Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight, the US debt is downgraded, the fear gage rises.
Could you handle twenty four hour day, five day a
week trading. You're listening to Simply Money, presented by all
Worth Financial. I'm Bob Sponseller along with Steve Ruby. We
have several new economic developments to talk about tonight and
to help us do that as all Worth Chief Investment Officer,

(00:28):
Andy Stout. Andy manages more than twenty five billion dollars
worth of investments for our clients across the country from
right here in good old Cincinnati, and he's a great
resource for us. Andy, thanks for being with us today.

Speaker 2 (00:43):
Happy to be here. Thank you.

Speaker 1 (00:44):
All right, let's get right down to it. Explain this
debt downgrade we heard about over the weekend and what
this means in simple terms, simple terms, Andy, make explain
it to it. Yeah, explain it to us in plain.

Speaker 2 (00:57):
English, in plain English. Really nothing has changed.

Speaker 1 (01:02):
Uh.

Speaker 2 (01:02):
When you look at Yeah, when you when you look
at what Moody's, which is a credit rating agency, did
on Friday is they said our credit rating is went
from triple A to double A, meaning it's no longer
as safe and pristine as it once was. But to

(01:23):
be fair, a double A rating is still pretty strong.
And also, to be more fair, even though it's not
triple A, SMP standardumpoort you know did this like fourteen
years ago, so this was this is nothing new. I mean,
Moodies was kind of like the last hold it out
saying the US is, you know, pristine, perfect debt, we

(01:44):
can handle everything. But then they took a step back
then thought well, maybe the rising debt and deficits, maybe
that is something that isn't really triple A worthy. And
that's fair, I mean because when you think about it,
if you look at where our fiscal trajectory is moving,
essentially it's higher depth, right, it's it's wider deficits, and

(02:07):
we're not really seeing any sort of catalyst to change that.
So as a result, you know, what we have seen
is we've seen interest rates go up a bit. I mean,
you had the thirty year treasury jump above five percent
for the first time since twenty twenty three. But you know,
when I'm thinking about this, when I'm looking about at this,

(02:28):
is there an immediate crisis, like a funding crisis? Now,
you know, treasuries, the US treasury market is still the
deepest most liquid market in the world, So that isn't
going to be a problem, but we could see an
upward bias on yields over time. But I don't think
it's any sort of you know, siren sounding that you

(02:53):
know people need to you know, take cover in the basement.

Speaker 1 (02:57):
So I know it's early here in this game here
with this day you know downgrade, But if I hear
you correctly, you're saying, like a lot of things we've
already experienced this year, this might be a little bit
of overblown fear in the short term.

Speaker 2 (03:12):
Yeah, and this isn't new news. I mean, this is like,
you know, oh thanks Moodies, didn't already know all this stuff?
I mean, I would just I mean, I'm not saying
it's something to be ignored, but it's kind of light
in the game to be uh doing this.

Speaker 3 (03:32):
So I just want to hear your perspective because there
are folks that I work with out there that are
pretty spooked about the idea of this happening. Even though
you're talking about it not being a huge deal. What
could it actually take And do you think it's possible
for you know, short term US debt to actually not
be the most liquid investment in the world to be
downgraded even further than this small pullback that we just saw.

Speaker 2 (03:57):
Yeah, there's really nothing on the media rise. I mean
when we think about these bigger risks that you hear
people talk about, whether it's you know, the dollar being
the world's reserve currency, or US debt reaching an unsustainable
level and you know the world comes crashing now, I mean,
these aren't things that are one, two, or even three
years off. I mean these are things like if they

(04:19):
happen and there's it's still a low priority. We're talking
like a decade outlet. I mean, this isn't these aren't
things that happen overnight. Uh. The market isn't you know,
going to you know, go away. The US currency isn't
going to all of a sudden no longer be used
in international transactions. It's just to the world economy is

(04:41):
too well ingrained into using the US uh you know,
vehicles as kind of like the medium for investment in
the medium for investing excess sovereign from other foreign governments
investing their excess uh are serves into US government bonds.

(05:02):
I mean, that's not chinking, take a deep breath.

