what we try to do for
clients is, you know, clients that are taking distributions out
of their account, we do have two to three years
in cash and short term fixed income products or investments
products for them to draw them. Because you know, if
the average bear market is I think like nine point
(37:07):
six months almost three hundred days, then then you can
take distributions from your fixed income side and let the
stock side, you know, maybe go down, but also come
back up.
Speaker 2 (37:20):
So you know, we always try to have.
Speaker 3 (37:23):
Liquidity within the two to three year range for clients
so they can withstand those bear markets.
Speaker 1 (37:30):
True number three, always be on the lookoup for great
companies and allows the industries. I don't really agree with
this the great industry. It's grown too fast. It's just
computers and medical technology attracts too much attention and too
many competitors. I think, you know, that may be true
to a certain extent, but I think that what's impacting
technology right now and the pullback in technology, communication services
and consumer discretionary was the valuation the potential for tariffs
(37:53):
and deregulation reps here but more regulation. We talked about globalization,
to segmentation of the of the economy, of the global economy,
the regulation, more regulation overseas. I think that that could
hurt some of these technology companies. You know, and if
the economy slows down, you know, there's less demand for
(38:15):
some of these services. So I think you'll, I think you'll.
I think that's what's impacting the economy now. The growth
scare is impacting these stocks right now. I think we'll
get by it, you know, maybe a little bit lower levels,
but I did this this Going back to number two,
I think the stories of these companies like Apple, Microsoft,
Google in video is still there, stay impact, and I.
Speaker 3 (38:36):
Do think the whole artificial intelligence efficiency efficient efficiency trend
is still there as well.
Speaker 1 (38:43):
I agree, what's number four?
Speaker 3 (38:46):
People go to the library and and they do incredible
research on a microwave oven, and then they'll go out
and spend ten thousand dollars on a stock because they
hurt a tip on the bus.
Speaker 1 (38:56):
True. Yeah, you know, I go back to uh, when
CNBC was on at the Yelhouse in the year two thousand,
you kind of figured that was the end because it wasn't.
It wasn't you know, ESPN or anything like that. So
when your barber's giving you a tip, you kind of
know that, you know, maybe maybe it's you're getting a
(39:17):
little long in the tooth. Number five. If you don't
if you don't understand a company, if you can't explain
it to a ten year old in two minutes or less,
don't own it. Yeah, I think we live in a
different world when when that was actually written, what do
you think about them?
Speaker 3 (39:33):
I think it's you know, to a certain extent. You know,
do we own semiconductors? Can I tell you you know
the majority of what they do and how they fit
into the economy. Yeah, but you know, do I know
the technology behind a semiconductor? Now?
Speaker 2 (39:46):
You know?
Speaker 3 (39:46):
So I think it was a little bit easier for
Peter Lynch to say this when you know he was
you know, the largest investments were you know, I guess
Microsoft or you.
Speaker 1 (39:55):
Know, craft more it was more craped discretionary.
Speaker 2 (39:58):
He went on discretionairey and things like that.
Speaker 1 (40:00):
One of the things he said, and I don't I
don't know if it's within here. And I hope I'm
speaking close enough to the mic is that, you know?
Speaker 3 (40:07):
Because I was away, Well, I emailed Zach the first
half and he already said that it sounds great.
Speaker 2 (40:13):
So I know we had some issues last week.
Speaker 1 (40:14):
Yeah, right, And I think my sympthing was a matter
of I think you turned my microphone off because I
was talking too much. So Number six people who exit
the stock market to avoid decline are odds on favorites
to miss mix miss the next rally, And I don't
know who put it out, but you know you missed
the ten largest days every every year if you were
to miss with ten largest days, you're going to miss
(40:35):
the vast majority of the stock market, right.
Speaker 3 (40:37):
And you know, in something like seven of the ten
best days in the market are usually are during in
a market cycle, are during a bear market.
Speaker 2 (40:46):
Right, So it's just always important.
Speaker 1 (40:48):
Right. The other thing, too, is along those lines, well,
how do you deal with it? Then? What do I do?
What do I do? How do I avoid the downturn?
You don't, Okay, you don't. You basically deal with an
asset allocation model that conforms to your longer term of
and recognizing that these days will come. You know, it's
like being married. You know, I'm sure your mom doesn't
wake up every day next to me and thank the
thank the Good Lord that she's there. You know, every
(41:10):
once in a while now things hit the fan, but overall,
you know, been married forty two years, thrilled to be
married forty two years, and I think mom is too.
And but we know that once in a while things
go wrong. That's just part and parcel with with the relationship.
So the market's like a really good relationship. Every once
in a while things don't go well, but over the
longer haul, it's a good place to be? Am I
am I right about Mom? Or no?
Speaker 2 (41:30):
No, I think she's happy.
Speaker 1 (41:33):
You know she's not. She's an aggressive quardaler. You and
her both you're like a little team.
Speaker 3 (41:38):
You have a cordal group chat me and Mom because
the three of us do it. And you're a brutal man,
You're a different person.
Speaker 1 (41:46):
Am I brutal?
Speaker 2 (41:47):
You're a bully?
Speaker 1 (41:48):
Add a little levity to your otherwise mundane. Otherwise mundane,
you usually don't ice cream hoarding life.
Speaker 3 (41:56):
You know, I would say, between me, you and Mom,
you get it the least amount of times, and then me.
Speaker 1 (42:02):
Then Mom, I've been keeping track and I know that
it's me and then you and Mom are tired of.
Speaker 2 (42:07):
That because sometimes I'll teach you.
Speaker 3 (42:09):
I'll teach you how to play a little bit better
sometimes and sometimes you know, I know you're playing it.
You take your phone out at work, which I tell you.
Speaker 1 (42:15):
Not to do. All what you start with zebra right,
and then.
Speaker 3 (42:19):
You take your phone out and then two minutes later
you're texting us your results like Mom takes all day
to do it.
Speaker 1 (42:26):
You know, Oh, that's why Mom gets good scores.
Speaker 3 (42:29):
Probably you're right, Well, she thinks about it more yeah,
I have time, eir exactly, all right, that's true though too.
Speaker 1 (42:37):
You know we're working. It's like being a good golfer.
You know. I used to say, you know the person
that I know once in his name God, where God
rest is so great? Guys is showing me a good golfer?
And I'll show you a guy who's not working enough.
Speaker 2 (42:50):
Now I'm curious who it is.
Speaker 1 (42:51):
I'll tell you off the air if I remember. If
you can't find any companies that you think are attracted
to put your money in the bank until you discover
There's an article that we just read that says, you know,
Warren Buffett's run out of ideas right now. I don't
know if that's the case, but he also says there's
no balls and strikes. You can take pitches, take pitches
and swing at one, or buy something that you think
(43:12):
is a goodbye. There's no balls in structure that can
be called out if you have money in the silence,
what are we sitting on about ten or twelve percent?
Speaker 2 (43:18):
Twelve percent hash almost high elevens. So I do agree
with that.
Speaker 3 (43:23):
And now you have a especially like I always talk
about that, we have ten thousand people turning sixty five
every day. The majority of our clients are in retirement
or in your retirement. Now you have the option of
a four percent fixed incomes out of your portfolio. I
think it's just prudent to reduce risk when you know
the accumulation phase, get rich stage of your life is over.
