Episode Transcript
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Speaker 1 (00:06):
Tonight.
Speaker 2 (00:06):
Some days feel like a week, a year, a decade.
Speaker 1 (00:11):
I don't know.
Speaker 2 (00:12):
It has been a day and a week and the
markets and we're gonna help break it all down for you.
You're listening to Simply Money, presented by all Worth Financial.
I Mimi Wagner, along with Bob sponse Holler, I often
talk about needing a dramamine the.
Speaker 1 (00:26):
Past couple of weeks.
Speaker 2 (00:28):
You maybe needed a drama meme because markets were in
free fall today, maybe just because.
Speaker 1 (00:33):
We are all over the place with.
Speaker 3 (00:36):
This one, Amy, I think you got to look on
the bright side here. I mean, your four to one
K balance just took a major shot upward. I mean
you can go, you can afford to go, buy a
couple pairs of new shoes, maybe a purse, a nice
dinner out with your husband.
Speaker 4 (00:50):
You know this is a good day.
Speaker 2 (00:51):
Yeah, in thirty more years, yep, absolutely, I'll take a
day like today.
Speaker 1 (00:56):
And you know it's funny because I'm not surprised, are you.
I mean I have said to clients all through this week, Hey,
we could be having the same conversation.
Speaker 2 (01:07):
A week from now, we could be having an entirely
different conversation.
Speaker 1 (01:12):
Or is today a blip on the radar. I don't know.
Speaker 2 (01:15):
Yes, you're right, markets rebounded. Let's talk about why and
what we think about it.
Speaker 3 (01:22):
Well, what happened a little bit after one o'clock today?
The President came out and basically said, we're suspending tariffs
on everybody except China for ninety days.
Speaker 5 (01:31):
Now.
Speaker 3 (01:32):
They're still keeping the ten percent baseline tariff in place,
but you know, nothing on China. We're still at one
hundred and twenty five percent on China. And I just
have to chuckle because I was up early this morning
just trying to digest what was going on in the news,
and you know, very early this morning, Amy China came
(01:52):
out and reciprocated, you know, against our last tariff and said,
you know what, you bump our tariff one hundred percent.
We're putting another eighty four percent tariff on the United States.
The interesting thing is stock futures didn't move much. Yeah,
that was interesting.
Speaker 5 (02:08):
Yeah.
Speaker 3 (02:08):
We were set to open I mean we were set
to open down about two percent, opened up maybe slightly higher,
and then everything kind of treaded water throughout the day
and then boom. By about one eighteen this afternoon, it
was off to the races, and so far, so good.
We lived to fight another day. Who knows what happens next.
Speaker 2 (02:29):
Interestingly, we did get a weird little sneak preview of
this earlier this week, right when fake news was leagud
on Twitter or someone's x accounts that said kind of
exactly this news. I mean, it was a little after
ten o'clock in the morning. What day was that, now, Tuesday?
Speaker 4 (02:48):
It was Monday, Monday, Yeah, it was Monday.
Speaker 2 (02:50):
Yeah, And I was watching the market in real time,
and at first I didn't know what had happened, and
I was like, wait, what is happening here? And really,
over the course of just a few minutes, it went
up several percentage points and then right back down right
as people discovered, hey, this news is not true.
Speaker 1 (03:08):
Well now we know it's true.
Speaker 2 (03:09):
We've heard it from the president's mouth, and I think,
you know, it goes to show if you are thinking,
you know what is causing this market volatility, it seems
to be purely a reaction to tariffs.
Speaker 3 (03:24):
Absolutely, So you know, I who knows what the President's
going to do next, but I think the way he's
and I'm trying to just get in his head.
Speaker 5 (03:32):
Here a little bit.
Speaker 3 (03:32):
I think he's got all these world leaders coming in town.
I think the big news is he's starting to talk
to the European Union, he's starting to talk to other countries,
and I think they're basically trying to get this thing
together and kind of then surround China and say, listen,
we got the whole world lined up here, and you
better get on board and let's work out a deal.
(03:52):
And I think President Trump and President Chi both have
big egos. They both want to say face Supposedly they
got a pretty good relationship. So someday, someday, soon, I
think those two guys are gonna get it in a room.
Hopefully they'll each allow the other one to puff their
chest out a little bit and save their male ego,
(04:14):
and we'll get something done with China.
Speaker 4 (04:16):
And there you go.
Speaker 2 (04:19):
For those of you who I mean, listen, I think
the message remains the same here, you know. And actually,
one of the things that I was thinking about as
markets are rebounding today is we have said many times
over the course of this past few weeks, if you
are someone who is getting nervous and you are thinking
about taking your money out of the market, what you
(04:41):
have to remember is some of the best days in
the markets are on the heels of the worst days.
You know, think about you know John Doe, who maybe
on Monday morning was like, I can't take this anymore.
Speaker 1 (04:53):
I'm just going to get out until the dust settles.
Speaker 2 (04:57):
Is there any reason to have thought that midday on
Wednesday not only would us settle, but we might be
looking at a pretty sizable rebound. In fact, maybe one
of the best days we've seen is as far as
a rebound. And you know, so for those who do
try to time the market, this is exhibit a why
we say it's not a great idea.
Speaker 3 (05:19):
Well, and we'll step aside from the day traders and
the swing trader a little bit and talk to a
lot about a lot of the folks that we work
with and on what i'd call normal regular investors. They're
just trying to investors. Yes, yeah, they're just trying to
put a plan together and sleep at night. So I
think the message here is, yeah, we get a rebound
for those folks that were over allocated to tech, maybe
(05:42):
over allocated to growth stocks or stocks in general. Based
on what your financial plan dictates you should be doing,
you got to take days like this as an opportunity
to continue to reevaluate are we positioned correctly based on
our financial and risk tolerance and amy I look at
(06:02):
today is a kind of a break mana from heaven,
so to speak. Yeah, you know, we kind of get
a little bit of a do over here to be
able to write the ship if in fact we have
a ship needs to be righted.
Speaker 2 (06:14):
You're listening to simply money presented by all Worth Financial.
Immi Wagner along with Bob Sponsor or. I'm going to
go with this ship metaphor here because I think, hey,
if you're someone who fell asleep at the wheel of
the proverbial ship over the past couple of years, because
you were only going in the best direction in the
stillest of waters with only a sunset ahead of you, right,
(06:37):
I mean that's what markets were the past couple of years.
Speaker 1 (06:40):
What the past couple of.
Speaker 2 (06:41):
Weeks I hope woke you up to is there are
certain things that you absolutely need to be paying attention
to in your portfolio, how it is allocated, how well
diversified you are. And I think the past few weeks
have been an excellent test stress test.
Speaker 1 (06:59):
On our portfoit to say, are are we invested the
way that we should be?