Speaker 3 (05:04):
It's not something we need to worry about, even though
we do see the fear gauge rising here in the
short term.

Speaker 2 (05:09):
From this, yeah, I'm not really concerned about any sort
of rise in whichever fear gauge. And you want to
look at, I know there's quite a few out there. Uh,
you know, if you're looking at like the the stock
market fear gauge, right, it's gone down a lot. When

(05:30):
you look at the bond market fear gauge, you know
that hasn't actually you know, gone up recently either. I
mean we've seen that that's been trending lower. Now you
might see a little bit of rise today, but overall,
I mean it hasn't moved all that much. It's actually
been coming down all.

Speaker 1 (05:49):
Right, Andy shifting gears a little bit here to the
most recent retail sales report, which skewed a little bit
negative ord tear us the reason why and is that
anything to be concerned about.

Speaker 2 (06:01):
So, yeah, there was a lot of data that came
out last week, and the retail sales was was one thing.
And I would say with our tearffs, are our trade
having an impact you know, maybe a little bit, because
where you saw some weakness, it wasn't what I would
call the tariff sensitive categories like you know, sporting goods

(06:25):
as one example, things that you're importing from abroad, essentially.
But when you look at other areas, it's certainly not
as bad, like restaurants, people going out, discretionary spending, restaurants, bars. Uh,
you know, fortunately that hasn't seen an impact. And when
you look at just the.

Speaker 1 (06:41):
So and so, Americans are still eating out every night
and drinking a lot, but they're just buying fewer gym
shoes and yoga pants. Is that is that the story here?

Speaker 2 (06:52):
Yeah? I guess maybe they should be buying more yoga pants,
but yeah, that's essentially the story.

Speaker 1 (06:59):
All right, talk about the strong earnings report we've seen
for the first quarter. Ninety two percent I think of
S and P five hundreds have reported, and the news
has been pretty good so far.

Speaker 2 (07:09):
Right, Yeah, So the overall earnings picture is a solid one.
You have seen roughly seventy seven percent of those companies
beat earnings estimates. And when we say of those companies,
we're talking large cap companies like Procter and Gamble as
an example, and the year of a year earnings growth
on average of all of those large cap companies those

(07:31):
ninety two percent that have reported, it's thirteen point three
percent higher compared to the same time last year, which
is pretty much double what Wall Street analysts expected at
the start of earning season. So it's pretty solid on
the earning side when you look at the sales side
of it, because keep in mind, you got sales and
then you have expense. Then you have the expenses get

(07:52):
you down to earnings. But let's look at the top
line sales level. What we're seeing there is that sales
are about four point nine percent higher over the past year,
and that's a little bit better than what was expected.
I mean four point three percent, so not too too much,
but usually that's the smaller spread anyway. So sales are
still increasing, and they're increasing at a modest rate, and

(08:12):
earnings are increasing at a more robust rate, suggesting that
companies are controlling their expenses pretty well. And that's something
to watch out though for. I mean, if you think
you're seeing things in the news like Microsoft laying off
three percent of their workforce, when when you look at
how companies can control their expenses, especially with tariffs uh
in the news right now, and you know, impacting the

(08:34):
broad economy and impacting companies. I mean you saw you
may have soltware. President Trump suggested to Walmart that you know,
they that Walmart should eat those tariff costs as passing
them off. Well, that probably won't happen because Walmart's more
concerned about, you know, their bottom line earnings and controlling expenses.
So it's a lot of moving here. So we what

(08:56):
we really want to watch really closely is the job
market because that's where a lot of companies can quote
unquote control expenses, meaning they might let some people go
to keep margins where they're at.

Speaker 3 (09:07):
So I've been asking you about inflation for years, and
I'm going to do it again today because I'm curious
to hear your perspective after all of this, where you
think inflation will be here in the near term.