(43:45):
Now it's time to you know, we have a diverse portfolio,
you have a little bit less volatility in your portfolio, and.
Speaker 2 (43:56):
Enjoy your enjoy the retirement years for sure.
Speaker 1 (44:00):
For sure, you know, and I think that it's not
a competition. You know, this is not a competition. It's
not to see who can accumulate the most. It's about
the having the money to do what you need to
do when you're retire. If you own stocks, there's always
something to worry about. You can't get away from it.
Speaker 2 (44:18):
Yeah, that's the hardest part about this job.
Speaker 3 (44:20):
It is twenty four to seven, and you know, you're
always worrying about stocks. You're always worrying about people's portfolios,
and it's just something you have to live with. And
I think if our clients are listening to this, we
are always worrying about it. But also, you know, get
comfortable with getting uncomfortable. And that's not just from a
stock market perspective. That's from not having an income perspective
(44:43):
in retirement and replacing your distributions with income. So it's
uncomfortable and it takes a little bit getting used to.
You know, we're humans, we're you know, we're humans who
like to be have routines, you know, and after thirty
forty years of working for a lot of people, it's
hard to break those that routine. So it's a tough
time for people when they do retire, especially if you
(45:03):
don't have a pension less and less people have pensions now,
so you know, it is uncomfortable, and you know, find
ways to get used to it. Don't look at your
portfolio as much. That's a good look at it every day.
Go outside, you know, find a hobby.
Speaker 2 (45:16):
You know.
Speaker 3 (45:17):
A lot of times, I think some of the hardest
clients to work with are the people that are listening
to CNBC all the time, because definitely they're always worried
because everything's breaking news.
Speaker 1 (45:27):
If the market goes off half the time and down
half the time, half the time, you're worried, even though
over the longer term it goes up most of the time,
you know, and I think you want to you want
to learn a little bit about it, you know, you
want to learn a little bit about the functioning of
the market. You don't have to learn about the individual securities.
Learn about the functioning of the market. You know, I
would think if I could come up with three or
four things, I hope I can over the top of
(45:49):
my head. Learn about the longer term percentage of positive
returns versus negative returns. You know, learn about you know,
what the S and P does over the longer peer
of time. Long learn about the erosionary impact of inflation.
Speaker 3 (46:04):
Maybe I think the benefits of a diversifified portfolio, right,
you know, I think that, you know, we have clients
come in a lot, you know, with stock ideas, and
you know, during a bull market, all their stock ideas
look exactly the same, and they're all technology, and they're
all volatile. So you know, learn that a lot of
you know, you'll get a well diversified portfolio will always
(46:25):
lead to some of the things that you have underperforming.
And that's a good thing if you're in retirement.
Speaker 1 (46:30):
And that's a good point because at the end of
a bull market, the the the people tend to be
undiversified because look at right now, what has been doing
well in the past seven or eight years has been technology.
So people like, well, why don't I need any Bristol Myers,
Why don't you need any Regina around? You buy low
and sell high, so things have been left international is
(46:52):
the same thing. I think those are real potential opportunities
right now. So we're going to we consider the tax
consequences and we move money along those lines looking for opportunities.
Number nine, Avoid long shots. I bought about thirty long
shots in my life. I've never broken even on one.
I would probably say the same thing for my segree
you like long shots?
Speaker 3 (47:12):
Now, I think that if you have a personality that is,
someone that likes to take long shots, just know that
they're long shots and core and allocate a very small
percentage to those long shots, you know.
Speaker 2 (47:26):
I think.
Speaker 3 (47:26):
I think by taking those shots it you know, if
you allocate one, two, three percent of your portfolio too
long shots, it allows you to at least have a plan,
you know, and not go too deep into the long shots.
Speaker 1 (47:40):
That's true, you don't you won't. You don't want a
portfolio of long shots.
Speaker 2 (47:42):
Yeah.
Speaker 1 (47:43):
Five or ten percent in long shots tops five. I agree.
I agree, speculate once in a while.
Speaker 3 (47:49):
But speculate that don't yet, don't Yeah, don't destroy the
course you're on or the core.
Speaker 1 (47:55):
Of your portfolio goods. You need to know number ten.
You need to know the market's going to go down
sometimes and if you're not ready for that, you should
have known stocks. You should known equities. You should know
an ETF set of equity based, you should know mutual funds
of equity based. And it's good when it happens, you know,
you know, you don't get a guard without rain, you know.
And that's that's all I have to say about that.
So that'll just about do it for the show. Give
(48:17):
us a call during the week at five one, eight, two,
seven four. Check us out on the web at Faganasset
dot com. You know, like us on Facebook. And also
if you want these quotes, a copy of these quotes, uh,
I can certainly give you the ur L or send
you a PDF of this. Uh that'll just about do it.
Thanks for listening. I have a great daycare
Good morning, and welcome to the Capital District's Money and
Investment Program. You're listening to the Fagan Financial Report. I'm
Dennis Fagan sitting here with my son Aaron, as we
do every as you listen to us every Sunday, but
right now it's Friday at around eleven o'clock. So we're
gonna talk about a lot of different things this week.
I'll touch base on what we're going to talk and
then I'll say, lookie, are ECB cuts rates, Germany willing
(00:21):
to take the cap off any type of spending, both
infrastructure and defensive spending, plug power to cut jobs after
losing more than two billion dollars last year, Costco's earnings,
broadcoms earnings, crowdstrikes earnings, and in a broader sense, what
does it mean for the market those types of earnings
and how the market's responding. President Trump talks about short
term pain versus long term gain. Certainly got to talk
(00:44):
about tariffs. We're going to talk about our take on it,
and a lot of different things today on a broader topic.
During the second half ten, Peter Lynch quotes anyone hoping
the retire needs to hear and we did not get
to that last week there, so start off with that
next week and then some broader eye ideas like passive investing,
this and that. So got a good show planned for
(01:05):
you today. But first and foremost thereon how are you
doing today?
Speaker 2 (01:09):
I'm doing good?
Speaker 1 (01:09):
How are you good? Good? Good? So Mom and I
baby sad last night? Yeah?
Speaker 2 (01:14):
So yeah, we.
Speaker 1 (01:15):
Baby said last night you have two kids for the
first time listeners of the show. Jude, who's almost three
three on May third, Yeah, and esme it was eight months, right,
H'll be eight months on the fifteenth. Right, So you
come in, you and Lauren had gone out to you
come in with a half gallon of ice cream.
Speaker 2 (01:33):
I did. You're flashing it, Alley, half gallon of ice
cream like.
Speaker 1 (01:37):
You'd be carrying a football. We have to get into
the end zone, you know, up high. Jude, who's gonna
be three, looks at it, Daddy, ice cream is like
his eyes lit up, his face lit up. What did
you say?
Speaker 3 (01:48):
It's for tomorrow? It's for tomorrow, for tomorrow? So you know,
well earlier in the day like can we making pancakes?
Reading or something like sure you can make in pancakes.
So I not only got the stuff for to make
pan cakes. I got stuff to make chocolate chip pancakes.
So I walk in the door. He has chocolate all
over his face. I'm like, does he really need ice
cream on top of chocolate chip pancakes for dinner?
Speaker 1 (02:10):
Dancwers? No, Mom gave it the dancers.