Speaker 2 (07:04):
And if the answer to you at any point in
the past few weeks has been no, okay, well then
maybe today you got a little bit of a reprieve
to catch your breath and to dive back in and
to say, all right, I'm going to do some work
right now to figure out exactly how I really do
need to be invested exactly.
Speaker 3 (07:20):
And you know, again this is a bit of a reprieve.
But you know, we're still down for the year. There's
still going to be volatility. So you got to you
got to take today, like you know, as a grain
of salt, just like we took the down day yesterday.
Speaker 4 (07:35):
The key point is you got to get in a room.
Speaker 3 (07:37):
Hopefully with a good fiduciary advisor, and evaluate your overall plan.
Take a look at whether you know there's opportunities now
with us being back up a little bit to maybe
replenish that emergency fund where maybe that thing was down
you know a little bit low. Think of it as, hey,
I'm trying to squeeze out a trip in my car
with less than a quarter tank of gas left, and
(07:58):
I hope I get there without running out of gas. Well,
now you just got a little gas in the tank,
but it's time to stop in and fill up, you know,
so you're ready for the next down day, if and
when it ever comes.
Speaker 2 (08:10):
Have we seen the last of the tariffs? Have we
seen the last of volatility? We do not have a
crystal ball, but I would venture to say probably no
on both of those points. So it's not a Okay,
we're out of this right, this is we're free and
clear now and we don't have anything to worry about.
You know, you should always be planning for volatility because listen,
(08:31):
we don't know what the name of that volatility is
going to be at that point, whether it will be
named tariffs, brexit, COVID nineteen, the Great Recession, it can
be named different things.
Speaker 1 (08:43):
But it's actually.
Speaker 2 (08:44):
Always a part of a very normal market cycle. And
you know, for anyone who's been invested for a long time,
you know how this works. And I have seen a
difference over the past few weeks between investors who have
been long term investors who are like, yep, get it,
been here before, done this before, to those who might
be newer investors and they're a little bit more hair
(09:07):
on fire.
Speaker 1 (09:08):
What's happening here should we make changes.
Speaker 2 (09:12):
Someone who not a client of mine, but someone who
I was talking to in their forties went from a
ninety percent stock allocation to a thirty percent stock allocation
recently because he was so nervous about this. Probably not
where a forty year old needs to be, right, But
he made changes based on fear because he's inexperienced in
(09:33):
how these market cycles work.
Speaker 3 (09:36):
Yeah, and again as a reminder, this is a ninety
day reprieve on tariffs. This isn't the end of the
whole tariff thing. And you know we all know from
dealing with President Trump for years now, things can and
do change often. So we're in the beginning of negotiations
with all these countries. Nothing's been side signed, sealed and delivered.
(09:57):
So again to your point, Amy, whow's the time to
continue to sit down and take stock of where you are.
It's an opportunity with a real nice upday to be
able to make some changes that are needed, you know,
in a good up day rather than a huge down day.
But don't think that we're off to the races and
it's time to pile in one hundred percent to tech
(10:19):
stocks and assume you're going to make eighty percent between
now and June, you know, be responsible.
Speaker 2 (10:25):
Yeah, and you know, just a little more historical perspective here, right, stocks,
This market is absolutely cyclical.
Speaker 3 (10:32):
Right.
Speaker 1 (10:32):
We have had twelve.
Speaker 2 (10:33):
Bull markets, twelve fair markets since nineteen forty nine, twelve
of each, and they stocks have posted on average a
twelve percent annualized total return across all time periods. That's why,
that's why you're in right. And sometimes I think it's
easy to say, wait, why am I doing this?
Speaker 5 (10:52):
Right?
Speaker 2 (10:52):
This is driving me insane? You know, all of this
market volatility. This is why you do it because over time,
what you're betting on is not any Paul let's see
that's coming out of Washington. It's you're betting on these
large companies figuring out new innovative ways to make money,
and they are financially incentivized to do that.
Speaker 3 (11:13):
Time in the market, not timing the market. The three
year data going back to nineteen forty nine, for every
three year holding period, not three days, three years, market's
up ninety percent of the time. Extend that to five years,
market's up ninety three percent of the time. Extend that
out to ten years. Ninety seven percent of the time, again,
(11:35):
time in the market, not timing the market. The only
people that need to and do panic tend to be
those that didn't prepare in advance to have their short
term cash needs out of the market period.
Speaker 2 (11:50):
The other thing I would add to that is also
the best days in the market often come on the
heels of the worst days. And if you've ever questioned that,
here you go everyone, Exhibit A. Here's the all Worth advice.
We said, market volatility, and that's what we have. You've
built your boat for storms, and you've built your boat
for sunny times, and if you don't have your boat built,
(12:11):
it's time to get to build in. We've talked time
and time again about the concept in the stock market
known as market capitalization.
Speaker 1 (12:19):
Here it is right in your face.
Speaker 2 (12:20):
We're going to explain what we're talking about and what
it means for you. Next, you're listening to Simply mone
You're presented by all Worth Financial. Here in fifty five
KRC the talk station. You're listening to Simply Money, presented
(12:40):
by all Worth Financial. I me Me Wagner along with
Bob Sponseller. You know, we've gotten a lot of questions
recently about all of this market volatility. What you should
be doing. We're going to answer some of them coming
up next in our Ask the Advisor segment that's at
six forty three.
Speaker 1 (12:56):
In twenty twenty three and twenty twenty four.
Speaker 2 (12:58):
Likely every time you check that balance on your flour one, ky,
you were feeling pretty good about life rights, largely because
of certain stocks that were always in the headlines. I mean,
these were the sexy companies that were certainly making all
the headlines, the Apple, Microsoft, Amazon, and Video Tesla, right
the Magnificent seven.
Speaker 1 (13:18):
We made the point during that time of.
Speaker 2 (13:21):
Listen, there's something about the way that the S and
P five hundred is set up where certain companies, as
they grow.
Speaker 1 (13:28):
Larger, also take up a larger piece of that S
and P five hundred PI.
Speaker 2 (13:33):
You maybe weren't so worried about it when markets were up,
but now you might be paying a closer attention.
Speaker 3 (13:41):
It is always ver irritating to me when Amy when
people come in after the fact and you know the
proverbial I told you so. Unfortunately, this is going to
be the I told you so segment because you and
I have been talking about this for months now.
Speaker 4 (13:56):
Yeah, and here's what we mean.
Speaker 3 (13:57):
Market cap basically just means the number of shares times
the share price. That's what that company is quote unquote worth.
And when you look at the S and P five
hundred index, things can get out of whack in terms
of some of these large cap and in this case,
we're talking about Magnificent seven tech stocks. And here's kind
of how auto whack things got. As of last month,
(14:21):
the Magnificent seven stocks accounted for thirty two percent of
the market cap of the S and P five hundred.