Speaker 2 (09:18):
We've seen some decent numbers on inflation recently, like if
you look at the year over year numbers, because we
did just get the updated CPI report, a consumer inflation
report last week. It showed that prices were two point
three percent higher over the past year. But when you
get rid of food and energy, I'm not that you
we can ever as a consumer to get rid of

(09:40):
food and energy. I mean, I still go to the
gas stage and I still have to eat. But it
tends to be pretty volatile. And the reason we look
at it without food and energy, it's called core CPI
or core inflation, is because it moves a lot and
it's almost impossible for the Federal Reserve to have any
sort of material impact on it. Anyway, that was up

(10:00):
two point eight percent, so a little bit hotter. Uh.
You know, the FED wants inflation to be lower than
where it is. But when we look ahead, to answer
your question, Steve, you know where inflation might be going.
When I look at that year over year print, I
don't really see it improving too much in your dream.
I think it might actually get worse in the in
the summer months. Uh, just because of when you look

(10:20):
at what happened last year, we had some pretty low
inflation in the summer months. We'd almost have to have
zero to uh negative prints in order to bring that
year over year number much lower. So not too optimistic
on the inflation front, especially with all of the tariffs
that are in play right now and the uncertainty surrounding
the trade world. So it's a lot to take in

(10:42):
and a lot to take as part of the equation.
So we'll be watching that really closely. We'll see how
much tariffs bite.

Speaker 1 (10:50):
All right, And in spite of all the volatility around
tariffs and and everything we've seen year to date, I mean,
as a Friday's closed the broad market, the S and
P five hundred is up now year to date nearly
two percent. What should that indicate to the average investor
out there.

Speaker 2 (11:08):
Well, to the average investor, it should indicate that when
you're looking at the market, when you're looking at how
much pain you're experiencing in the new year term, that
this is a normal occurrence. I mean, what we've seen
is the S and P five hundred as a Friday

(11:29):
got back into the green right up almost two percent.
Last week was up five percent overall. I know, the
Dow is also up a little bit.

Speaker 1 (11:35):
You know.

Speaker 2 (11:36):
What it shows is that patience diversification is really the
best way to you know, weather market volatility. I mean,
we've seen lots of crises over the past decade. You
get the Eurozone crisis in the early twenty tens, China
devaluing their currency. I don't know if you guys remember that,
but the world was coming to an end when they

(11:57):
started to change how their currency was paid to the dollar.
You have COVID, you have inflation. Now we have the
trade wars again or trade war two point oho, I
should say. And there's an emotional weight on people these
scary headlines. You get this wave of anxiety and then
you know what happens. You gotta recovery. Now, last week's

(12:20):
snap back and recovery over the past a few weeks
doesn't mean it will continue to head higher. We could
easily see a pullback. But what it shows is that
just staying discipline, staying consistent, not letting your emotions get
carried away, and thinking about how much history has repeated
the same process over and over and over again can

(12:41):
really help you stay ground it because that's the key.

Speaker 1 (12:44):
Great stuff, as always from All Wars Chief Investment Officer
Andy Stout, Andy, thanks so much. In case you missed
our show on Friday, we want to let you know
that Amy Wagner, who so many of you have listened
to for years, is no longer with All Worth. This
was a personal decision Amy made as she looks to
create more space for the priorities that matter most to her.

(13:08):
We're incredibly grateful for everything Amy has brought to the show.
We will miss her and we're absolutely cheering her on
in her next chapter. As for the future, Simply Money
isn't going anywhere. In fact, our new co host joins
me tomorrow and he's a very familiar voice, all Worth
advisor Brian James. You might know Brian from his Monday

(13:31):
morning segments with Brian Thomas right here on fifty five KRC.
We love Brian here at Alworth and we think you'll
love him as well. And good old mister Ruby here
will continue to fill in from time to time and
you can always read his Inquirer column that appears every Sunday.
So Steve is going anywhere. Coming up next, you're about

(13:54):
to be enticed to monitor the stock portion of your
portfolio around the clock. We'll give you our take on that.
You're listening to Simply Money presented by all Worth Financial
on fifty five KARC, the talk station. You're listening to
Simply Money presented by all Worth Financial. I'm Bob Sponsller

(14:16):
along with Steve Ruby. If you can't listen to Simply
Money every night, sub subscribe and get our daily podcast.
You can listen the following morning, during your commute or
at the gym. And if you think your friends could
use some financial advice, tell them about us as well.
Search simply Money on the iHeart app or wherever you
find your podcast. Now is now the time to revisit

(14:40):
your risk tolerance. We're gonna examine that straight ahead at
six forty three. All right, Steve. There once was a
world where trading was done during a specific time of
day between the opening bell and closing bell, in other words,
nine thirty in the morning to four o'clock in the afternoon.
But thanks to global marketing, it's increasing technology and more.