Speaker 3 (02:12):
No, So you know, tonight will be the night that
we can have some ice cream. We usually watch Friday nights.
We you know, have a bowl of ice cream in
bed and watch like a Disney movie. That sounds and
it's nice. So I didn't want to give him, you know,
fource feed him. RFK would be proud of me.
Speaker 1 (02:29):
You know, yeah, God forbid you gave him ice cream.
Speaker 2 (02:34):
Yeah, the kid, he's like, start looking like me.
Speaker 1 (02:37):
We had a lot of fun. We had a lot
of fun. He likes to fly around. I can still
pick him up flat, you know, and fly him around
and fly him around your house. So anyway, so you know,
well let's let's you know, I came up with a
couple of things this week that that you know, and
I guess I want to preface what we do every
week with with the fact that you know, managing in
(02:59):
and around one hundred million dollars, you know, twenty five
million dollars on either side, depending upon the market. The
market's down four or five percent this week, down two
or three percent, Nazeks down six percent year to day.
So we are paid and we to to you know,
if you look think of us as if money, if
money is like a ship going down a river. Each
(03:20):
one of our clients we are the captain of that ship.
You know, certainly the client. You know, we have deep
you know, meetings with the client and we outline what
their objectives are. But you know, we have to come
up with with with this decision. Sometimes they're not politically popular,
but but hey, we're not. But they're not political decisions.
(03:42):
They're basically decisions that we think that the administ policies
of the administration, how they're going to impact the market.
And right now, I think I came up with something.
I thought it made a lot of sense to why
the market is is in it is isy. A couple
of things. Is one is that you know, the thecou
enemy did not need the paddles, did not need the
(04:02):
heart paddle, just need a change of diet, to change
our diet. And I think that's what is going on
with the market right now, the Trump administration is hitting
the market with paddles and the economy of paddles. And
yet yes, we needed, we need to cut down the
bloating and the federal government in fact that non form
payils were port came out today. Federal gunment shed ten
(04:22):
thousand jobs, private public sector in general added eleven. Uh So, yeah,
we need, we needed a change in direction. But I
think the market is wondering, you know, you know, the
abruptness of the change. Is it too much to handle?
Is the pain going to be too much over the
short term that you know? Or when do we get
(04:43):
to the other side? That's the uncertainty of it, you know,
you know, yeah, yeah, I think that you think it's
this is kind of fair value, don't you hear?
Speaker 3 (04:52):
No? I do you know barring uh you know, a
major recession. I think that you know, a temp percent correction,
uh is and I think we're getting there with the
with the triple ques is warranted and you know, is
fair barring.
Speaker 1 (05:09):
A major recession? What would? But what does that mean? Though?
You know I'm saying, or do you think then you
don't think we're gonna get into you You're gonna think
we're gonna be get into one.
Speaker 3 (05:18):
I think it's possible we get into a recession from
GDP numbers, but I do still think a lot. You know,
if if forty percent of the S and P is
is technology, let's say, I do still think that large
cap technology stocks could do well even if we do
go into a technical recession, you know, and I think
we're getting around fair value for those companies.
Speaker 1 (05:39):
Right, Yeah, I don't. I don't disagree with you know,
I don't. Just I think just to we have to
begin to get some certainty into the policies. And I
think President Trump is making and look, people would say, well,
what do you know? That's fine, you can say what
you want, but we have to try to know something because,
like I said at the top of this, we're managing money.
And I think, what but President Trump is making mistaken
(06:02):
the inconsistency with a parent, perceived inconsistency with with with
with the foreign policy and tariff policies. That's making people wonder,
how is this going to end up? If you're an
automobile maker, what do you do now? Nothing? You're now
sitting wait for another month.
Speaker 3 (06:20):
And I think that's the biggest threat to the United
States right now is let's say Donald Trump's policies do work,
and he says, oh, this takes time. This takes time.
People aren't going to be waiting around for two or
three years. So let's say his policies are more economically
or or you know, company friendly in three years, Well,
if they if people don't know what's going to go
on for the next three years, you could see a
(06:41):
stall in production, you could see a stall in spending
and capac spending, and you could potentially see a flight
of capital to you know, I know Europe or emerging
markets isn't more friendly, especially to corporations. But at the
same time, if they at least know what to expect,
they can plan around that exactly. So if company can't
know what to expect, how do you plan for? How
(07:04):
do you plan it all?
Speaker 1 (07:05):
Well, is this going it's just going to be attack
that that's being going to be continuously deployed throughout his
throughout his administration. If so, I think that, you know,
it's going to be a difficult time, I really do,
you know. So that's why there's got to be some
certainty for the markets, you know, and I use you know,
and you you always make fun of me. I use
a lot of different analogies, but I don't make fun
(07:25):
of you.
Speaker 2 (07:27):
That's not true.
Speaker 1 (07:27):
We joke a hard time, yes, so, but you know,
you know, if if I was, we are. Our official
policy or our stance on the Trump administration is, you know,
the the his the tactics. You know that he has
taken or unprecedented and as such, there's going to be
a wider range of potential returns outcomes as opposed to
(07:51):
a traditional politician. Now, given that because some of these
changes are unprecedented or or the tariff's not really to
utilize broadly, you know, Trump did a little bit in
his first administration over the past hundred years. Let's call
them unprecedented then and say that. You know, it's like
taking a shortcut. You know, at some point in time,
(08:13):
even though it ends up being a shortcut, you're gonna wonder, hey,
am I going the right way? I think that's what
the market's feeling right now. And President Trump came out
this week and said, you know, it might be during
his address before Congress, you know, to the farmers, Hey,
there could be some pain before we get to the
other side. Well, you know, I don't think anybody knows
how much and how long?
Speaker 3 (08:34):
And just trust me, Just trust me, Just trust me. Eventually,
you know, you'll lose trust if someone keeps ontil you
needed to just try not.
Speaker 1 (08:41):
Is he going to be the typical guy who doesn't
ask for directions at some point time alone that shortcut
you know, or checks the map, you know. And I
think that's what the market's feeling right now. So even
though today you had and look, the market might turn
around today, and I'm not you know, I don't want to.
I want to get into that a little bit too
air because if I'm a listener to the sh know,
I'm saying, Okay, these guys are telling me things, but
(09:03):
I want to know. I want to know what do
I do now? So what you know, if you want
to start off, I can start off a little bit.
I know, we rebalanced, we got we got done with
three rebalancing last Friday. Yeah, so I'm happy about that.
You know, the markets were in the positive last friday,
or at least the S and P five hundred, So
what what do you do now? Where are the opportunities?
(09:24):
Are the opportunities? I'm asking a question I'm not going
to answer this, I'll let you answer, but you think
CAN tend to think and I tend to think that
some of these opportunities are more in the some of
the beaten down things. Are they in technology, are they
in Nvidia?
Speaker 3 (09:39):
You know, I think they're you know, quite frankly everywhere.
And I'm not saying the opportunities aren't everywhere, but you know,
we had a client come in on Thursday, and I
think the I think that right now you have a
well diversified portfolio because I think what you're seeing in international,
I'm in emerging markets is people really really do want
to be invested. You know, if you just look at
(10:01):
you know, NBL, which is the diven end Aristocrat ETF,
that's up a year to date, that's up three point
three three and a half percent year to date. You know,
you have the SCCHF International up nine percent year to date.