So again, five hundred stocks, thirty two percent of the
valuation was based on seven companies. Go back to ten
years ago to twenty fifteen, those same companies only made
(14:42):
up twelve point three percent of the S and P
five hundred. So you know, the I told you so
part was, you know, we we we've been telling people, hey,
this thing has gotten a little bit of skew, a
little bit skewed here to big cap tech and you
could take tariffs off the table. I mean, we've seen
these man Magsie seven stocks coming down all year now
(15:02):
and it's just valuations got a little bit ahead of themselves.
Speaker 2 (15:05):
Yeah, And I think if you're looking for a visual
here it's like if you're thinking, oh, okay, I own
an index attracts the S and P five hundred. So essentially,
if there's a pie, there's five hundred individual pieces, and
each one of them is cut exactly the same.
Speaker 1 (15:20):
That's actually not how this works.
Speaker 2 (15:22):
There's like Amy sized slices versus like my aunt and
how she cuts the pie right and and.
Speaker 1 (15:28):
Jojo cuts really large pieces.
Speaker 2 (15:30):
And so you know, seven of these companies now take up.
Speaker 1 (15:34):
A third a third of that pie.
Speaker 2 (15:37):
Just a few years ago they were only a tenth
of it, but now they're a third. And that's great
because that has driven some great returns over the past
couple of years when these tech stocks.
Speaker 1 (15:48):
Were just on a tear.
Speaker 2 (15:49):
But these are the companies now that are seeing a
lot of volatility and if you have a ton of
exposure to them in Bob, you and I see this
a lot in people's portfolios who are maybe saying, hey,
can you can you take a look at what's going
on here? You know, and maybe they've got, you know,
several S and P five hundred funds in different five
or four one ks and iras, and they own individual
(16:12):
positions in some of these companies and they think they're
well diversified, and you're like, actually, about half of your portfolio.
Speaker 1 (16:20):
Is exposed totally to these tech stocks.
Speaker 2 (16:22):
Great in years when they're up, not so great in
years when they're down.
Speaker 5 (16:26):
Yeah.
Speaker 3 (16:27):
When people come in and we you know, people come
in as new clients, one of the first things we
do is we take a look at everything that they
have and we stress test their portfolio. You know, we
look at in periods of historic volatility based on what
you own now. It's not an exact but it's a
pretty good predictor of the amount of volatility your portfolio
(16:48):
will experience in a downturn like what we're happening, what's
happening right now. So you might feel diversified, you know,
to your point, Amy, if you own six different large
cap growth funds, but you're not because there's a tremendous
amount of overlap of stocks in those funds. And let's
face it, people like recency returns and recency bias. Left
(17:10):
of their own devices, a lot of people are going
to take a look at their four oh one K
offerings and say, well, I'm gonna buy all the stuff
that's been really up the last three years, and they
tend to overweight to those things, and that can be
you know, that can put you in a situation like
what we're experiencing now where a lot of those folks
are saying, Man, I'm good with the markets going up
(17:33):
and down, but I never dreamed it would go down
this much. That's the time where you need to kind
of take a look at moving forward, how are we
going to balance and get some different asset classes and
different types of stocks in our portfolio. And I'll throw
one example out amy, and this is not a recommendation,
you know, just want to make that point clear. You
(17:54):
look at a company like Delta Airlines. They came out
with earnings this morning, by the way, they said, we're
not going to provide any forward guidance moving forward with all.
Speaker 1 (18:03):
These don't know what is happening.
Speaker 3 (18:05):
We have no idea what the heck's going on. But
this is a company right now that's paid, that's trading
in a five and a half pe ratio. You know,
you go, you go, yeah, you go compare that pe
to Navidia or you know, Tesla or something like that.
You know, you can make an argument pretty good value.
You know, the oil prices are coming down that tends
(18:27):
to be bullish for airline stock, you know, just an example.
And you mentioned some other stocks and sectors at the
beginning of the show where they're not even subject to tariffs,
and those stocks are actually up for the year.
Speaker 4 (18:40):
So again, the.
Speaker 3 (18:41):
Point is not to put all your eggs in one
basket and not get too overweighted to one sector so
that you're you're experiencing more volunt volatility and downward movement
in your portfolio than you might have bargained for.
Speaker 2 (18:56):
But don't you think, Bob, if you were someone who
was just starting a job, say January first, this year,
you were starting a new job, and you had the
Floral one k investment options ahead of you. So many
people come to me and they're like, well, I just
I just picked what was doing great last year.
Speaker 1 (19:11):
You would have not necessarily been like, you know, I
think large cat.
Speaker 2 (19:15):
Value is where it's at. You know, give me some
value companies. I like strong, you know, companies that are
fundamentally sound, but no one's talking about them in the headlines, right.
And it's like, if you if that's how you picked
your floral one k investment options based on what was
doing well last year, not so great this year, right,
(19:35):
So you know, for those who are like you know,
just laser focused on last year's returns.
Speaker 1 (19:41):
This is why you need to be well diversified.
Speaker 2 (19:44):
And I think if you are picking these things on
your own without the help of fiduciary, you may miss this.
Last year's winners are oftentimes this year's losers and vice versa,
and you could be missing that.
Speaker 1 (19:56):
Here's the all Worth advice.
Speaker 2 (19:57):
If your investments are highly diversified and also align with
your long term goals, please resist the urge to panic
sell coming up next. If you're losing sleep over the
stock market right now, you know there's an upside. We
do have some solutions for you. We spoke to actually
all Worth Chief Investment Officer Andy Stout last week about this,
(20:19):
but we're bringing it to you again tonight because it's
incredibly important. You're listening to Simply Money presented by all
Worth Financial here on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial.
Speaker 1 (20:34):
I mean you Wagner along with Bob Sponseller.
Speaker 2 (20:36):
We often talk about the price of admission into the markets,
meaning you get to take advantage of the upside of
when these companies are doing really well, but also there's
going to be a few times when you're checking that
four oh one K and that balance is going to
be down. But from time to time I come across
some investors who just struggle so much with the law.
(20:57):
I cannot sleep bitnight if they think they're going to
lose any money from their investments.
Speaker 1 (21:03):
Of course, no one wants to do that.
Speaker 2 (21:05):
But these, Bob are conversations we're having all the time.
Andy Stalder, chief investment Officer, coming back tonight, as we
talk about kind of investment solutions.
Speaker 1 (21:14):
Right if this is.
Speaker 2 (21:15):
Something that sounds familiar to you, maybe you lose sleep
over this.
Speaker 1 (21:19):
I want you to listen up.
Speaker 2 (21:20):
We have maybe some potential suggestions for you.
Speaker 1 (21:23):
Andy, several several years.
Speaker 2 (21:26):
Ago, we weren't necessarily talking about these things as options,
but we have some.
Speaker 1 (21:31):
We do have some options for investors right now.
Speaker 5 (21:35):
Yeah, there's quite a few.
