Episode Transcript
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Speaker 1 (00:00):
Thirteen ten WUIBA and straight talk from the House with
certified financial Planner Tracy Anton. Tracy of course, comes to
us from Tanton Investment House the website Tanton Investment House
dot com. That's t A N t O N investment
House dot com. Of course, Tanton Investment House a fee
only fiduciary. Their office right in Middleton. Six oh eight
(00:22):
five zero one, fifteen forty nine. That's six soh eight
five zero one fifteen forty nine And join the Joining
us this morning is certified financial planner Tracy Anton. Tracy,
How you doing today?
Speaker 2 (00:33):
I'm doing great and.
Speaker 1 (00:34):
You I'm doing really well. I have a pretty good
guest because I know kind of where we left off
last week. But I'm I'm gonna ask what are we
what are we talking about this week? My friend?
Speaker 2 (00:44):
Yeah, Well, today is the second part of our midyear
outlook from the perspective of the American Funds Group. And
today we're going to be reviewing some earnings expectations for
twenty twenty four and beyond that, and we're also going
to take a look at whether markets are overpriced and
look at some historical data there. And also we're going
(01:05):
to take a look at what global markets are doing
and see if there's some opportunities as well as taking
a look at you know, if you've missed this recent
market increase, you know, is it too late? Is it
too late for you to get money invested? So the
answer is no, of course, but you know, I think
it's worth re looking at some history. And of course
(01:27):
there's no guarantee, but it's it's important to keep things
in perspective. And I mean we're pretty much an optimistic
kind of a show, but in general, I think there's
things that people can look at and go that makes sense.
Speaker 1 (01:41):
We've got history on our side with that stuff as well,
and as you mentioned, we'll get into get into some
kind of deeper into some of the opportunities as far
as if you had your money and cash. We'll kind
of get deeper into the opportunities that are out there
and what you need to know. Also, another thing is
this is a part two. If you missed part one,
don't you can listen back. Just had an overt and
Ton Investment House dot com. Also, if you miss part one,
(02:02):
part two will make I looked over the notes. It
makes perfect sense. You don't need to know it's not
like a sequel to a movie where you need to
know the first in the first part, you'll definitely definitely
be something you can pick up and hit the ground running.
As we talk with Tracy, don't forget about that website,
Tanton Investment House dot com. Great website and resource and
Thet's tell forhon number six oh eight, five zero one,
fifteen forty nine. So what is something Tracy we can
(02:25):
expect to grow in twenty twenty four.
Speaker 2 (02:28):
Well, the good news here is that corporate earnings are
expected to strengthen in twenty twenty four and beyond. So
the Wall Street analysts predict that earnings for companies in
the SMP five hundred index will grow by over ten
percent in twenty twenty four, with even faster growth expected
in twenty twenty five. According to the US economist Jared Franz,
(02:50):
he says that underlying conditions appear supportive of solid revenue
growth and steady margins quote unquote. So again, this bodes
well for equity and as profit growth is a primary
driver of return. So we always talk about you know
what makes markets go up? Well, you know in somebody
asked me recently, they said, you know this happens and
(03:13):
doesn't make sense because you know, the market reacted this
way and it doesn't make sense. I mean that's true.
I mean we're not rational sometimes, you know, our actions
aren't always rational as people. But as you know, even
in individual investors, So you see markets moving, you go, well,
that doesn't make any sense. But over time, you know
the reason why I think we're going off on a
(03:35):
tangent shown But you know the reason why I don't
think that the stock market is like a gambling situation
or something is because it's based on something. You know,
gold prices are not based on anything, but you know
stock prices are. They're based on earnings. So this this
information is saying that they're expecting the earnings to increase
(03:58):
and grow by ten for and in twenty twenty five
e've ben better than that. So again, this bolds really
well for people who are equity investors because profit growth
is the primary driver of returns. So what's based what's
that stock price based on? It's based on earnings, and
if those earnings are going up over time, that's really
(04:19):
a positive you know, positive information or positive information, you
know something you can really kind of hold your hat on,
hang your hat. You know what I'm saying.
Speaker 1 (04:29):
I do know it's saying. And by the way, is
kind of off track a little bit. I was going
to ask you when you mentioned you said that we're
not always rational as people. I think we're all guilty
of it. From time to time we do something, go
why did I do that? At the moment, it seemed
like a great idea, and then you look back like
that was silly. Just working with someone like you. Does
that help people?
Speaker 3 (04:48):
Is?
Speaker 1 (04:48):
I think sometimes? Obviously we work so hard, we earn
this money, we save this money, we watch it grow,
and having somebody there to kind of say, all right,
let me help you put that that kind of has
does you know they Obviously you have personally very much
invested in time and energy with your with your folks.
But the help having somebody like you to kind of
(05:08):
help us make some of those more rational decisions.
Speaker 2 (05:12):
It really does. So it's really interesting. Yesterday, you know,
I was speaking with a client and I've been at
the start of the investment house about ten years ago.
So we talked about the fact that, you know, we've
been together more than ten years ago, because I knew
I knew them previously to that, but you know, they
said in the conversation, we were talking about, you know,
(05:35):
how aggressive our conservative we want to be, so you know,
we're always checking on these things, what your allocation is
between stocks and bonds, and you know, I said, I
think you're you're perfect at seventy thirty seventy percent stocks
thirty percent bonds, and based on their distribution, right, it
was like, I think it was about five percent, and
I thought, you know, this number looks good. I said,
but you're a little heavier in growth if you want
(05:56):
to pull back, you know, I said, do you worry
about it? And she's like, oh, you know, I don't
really worry about it.
Speaker 3 (06:03):
And then her husband said, really quickly, well you used to,
you know, And that kind of goes why I'm bringing
up the story is is that once you have a
history with.