You know emerging emerging markets are up significantly or up
you know, five percent year to date. So you know,
I think you're seeing people want wanting to be invested.
(10:24):
It's just not in the things that have really pulled
the market along for the past fifteen years. So I
think people are really trying to diversify as much as possible.
You'll see you're even seeing gold up forty five percent
year over year over year, so ten percent year to date.
So you know, I think what is key is to
have a diversified portfolio because you know, if let's say, hey,
(10:47):
this does take a long time, you know, we could
we could we're down about let's say ten percent. We
could just be down ten percent for the next six
months to a year. But I do still think there
are pockets of this market that you can get a
yield from a dividend yield, you can get interest from
and with four percent on the AGG about over four
(11:08):
percent closer to four and a half percent on the
AGG and then international. So you know, I think you
could have that like all weather diverse portfolio that you know,
even if the market goes nowhere, you can still yield,
you know, two three four percent on a diversified portfolio
until you know, we have some of these policies that
the administration is putting in place into until we see some.
Speaker 2 (11:32):
I guess outcomes from it.
Speaker 1 (11:33):
Right, you know, as I look at as I look
at our largest ETF and mutual fundholdings, you know, I
think they they they do represent some good opportunity. You know,
you mentioned the n OBL S and P five hundred
dividend Aristocrat Fund. It's our largest ETF holding. On the
equity side, uh and is up three point you know,
(11:57):
let's say a little over three percent as we speak.
Speaker 2 (11:59):
J didend as well, j T E.
Speaker 1 (12:02):
K UH is down five percent, and that's the JP
Morgan Us Tech Equity Leaders when that's our second largest.
Our third largest is the x l E Energy Energy
Select uh AND and that you know, totally diversification, good dividends.
Speaker 3 (12:19):
That's down point three point three senior to date, it's
up point three five.
Speaker 1 (12:23):
Percent, okay, x l E Yes, x l E is
it's one.
Speaker 2 (12:28):
And a half percent as of you know, eleven o'clock on.
Speaker 1 (12:32):
Okay, So that that's flat the markets down two or three.
Then you go to the schwab Us broad s Hbcential
Yeah with with but it's it's down two point seven three.
And then the final one is the schwab Us Dividend
Fund SHD and what's that doing this year?
Speaker 3 (12:51):
It's up two point seventy five percent with you know,
three and a half percent dividends.
Speaker 1 (12:55):
So our fifth third and first, third and fifth largest
etf are up this year, US tech leaders and broad
market down a bit this year. And that's kind of
go ahead, you talk about it bit now.
Speaker 3 (13:07):
And that's kind of how we construct portfolios is we
do still believe in the long term innovation advantage America has,
and that's you know, large cap growth companies. So you know,
we do trim those companies when they become an outsized
percentage of your portfolio. We did that this year with
(13:27):
a couple of large cap tech stocks as well as Palenteers.
So you know, what we do is try to use
individual stocks and that we're going to hold on to
for a long, long period of time, and then we
do use ets to counterbalance the volatility. Let's say that
large cap tech stocks has you know, kind of like
the QQQ essentially, so you know, we use yeah again,
(13:49):
you know, I guess you know, I just said it,
but you know, we use it. We kind of still
believe that the long term trend in you know, American
innovation is still there. In artificial intelligence, we do believe
it could all out a little bit. We do believe
that they are relative, they are fairly valued, and you know,
we try to use ets that are more you know,
(14:10):
value oriented, dividend oriented, less volatile to counterbalance that when
you know, they do go down or go nowhere.
Speaker 1 (14:19):
Right, Yeah, you know, I was just thinking that, you know,
I don't even know whether to say it on the
air whatever. But I guess what bothers me most about
right now, you know, is I do believe in American exceptionalism.
You know, it's sixty three years old. You know, I
don't want to give up that belief that we are
the greatest country in the world and that we have
something to offer other countries and not just transactional. Now,
(14:42):
some may say and I agree with that to a
certain extent, and you say it all the time, and
I agree that the middle middleman's you know, the middle
income middle America has been left out of the whole
equation and that's totally wrong. We've got to do something
about that. But I go back to what I first
said at the top of the show, is that I
think a change in direction, rather than the heart attack paddles,
(15:02):
you know, the way to go, you know.
Speaker 3 (15:04):
Yeah, you know, And I just find it a little
odd that, you know, we're we're really trying to build
it the middle class. And then the people that you
know helped, you know, and I'm not saying destroyed the
middle class. Who was behind Trump? It is an inauguration
Elon Musk, Jeff Bezos, Mark Zuckerberg. You know, companies that
(15:25):
are worth billions of billions of dollars, trillions of dollars
and you know, employee far less people than let's say,
like US Steele did when it was the largest company
in the nineteen field.
Speaker 1 (15:37):
You know, it's I don't know, Yeah, well we'll see,
you know, I just could to continue to say what
to do here? So you know, we mentioned some of
our largest ETFs will go on and then that's the domestic.
Our largest international ETF is a global Dow the DGT,
and that's of seven or eight percent this year. It's
followed by the Ice Shows Global one hundred. That's the
(15:59):
largest hundred company he's in the world, and that's about
flatted down a little bit this year. And why is
it flatted down a little bit this year? Because it's
it's the largest company and a lot of it is America,
right states. So I think that's it. And then what
do we have? What else we have in there?
Speaker 2 (16:16):
You know, let's I know it's going a little bit.
Speaker 1 (16:20):
Let me just say what what we got there? So
we have the Vanguard International High Yield Dividend and the
I Shares more Morgan Stanley or World E t F.
All right, so those are FUR four or five international
funding go within there. Our largest balanced fund or fixed
income fun is the JP Morgan Premium Equity Income fun
and by far it's our largest fund in that category.
(16:43):
And you know J E. P I is the symbol
there and I think you you're gonna want some of that.
Speaker 3 (16:48):
So yeah, and you know, I do think there's still
an opportunity in international, huge, huge opportunity. You know, I
know I'm scuffling around here, but you know, there's an
Our article this week about Germany loosen's fiscal change to
transform European defense, so they will emit its constitution to
exempt defense and security allies for fiscal spending limits, allowing
(17:10):
for hundreds of billion dollars of euros and investment. And
you know, I think this is a I think we
talked about last week on the show, how all the
companies in the EU that are worth ten plus billion
dollars that have been founded in the last fifty years,
you add all those companies up and it's still and
home Depot is still worth more than all those companies. So,
(17:32):
you know, if you look for a place that has
an opportunity here, and you know, maybe that opportunity for
them is.
Speaker 2 (17:41):
Anti American.
Speaker 3 (17:42):
Essentially, the EU has an opportunity and they probably have
more support from their constituents now than ever to really
embrace innovation and embrace creativity within you know, the technology
sector and all sector. So I do think that the
(18:03):
SCHF Schwab International still has you know, a ways to run. Also,
you know, you look at International, SCHF has a point
zero six expense ratio and it's diving in you know
this two point ninety seven percent, so you know, you
get two point nine percent on your money even it
goes nowhere. So I do think International will continue to
(18:25):
be an opportunity. And you know, if they don't take
advantage of this, I don't think there'll be that many
more chances for them.