(15:02):
You can now be enticed to trade twenty four hours
a day, five days a week. And now a key
player wants to join the whole crowd.

Speaker 3 (15:13):
Yeah, how exciting. So that this comes from an article
through our friends of our MarketWatch. One of the last
obstacles for the twenty four hour stock trading is about
to fall. And what this is referring to as a
proposal from the operating committees of the Securities Information Processors,
which we call SIPs. What they did is they recently
published a statement that declares their intention to ask the

(15:35):
sec the securities Exchange Commission for permission to extend the
operating hours of SIPs, which these organizations.

Speaker 1 (15:43):
What they do is.

Speaker 3 (15:45):
They control the public data feeds that record trading activity
that broadcast prices to investors globally. Their goal is to
get that open window is close to twenty four hours
a day as possible. On this new proposed regime, the
trading would now run from eight pm Eastern Time on

(16:05):
Sunday through eight pm Eastern Time on Friday night, with
only a single one hour technical pause each day to
process things like corporate actions, for example, dividend related housekeeping
or bookkeeping that needs to be done, and any changes
arising from things like mergers and acquisitions.

Speaker 1 (16:25):
Steve, I just want to get your opinion. There's about
a twenty year age difference between us, you know, as
you point out all the time, I'm older all the time.
I'm interested in your perspective on this.

Speaker 3 (16:38):
I mean, this is certainly an interesting thing that I
think would cause people to be a little bit more
reactive to some of the news that might come out
in an overnight cycle. I see it as risky. You know,
there's not a big purpose for this type of thing
for the average investor that needs to focus on the

(16:59):
law long term. If you're focusing on the long term,
and you have a diversified portfolio, and you have a
financial plan and you know what your money needs to
do to meet your goals, then you don't really need
to be trading at two in the morning when some
kind of news comes out internationally that might affect things
in a very short swing, because what happens in the
very short term doesn't matter over the long term if

(17:21):
you're not reacting based on that information.

Speaker 1 (17:24):
Yeah, I share those concerns. I share a couple of
additional ones. One is just the bid and ask spread.
And without getting too technical, anytime you buy and sell something,
there's a bid price that's the price that somebody is
willing to buy something from you at, and then the
ask price, you know, the price that you're going to
pay for it. And the more liquidity that is going

(17:47):
on within any investment, whether it's an individual stock and
ETF what have you, that bid and ask spread shrinks
down a lot. When you get into after market, you
know hours trading or trying to trade at two or
three in the morning, that spread widens, and that's because
there's not a lot of volume going on. I mean

(18:07):
the institutional traders out there, the ones that trade these
mutual funds and ETFs, they're they're not going to be
adjusting their portfolios at three point thirty in the morning.
You know. It's the amateur, you know, day trader, emotionally
driven trader that's going to feel like they need to
do something based on a headline, which, by the way,

(18:29):
at two or three in the morning. There's always people
out there or can be on social media that will
try to manipulate an event to get people to do something,
and that can be detrimental to investors out there. Those
are my two concerns.

Speaker 3 (18:43):
Yeah, I actually think of a situation, you know, hypothetical
where like Wall Street bets on Reddit gets together and
does something silly in the middle of the night because
they had a lot of an impact on some of
the meme stocks during COVID. So I know that's a
little bit out there of a thought, but there could
be some reality to it if there's enough people acting
to to affect that ask spread that you're talking about.

(19:04):
But I also wonder if it would shrink the bitesk
spread over time as that as more people normalize and
more people trade.

Speaker 1 (19:12):
As more people don't sleep and send in their basements
and day.