Speaker 2 (06:14):
Markets and you recognize, okay, I've been in it a
long time, long time, and if you have an advisor
that you've had also a long time, you kind of
understand and you there's a level of education that happens
and also a comfort level with understanding how stocks work,
you know, over time. So you know, maybe she was
(06:34):
a little more uncomfortable when she first started. And her
sister also interesting, she also invested with me, and she's like, oh,
do you ever hear from Mary? You know? You know,
so we have the history, but she has the history
of her numbers, her history of returns, and we could
say here, here's your one year, three year, five year,
ten year. Oh you know what I mean. So when
(06:54):
she saw that over time, there was a there's a
level of comfort that was built basically or time. So
I love that perspective because investing can be hard if
you're new to the game, but it is kind of
a game and you just have to recognize markets do
correct down. You can hold your ground because if you're
in high quality things, it's highly likely your numbers are
(07:17):
going to go up over time. And that's what that's
what her numbers proved out. And so that was really
cool to see that. And now she doesn't worry. And
that's the whole point. It's like, why should you worry
in retirement? You know, that's what your job is, not
to be worrying about your money or or overthinking things
or spending a lot of time on it. In my perspective,
(07:38):
right unless you love it. But it's about trying to
enjoy the fruits of your labor at that point in
your life where hey, you've worked hard, why don't you
enjoy it now? So anyway, it's cool to see. So
I think I think it does make a difference if
you have a really good advisor that you've been working
for for a long time and you can see, yeah,
(07:59):
the numbers prove out my numbers as well as you know,
when they do a financial plan. I showed them how
the numbers changed over time. And that was really fun too,
because I could show them, Okay, you know, this is
the dollars and once you have now we got another
ten years, you'll be eighty five. Well, you know this
is what it's likely to be at this rate of return.
Is there anything I kept saying to them, is there
(08:20):
anything you want to do? Is there anything you want
to do that you haven't haven't done yet that you
could use more money? You know? So that was that
was fun to have that conversation.
Speaker 1 (08:30):
Yeah, what a great how liberating that is to to
have that freedom. We talk about having that history and
the education and then building that trust, and that's one
of the great things. Working with Tracy, you can learn
more about the team at Tanton Investment House. The website
Tantoninvestment House dot com. Delphan Oumber six eight five zero one,
fifteen forty nine. That's six h eight five zero one,
(08:50):
fifteen forty nine. Talk about the website. There's a lot
of really good information online as well. You can read
of course links to this and previous shows podcasts as well,
that all available to you right up at tantoninvestment House
dot com. And Tracy. One of the things I often
hear people ask, and I know you get this question
quite a bit, which is our markets over priced? What
(09:11):
are we seeing there? And what's kind of the guidance
on that one?
Speaker 2 (09:14):
Yeah, it's very interesting. So the stock market evaluations don't
actually seem overly inflated, even if we take into consideration
the recent rallies. So if we look at the end
of May, the price to earnings ratios for most markets
were close to or just slightly above their ten year averages,
and the PE ratios again which is price divided by earnings,
(09:37):
are anticipated to keep increasing through twenty four and twenty five.
But so Sean, if you look at like a ten
year average for the S and P five hundred, it's
about twenty point three. Well, currently it's about twenty point
three percent. So the ten year average is about seventeen
point eight on the S and P five hundred. So
(09:58):
I often say, well, eratios ranged from fifteen to eighteen
and the SMP five hundred. Okay, so that kind of
gives you a sense of, well, our stocks overpriced. Well,
you know, individual stock plays might be overpriced, like a
Teslag And I'm not a stock picker, but you know
Tesla trading over forty times zornings. Yeah, that might be overpriced.
(10:21):
But you know the market as a whole is it overpriced?
So I would I would you know, say basically that
you have a lot of sectors, whether it's small cap,
mid cap, large cap, value, international, all of those do
not look as a whole overpriced. You might have individual
(10:41):
securities in the large cap growth sector that are like, oh,
you know that looks a little pricing, right, So I
think again, stock selection is just again really important, and
so and you want to you want to temper you know,
being too aggressive. If you saw a return, for example,
last year of forty and a large cap growth you know,
(11:02):
when you look at all your individual returns, it's like
that number is great, and I'm so glad you got it.
We got it too awesome, But don't throw all the
money back into that fund and go let's do it again,
because those are really high numbers. Is it possible? Sure?
AI is going to change the landscape here. We know
that it's changing industries, it's changing. But at the same time,
(11:26):
you know, just don't put all the baskets in the
large cap growth sector. And if you're a retiree and
you're thinking yourself, you know, am I perfectly allocated? Well?
This one area you should look at large cap growth
versus value. You should be looking at the difference between
the stock and the bond components. Those are kind of
two big areas.
Speaker 1 (11:46):
Getting a midyear outlook. This is the second part of
this conversation. Door Forget. If you missed any part today's program,
or you want to listen back or catch up on
previous shows, you can always head on over to Tanton
investment House dot com listen to the podcast. Also a
lot of great information there as well, for you can
get to know Tracy and the team. The website Tanton
investment House dot com. That's t A N T O
(12:08):
N investment House dot com. Telephon number six oh eight
five zero one fifteen forty nine. That's six oh eight
five zero one fifteen forty nine. Is his growth just
domestic thing. We'll get the details from Tracy on that
next as Straight Talk from the House continues right here
on thirteen ten double U I B A. This is
straight Talk from the House with certain five financial planner
Tracyanton right here on thirteen ten double U I B A.
(12:31):
Don't forget about the website. You guys can learn more
about Tracy and the team. Listen back to the podcast
and get some great information. Tanton Investment House dot com.
That's t A N T O N investment House dot com.
Telephon over for the office right in middle ten six
oh eight five zero one fifteen forty nine. That's six
soh eight five zero one, fifteen forty nine. Doing a
twenty twenty four mid year outlook. And this is part
(12:54):
two if you can catch part one as well at
Tanton Investment House dot com. Tracy, as we're talking about
growth in that last segment, a lot of folks wonder
is the growth only happening here in the US, or
is there more to this?