Speaker 1 (18:33):
Well, I agree, So this is this is I mean,
if you look at the real opportunity, the opportunity right now,
and I look at you know, if you look at
International is lagged domestic probably by one hundred percent over
the past decade, meaning that there's been a two toor
rue ratio of the S and P five hundred versus
the Morgan Stanley composite Index. So if you were to
(18:57):
take a look at that, you would say to yourself
that either there's a regression to the mean that the
US slows down and and and foreign catches up, or
the US goes down and foreign stays flat. But I
think touching on what you you were saying, is that
there there's a from I was tors and Slock put
out something from Apollo that we are there's we're going
(19:20):
from globalization to segmentation. And when you go from segmentation,
if you think about that, just in terms of politics domestically,
if every little town has a town supervisor, they have
a you know, they have a mayor, they have or whatever,
they have a fire department, they have a police department,
the costs go up, but so does the potential to build.
You have to build police cars, you have to do this,
(19:41):
you have to that. So if if we're going from
to segmentation, what you were saying earlier, just to kind
of clarify in my own head, you know, you Europe's
gonna have to have their own defense. They're gonna and granted,
it might help us to a certain extent, you know,
and maybe it'll help us in the long run. But
you're saying there's real opportunity in in infrastructure. Germany's lifting
(20:02):
the cap on their own infrastructure, the deregulation, right, So
I think there's opportunity there a lot more than I
would have thought of, you know, five or six months ago.
And and you know, most of the outlook for twenty twenty
five was a decent US market and we think it'll
be okay. But we also think that the longer this
(20:23):
uncertainty goes on, the more difficult it's going to be
for it to be okay. But and I also think
that you know, once you take that, once people think
well the US is not exceptional, it's hard to get
that back. It's kind of like a reputation, you know,
it's going to be it's hard to get that back.
So we don't want to give you don't want to
(20:43):
give that up exceptional both from a from an economic
perspective and innovation perspective, and also from a certainly a
soft power perspective. So that's kind of. So, so you know,
we are in this churning phase. We're over sold on
a short term basis. Technical we are, you know, at
(21:03):
pretty much the height of uncertainty that we've seen in
probably since COVID.
Speaker 3 (21:09):
Yeah, and I think I think what the next step
really for major market movements?
Speaker 2 (21:14):
You know, who knows?
Speaker 3 (21:15):
But is you know, this week we finally saw a
little bit weaker numbers on the on the job front.
Speaker 1 (21:21):
Yeah, why don't you touching them? You got them in
front of you or no?
Speaker 3 (21:23):
Yeah, US payroll growth one hundred and fifty one thousand
in February, less than expected of one hundred and seventy thousand.
Federal government employment declined by ten thousand in February.
Speaker 1 (21:35):
And dose isn't really a full foreshit that you'll see
that in the in the March none, but.
Speaker 3 (21:39):
Average hourly earnings climbed to a point three percent, as expected,
though the annual increase of four percent was a bit
softer than four point two percent. So you're starting to
open the door to the FED possibly cutting rates. You know,
I think fed the Fed. The chances of the Fed
cutting three times this year just went up drastically, So,
(22:02):
you know, could you see a little bit of a
tailwind in the near future if we do see the
FED rate cut. So what I think the administration's goal
is to to you know, I do think it's possible.
I do think, like, so, what is the goal if
I were them? You know, I think we maybe talk
about it on the second half of the show. But right, so,
(22:24):
you get people to retire. You have thirteen thousand people
turn in sixty five every day. You have a lot
of those people retire. You have a lot of people
in the federal government retire. So then you see a
weakening job numbers, but you might not see a weakening
economy because those people will just get on Social Security,
just get on their pensions or the like. And then
(22:46):
you see a cut in interest rates, a deregulation to
be more business friendly, so those private sector companies can
start to pick up the people who lost their jobs hypothetically.
So and I think that's the end goal, and if
it works, I think it could be good for the
stock market. But again, you know, there's so much uncertainty
in the time being.
Speaker 1 (23:07):
And I would say this, you know that the whole
of Americans are working a lot longer, in part because
they feel uncertain about their financial situation. But if there
are government employees that are being laid off, they have
the potential to have pensions. So let's say you replace
some of them with lower cost employees, maybe a different
pension structure. Like So there are a lot of good
(23:28):
that There's a lot of good that can come out
of this economically, same with the tariffs. If we get
on equal playing field with some other countries, it's just
going to be watching this sausage made that is that
the market really doesn't like to see, you know what
I mean? But all right, right now, it's ten thirty
on the station depend upon for news, weather and information.
I hope you come back for the second half hour
(23:48):
of the Capitol District's Money and Investment Program. You're listening
to the Faguan Financial Report. Good morning, Welcome back to
the second half hour of the Capitol District's Money an
Investment Program. You're listening to the Fague and Financial Report
and then fig and sitting here with my son Aaron,
as we do every Sunday. We're airing this on Sunday.
We're actually it's about what eleven twenty on a Friday,
market suffering or we're a rough week. I think it's
(24:10):
uh and I think it's you know, a few weeks
of this. I think President Trump come out of the
gate running and has added uncertainties to the market, not
the why, but the how on some of the issues.
Like I said in the first half hour, you know,
we need to change the direction, not the paddles I've
gone with that, you know it shortcuts, you know, and
the uncertainty. And I think and I think, I think
(24:33):
President Trump and there was a couple of his advisors
or member of his cabinet that said, I think the
Scott Beston Treasure secretary said I today President Trump isn't
really watching the stock market.
Speaker 3 (24:42):
And I think you saw that midday on Thursday in
the market and went down precipitously since then.
Speaker 1 (24:48):
And no one wants him to do better in America,
to do better than us. You know, we're big, you know,
proponents of America. One time, you know, and you know,
I always worry, you know, Karen said to me, yeah,
you're not out thimistic. Mom, you know, yeah you're not,
I said, ask the kids. And you probably don't remember this,
maybe maybe maybe it was in my dream, but I
think she did it. I'm an optimistic person.
Speaker 3 (25:08):
You're a very optimistic person. I think you are not
as much as you know when you're in your fifties.
Speaker 1 (25:14):
Well, yeah, I've seen a lot. I've seen a lot,
you know. Anyways, So so that's where we sit right now.
And and also some what's this guy?
Speaker 2 (25:26):
Now?
Speaker 1 (25:27):
Well that's fine, you know, but like I said, we
manage money and we've got to we've got to put
into gear what we think is going to protect our clients.
Speaker 2 (25:34):
And that's so try to take our personal opinions out
of it.
Speaker 1 (25:37):
And definitely, So there's two things I want to touch
on right off the rip air and then the first
one was going to be the one from Peter Lynch's.
Peter Lynch had ten We both got to find it,
let me find it. We had to break to find it,
and we did not. Peter Lynch, where is she just
(26:02):
lost our listeners?
Speaker 2 (26:04):
I don't think so I have it anymore?
Speaker 1 (26:09):
You do have it? Or I had it? Black rock
and of Mexico plug power cut vib.
Speaker 2 (26:14):
Plug power dollars. Usually that's that's a tough thing.
Speaker 1 (26:20):
If I tug plug power with a ten foot poll,
what happens in a recession, kind of Mexico's tariffs, black
rock bitcoin, you know.