Speaker 3 (19:15):
Trade, multiple monitors on their desk looking at charts and whatnot.

Speaker 1 (19:19):
We'll see what happens. Here's the all Worth advice if
you're a long term investor. Twenty four hour a day,
five day trading is like keeping a cook each next
to your bed. It's convenient, it's tempting, but it's potentially damaging.
Use it sparingly, if at all. Remember your edge here
as an investor is patience, not speed. What if we

(19:42):
told you that you could get some return if the
market does well, while at the same time protecting you
from losing money. It's an investment solution we're going to
discuss next. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the talk station. You're

(20:04):
listening to Simply Money because I have my all Worth Financial.
I'm Bob sponseller along with Steve Ruby, joined by our
Chief investment Officer, Andy Stout. Andy. In light of a
lot of the recent volatility we've had. You know, I
don't know about you, Steve, but you know I've had
a few a handful of clients come in and say
you know that age old thing. Hey, I want to

(20:25):
get a lot of the percentage of the stock market return,
but I don't want to have my portfolio to client
in value at all. Seems too good to be true.
But there is a product out there or a strategy
that we've talked about with clients that are more risk averse.
Tell us about that strategy, Andy.

Speaker 2 (20:45):
So when we look at the various ways investors can
put their money to work, one of them is what's
called a structured no now structured notes. Essentially, there is
a debt instrument issued by a bank, and what it
does it allows you to customize a risk return profile

(21:06):
for yourself. So you're able to tailor exposure to different
you know, stock indexes or even bond the bond market.
And essentially what it allows you to do is we'll
put a downside protection or a floor associated with your investment,
but nothing is free. But so it also kind of

(21:27):
caps the upside to a degree. So what you're able
to do is you're able to minimize a downside risk,
but you're limiting your upside. Now, this is really good
for investors who are worried about where the market might go.
In the near term and also but still also want

(21:47):
to be invested because they understand that overtime markets had
higher Now, when you think about it from that perspective,
you know, if you're a long term investor, you don't
want to have that cap because the markets can rip
in a very quick you know, a short period of time.
We're up almost twenty percent from the lows that we
had earlier this year. After that, you know, the tariff

(22:09):
sell off if you will, But if you were invested
in that to begin with, you wouldn't have experienced all
of that downside from the tariff sell off. So putting
that together, the question is what is the risk level
that someone is comfortable with if they want to really
limit that downside risk. You know, there's one really good
opportunity and there's other types of structure notes, but you

(22:30):
know that's one of the main ones. Allowing you to
protect the downside customize your upside a return as well.

Speaker 3 (22:38):
These are fascinating solutions, I think because they almost fill
a niche in that they behave a little bit like
an equity indexed annuity, which we've certainly shared our viewpoints
on in the past, and I've come across because they
didn't quite understand what they were getting into and they
found themselves with a product that didn't exactly meet their

(22:59):
needs and they were tied to for a decade plus
without getting rocked by surrendered charges. So this is a
similar solution. I would say that can set that floor,
but also cap that ceiling. Because you mentioned yourself, that's
that's the cost of using these underlying options to create
that defined outcome.

Speaker 2 (23:21):
Yeah, but I would say there's definitely some benefits and
differences relative to inequity indextinuity. I mean, for example, while
you look at those equity index inuitiesitters these surrender charges,
if you want to get out earlier, I mean, you
can get out of a structured note and it may
not be as liquid as a Procter and Gamble stock,

(23:45):
but you can get out of them. And there also
can be you can customize them to whatever term you
want regarding when they would mature, so maybe it's one year,
maybe it's two years, so you're not locked up over
a very long period time. All of this is really
you know, customizable now, you know. With that said, I
mean there's there's definitely some benefits we already mentioned the

(24:08):
upside and downside customization. Uh. But there's also the fact
that you know what you're going to get. It's almost
that peace of mind, right, So you have that clarity
in this it's called a defined outcome. You know where
you're going to be. You're going to be in this range.

Speaker 1 (24:25):
Uh.