Speaker 2 (13:07):
No so earnings growth you know. This trend is also
happening in other regions, including Europe and Japan. Although their
growth isn't as sharp, profits are still increasing and are
expected to continue rising into twenty twenty four and twenty
twenty five. In Europe, what we're seeing as profit growth
is anticipated to be more muted, but still positive. And
(13:28):
in emerging markets, economists are predicting a strong rebound in
profits after last year's decline. So even in China, where
the economy has been sluggish, there are early signs of
improvement in some sectors. And of course at these are
optimistic forecasts and they could be disrupted by inflation stagnates
or oil prices surge, geopolitical tensions, you know that could
(13:51):
lead to some trade wars or other unexpected events. So
we don't know for sure, but I would just say,
you know, if you're looking to invest, would look, you
know globally to invest emerging markets. They can be volatile.
So if you invest in those kinds of funds, just
be aware of that and invest only the portion you're
comfortable investing with. I tend to invest in a fund
(14:14):
that is also it's more like multinationals that take advantage
of emerging markets and has some emerging markets play in there,
but I'm kind of conservative when it comes to that,
but there is opportunity there because you know, those markets
haven't done well and you know tis times typically change
where you have some potential growth in especially the international markets,
(14:35):
their prices are just less expensive than the US. You know,
so a similar kind of stock here, whether it's a
car company for example, is less expensive there versus here
as far as the stock prices go. And we're going
to talk a little later about the opportunities that we're
seeing in the international space too.
Speaker 1 (14:55):
Should be exciting talking this morning with certified financial planner
Tracy Anton right here, ten Wiba. You're definitely want to
stay tuned for that. As we talked this week, don't
forget about the website Tanton Investment House dot com. That's
t A N t O N investment House dot com.
The telephone number six oh eight five zero one, fifteen
forty that's six h eight five zero one, fifteen forty nine.
(15:18):
I know a lot of not a lot of people,
but I've heard from a number of people that that
have you know, they've had cash at cash on hand.
They kind of pulled back a bit. Have those folks
missed out if they had money in cash or what's
the what's the perspective there.
Speaker 2 (15:31):
That's a great question. So when starts hit record highs,
investors might think that the market has peaked and they've
missed their chance to invest. However, basically history shows that
usually is not the case. Over long periods of time,
markets have generally trended upward and they've reached new peaks
multiple times. So while market declines you know, are inevitable
(15:53):
and stocks can drop at any time, history would suggest
that new highs have often been good entry points for
long term investors. So if we go back from nineteen fifty,
each time that the SMP five hundred index hit its
first all time high in at least a year, Stacks
then delivered another seventeen point one percent average return for
(16:14):
the subsequent twelve months. So again, there was this kind
of cool chart that was on the American Funds Brochure
and it said, since nineteen fifty, the SMP five hundred
index has reached one thy, four hundred and thirty four
new all time highs. And when the s and P
five hundred reached its first new high in more than
again a year, thirteen out of the fourteen periods that
(16:37):
were highlighted were high, and the average over the year
was seventeen percent. So again an investor would have had
gains in each of these periods, you know, So like
the market hit a high and then the next twelve
months it basically hit another high. And so there was
only one period of time out of these fourteen periods
(16:58):
that were identified that which was the global financial crisis
in two thousand and seven that didn't happen. So again,
the bottom line is historically, bull markets have been much
longer than bear markets, leading to new highs within each cycle.
So of course there's no guarantees, you know, but that's
why I stress here, it's got to be long term
money that you're thinking about. Don't put your emergency cash
(17:20):
into the market, obviously, but if it's long term money.
I see a lot of people who have a lot
of money that's in you know, cash or CDs or
money markets, and you know, it's great, you're getting five percent,
but at the same time, if they lower rates those rates,
you know, typically a risk free asset doesn't beat inflation,
(17:41):
and if inflation runs three percent long term, I don't
think that those CDs will hold for the long term,
long long term. Right, you might be getting five percent now,
but it probably won't be held long term, So those
rates will likely come down as the FED cuts rates eventually.
So I got I just say, you know, if it's
long term money, make sure it's invested properly.
Speaker 1 (18:04):
Really good guidance this morning from sort of fied financial
planner Tracy Anton here on thirteen ten Wuiba. So, Tracy,
of course a lot of talk about the FED and
rate cuts and if those are delayed, is that bad
news if you're if you're a municipal bond holder or
what's yeah thinking.
Speaker 2 (18:21):
Through this question in here, Sean, because I think you
know municipal bondholders, they might be frustrated by the FED
slow rate cuts, but there is a silver lining here
that in stable interest rates that they're getting pretty good income.
So for those and like people who are in moderate
to high tax brackets, municipal bonds offer pretty attractive after
tax returns. So again I'm just giving you some numbers
(18:44):
here to chew on. In May, the tax equivalent yield
for the Bloomberg Municipal Bond Index was six point six percent.
If you compare that to like a taxable bond, it
would be like five percent. So in general, like if
you're if you're somebody who has high are in high
(19:04):
tax brackets, you should look into the municipal bonds because
they're paying such great yields and when you look at
the after tax return, that's the big deal. You know,
the municipal bonds could actually be paying out more than
the taxable bonds, which is you know, not always the case,
so usually not the case. So and again investors, really,
(19:25):
according to the American Funds, they don't have to sacrifice
quality for attractive income. And that's because the difference in
yields between the high and low rated bonds has compressed.
So according to Mark Marniella and American Funds, he says,
many of our portfolios lean relatively to higher quality, which
may provide better resilience should the economy weik. And even
(19:47):
so again, look into high yield bonds if you're in
higher if you're in a higher tax bracket and you're
looking into bonds.