Speaker 6 (21:36):
When you think about what's out there in terms of
investment solutions, there's a schmorgasbord. Now when you think about
client needs and client concerns, certainly the concerns of I
know I need to be invested, I know I want
to be invested, but I know the markets out to
(21:58):
get me, so as soon as I go, and the
market's going to go down and on sol right, I mean,
I think that's just a typical mindset that a lot
of people have. And you know it could happen, market
could go down, but obviously with the longer run, you're
better off staying invested regardless of those short term pullbacks. Now,
if you have some real concern and like you're losing
(22:19):
sleep at night, but you know you need to have it,
so you still want that stock market upside without the
full risk of the downside. You know, a couple of
solutions as that come to mind. One is what we
call structured notes and another is called buffer ETFs, and
they both behave very similarly. They both give you that
upside market participation participation, butmizes that downside risk. So you
(22:44):
may not get all of the market upside. If the
market goes up fifty to thirty percent in a year,
you may not get all of it. Conversely, the market
goes down ten twenty percent, you won't get all that well.
So essentially you're getting a floor on the downside and
a bit of a ceiling on the upside and ideally
this help you know, reduce your daily stress, right, so
you don't have to worry about those market swings. You
(23:04):
don't have to really worry about, oh, what are our
futures doing today, or what's going on with the economy.
Speaker 5 (23:10):
It's a little bit more of a set it and
forget it approach.
Speaker 6 (23:12):
So on the structured note side of things and the
buffered ETFs they behave similarly from that perspective where you
have a cap and a floor. Now the big difference
is i'll call liquidity and maybe also knowing what you're
going to get.
Speaker 5 (23:29):
So structured notes those are really.
Speaker 6 (23:33):
More than anything else or like a note issued by
a bank, I think like JP Morgan as an example.
Then they're essentially guaranteeing you that you'll get the floor
and the ceiling based on whatever underlying stock market that
structure note is tied to. So it could be like
the S and P five hundred, right, So if that's
and five hundred goes up ten percent, maybe you get
(23:54):
all ten percent. If it goes up twenty percent, maybe
some only get ten percent. But if it goes down
ten percent, maybe only lose two percent. So there's going
to be like a floor in the ceiling, and it's
going to you'll get that payout, you know, assuming JP
Morgan doesn't go wonder because nothing's ever guaranteed. But when
you look at it from that perspective, it's pretty safe
and you know what you're going to get, and it
had the set start date in a set end date. Now,
(24:16):
the difference with a buffered ETF is that it's you
get daily liquidity I meaning you can go trade it
on a stock exchange and get in and out and
don't have similar terms. However, to really enjoy that buffer
of the floor and the ceiling, you need to hold
it for. You need to look at i should say
over one year time horizons and you'll see a little
(24:38):
bit more wiggle room, but you should be getting pretty
close to what you're expecting.
Speaker 3 (24:44):
So Andy, when you when you talk about you know
the fact that the buffer ETFs do have daily liquidity,
but you strongly suggest and especially with the strategy that
you and your team developed here at all worth, when
you get into that strategy holding it for at least
one year, talk about the why behind that. You know,
usually when people have the option for daily liquidity, the.
Speaker 4 (25:06):
Next question is well, why should I hold that for
a year? Talk about the benefits of that.
Speaker 6 (25:11):
Well, when you think about the holding it for a
one year period, you have to understand what the ETF
is actually invested in. And it's invested in stock options,
which can be very complex. But they're going to have
time frames depending on the ETF, but they're going to
have time frames that roll for every year. Could be
(25:32):
March to March, April to April.
Speaker 5 (25:34):
May to May.
Speaker 6 (25:35):
So the point of these ETFs is to capture that
floor and ceiling over that one year interval. Now you
know one of the things that you know can add
some value and I think is really interesting. One way
that we look at it from like a i'll call
it a tactical rebalancing position, is that we look to
essentially optimize upside potential while keeping that downside protection in place.
(25:59):
So you know, for example, as the market rises in value,
you know what you could do is reallocate those ETFs,
so you could have like a May s and P
five hundred series, and two you might move it to
a July series. So what you're trying to do, because
we do this here internally, just you know, it's an
(26:19):
algorithmic smart trading process that we have built in, we
can reallocate the ETFs to essentially reset that downside buffer
and lock in games and allow us to maintain whatever
downside buffer we were looking at, maybe it's ten percent,
maybe it's fifteen percent, while at the same time taking
advantage of market growth. So as the market rises, we're
(26:41):
going to reallocate the ETFs to reset the buffer and
lock and gas.
Speaker 5 (26:46):
Now, if the market declines.
Speaker 6 (26:48):
What we would do is we would stay invested for
a bit to exhaust the majority of that buffer and
then reallocate the ETFs to increase participation in the upside. Now,
I know that can sound somewhat complicated and complex because.
Speaker 3 (27:02):
Well, and as you explained to it, you know, the
thought that comes to my mind is the old kids
don't try this at home exactly. You know, this is
what it's great to have you and a team you know,
that are monitoring this all day, every day, and you
know when to make the adjustments, and you do it
for these strategies that we have in place, and so
(27:22):
the client doesn't have to think about it.
Speaker 4 (27:24):
It's being done for them. And I love that.
Speaker 6 (27:28):
Yeah, and it's a it can be really powerful and
provide that peace of mind, and that's key. So with
these buffer ETFs, I mean that's where when I mentioned
the liquidity, So you can if you want, if you
choose like, hey, I don't want these buffer etf anymore
for whatever reason, maybe you need to go, you know,
buy a house or whatever it is, you can sell
them that day and they trade just like a stock.
(27:51):
So it's very easy to get in and out with
a structured note. You know, I think the advantage of
a structure note is it's more certain what you're going
to get at the end of the day because you're
not looking to see the inter day volatility.
Speaker 5 (28:02):
With that being said, they do have.
Speaker 6 (28:04):
Maturity dates because technically they're a note or a bond,
if you will, issued by a bank, So you can
sell them, but it might you might not be able
to sell them as quickly as you could the ETF.
So if you value liquidity, that's where the buffer ETFs
come into play.
Speaker 5 (28:23):
If you value.
Speaker 6 (28:25):
Significantly significant certainty, I should say, that's where the structured
notes come to play.
Speaker 5 (28:30):
But they do the same thing.
Speaker 6 (28:31):
It just kind of depends whether or not you want
to have that certainty A little bit higher, or that
liquidity a little bit better.
Speaker 2 (28:36):
Yeah, I don't think you have to be a sophisticated
investor right for this to make sense for you. But
I will go back to the point of don't try
this at home. Either one of these could be fantastic options,
and this is a look yourself in the mirror.
Speaker 1 (28:49):
Kind of proposition.
Speaker 2 (28:51):
If you do loose sleep when there's volatility in the markets,
there are options. I would suggest finding a financial advisor
that you can trust, a.
Speaker 1 (28:59):
Fiduciary to partner with.