Speaker 2 (24:25):
And also you know it can complement your traditional portfolio
because it provides a little bit of a diversification as well.
And if you're worried again, like if you have some
emotional concerns about what may happen in the near term,
it's a it's a good way to kind of tiptoe
into the market. But you know, of course, I'd be
remiss if I didn't mention some of the the drawbacks

(24:46):
of structure note because nothing is perfect, right. One of
the obvious drawbacks is you know your upside is cat
we already talked about that. Uh. They can be somewhat
hard to understand. So unless you uh spend some time
talking with a ninetel advisor to get all of the
facts behind them. You know, that's something that you know
could be a concern, but if you're able to wrap

(25:08):
your head around it, because they can be complex, I
think they can definitely provide you know, a good essentially
ballast to your overall portfolio under a certain circumstances.

Speaker 1 (25:20):
Of course, Andy, you know, picking up on Steve's point,
and I'm going back to a meeting I had earlier today. Somebody,
you know, he and his wife both put a pretty
large chunk of money into these indexed annuities, and I
don't think they understand the caps that are involved, how
those caps can change, and by cap, I mean a
lid on the amount of upside return you can get.

(25:42):
And they're they're staring at a nine and a half
percent surrender charge if they want to get out of
this thing. So compare the flexibility of indexed annuities from
both the cap space and the surrender charge to the
structured notes that were able to do. You know, here
it all worth well.

Speaker 2 (26:02):
In the structured note world, it's essentially it's essentially a bond,
all right, And it's because it's issued by a bank,
and it's an issued on the full faith and credit
of a bank. So when you're doing this a structure note,
you do want to make sure that you're looking and
not investing in some fly by night sort of bank.

(26:23):
You want to make sure you're you know, with something
definitely of high quality. And if you do want to
exit out of a structured note, essentially you would trade
it like you would any bond, So you have to
go to the market and sell it, and you're not
going I mean, it's highly highly unlikely that you see

(26:44):
anything like you just mentioned there, you know, with a
nine and a half percent the surrender charge, I mean,
you'll get pretty close to where it's actually valued at
because there is an underlying market for it.

Speaker 1 (26:56):
And that's the key point that if life changes, if
circumstances change, you can get out of these structured notes
very easily and with minimal charge to do so or
spread versus these embedded permanent surrender charges. Good stuff, Andy,
I appreciate you walking through that. You're listening to Simply

(27:17):
Money presented by all Worth Financial on fifty five KRC
the talk station. You're listening to Simply Money presented by
all Worth Financial. I'm Bob sponseller along with Steve Ruby.
Do you have a financial question you'd like for us
to answer. There's a red button you can click while

(27:38):
you're listening to the show right there on the iHeart
app simply record your question and it'll come straight to
us straight ahead. The mistake some travelers might be making
now due to fear of economic uncertainty. All right, when
markets are calm or climbing, most of us feel like
we're comfortable with risk. But what happens when things go

(28:02):
the other way? Honest and volatility returns allah the first
three weeks of April. What happens when inflation hangs are
when the economy starts sending mixed signals. Today, we're asking
a timely question that really should be in play all
the time. Is now the right time to revisit your
risk tolerance?

Speaker 3 (28:22):
It doesn't hurt to revisit your risk tolerance from time
to time, that's for sure. And you know I say
that because it could be a moving target. It's not
a set it and forget it number. It's not a
questionnaire that you filled out, you know, five or ten
years ago with your advisors. It's dynamic. It changes with age,
it changes with income, your family situation. You know, it

(28:45):
has a lot of factors that need to be taken
into consideration.

Speaker 1 (28:50):
Give us an example. You know you meet with a
ton of clients. Give us a good real life example
of when it was actually appropriate to sit down with
client and actually reevaluate their entire risk tolerance based on
some of these situational changes that you mentioned.