Speaker 1 (19:54):
Talking this morning with certified financial planner Tracy Anton here
on thirteen ten WI b A. Of course, Tracy comes
to us from Tanton investment house. The website Tantoninvestmenthouse dot com.
That's t A N t O N investment House dot com.
Telphon up for the office in Middleton six SOH eight
five zero one, fifteen forty nine. That's six SOH eight
(20:14):
five zero one, fifteen forty nine. Here, I say, I
love how this is worded. Is this your father's dividend market?
Speaker 2 (20:21):
I love that question again. This comes directly from a
statement from American Funds, and the headline was no, this
is not your father's dividend market. And what they're trying
to point to here is is that, you know, we
expect dividends from only mature companies that have slow growth potential. However,
dividends are becoming popular among big tech companies, so Meta,
(20:43):
Alphabet and Salesforce all introduced dividends in the first half
of twenty twenty four. It's it's amazing to me. So.
In fact, the tech company Sean accounted for fourteen point
one percent of the total cash dividends paid by S
and P five hundred companies in twenty twenty three, which
actually ran them second largest contributor bisector in dollar terms.
(21:04):
So I know, does that I mean, does.
Speaker 1 (21:06):
That surprise you a little bit, but it's good to hear.
But yeah, I was surprised when you said that.
Speaker 2 (21:11):
I know, well, the divining yields for many tech firms
are monus, but the data amounts are massive and are
expected to have strong earnings growth this year again and
twenty twenty five. So if you look in twenty twenty three,
companies in the tech sector like Microsoft and Apple, they
paid out a total of thirty five billion in dividends.
And I look to see, you know, well, who is higher.
(21:32):
You know what sector is higher than the tech it's financials.
Financials are the highest dividend payers, but then tech companies
are the next highest dividend So we forget that. We
think that, oh, tech companies don't pay any dividends, right, No,
you're wrong, you know, And it's just it's easy to think,
you know, we learn, We learn old things and remember
what our parents bought. Right, the dividend payer, they would
(21:56):
be surprised. I think that these companies are maturing and
paying pretty good dividends and that shows some stability there,
which is good.
Speaker 1 (22:02):
Learn something new every day in tracy. As we talk
about dividend paying companies, how can investors seek them out well.
Speaker 2 (22:09):
For investors looking for immediate income. Shown companies and the technology,
aerospace and energy sectors have been introducing increasing dividends for years.
So for instance, semiconductor companies Broadcom and Texas Instruments, as
well as General Electric, which manufactures and services jet engines,
have all raised their dividends since the end of twenty
(22:31):
twenty three. And the energy company Canadian Natural Resources has
also increased its dividend even with fluctuating oil prices. And
so I give you these names not so that you
run out and buy those stacks. That's not the idea.
The idea is just to give you a sense of
what's kind of happening out there, and that there's opportunities
if you need income, and most retirees do, right, it's
(22:53):
good to have partier return based on income, based on
dividend income. And so there's opportunity in these sectors. And
again I would steer you close, you know, to more
mutual funds or exchange ETF funds that have good tax
advantages instead of buying the individual securities.
Speaker 1 (23:11):
And Tracy has been talking this morning. I heard you
mention a couple of the Magnificent seven already. Yeah, let's
talk about some of the investment opportunities that are there
for those those players.
Speaker 2 (23:20):
Well, yeah, so the magnificent seven stocks the people that
you hear about it a lot, because last year those
seven stocks made up seventy percent of the return of
the S and P five hundred last year, and now
they account for about thirty percent of the S and
P five hundred. So names like Microsoft, Apple, Alphabet, Amazon, Navidia, Meta,
(23:42):
and Tesla, those are the seven stocks, But those aren't
the only ones that have strong investment options. So again,
if you look outside the US, there's a growing number
of competitors. So in Europe the equity market is less concentrated,
offering a broad range of top performing companies in what
they call the MSCIEFA index, which is the international index.
(24:04):
And those sectors are healthcare leader like Novo Nordis, chip
equipment maker like ASML, software giant SAP, and banking powerhouse HSBC.
So again you also have Japanese docks have seen a
remarkable rally this year, reaching levels not seen since the
late nineteen eighties. So again, why do I bring this
(24:25):
up Because instead of just focusing on one changing region
like the United States, it's smarter to look globally for
top companies. And again this is American Fund's opinion, but
I also agree. I've been a global investor for a
long time. And if you look like at those seven
leading companies that the MSCI EFA Index had, so the
(24:50):
international index like the Novo, Nordis, the ASML, SAP, Toyota, HSBC,
Assignments and ubs, they actually performed better than and the US
Magnificent seven. And they did it. You know, if you
look at since twenty twenty two, the value actually increased
by over sixty percent, So you would have been better
(25:12):
off with Global Magnificent seven by far since two thousand
and two or twenty twenty two, then the seven stocks
here in US. So I bring this up because we
always think, oh, well, I got to invest a Microsoft, Apple,
And of course you are invested there, like if you're
a good mutual fund investor, you're going to own all
of those things. But globally you should also be looking
(25:34):
because there's a lot of value there and they've done
very well.
Speaker 1 (25:37):
Talking this morning with certified financial planner Tracy Anton, a
lot of insight. As always in the program, don't forget
if you missed any part of the show. I get
it sometimes to stop out, you grab a coffee and
pick back up. You miss something, you could always listen
back tantoninvestment House dot com. You listen back to the
podcast there, Share the podcast as well. Get for more
information about Tracy and the team again the website Tanton
(25:59):
investment Minhouse dot com. That's t A N t O
N investment house dot com and the telephone number six
oh eight five zero one, fifteen forty nine. That's six
oh eight five zero one, fifteen forty nine. Tracy, thanks
for joining us this morning. It's always informative. You enjoy
this beautiful day.