Speaker 2 (29:00):
But certainly if you're working with someone, bring up these
options if you are someone who really really cannot just
ride the waves of when the markets are down. Great perspective,
as always from our Chief investment Officer, Andy Stout. You're
listening to Simply Money presented by all Worth Financial here
in fifty five KRC the talk station. You're listening to
(29:21):
Simply Money presented by all Worth Financial. I mean when
you're along with Bob sponseller. You might have some financial
questions right now, and if you do, you are not alone.
There's a red button you can click on where you're
listening to our show. It's right there on the iHeart app.
Record your question. Whatever you are trying to figure out,
it's coming straight to us. We'll help you figure it
out right here on the show. Speaking of those questions,
(29:43):
let's get to them, Bob. First question comes from John
and Madeira and he's saying, hey, listen, could this crazy
market volatility impact my tax planning.
Speaker 3 (29:56):
I would say to John, it absolutely could, and I
would say it should in a positive in a positive way,
not a year day where yeah, in the spirit of hey,
let's control what we can control. Now's a great time
to take a look at how this market volatility is
impacting your portfolio. And what I'm talking about specifically now
(30:17):
are two things. Doing some tax loss harvesting, which you
can harvest those losses indefinitely to use against future gains,
and then roth conversions. If that's something that makes sense
for you, you know, now's a great time. If we're
going to do it anyway and twenty twenty five, do
it when the market's down, because it doesn't impact the
amount of money that has to come out of your IRA.
(30:38):
But let's get it into the wroth now, so when
the ultimate recovery comes, you're getting that recovery completely tax
free on those dollars. So now's a great time to
do tax planning.
Speaker 5 (30:49):
Okay.
Speaker 1 (30:50):
I feel like we've been trying to make that point.
Speaker 2 (30:52):
So you know, whenever there are obviously bad things happening,
there's often silver linings.
Speaker 1 (30:57):
And I think the silver.
Speaker 2 (30:58):
Lining right now is that you have some opportunities in
your tax planning that aren't always available to you, and
you should absolutely be researching those with your fiduciary financial
advisor to see if they make sense for you.
Speaker 1 (31:11):
But yeah, there are actually some opportunities right now.
Speaker 3 (31:15):
All right, Amy, Mary and Fort Mitchell's coming up coming
to us with this question. The stock market definitely has
me spooked. Should I be looking at private markets or
alternative investments right now?
Speaker 1 (31:27):
So, Mary, I have a few thoughts on this.
Speaker 2 (31:29):
First of all, the good thing for investors is that
UH investment options like alts like private markets are becoming
more and more accessible to normal investors.
Speaker 1 (31:43):
And I like when you have more choices, I would say, this.
Speaker 4 (31:46):
Is a normal investor in.
Speaker 2 (31:48):
You know someone who's not Warren Buffett, That's what I'm saying, Like.
Speaker 1 (31:51):
You know someone who is saved. Regular folks, Yes, normal
normal folks, right.
Speaker 2 (31:56):
I mean, you weren't talking about all investments necessarily or
access to private equity or private debt. And also on
the flip side, what you have to keep in mind
too is what are the expenses associated.
Speaker 1 (32:09):
With these kinds of investments? But I would say I.
Speaker 2 (32:11):
Wouldn't make any decision about what I'm invested in based
on the market volatility right now, because if it doesn't
make sense for you when markets are up, then it
pridly doesn't make sense to you when for you when
markets are down. Don't make this decision just based on
this volatility. However, I think it's worth a discussion right
with your fiduciary financial advisor of are these something that
(32:33):
do make sense to me for me long term?
Speaker 1 (32:36):
Talk through the pros and the cons.
Speaker 2 (32:37):
There are definitely both and these kinds of investments and
if this does make part make sense for you as
part of a long term plan, then absolutely.
Speaker 1 (32:47):
Let's get to Brad now and Anderson. He says, are.
Speaker 2 (32:50):
There hedging strategies Everyone's looking for an option here, Bob,
hedging strategies I should be considering right now?
Speaker 3 (32:57):
Well, Brad, I would say, Amy, you know, cover this
topic pretty well when she's talked about alternative investments hedge
funds are a form of alternative investments, and by that
we mean looking just to add non related asset classes
to your portfolio to cushion volatility. Depending on your individual situation,
now might be a time to evaluate that moving forward
(33:20):
and add that to your portfolio. The only thing I
would add is if it means, you know, dumping a
ton of stock positions now after the market has gone down.
Speaker 4 (33:31):
Now might not be the.
Speaker 3 (33:32):
Right time to make wholesale changes in order to add
a hedging strategy, But I think it's something to start
to learn more about when we get on more of
a back to what i'd call a normal market, and
then responsibly maybe consider adding some of those strategies as
a protection against volatility moving forward.
Speaker 1 (33:53):
Yeah, absolutely, I agree.
Speaker 3 (33:56):
Here's one amy I'm interested in your answer on this,
Jeff and Day and is saying, Hey, is the market
reacting to fundamentals or just emotion right now?
Speaker 2 (34:06):
I think a lot of what we're seeing right now
is emotion. Market hates uncertainty. And I was actually just
saying this to a client yesterday. It almost feels like
we're on a little bit of a chessboard right now,
and that we can only see the last move that
was made. Right as investors, there's probably an overall strategy
that's happening in this game, but we don't know what
(34:28):
it is, and markets don't know what it is, and
we don't know whether by next Friday we're no longer
going to be talking about tariffs, or if we're going
to be in a full blown trade war over the
next few months. We don't know, and that uncertainty is
driving markets. And I think, Bob, we've seen it in
the daily fluctuations. Right someone leaks a rumor on Twitter
(34:51):
or x or whatever it is, and all of a sudden,
markets are markets are going up fully based on emotion
at that point, So I think it's important not to
make vestment decisions based on emotion. I think the economy
going into this was pretty much fundamentally sound, right. We've
got our chief investment officer, Andy Stout looking at economic
indicators all the time, and you know, now, could this
(35:14):
change how the economy is fundamentally doing over time? Absolutely,
if we do get into a full full blown trade war,
I think that could affect our economy long term, But
we're not there yet, and I think at this point
we're looking at emotion.
Speaker 4 (35:28):
I think that's well said.
Speaker 2 (35:29):
Coming up next, how legendary investor Warren Buffett thinks about
market volatility. You're listening to simply money, because why all
worth financially Mimi Wagner along with clop sponsor. Or. If
you've been listening to the show for any amount of time,
and I were to ask you, like, who am I
the largest fan of, the biggest fan of, maybe president
(35:50):
of their fan club. When it comes to investors, it
is absolutely Warren Buffett. I just think, you know, and
I think he's earned it, right, He's he's built himself
up from nothing.
Speaker 1 (36:00):
He is such a smart investor.