Speaker 3 (29:09):
It's part of a conversation for every single anti review
meeting that I have with folks, But that that's also
because we run full fledged financial plans that take into
consideration much more than just a risk tolerance questionnaire. Obviously,
that's something that has to happen at some point when
you're working with an advisor, but when you're working with
a fiduciary financial planner that has an active, living, breathing

(29:32):
financial plan tied to your family's finances, then I would
argue that it's almost revisited every time that financial plan
is reviewed, because that's going to take into consideration every
one of these things that we spoke about now, And
you know, a little bit more of a honed answer
would be if if somebody calls in and they're absolutely
freaking out about the markets and they're asking to sell

(29:54):
to cash and they want to act based on headlines
and short term fluctuations, sometimes we'll revisit risk time lance
at that point, paired with reviewing the financial plan to
remind them that there's a reason why their money is
where it is, and that's what they need to do
to meet their goals over the long run.

Speaker 1 (30:10):
Now, I agree totally. I mean, people, it's it's just
human behavior, and we all go through it. We all
experience it, even you and I do, Steve. When markets
get volatile, I mean, we all tend to overestimate our
tolerance for investment risk during bull markets or when the
market's just you know, continually climbing, and then when things
go the other way, well, all of a sudden, we

(30:32):
underestimate what are tolerance for risk is. And you've made
the key point. That's why that financial plan should be
reviewed every year because once you factor in the true
changes in lifestyle needs and circumstances, that helps drive what
that risk tolerance should be in order to help clients,

(30:53):
you know, reach their long term goals with ninety five
percent probability.

Speaker 3 (30:58):
Right, I met with somebody who relatively recently that was
looking at hiring an advisor.

Speaker 2 (31:03):
Again.

Speaker 3 (31:04):
So when I say that that they, you know, back
in COVID during the recession, they fired their advisor, they
sold the cash, and they waited till twenty twenty one
to buy back in hired advisor markets tanked in twenty
twenty two, they fired him, sold the cash. This person
never had the proper risk tolerance and never had a

(31:25):
financial plan built that showed the risk they needed to
take to meet their goals and how which they could
afford based on their financial situation. It was just a
risk tolerance questionnaire that said you can take this much risk,
and then they put him in that and that was it.
They forgot about it and they moved on, and then
when the markets did have an inevitable correction, they couldn't
stomach it. So this is the importance of working with
a fiduciary financial planner to help you identify that absolute

(31:48):
sweet spot risk tolerance that you should have based on
your financial situation.

Speaker 1 (31:52):
You're listening to Simply Money present up by all Worth
Financial LOMBOB sponsor along with Steve Ruby. So when is
it time to reassess your risk tolerance? Well, if you're
watching every tick on CNBCA throughout the day, you know,
depending on what headline article pops up, and you freak out,
that's probably not a good sign, you know, Or if
you've made changes in panic or as you mentioned, Steve

(32:16):
just freeze during a volatile market. That's not a failure,
by the way, it's a clue. It's a clue that
you should probably sit down with a good fiduciary advisor
and have them walk you through how investment risk and
investment allocation fits with your personalized long term financial plan.

Speaker 3 (32:38):
Yeah, so how do you re reevaluate this? You know
you need to Your goal is to let's say, invest
for income, maybe for your legacy. I think that's an
important one because there are folks out there that are
they're older, and they think that they have to be
more conservative. But if they have two pensions, two social securities,
and they don't even need their RM, they are more

(33:00):
of a nuisance than anything else. So they give them
to charity. That means that they could put their investments
in something more aggressive. So when I bring up legacy,
think about investing how your children or your grandchildren might invest,
probably a little bit more aggressive than you, So that
could have an effect on your risk tolerance. Maybe it's
just a travel goal for next year or in retirement,

(33:23):
then you've got to be a little bit more conservative.
You know, your goal is to find your timeline, and
your timeline should help shape your risk.

Speaker 1 (33:30):
If there's one positive out of this Volatiley head during
the month of April, where let's face it, the stock
market dropped, you know, ten or twelve percent in a
week or so. The one positive about that is when
we are doing a review with a client, we can
ask the question, and I'm doing it right now, how
did you feel and how did you want to react
the last time the market dipped. Because sometimes people forget

(33:53):
that the market can go down, that's often a great
time to reassess risk tolerance. Here's the all Worth advice.
Your risk tolerance should reflect who you are today, not
who you were five years ago. Coming up next, a
mistake people are making right now amid tariffs and market uncertainty.