Speaker 2 (26:15):
Thanks Sean. Take care,
Thirteen ten WUIBA and straight talk from the House with
certified financial Planner Tracy Anton. Tracy of course, comes to
us from Tanton Investment House the website Tanton Investment House
dot com. That's t A N t O N investment
House dot com. Of course, Tanton Investment House a fee
only fiduciary. Their office right in Middleton. Six oh eight
(00:22):
five zero one, fifteen forty nine. That's six soh eight
five zero one fifteen forty nine And join the Joining
us this morning is certified financial planner Tracy Anton. Tracy,
How you doing today?
Speaker 2 (00:33):
I'm doing great and.
Speaker 1 (00:34):
You I'm doing really well. I have a pretty good
guest because I know kind of where we left off
last week. But I'm I'm gonna ask what are we
what are we talking about this week? My friend?
Speaker 2 (00:44):
Yeah, Well, today is the second part of our midyear
outlook from the perspective of the American Funds Group. And
today we're going to be reviewing some earnings expectations for
twenty twenty four and beyond that, and we're also going
to take a look at whether markets are overpriced and
look at some historical data there. And also we're going
(01:05):
to take a look at what global markets are doing
and see if there's some opportunities as well as taking
a look at you know, if you've missed this recent
market increase, you know, is it too late? Is it
too late for you to get money invested? So the
answer is no, of course, but you know, I think
it's worth re looking at some history. And of course
(01:27):
there's no guarantee, but it's it's important to keep things
in perspective. And I mean we're pretty much an optimistic
kind of a show, but in general, I think there's
things that people can look at and go that makes sense.
Speaker 1 (01:41):
We've got history on our side with that stuff as well,
and as you mentioned, we'll get into get into some
kind of deeper into some of the opportunities as far
as if you had your money and cash. We'll kind
of get deeper into the opportunities that are out there
and what you need to know. Also, another thing is
this is a part two. If you missed part one,
don't you can listen back. Just had an overt and
Ton Investment House dot com. Also, if you miss part one,
(02:02):
part two will make I looked over the notes. It
makes perfect sense. You don't need to know it's not
like a sequel to a movie where you need to
know the first in the first part, you'll definitely definitely
be something you can pick up and hit the ground running.
As we talk with Tracy, don't forget about that website,
Tanton Investment House dot com. Great website and resource and
Thet's tell forhon number six oh eight, five zero one,
fifteen forty nine. So what is something Tracy we can
(02:25):
expect to grow in twenty twenty four.
Speaker 2 (02:28):
Well, the good news here is that corporate earnings are
expected to strengthen in twenty twenty four and beyond. So
the Wall Street analysts predict that earnings for companies in
the SMP five hundred index will grow by over ten
percent in twenty twenty four, with even faster growth expected
in twenty twenty five. According to the US economist Jared Franz,
(02:50):
he says that underlying conditions appear supportive of solid revenue
growth and steady margins quote unquote. So again, this bodes
well for equity and as profit growth is a primary
driver of return. So we always talk about you know
what makes markets go up? Well, you know in somebody
asked me recently, they said, you know this happens and
(03:13):
doesn't make sense because you know, the market reacted this
way and it doesn't make sense. I mean that's true.
I mean we're not rational sometimes, you know, our actions
aren't always rational as people. But as you know, even
in individual investors, So you see markets moving, you go, well,
that doesn't make any sense. But over time, you know
the reason why I think we're going off on a
(03:35):
tangent shown But you know the reason why I don't
think that the stock market is like a gambling situation
or something is because it's based on something. You know,
gold prices are not based on anything, but you know
stock prices are. They're based on earnings. So this this
information is saying that they're expecting the earnings to increase
(03:58):
and grow by ten for and in twenty twenty five
e've ben better than that. So again, this bolds really
well for people who are equity investors because profit growth
is the primary driver of returns. So what's based what's
that stock price based on? It's based on earnings, and
if those earnings are going up over time, that's really
(04:19):
a positive you know, positive information or positive information, you
know something you can really kind of hold your hat on,
hang your hat. You know what I'm saying.
Speaker 1 (04:29):
I do know it's saying. And by the way, is
kind of off track a little bit. I was going
to ask you when you mentioned you said that we're
not always rational as people. I think we're all guilty
of it. From time to time we do something, go
why did I do that? At the moment, it seemed
like a great idea, and then you look back like
that was silly. Just working with someone like you. Does
that help people?
Speaker 3 (04:48):
Is?
Speaker 1 (04:48):
I think sometimes? Obviously we work so hard, we earn
this money, we save this money, we watch it grow,
and having somebody there to kind of say, all right,
let me help you put that that kind of has
does you know they Obviously you have personally very much
invested in time and energy with your with your folks.
But the help having somebody like you to kind of
(05:08):
help us make some of those more rational decisions.
Speaker 2 (05:12):
It really does. So it's really interesting. Yesterday, you know,
I was speaking with a client and I've been at
the start of the investment house about ten years ago.
So we talked about the fact that, you know, we've
been together more than ten years ago, because I knew
I knew them previously to that, but you know, they
said in the conversation, we were talking about, you know,
(05:35):
how aggressive our conservative we want to be, so you know,
we're always checking on these things, what your allocation is
between stocks and bonds, and you know, I said, I
think you're you're perfect at seventy thirty seventy percent stocks
thirty percent bonds, and based on their distribution, right, it
was like, I think it was about five percent, and
I thought, you know, this number looks good. I said,
but you're a little heavier in growth if you want
(05:56):
to pull back, you know, I said, do you worry
about it? And she's like, oh, you know, I don't
really worry about it.
Speaker 3 (06:03):
And then her husband said, really quickly, well you used to,
you know, And that kind of goes why I'm bringing
up the story is is that once you have a
history with.