Speaker 2 (36:01):
And I also think now we are drawing from years
of wisdom, right. I mean he's in his late nineties
at this point, so he's been doing this.
Speaker 1 (36:09):
He's seen a market cycle or two. You know what
I'm saying, Bob.
Speaker 3 (36:12):
Absolutely, And this is a good time to interject, why
has Warren Buffett been so successful for so many deco decades?
Is Warren Buffett a day trader? Is Warren Buffett a
swing trader?
Speaker 5 (36:25):
No?
Speaker 4 (36:26):
He is a long term.
Speaker 3 (36:28):
Fundamentally based investor that has a ton of patience, and
patience is not necessarily a word that people like to
hear during times that we're going through right now. And yeah,
the key is long term and patience. And that's why
mister Buffett has been so successful.
Speaker 1 (36:47):
I've said it this week.
Speaker 2 (36:48):
One of his best quotes is so pertinent right now
right be fearful when others are greedy, and greedy when
others are fearful. We know those are the two emotions
that drive so many decisions with people's mind. And so
I think it's important to keep that one at the
edge of the top of your head. But you know,
here's another quote, and I think this one is so
(37:08):
grateful right now. If you can keep your head when
all all about you, when others are losing theirs, it
can wait.
Speaker 1 (37:14):
And not be tired by waiting.
Speaker 2 (37:15):
If you can think and not make thoughts your aim,
if you can trust yourself when all mends out you
yours is the earth and everything that's in it.
Speaker 6 (37:22):
Right.
Speaker 1 (37:23):
This is from Rudyard Kipling's classic poem.
Speaker 2 (37:25):
If in Buffet quotes this poem all the time is hey,
this is someone saying, keep your wits about you when
everyone else is losing their minds.
Speaker 1 (37:34):
And so if you.
Speaker 2 (37:35):
Are at a I don't know, a baseball game this
weekend or out with friends or whatever, and they're losing
their minds.
Speaker 1 (37:43):
Please, as an investor, keep your wits about you.
Speaker 3 (37:47):
Well, you talked about earlier in the show. You know
how the economy in the market always moves in cycles,
and talking about mister Buffett reminds me of that.
Speaker 4 (37:55):
Amy.
Speaker 3 (37:55):
I can recall recently, within the last eighteen months, articles
were saying, hey, has Warren Buffett lost his touch? You know,
is his are his methods outdated?
Speaker 4 (38:06):
Why was that? Magnificent? Says seven stocks.
Speaker 3 (38:10):
Were going through the roof, and Warren Buffett's sitting there
with you know, low pe dividend paying stocks that gradually
rise their earnings over decades and decades. Fast forward to today.
He's not looking like so much of an idiot today.
Speaker 1 (38:27):
Yeah, and I think it's so smart. And listen, if
you are someone who's nervous.
Speaker 2 (38:32):
Please just google Warren Buffett quotes Warren Beauffett Buffett investing wisdom.
You know, I mean, I think, of gosh, how many
times I have pulled a Warren Buffett quote out of
my back pocket When everyone's talking about crypto and if
they should be in bitcoin right. He was saying, can
you explain it to other people? Then you can be
invested in it.
Speaker 5 (38:49):
Right.
Speaker 1 (38:50):
Look at what Warren Buffett.
Speaker 2 (38:51):
Says, keep your witz about you great advice for times
such as this.
Speaker 1 (38:55):
Thanks for listening.
Speaker 2 (38:56):
You've been listening to Simply Money, presented by all Worth
Financial here in fifty five I k r C the
talk station
Tonight.
Speaker 2 (00:06):
Some days feel like a week, a year, a decade.
Speaker 1 (00:11):
I don't know.
Speaker 2 (00:12):
It has been a day and a week and the
markets and we're gonna help break it all down for you.
You're listening to Simply Money, presented by all Worth Financial.
I Mimi Wagner, along with Bob sponse Holler, I often
talk about needing a dramamine the.
Speaker 1 (00:26):
Past couple of weeks.
Speaker 2 (00:28):
You maybe needed a drama meme because markets were in
free fall today, maybe just because.
Speaker 1 (00:33):
We are all over the place with.
Speaker 3 (00:36):
This one, Amy, I think you got to look on
the bright side here. I mean, your four to one
K balance just took a major shot upward. I mean
you can go, you can afford to go, buy a
couple pairs of new shoes, maybe a purse, a nice
dinner out with your husband.
Speaker 4 (00:50):
You know this is a good day.
Speaker 2 (00:51):
Yeah, in thirty more years, yep, absolutely, I'll take a
day like today.
Speaker 1 (00:56):
And you know it's funny because I'm not surprised, are you.
I mean I have said to clients all through this week, Hey,
we could be having the same conversation.
Speaker 2 (01:07):
A week from now, we could be having an entirely
different conversation.
Speaker 1 (01:12):
Or is today a blip on the radar. I don't know.
Speaker 2 (01:15):
Yes, you're right, markets rebounded. Let's talk about why and
what we think about it.
Speaker 3 (01:22):
Well, what happened a little bit after one o'clock today?
The President came out and basically said, we're suspending tariffs
on everybody except China for ninety days.
Speaker 5 (01:31):
Now.
Speaker 3 (01:32):
They're still keeping the ten percent baseline tariff in place,
but you know, nothing on China. We're still at one
hundred and twenty five percent on China. And I just
have to chuckle because I was up early this morning
just trying to digest what was going on in the news,
and you know, very early this morning, Amy China came
(01:52):
out and reciprocated, you know, against our last tariff and said,
you know what, you bump our tariff one hundred percent.
We're putting another eighty four percent tariff on the United States.
The interesting thing is stock futures didn't move much. Yeah,
that was interesting.
Speaker 5 (02:08):
Yeah.
Speaker 3 (02:08):
We were set to open I mean we were set
to open down about two percent, opened up maybe slightly higher,
and then everything kind of treaded water throughout the day
and then boom. By about one eighteen this afternoon, it
was off to the races, and so far, so good.
We lived to fight another day. Who knows what happens next.
Speaker 2 (02:29):
Interestingly, we did get a weird little sneak preview of
this earlier this week, right when fake news was leagud
on Twitter or someone's x accounts that said kind of
exactly this news. I mean, it was a little after
ten o'clock in the morning. What day was that, now, Tuesday?
Speaker 4 (02:48):
It was Monday, Monday, Yeah, it was Monday.
Speaker 2 (02:50):
Yeah, And I was watching the market in real time,
and at first I didn't know what had happened, and
I was like, wait, what is happening here? And really,
over the course of just a few minutes, it went
up several percentage points and then right back down right
as people discovered, hey, this news is not true.
Speaker 1 (03:08):
Well now we know it's true.
Speaker 2 (03:09):
We've heard it from the president's mouth, and I think,
you know, it goes to show if you are thinking,
you know what is causing this market volatility, it seems
to be purely a reaction to tariffs.