(34:15):
You're listening to Simply Money presented by Allworth Financial on
fifty five KRC the talk station. You're listening to Simply
Money presented by Allworth Financial. I'm Bob sponseller along with
Steve Ruby. When's the last time you booked a trip
way in advance? Because lately that doesn't seem like what

(34:39):
most people, or at least a lot of people are doing.
Thanks to this uncertain economy we're living in. Rising cost
tariff concerns, stock market jitters, what have you. More and
more folks are just waiting until the very last minute
to book travel. Sometimes that works, and Steve, sometimes it doesn't.

Speaker 3 (35:00):
Yeah, this is a risk I'm not sure I'm willing
to take what folks are doing. They're realizing airlines, hotels,
cruise lines, if they have empty spots to fill, then
you might might, as the key, be able to score
a great rate. You know, if you're flexible, think maybe
like a Tuesday through Thursday trip instead of weekend travel.

(35:22):
You know that there are some opportunities to keep costs down,
but you know, on the flip side, last minute can
certainly blow up right in your face.

Speaker 1 (35:32):
Well, give us some examples of what blow up might mean.
What do we need to avoid here?

Speaker 3 (35:36):
Well, if you're trying to travel, I guess during peak season,
this is a risk again that I wouldn't be willing
to take. So that would be summer break, Christmas, spring break,
you know, way too long, and not only in some
situations are price is absolutely sky high, but you might
not find a seat on a flight or a room
in a hotel.

Speaker 1 (35:53):
Whatsoever, I think with the advent or the ongoing usage
of AI. I got to think that these airlines and
hotel chains and they're starting to figure this out a
little bit, right. I mean, they can track how many
folks are clicking on their website looking at flights, looking

(36:13):
at rooms, and they can adjust that old supply and
demand component, which results in price fluctuation even without people
actually booking a reservation. That's a that's just an assumption
on my part.

Speaker 3 (36:28):
No way, they're not doing that. It makes Yeah, that
is something there one hundred percent capitalizing on because why
wouldn't they. There's opportunities out there to collect real time
data to make sure that they can create that optimal
price point that makes sure that they maximize profits and
still manage to sell the ticket in this situation.

Speaker 1 (36:46):
Yeah, and let's face it, if you're trying to actually
go on vacation and relax a little bit, I mean,
at least to me, having this stuff booked in advance
and knowing what you're getting with nose surprises on the
back end, that's part of the whole vacation experience. I
personally would not want to book at the last minute
and be on a standby and getting thrown off my

(37:08):
flight to go on vacation.

Speaker 3 (37:10):
Maybe maybe if I were retired and felt like being
a little bit more adventurous, I would experiment with this
just to see what happens, going into it with a
full expectation that things might just get flipped on their heads.

Speaker 1 (37:24):
All right.

Speaker 3 (37:25):
I need to have a lot of flexibility to take
these risks, in my opinion, because I value vacation and
it's hard to get away when you're working, you know,
full time, smacked AaB in the middle of your career.

Speaker 1 (37:34):
All right, I'm picturing you already as this cost conscious
retirement guy. You're the kind of person that would purposely
book a last minute flight, hoping that that person comes
on that microphone and says, we're looking for volunteers to
get off your flight, and we're going to give you
a five hundred dollars travel voucher. So you're that guy today.

Speaker 3 (37:56):
There is not a chance that I would accept that,
not a chance in retirement, but the same retirementy five
year old Steve, maybe that, yeah, maybe I'm not going
to deny that, especially if I can haggle the price
that the compensation that they would give me. Because you
sit there long enough, they're like, all right, we'll give
you fifteen hundred dollars. I've heard that before, and you
know I wasn't tempted to take it, but maybe at

(38:18):
some point in the future. Sure.

Speaker 1 (38:20):
Thanks for listening. Tune in tomorrow where we will talk
about private investments in your portfolio. You've been listening to
Simply Money, presented by all Worth Financial on fifty five KRC,
the talk station