Speaker 2 (06:14):
Markets and you recognize, okay, I've been in it a
long time, long time, and if you have an advisor
that you've had also a long time, you kind of
understand and you there's a level of education that happens
and also a comfort level with understanding how stocks work,
you know, over time. So you know, maybe she was
(06:34):
a little more uncomfortable when she first started. And her
sister also interesting, she also invested with me, and she's like, oh,
do you ever hear from Mary? You know? You know,
so we have the history, but she has the history
of her numbers, her history of returns, and we could
say here, here's your one year, three year, five year,
ten year. Oh you know what I mean. So when
(06:54):
she saw that over time, there was a there's a
level of comfort that was built basically or time. So
I love that perspective because investing can be hard if
you're new to the game, but it is kind of
a game and you just have to recognize markets do
correct down. You can hold your ground because if you're
in high quality things, it's highly likely your numbers are
(07:17):
going to go up over time. And that's what that's
what her numbers proved out. And so that was really
cool to see that. And now she doesn't worry. And
that's the whole point. It's like, why should you worry
in retirement? You know, that's what your job is, not
to be worrying about your money or or overthinking things
or spending a lot of time on it. In my perspective,
(07:38):
right unless you love it. But it's about trying to
enjoy the fruits of your labor at that point in
your life where hey, you've worked hard, why don't you
enjoy it now? So anyway, it's cool to see. So
I think I think it does make a difference if
you have a really good advisor that you've been working
for for a long time and you can see, yeah,
(07:59):
the numbers prove out my numbers as well as you know,
when they do a financial plan. I showed them how
the numbers changed over time. And that was really fun too,
because I could show them, Okay, you know, this is
the dollars and once you have now we got another
ten years, you'll be eighty five. Well, you know this
is what it's likely to be at this rate of return.
Is there anything I kept saying to them, is there
(08:20):
anything you want to do? Is there anything you want
to do that you haven't haven't done yet that you
could use more money? You know? So that was that
was fun to have that conversation.
Speaker 1 (08:30):
Yeah, what a great how liberating that is to to
have that freedom. We talk about having that history and
the education and then building that trust, and that's one
of the great things. Working with Tracy, you can learn
more about the team at Tanton Investment House. The website
Tantoninvestment House dot com. Delphan Oumber six eight five zero one,
fifteen forty nine. That's six h eight five zero one,
(08:50):
fifteen forty nine. Talk about the website. There's a lot
of really good information online as well. You can read
of course links to this and previous shows podcasts as well,
that all available to you right up at tantoninvestment House
dot com. And Tracy. One of the things I often
hear people ask, and I know you get this question
quite a bit, which is our markets over priced? What
(09:11):
are we seeing there? And what's kind of the guidance
on that one?
Speaker 2 (09:14):
Yeah, it's very interesting. So the stock market evaluations don't
actually seem overly inflated, even if we take into consideration
the recent rallies. So if we look at the end
of May, the price to earnings ratios for most markets
were close to or just slightly above their ten year averages,
and the PE ratios again which is price divided by earnings,
(09:37):
are anticipated to keep increasing through twenty four and twenty five.
But so Sean, if you look at like a ten
year average for the S and P five hundred, it's
about twenty point three. Well, currently it's about twenty point
three percent. So the ten year average is about seventeen
point eight on the S and P five hundred. So
(09:58):
I often say, well, eratios ranged from fifteen to eighteen
and the SMP five hundred. Okay, so that kind of
gives you a sense of, well, our stocks overpriced. Well,
you know, individual stock plays might be overpriced, like a
Teslag And I'm not a stock picker, but you know
Tesla trading over forty times zornings. Yeah, that might be overpriced.
(10:21):
But you know the market as a whole is it overpriced?
So I would I would you know, say basically that
you have a lot of sectors, whether it's small cap,
mid cap, large cap, value, international, all of those do
not look as a whole overpriced. You might have individual
(10:41):
securities in the large cap growth sector that are like, oh,
you know that looks a little pricing, right, So I
think again, stock selection is just again really important, and
so and you want to you want to temper you know,
being too aggressive. If you saw a return, for example,
last year of forty and a large cap growth you know,
(11:02):
when you look at all your individual returns, it's like
that number is great, and I'm so glad you got it.
We got it too awesome, But don't throw all the
money back into that fund and go let's do it again,
because those are really high numbers. Is it possible? Sure?
AI is going to change the landscape here. We know
that it's changing industries, it's changing. But at the same time,
(11:26):
you know, just don't put all the baskets in the
large cap growth sector. And if you're a retiree and
you're thinking yourself, you know, am I perfectly allocated? Well?
This one area you should look at large cap growth
versus value. You should be looking at the difference between
the stock and the bond components. Those are kind of
two big areas.
Speaker 1 (11:46):
Getting a midyear outlook. This is the second part of
this conversation. Door Forget. If you missed any part today's program,
or you want to listen back or catch up on
previous shows, you can always head on over to Tanton
investment House dot com listen to the podcast. Also a
lot of great information there as well, for you can
get to know Tracy and the team. The website Tanton
investment House dot com. That's t A N T O
(12:08):
N investment House dot com. Telephon number six oh eight
five zero one fifteen forty nine. That's six oh eight
five zero one fifteen forty nine. Is his growth just
domestic thing. We'll get the details from Tracy on that
next as Straight Talk from the House continues right here
on thirteen ten double U I B A. This is
straight Talk from the House with certain five financial planner
Tracyanton right here on thirteen ten double U I B A.
(12:31):
Don't forget about the website. You guys can learn more
about Tracy and the team. Listen back to the podcast
and get some great information. Tanton Investment House dot com.
That's t A N T O N investment House dot com.
Telephon over for the office right in middle ten six
oh eight five zero one fifteen forty nine. That's six
soh eight five zero one, fifteen forty nine. Doing a
twenty twenty four mid year outlook. And this is part
(12:54):
two if you can catch part one as well at
Tanton Investment House dot com. Tracy, as we're talking about
growth in that last segment, a lot of folks wonder
is the growth only happening here in the US, or
is there more to this?