Speaker 3 (26:31):
But you know, can I can I break this up
of not talking and talk a little bit.
Speaker 1 (26:35):
More about this.
Speaker 3 (26:37):
You know, we have a I have an article here
from First Trust. So first Trust, you know, is one
of the largest privately owned but largest ETF managers in
the entire country. And you know, they've been they haven't
been optimistic. So but I do think this is interesting.
(26:59):
And you know, they go on to say, talk about
the economy a little bit as US and our intercession.
Probably not, but as the first quarter real GDP is
very likely have a minus signed in front of it, Yes,
a negative reading for real growth. But then it goes
on to say at the end of it, you know,
but that still leaves the effect of what is likely
to be a consistent effort by the Trump administration to
bring down government spending. We think those efforts are positive
(27:21):
for future long term economic growth, but in the short
term could deliver some pain as the consumers and businesses
who have grown addicted to living off of government redistribution
need to adapt to a more free market environment. And
I think that is obviously the main goal of the
Trump administration.
Speaker 1 (27:42):
Very noble, very noble goal in as much that you
know we are we were out of sorts, out of balance,
are are spending and perhaps our tax structure from from
from a public perspective. So I think now he is
(28:02):
trying to get that back and he has hit the
ground running. See, I think he's hit the ground running too.
I mean, they keep going with I think he's hit
the ground running because he knows he's got to get
the bad news out of the way first, because if
he doesn't and get it done and get it going
and then get some positive information.
Speaker 3 (28:17):
He needs positive information by summer of next year, right
before mid terms.
Speaker 1 (28:22):
Right, So that's what that's what he's got going. And
then so before we were talking about the churning in
the market and this and that and and there was
a post from Ben Carlson and what our clients really
want to know is am I going to be okay?
And that's you know, you know, will I be okay?
Will I be able to take a vacation? Will will
I be able to you know, will it be okay?
(28:43):
If we save a little less? Will be okay? Will
I be able to retire? And that's really what people
want to know, and I think the answer to that
is is that you know, we allocate assets according to uh,
your long term objectives, rebalance periodically. We balanced periodically and
then go from there. I pulled out, so we'll do
(29:07):
the ten Peter Lynch quotes anyone hoping to retire one
day needs to hear. We both ended up fine in
but I pulled out our first quarter newsletter. And the
title of that that newsletter, which was I wrote wrote
on the date written was January eleventh, is twenty twenty five.
Into the Unknown. That's the title of our cover letter
(29:28):
to our clients and starts. For obvious reasons, as we
slocked through the first month of twenty twenty five, we
were reminded of the song into the Unknown from the
Frozen two soundtrack.
Speaker 2 (29:38):
Have a three year old?
Speaker 1 (29:39):
Yeah, you have a three year older. In part is
in response to the frigid temperatures outside, but also due
to the onset of President Trump two point zero. Regular
readers to our Weekly Snapshot and listeners to our show
know that since the election, we have stated that a
Trump administration brings with it a much wider range of
potential economic outcomes than that of a traditional executive branch,
even though as a jename ultimately proof successful. The unorthodox
nature of his approach maybe company by uncertainty as he
(30:01):
bucks the system. As citizens of the United States, we
wish him nothing but the best, you know. So so
that's how we began the newsletter. We you know, we
close the newsletter with in closing, we believe that as
we extit twenty twenty five, investors will have experienced moderate gains,
(30:23):
but with shoppiness and volatility along the way. And I
guess I still think that, you know, I agree, you know,
I think things are gonna be okay.
Speaker 3 (30:30):
Yeah, my market cycles happen much quicker. I do think
that we could obviously it's better, that's this is the
beginning of the year, but you know, I think we
could see some short term pain until these things digest
themselves and then you know, we get all the data
out from you know, all the what doche has done
so far, you know, see what they do in the
next three months, and then I think you could see
(30:51):
some stabilization in the market. Because I don't think the
market is grossly overvalued here. I don't know their pockets
of the market that are valued, Yeah, there always are,
but right now. I don't think there's I think, you know,
on an S and P front, on a equal weighted front,
you know, you're seeing a lot of strength in the market.
You know, even we were talking about performance of everything
(31:16):
at the beginning of all of our equity funds at
the beginning of the show, But even the RSP is
down point one percent as of noon, as of eleven
thirty on Friday, So you know, I do think you're
seeing pockets of strength in the market because people do
want to stay invested. It's just a rotation out of
the things that have been working because they were the
most overvalued. And we're seeing a lot of uncertainty in
(31:38):
the market.
Speaker 1 (31:39):
Yeah, and i'd be careful about really for our clients.
You know, we know we're never We're never over our skis,
not never, but generally not over our skis and valuations
on specific securities, I think we're over our skis at all.
With Palenteer is probably the only one that I think,
you know, and we sold twenty percent of it for
the clients where we felt we where we should Palenteer
(32:02):
right now sitting down twenty seven cents. We sold uh,
twenty percent of it at one tenants at eighty Our
average cost on Palenteer for our for our portfolio, let
me just punch it up is twenty three twenty three
and change or something twenty four to ninety one. So
you know, it's still you know, more than a triple.
And I think I think, I think those those will
(32:24):
begin to stabilize. So be careful about throwing out the
baby with the bath water right now in videos as
we speak, down the market's down three hundred on the Dow,
two hundred on the Nasdak. So the nasdak's down one percent,
I think we've got to be. Nazdek's down one ninety
three one percent, So I think we've got to, you know,
just just be patient with these things. Uh, the market
(32:45):
craks ten percent most years. Nasdak was down about ten
percent coming in Nazek one hundred. You know, you've seen
a rotation to things that haven't that haven't been doing
that well. Uh, the consumer on durables and the like.
So we're getting to the point where you don't want
to you don't want to, you know, sell in mass
if you haven't sold already, I'd be looking more at
(33:06):
the bargain side. Than I would at selling more. Do
you feel the same way I do? Yeah? You know,
you know, I think it's gonna be choppy. As we said,
I think the first half is gonna be very choppy,
you know, and most games will be in the in
the second half. So just bear with it. So what
do you want it? What do you want to do?
The ten peerter We gotta do the ten Peter Lynch quotes.
Speaker 2 (33:25):
Did you find it?
Speaker 1 (33:26):
Yeah? Did you?
Speaker 3 (33:26):
Yeah?
Speaker 2 (33:26):
I found it too, but then I lost it again.
Here we go.
Speaker 1 (33:29):
Yeah, So Peter Lynch, famous manager of the Magellan Fund.
I think you retired in I think the early nineties
maybe mid nineties. Nineties average twenty nine point two percent
return of Magellan and people hoping to retire. He has
ten different quotes, and why don't you start with number one? Aaron?
Speaker 3 (33:51):
The trick is not to learn to trust your gut feeling,
but rather to discipline yourself to ignore them. Stand by
your stocks as long as the fundamental story of the
company hasn't changed.
Speaker 1 (34:00):
Because I think the valuation is going to come up
and down. Like Reddit. You know, we don't own Reddit
for we haven't read it for three or four clients.
But by and large we've just been nibbling out a
little bit after it's pulled back a lot. Pollunteer is
another one. You know, the fundamental the story hasn't changed. Look,
if it's a great company but but overvalued a little bit,
you know, I think you kind of hanging there with
(34:21):
it if.