Speaker 3 (03:24):
Absolutely, So you know, I who knows what the President's
going to do next, but I think the way he's
and I'm trying to just get in his head.
Speaker 5 (03:32):
Here a little bit.
Speaker 3 (03:32):
I think he's got all these world leaders coming in town.
I think the big news is he's starting to talk
to the European Union, he's starting to talk to other countries,
and I think they're basically trying to get this thing
together and kind of then surround China and say, listen,
we got the whole world lined up here, and you
better get on board and let's work out a deal.
(03:52):
And I think President Trump and President Chi both have
big egos. They both want to say face Supposedly they
got a pretty good relationship. So someday, someday, soon, I
think those two guys are gonna get it in a room.
Hopefully they'll each allow the other one to puff their
chest out a little bit and save their male ego,
(04:14):
and we'll get something done with China.
Speaker 4 (04:16):
And there you go.
Speaker 2 (04:19):
For those of you who I mean, listen, I think
the message remains the same here, you know. And actually,
one of the things that I was thinking about as
markets are rebounding today is we have said many times
over the course of this past few weeks, if you
are someone who is getting nervous and you are thinking
about taking your money out of the market, what you
(04:41):
have to remember is some of the best days in
the markets are on the heels of the worst days.
You know, think about you know John Doe, who maybe
on Monday morning was like, I can't take this anymore.
Speaker 1 (04:53):
I'm just going to get out until the dust settles.
Speaker 2 (04:57):
Is there any reason to have thought that midday on
Wednesday not only would us settle, but we might be
looking at a pretty sizable rebound. In fact, maybe one
of the best days we've seen is as far as
a rebound. And you know, so for those who do
try to time the market, this is exhibit a why
we say it's not a great idea.
Speaker 3 (05:19):
Well, and we'll step aside from the day traders and
the swing trader a little bit and talk to a
lot about a lot of the folks that we work
with and on what i'd call normal regular investors. They're
just trying to investors. Yes, yeah, they're just trying to
put a plan together and sleep at night. So I
think the message here is, yeah, we get a rebound
for those folks that were over allocated to tech, maybe
(05:42):
over allocated to growth stocks or stocks in general. Based
on what your financial plan dictates you should be doing,
you got to take days like this as an opportunity
to continue to reevaluate are we positioned correctly based on
our financial and risk tolerance and amy I look at
(06:02):
today is a kind of a break mana from heaven,
so to speak. Yeah, you know, we kind of get
a little bit of a do over here to be
able to write the ship if in fact we have
a ship needs to be righted.
Speaker 2 (06:14):
You're listening to simply money presented by all Worth Financial.
Immi Wagner along with Bob Sponsor or. I'm going to
go with this ship metaphor here because I think, hey,
if you're someone who fell asleep at the wheel of
the proverbial ship over the past couple of years, because
you were only going in the best direction in the
stillest of waters with only a sunset ahead of you, right,
(06:37):
I mean that's what markets were the past couple of years.
Speaker 1 (06:40):
What the past couple of.
Speaker 2 (06:41):
Weeks I hope woke you up to is there are
certain things that you absolutely need to be paying attention
to in your portfolio, how it is allocated, how well
diversified you are. And I think the past few weeks
have been an excellent test stress test.
Speaker 1 (06:59):
On our portfoit to say, are are we invested the
way that we should be?
Speaker 2 (07:04):
And if the answer to you at any point in
the past few weeks has been no, okay, well then
maybe today you got a little bit of a reprieve
to catch your breath and to dive back in and
to say, all right, I'm going to do some work
right now to figure out exactly how I really do
need to be invested exactly.
Speaker 3 (07:20):
And you know, again this is a bit of a reprieve.
But you know, we're still down for the year. There's
still going to be volatility. So you got to you
got to take today, like you know, as a grain
of salt, just like we took the down day yesterday.
Speaker 4 (07:35):
The key point is you got to get in a room.
Speaker 3 (07:37):
Hopefully with a good fiduciary advisor, and evaluate your overall plan.
Take a look at whether you know there's opportunities now
with us being back up a little bit to maybe
replenish that emergency fund where maybe that thing was down
you know a little bit low. Think of it as, hey,
I'm trying to squeeze out a trip in my car
with less than a quarter tank of gas left, and
(07:58):
I hope I get there without running out of gas. Well,
now you just got a little gas in the tank,
but it's time to stop in and fill up, you know,
so you're ready for the next down day, if and
when it ever comes.
Speaker 2 (08:10):
Have we seen the last of the tariffs? Have we
seen the last of volatility? We do not have a
crystal ball, but I would venture to say probably no
on both of those points. So it's not a Okay,
we're out of this right, this is we're free and
clear now and we don't have anything to worry about.
You know, you should always be planning for volatility because listen,
(08:31):
we don't know what the name of that volatility is
going to be at that point, whether it will be
named tariffs, brexit, COVID nineteen, the Great Recession, it can
be named different things.
Speaker 1 (08:43):
But it's actually.
Speaker 2 (08:44):
Always a part of a very normal market cycle. And
you know, for anyone who's been invested for a long time,
you know how this works. And I have seen a
difference over the past few weeks between investors who have
been long term investors who are like, yep, get it,
been here before, done this before, to those who might
be newer investors and they're a little bit more hair
(09:07):
on fire.
Speaker 1 (09:08):
What's happening here should we make changes.
Speaker 2 (09:12):
Someone who not a client of mine, but someone who
I was talking to in their forties went from a
ninety percent stock allocation to a thirty percent stock allocation
recently because he was so nervous about this. Probably not
where a forty year old needs to be, right, But
he made changes based on fear because he's inexperienced in
(09:33):
how these market cycles work.
Speaker 3 (09:36):
Yeah, and again as a reminder, this is a ninety
day reprieve on tariffs. This isn't the end of the
whole tariff thing. And you know we all know from
dealing with President Trump for years now, things can and
do change often. So we're in the beginning of negotiations
with all these countries. Nothing's been side signed, sealed and delivered.
(09:57):
So again to your point, Amy, whow's the time to
continue to sit down and take stock of where you are.
It's an opportunity with a real nice upday to be
able to make some changes that are needed, you know,
in a good up day rather than a huge down day.
But don't think that we're off to the races and
it's time to pile in one hundred percent to tech
(10:19):
stocks and assume you're going to make eighty percent between
now and June, you know, be responsible.
Speaker 2 (10:25):
Yeah, and you know, just a little more historical perspective here, right, stocks,
This market is absolutely cyclical.
Speaker 3 (10:32):
Right.
Speaker 1 (10:32):
We have had twelve.
Speaker 2 (10:33):
Bull markets, twelve fair markets since nineteen forty nine, twelve
of each, and they stocks have posted on average a
twelve percent annualized total return across all time periods. That's why,
that's why you're in right. And sometimes I think it's
easy to say, wait, why am I doing this?