Speaker 2 (13:07):
No so earnings growth you know. This trend is also
happening in other regions, including Europe and Japan. Although their
growth isn't as sharp, profits are still increasing and are
expected to continue rising into twenty twenty four and twenty
twenty five. In Europe, what we're seeing as profit growth
is anticipated to be more muted, but still positive. And
(13:28):
in emerging markets, economists are predicting a strong rebound in
profits after last year's decline. So even in China, where
the economy has been sluggish, there are early signs of
improvement in some sectors. And of course at these are
optimistic forecasts and they could be disrupted by inflation stagnates
or oil prices surge, geopolitical tensions, you know that could
(13:51):
lead to some trade wars or other unexpected events. So
we don't know for sure, but I would just say,
you know, if you're looking to invest, would look, you
know globally to invest emerging markets. They can be volatile.
So if you invest in those kinds of funds, just
be aware of that and invest only the portion you're
comfortable investing with. I tend to invest in a fund
(14:14):
that is also it's more like multinationals that take advantage
of emerging markets and has some emerging markets play in there,
but I'm kind of conservative when it comes to that,
but there is opportunity there because you know, those markets
haven't done well and you know tis times typically change
where you have some potential growth in especially the international markets,
(14:35):
their prices are just less expensive than the US. You know,
so a similar kind of stock here, whether it's a
car company for example, is less expensive there versus here
as far as the stock prices go. And we're going
to talk a little later about the opportunities that we're
seeing in the international space too.
Speaker 1 (14:55):
Should be exciting talking this morning with certified financial planner
Tracy Anton right here, ten Wiba. You're definitely want to
stay tuned for that. As we talked this week, don't
forget about the website Tanton Investment House dot com. That's
t A N t O N investment House dot com.
The telephone number six oh eight five zero one, fifteen
forty that's six h eight five zero one, fifteen forty nine.
(15:18):
I know a lot of not a lot of people,
but I've heard from a number of people that that
have you know, they've had cash at cash on hand.
They kind of pulled back a bit. Have those folks
missed out if they had money in cash or what's
the what's the perspective there.
Speaker 2 (15:31):
That's a great question. So when starts hit record highs,
investors might think that the market has peaked and they've
missed their chance to invest. However, basically history shows that
usually is not the case. Over long periods of time,
markets have generally trended upward and they've reached new peaks
multiple times. So while market declines you know, are inevitable
(15:53):
and stocks can drop at any time, history would suggest
that new highs have often been good entry points for
long term investors. So if we go back from nineteen fifty,
each time that the SMP five hundred index hit its
first all time high in at least a year, Stacks
then delivered another seventeen point one percent average return for
(16:14):
the subsequent twelve months. So again, there was this kind
of cool chart that was on the American Funds Brochure
and it said, since nineteen fifty, the SMP five hundred
index has reached one thy, four hundred and thirty four
new all time highs. And when the s and P
five hundred reached its first new high in more than
again a year, thirteen out of the fourteen periods that
(16:37):
were highlighted were high, and the average over the year
was seventeen percent. So again an investor would have had
gains in each of these periods, you know, So like
the market hit a high and then the next twelve
months it basically hit another high. And so there was
only one period of time out of these fourteen periods
(16:58):
that were identified that which was the global financial crisis
in two thousand and seven that didn't happen. So again,
the bottom line is historically, bull markets have been much
longer than bear markets, leading to new highs within each cycle.
So of course there's no guarantees, you know, but that's
why I stress here, it's got to be long term
money that you're thinking about. Don't put your emergency cash
(17:20):
into the market, obviously, but if it's long term money.
I see a lot of people who have a lot
of money that's in you know, cash or CDs or
money markets, and you know, it's great, you're getting five percent,
but at the same time, if they lower rates those rates,
you know, typically a risk free asset doesn't beat inflation,
(17:41):
and if inflation runs three percent long term, I don't
think that those CDs will hold for the long term,
long long term. Right, you might be getting five percent now,
but it probably won't be held long term, So those
rates will likely come down as the FED cuts rates eventually.
So I got I just say, you know, if it's
long term money, make sure it's invested properly.
Speaker 1 (18:04):
Really good guidance this morning from sort of fied financial
planner Tracy Anton here on thirteen ten Wuiba. So, Tracy,
of course a lot of talk about the FED and
rate cuts and if those are delayed, is that bad
news if you're if you're a municipal bond holder or
what's yeah thinking.
Speaker 2 (18:21):
Through this question in here, Sean, because I think you
know municipal bondholders, they might be frustrated by the FED
slow rate cuts, but there is a silver lining here
that in stable interest rates that they're getting pretty good income.
So for those and like people who are in moderate
to high tax brackets, municipal bonds offer pretty attractive after
tax returns. So again I'm just giving you some numbers
(18:44):
here to chew on. In May, the tax equivalent yield
for the Bloomberg Municipal Bond Index was six point six percent.
If you compare that to like a taxable bond, it
would be like five percent. So in general, like if
you're if you're somebody who has high are in high
(19:04):
tax brackets, you should look into the municipal bonds because
they're paying such great yields and when you look at
the after tax return, that's the big deal. You know,
the municipal bonds could actually be paying out more than
the taxable bonds, which is you know, not always the case,
so usually not the case. So and again investors, really,
(19:25):
according to the American Funds, they don't have to sacrifice
quality for attractive income. And that's because the difference in
yields between the high and low rated bonds has compressed.
So according to Mark Marniella and American Funds, he says,
many of our portfolios lean relatively to higher quality, which
may provide better resilience should the economy weik. And even
(19:47):
so again, look into high yield bonds if you're in
higher if you're in a higher tax bracket and you're
looking into bonds.