Speaker 3 (34:21):
The story of the company is still intact. And I
do think that's as important, you know, I think, uh,
you know, there's a lot of value investors that are
that have been you know, disciples, let's say of you know,
the Peter lind or Benjamin Graham Warren Buffett school where
value value, value, fundamental value. But I do think, uh,
the more we become a service based economy, a technology
(34:44):
based economy, I do think you have to you have
to see, hey, what is the story of this company,
and is the story still on the same path as
as it previously was.
Speaker 1 (34:53):
And does that story kind of is that story in
line with with the economy right now? You know? Is
that is that story? Like you don't and you don't
want every all the same story. It's like loading cargo
on a ship, you know, you don't want to load
all that cargo into the same ship.
Speaker 3 (35:10):
Yeah, And I do think, you know, you do have
to have disciplines, you know, he goes on to say,
but rather to discipline yourself to ignore them. And you know,
I do think that, you know, you know, people pay
us to have disciplines for them because they trust us
with their money. And I think that is one of
the most important things.
Speaker 2 (35:26):
And you know, we.
Speaker 3 (35:27):
Have thirty years, right, you know, thirty five years of
back testing since this company was formed to and have
disciplines in place, you know, kind of like Palenteer. You know,
when things become too much of a percentage your portfolio,
even if you still believe in the story, it's prudent
to trim that. You know, hopefully it's a mistake, right,
you know, but it's still the right thing to do,
(35:48):
because you know, you always have to invest with the
possibility that you're wrong, right. You know, you'd never want
to be too confident in yourself because that leaves arrogant,
and you know you can always be wrong.
Speaker 2 (35:58):
Obviously.
Speaker 1 (36:00):
Number two, the stock market's the best place to be
over the last ten years, thirty years, one hundred years,
and that would hold true here for sure. The last
ten years. As a people, I've put average over ten percent.
But if you need money in one or two years,
you shouldn't be in stocks. And I would even extend that,
you know, you know, if you need money in three
four five years, the sooner you need money, it's an
(36:22):
inverse relationship correlation the larger percentage that you would want
out of the stock market, you know, so if it's
three four five years, depending upon your tolerance to risk,
the classic retirement portfolio is like a sixty forty ratio,
So sixty forty, seventy thirty and around there, you know,
is what you want to be when you retire. If
you're ten fifteen years for retirement, you know, eighty or
ninety percent in the market. If you're twenty or twenty
(36:43):
five years old, hey, you know one hundred percent in
the market.
Speaker 3 (36:46):
So yeah, and that's what we try to do for
clients is, you know, clients that are taking distributions out
of their account, we do have two to three years
in cash and short term fixed income products or investments
products for them to draw them. Because you know, if
the average bear market is I think like nine point
(37:07):
six months almost three hundred days, then then you can
take distributions from your fixed income side and let the
stock side, you know, maybe go down, but also come
back up.
Speaker 2 (37:20):
So you know, we always try to have.
Speaker 3 (37:23):
Liquidity within the two to three year range for clients
so they can withstand those bear markets.
Speaker 1 (37:30):
True number three, always be on the lookoup for great
companies and allows the industries. I don't really agree with
this the great industry. It's grown too fast. It's just
computers and medical technology attracts too much attention and too
many competitors. I think, you know, that may be true
to a certain extent, but I think that what's impacting
technology right now and the pullback in technology, communication services
and consumer discretionary was the valuation the potential for tariffs
(37:53):
and deregulation reps here but more regulation. We talked about globalization,
to segmentation of the of the economy, of the global economy,
the regulation, more regulation overseas. I think that that could
hurt some of these technology companies. You know, and if
the economy slows down, you know, there's less demand for
(38:15):
some of these services. So I think you'll, I think you'll.
I think that's what's impacting the economy now. The growth
scare is impacting these stocks right now. I think we'll
get by it, you know, maybe a little bit lower levels,
but I did this this Going back to number two,
I think the stories of these companies like Apple, Microsoft,
Google in video is still there, stay impact, and I.
Speaker 3 (38:36):
Do think the whole artificial intelligence efficiency efficient efficiency trend
is still there as well.
Speaker 1 (38:43):
I agree, what's number four?
Speaker 3 (38:46):
People go to the library and and they do incredible
research on a microwave oven, and then they'll go out
and spend ten thousand dollars on a stock because they
hurt a tip on the bus.
Speaker 1 (38:56):
True. Yeah, you know, I go back to uh, when
CNBC was on at the Yelhouse in the year two thousand,
you kind of figured that was the end because it wasn't.
It wasn't you know, ESPN or anything like that. So
when your barber's giving you a tip, you kind of
know that, you know, maybe maybe it's you're getting a
(39:17):
little long in the tooth. Number five. If you don't
if you don't understand a company, if you can't explain
it to a ten year old in two minutes or less,
don't own it. Yeah, I think we live in a
different world when when that was actually written, what do
you think about them?
Speaker 3 (39:33):
I think it's you know, to a certain extent. You know,
do we own semiconductors? Can I tell you you know
the majority of what they do and how they fit
into the economy. Yeah, but you know, do I know
the technology behind a semiconductor? Now?
Speaker 2 (39:46):
You know?
Speaker 3 (39:46):
So I think it was a little bit easier for
Peter Lynch to say this when you know he was
you know, the largest investments were you know, I guess
Microsoft or you.
Speaker 1 (39:55):
Know, craft more it was more craped discretionary.
Speaker 2 (39:58):
He went on discretionairey and things like that.
Speaker 1 (40:00):
One of the things he said, and I don't I
don't know if it's within here. And I hope I'm
speaking close enough to the mic is that, you know?
Speaker 3 (40:07):
Because I was away, Well, I emailed Zach the first
half and he already said that it sounds great.
Speaker 2 (40:13):
So I know we had some issues last week.
Speaker 1 (40:14):
Yeah, right, And I think my sympthing was a matter
of I think you turned my microphone off because I
was talking too much. So Number six people who exit
the stock market to avoid decline are odds on favorites
to miss mix miss the next rally, And I don't
know who put it out, but you know you missed
the ten largest days every every year if you were
to miss with ten largest days, you're going to miss
(40:35):
the vast majority of the stock market, right.
Speaker 3 (40:37):
And you know, in something like seven of the ten
best days in the market are usually are during in
a market cycle, are during a bear market.
Speaker 2 (40:46):
Right, So it's just always important.
Speaker 1 (40:48):
Right. The other thing, too, is along those lines, well,
how do you deal with it? Then? What do I do?
What do I do? How do I avoid the downturn?
You don't, Okay, you don't. You basically deal with an
asset allocation model that conforms to your longer term of
and recognizing that these days will come. You know, it's
like being married. You know, I'm sure your mom doesn't
wake up every day next to me and thank the
thank the Good Lord that she's there. You know, every
(41:10):
once in a while now things hit the fan, but overall,
you know, been married forty two years, thrilled to be
married forty two years, and I think mom is too.
And but we know that once in a while things
go wrong. That's just part and parcel with with the relationship.
So the market's like a really good relationship. Every once
in a while things don't go well, but over the
longer haul, it's a good place to be? Am I
am I right about Mom? Or no?
Speaker 2 (41:30):
No, I think she's happy.
Speaker 1 (41:33):
You know she's not. She's an aggressive quardaler. You and
her both you're like a little team.