Speaker 1 (19:54):
Talking this morning with certified financial planner Tracy Anton here
on thirteen ten WI b A. Of course, Tracy comes
to us from Tanton investment house. The website Tantoninvestmenthouse dot com.
That's t A N t O N investment House dot com.
Telphon up for the office in Middleton six SOH eight
five zero one, fifteen forty nine. That's six SOH eight
(20:14):
five zero one, fifteen forty nine. Here, I say, I
love how this is worded. Is this your father's dividend market?
Speaker 2 (20:21):
I love that question again. This comes directly from a
statement from American Funds, and the headline was no, this
is not your father's dividend market. And what they're trying
to point to here is is that, you know, we
expect dividends from only mature companies that have slow growth potential. However,
dividends are becoming popular among big tech companies, so Meta,
(20:43):
Alphabet and Salesforce all introduced dividends in the first half
of twenty twenty four. It's it's amazing to me. So.
In fact, the tech company Sean accounted for fourteen point
one percent of the total cash dividends paid by S
and P five hundred companies in twenty twenty three, which
actually ran them second largest contributor bisector in dollar terms.
(21:04):
So I know, does that I mean, does.
Speaker 1 (21:06):
That surprise you a little bit, but it's good to hear.
But yeah, I was surprised when you said that.
Speaker 2 (21:11):
I know, well, the divining yields for many tech firms
are monus, but the data amounts are massive and are
expected to have strong earnings growth this year again and
twenty twenty five. So if you look in twenty twenty three,
companies in the tech sector like Microsoft and Apple, they
paid out a total of thirty five billion in dividends.
And I look to see, you know, well, who is higher.
(21:32):
You know what sector is higher than the tech it's financials.
Financials are the highest dividend payers, but then tech companies
are the next highest dividend So we forget that. We
think that, oh, tech companies don't pay any dividends, right, No,
you're wrong, you know, And it's just it's easy to think,
you know, we learn, We learn old things and remember
what our parents bought. Right, the dividend payer, they would
(21:56):
be surprised. I think that these companies are maturing and
paying pretty good dividends and that shows some stability there,
which is good.
Speaker 1 (22:02):
Learn something new every day in tracy. As we talk
about dividend paying companies, how can investors seek them out well.
Speaker 2 (22:09):
For investors looking for immediate income. Shown companies and the technology,
aerospace and energy sectors have been introducing increasing dividends for years.
So for instance, semiconductor companies Broadcom and Texas Instruments, as
well as General Electric, which manufactures and services jet engines,
have all raised their dividends since the end of twenty
(22:31):
twenty three. And the energy company Canadian Natural Resources has
also increased its dividend even with fluctuating oil prices. And
so I give you these names not so that you
run out and buy those stacks. That's not the idea.
The idea is just to give you a sense of
what's kind of happening out there, and that there's opportunities
if you need income, and most retirees do, right, it's
(22:53):
good to have partier return based on income, based on
dividend income. And so there's opportunity in these sectors. And
again I would steer you close, you know, to more
mutual funds or exchange ETF funds that have good tax
advantages instead of buying the individual securities.
Speaker 1 (23:11):
And Tracy has been talking this morning. I heard you
mention a couple of the Magnificent seven already. Yeah, let's
talk about some of the investment opportunities that are there
for those those players.
Speaker 2 (23:20):
Well, yeah, so the magnificent seven stocks the people that
you hear about it a lot, because last year those
seven stocks made up seventy percent of the return of
the S and P five hundred last year, and now
they account for about thirty percent of the S and
P five hundred. So names like Microsoft, Apple, Alphabet, Amazon, Navidia, Meta,
(23:42):
and Tesla, those are the seven stocks, But those aren't
the only ones that have strong investment options. So again,
if you look outside the US, there's a growing number
of competitors. So in Europe the equity market is less concentrated,
offering a broad range of top performing companies in what
they call the MSCIEFA index, which is the international index.
(24:04):
And those sectors are healthcare leader like Novo Nordis, chip
equipment maker like ASML, software giant SAP, and banking powerhouse HSBC.
So again you also have Japanese docks have seen a
remarkable rally this year, reaching levels not seen since the
late nineteen eighties. So again, why do I bring this
(24:25):
up Because instead of just focusing on one changing region
like the United States, it's smarter to look globally for
top companies. And again this is American Fund's opinion, but
I also agree. I've been a global investor for a
long time. And if you look like at those seven
leading companies that the MSCI EFA Index had, so the
(24:50):
international index like the Novo, Nordis, the ASML, SAP, Toyota, HSBC,
Assignments and ubs, they actually performed better than and the US
Magnificent seven. And they did it. You know, if you
look at since twenty twenty two, the value actually increased
by over sixty percent, So you would have been better
(25:12):
off with Global Magnificent seven by far since two thousand
and two or twenty twenty two, then the seven stocks
here in US. So I bring this up because we
always think, oh, well, I got to invest a Microsoft, Apple,
And of course you are invested there, like if you're
a good mutual fund investor, you're going to own all
of those things. But globally you should also be looking
(25:34):
because there's a lot of value there and they've done
very well.
Speaker 1 (25:37):
Talking this morning with certified financial planner Tracy Anton, a
lot of insight. As always in the program, don't forget
if you missed any part of the show. I get
it sometimes to stop out, you grab a coffee and
pick back up. You miss something, you could always listen
back tantoninvestment House dot com. You listen back to the
podcast there, Share the podcast as well. Get for more
information about Tracy and the team again the website Tanton
(25:59):
investment Minhouse dot com. That's t A N t O
N investment house dot com and the telephone number six
oh eight five zero one, fifteen forty nine. That's six
oh eight five zero one, fifteen forty nine. Tracy, thanks
for joining us this morning. It's always informative. You enjoy
this beautiful day.
Speaker 2 (26:15):
Thanks Sean. Take care,
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