Speaker 3 (41:38):
You have a cordal group chat me and Mom because
the three of us do it. And you're a brutal man,
You're a different person.
Speaker 1 (41:46):
Am I brutal?
Speaker 2 (41:47):
You're a bully?
Speaker 1 (41:48):
Add a little levity to your otherwise mundane. Otherwise mundane,
you usually don't ice cream hoarding life.
Speaker 3 (41:56):
You know, I would say, between me, you and Mom,
you get it the least amount of times, and then me.
Speaker 1 (42:02):
Then Mom, I've been keeping track and I know that
it's me and then you and Mom are tired of.
Speaker 2 (42:07):
That because sometimes I'll teach you.
Speaker 3 (42:09):
I'll teach you how to play a little bit better
sometimes and sometimes you know, I know you're playing it.
You take your phone out at work, which I tell you.
Speaker 1 (42:15):
Not to do. All what you start with zebra right,
and then.
Speaker 3 (42:19):
You take your phone out and then two minutes later
you're texting us your results like Mom takes all day
to do it.
Speaker 1 (42:26):
You know, Oh, that's why Mom gets good scores.
Speaker 3 (42:29):
Probably you're right, Well, she thinks about it more yeah,
I have time, eir exactly, all right, that's true though too.
Speaker 1 (42:37):
You know we're working. It's like being a good golfer.
You know. I used to say, you know the person
that I know once in his name God, where God
rest is so great? Guys is showing me a good golfer?
And I'll show you a guy who's not working enough.
Speaker 2 (42:50):
Now I'm curious who it is.
Speaker 1 (42:51):
I'll tell you off the air if I remember. If
you can't find any companies that you think are attracted
to put your money in the bank until you discover
There's an article that we just read that says, you know,
Warren Buffett's run out of ideas right now. I don't
know if that's the case, but he also says there's
no balls and strikes. You can take pitches, take pitches
and swing at one, or buy something that you think
(43:12):
is a goodbye. There's no balls in structure that can
be called out if you have money in the silence,
what are we sitting on about ten or twelve percent?
Speaker 2 (43:18):
Twelve percent hash almost high elevens. So I do agree
with that.
Speaker 3 (43:23):
And now you have a especially like I always talk
about that, we have ten thousand people turning sixty five
every day. The majority of our clients are in retirement
or in your retirement. Now you have the option of
a four percent fixed incomes out of your portfolio. I
think it's just prudent to reduce risk when you know
the accumulation phase, get rich stage of your life is over.
(43:45):
Now it's time to you know, we have a diverse portfolio,
you have a little bit less volatility in your portfolio, and.
Speaker 2 (43:56):
Enjoy your enjoy the retirement years for sure.
Speaker 1 (44:00):
For sure, you know, and I think that it's not
a competition. You know, this is not a competition. It's
not to see who can accumulate the most. It's about
the having the money to do what you need to
do when you're retire. If you own stocks, there's always
something to worry about. You can't get away from it.
Speaker 2 (44:18):
Yeah, that's the hardest part about this job.
Speaker 3 (44:20):
It is twenty four to seven, and you know, you're
always worrying about stocks. You're always worrying about people's portfolios,
and it's just something you have to live with. And
I think if our clients are listening to this, we
are always worrying about it. But also, you know, get
comfortable with getting uncomfortable. And that's not just from a
stock market perspective. That's from not having an income perspective
(44:43):
in retirement and replacing your distributions with income. So it's
uncomfortable and it takes a little bit getting used to.
You know, we're humans, we're you know, we're humans who
like to be have routines, you know, and after thirty
forty years of working for a lot of people, it's
hard to break those that routine. So it's a tough
time for people when they do retire, especially if you
(45:03):
don't have a pension less and less people have pensions now,
so you know, it is uncomfortable, and you know, find
ways to get used to it. Don't look at your
portfolio as much. That's a good look at it every day.
Go outside, you know, find a hobby.
Speaker 2 (45:16):
You know.
Speaker 3 (45:17):
A lot of times, I think some of the hardest
clients to work with are the people that are listening
to CNBC all the time, because definitely they're always worried
because everything's breaking news.
Speaker 1 (45:27):
If the market goes off half the time and down
half the time, half the time, you're worried, even though
over the longer term it goes up most of the time,
you know, and I think you want to you want
to learn a little bit about it, you know, you
want to learn a little bit about the functioning of
the market. You don't have to learn about the individual securities.
Learn about the functioning of the market. You know, I
would think if I could come up with three or
four things, I hope I can over the top of
(45:49):
my head. Learn about the longer term percentage of positive
returns versus negative returns. You know, learn about you know,
what the S and P does over the longer peer
of time. Long learn about the erosionary impact of inflation.
Speaker 3 (46:04):
Maybe I think the benefits of a diversifified portfolio, right,
you know, I think that, you know, we have clients
come in a lot, you know, with stock ideas, and
you know, during a bull market, all their stock ideas
look exactly the same, and they're all technology, and they're
all volatile. So you know, learn that a lot of
you know, you'll get a well diversified portfolio will always
(46:25):
lead to some of the things that you have underperforming.
And that's a good thing if you're in retirement.
Speaker 1 (46:30):
And that's a good point because at the end of
a bull market, the the the people tend to be
undiversified because look at right now, what has been doing
well in the past seven or eight years has been technology.
So people like, well, why don't I need any Bristol Myers,
Why don't you need any Regina around? You buy low
and sell high, so things have been left international is
(46:52):
the same thing. I think those are real potential opportunities
right now. So we're going to we consider the tax
consequences and we move money along those lines looking for opportunities.
Number nine, Avoid long shots. I bought about thirty long
shots in my life. I've never broken even on one.
I would probably say the same thing for my segree
you like long shots?
Speaker 3 (47:12):
Now, I think that if you have a personality that is,
someone that likes to take long shots, just know that
they're long shots and core and allocate a very small
percentage to those long shots, you know.
Speaker 2 (47:26):
I think.
Speaker 3 (47:26):
I think by taking those shots it you know, if
you allocate one, two, three percent of your portfolio too
long shots, it allows you to at least have a plan,
you know, and not go too deep into the long shots.
Speaker 1 (47:40):
That's true, you don't you won't. You don't want a
portfolio of long shots.
Speaker 2 (47:42):
Yeah.
Speaker 1 (47:43):
Five or ten percent in long shots tops five. I agree.
I agree, speculate once in a while.
Speaker 3 (47:49):
But speculate that don't yet, don't Yeah, don't destroy the
course you're on or the core.
Speaker 1 (47:55):
Of your portfolio goods. You need to know number ten.
You need to know the market's going to go down
sometimes and if you're not ready for that, you should
have known stocks. You should known equities. You should know
an ETF set of equity based, you should know mutual funds
of equity based. And it's good when it happens, you know,
you know, you don't get a guard without rain, you know.
And that's that's all I have to say about that.
So that'll just about do it for the show. Give
(48:17):
us a call during the week at five one, eight, two,
seven four. Check us out on the web at Faganasset
dot com. You know, like us on Facebook. And also
if you want these quotes, a copy of these quotes, uh,
I can certainly give you the ur L or send
you a PDF of this. Uh that'll just about do it.
Thanks for listening. I have a great daycare
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