Speaker 5 (10:52):
Right?
Speaker 2 (10:52):
This is driving me insane? You know, all of this
market volatility. This is why you do it because over time,
what you're betting on is not any Paul let's see
that's coming out of Washington. It's you're betting on these
large companies figuring out new innovative ways to make money,
and they are financially incentivized to do that.
Speaker 3 (11:13):
Time in the market, not timing the market. The three
year data going back to nineteen forty nine, for every
three year holding period, not three days, three years, market's
up ninety percent of the time. Extend that to five years,
market's up ninety three percent of the time. Extend that
out to ten years. Ninety seven percent of the time, again,
(11:35):
time in the market, not timing the market. The only
people that need to and do panic tend to be
those that didn't prepare in advance to have their short
term cash needs out of the market period.
Speaker 2 (11:50):
The other thing I would add to that is also
the best days in the market often come on the
heels of the worst days. And if you've ever questioned that,
here you go everyone, Exhibit A. Here's the all Worth advice.
We said, market volatility, and that's what we have. You've
built your boat for storms, and you've built your boat
for sunny times, and if you don't have your boat built,
(12:11):
it's time to get to build in. We've talked time
and time again about the concept in the stock market
known as market capitalization.
Speaker 1 (12:19):
Here it is right in your face.
Speaker 2 (12:20):
We're going to explain what we're talking about and what
it means for you. Next, you're listening to Simply mone
You're presented by all Worth Financial. Here in fifty five
KRC the talk station. You're listening to Simply Money, presented
(12:40):
by all Worth Financial. I me Me Wagner along with
Bob Sponseller. You know, we've gotten a lot of questions
recently about all of this market volatility. What you should
be doing. We're going to answer some of them coming
up next in our Ask the Advisor segment that's at
six forty three.
Speaker 1 (12:56):
In twenty twenty three and twenty twenty four.
Speaker 2 (12:58):
Likely every time you check that balance on your flour one, ky,
you were feeling pretty good about life rights, largely because
of certain stocks that were always in the headlines. I mean,
these were the sexy companies that were certainly making all
the headlines, the Apple, Microsoft, Amazon, and Video Tesla, right
the Magnificent seven.
Speaker 1 (13:18):
We made the point during that time of.
Speaker 2 (13:21):
Listen, there's something about the way that the S and
P five hundred is set up where certain companies, as
they grow.
Speaker 1 (13:28):
Larger, also take up a larger piece of that S
and P five hundred PI.
Speaker 2 (13:33):
You maybe weren't so worried about it when markets were up,
but now you might be paying a closer attention.
Speaker 3 (13:41):
It is always ver irritating to me when Amy when
people come in after the fact and you know the
proverbial I told you so. Unfortunately, this is going to
be the I told you so segment because you and
I have been talking about this for months now.
Speaker 4 (13:56):
Yeah, and here's what we mean.
Speaker 3 (13:57):
Market cap basically just means the number of shares times
the share price. That's what that company is quote unquote worth.
And when you look at the S and P five
hundred index, things can get out of whack in terms
of some of these large cap and in this case,
we're talking about Magnificent seven tech stocks. And here's kind
of how auto whack things got. As of last month,
(14:21):
the Magnificent seven stocks accounted for thirty two percent of
the market cap of the S and P five hundred.
So again, five hundred stocks, thirty two percent of the
valuation was based on seven companies. Go back to ten
years ago to twenty fifteen, those same companies only made
(14:42):
up twelve point three percent of the S and P
five hundred. So you know, the I told you so
part was, you know, we we we've been telling people, hey,
this thing has gotten a little bit of skew, a
little bit skewed here to big cap tech and you
could take tariffs off the table. I mean, we've seen
these man Magsie seven stocks coming down all year now
(15:02):
and it's just valuations got a little bit ahead of themselves.
Speaker 2 (15:05):
Yeah, And I think if you're looking for a visual
here it's like if you're thinking, oh, okay, I own
an index attracts the S and P five hundred. So essentially,
if there's a pie, there's five hundred individual pieces, and
each one of them is cut exactly the same.
Speaker 1 (15:20):
That's actually not how this works.
Speaker 2 (15:22):
There's like Amy sized slices versus like my aunt and
how she cuts the pie right and and.
Speaker 1 (15:28):
Jojo cuts really large pieces.
Speaker 2 (15:30):
And so you know, seven of these companies now take up.
Speaker 1 (15:34):
A third a third of that pie.
Speaker 2 (15:37):
Just a few years ago they were only a tenth
of it, but now they're a third. And that's great
because that has driven some great returns over the past
couple of years when these tech stocks.
Speaker 1 (15:48):
Were just on a tear.
Speaker 2 (15:49):
But these are the companies now that are seeing a
lot of volatility and if you have a ton of
exposure to them in Bob, you and I see this
a lot in people's portfolios who are maybe saying, hey,
can you can you take a look at what's going
on here? You know, and maybe they've got, you know,
several S and P five hundred funds in different five
or four one ks and iras, and they own individual
(16:12):
positions in some of these companies and they think they're
well diversified, and you're like, actually, about half of your portfolio.
Speaker 1 (16:20):
Is exposed totally to these tech stocks.
Speaker 2 (16:22):
Great in years when they're up, not so great in
years when they're down.
Speaker 5 (16:26):
Yeah.
Speaker 3 (16:27):
When people come in and we you know, people come
in as new clients, one of the first things we
do is we take a look at everything that they
have and we stress test their portfolio. You know, we
look at in periods of historic volatility based on what
you own now. It's not an exact but it's a
pretty good predictor of the amount of volatility your portfolio
(16:48):
will experience in a downturn like what we're happening, what's
happening right now. So you might feel diversified, you know,
to your point, Amy, if you own six different large
cap growth funds, but you're not because there's a tremendous
amount of overlap of stocks in those funds. And let's
face it, people like recency returns and recency bias. Left
(17:10):
of their own devices, a lot of people are going
to take a look at their four oh one K
offerings and say, well, I'm gonna buy all the stuff
that's been really up the last three years, and they
tend to overweight to those things, and that can be
you know, that can put you in a situation like
what we're experiencing now where a lot of those folks
are saying, Man, I'm good with the markets going up
(17:33):
and down, but I never dreamed it would go down
this much. That's the time where you need to kind
of take a look at moving forward, how are we
going to balance and get some different asset classes and
different types of stocks in our portfolio. And I'll throw
one example out amy, and this is not a recommendation,
you know, just want to make that point clear. You
(17:54):
look at a company like Delta Airlines. They came out
with earnings this morning, by the way, they said, we're
not going to provide any forward guidance moving forward with all.
Speaker 1 (18:03):
These don't know what is happening.
Speaker 3 (18:05):
We have no idea what the heck's going on. But
this is a company right now that's paid, that's trading
in a five and a half pe ratio. You know,
you go, you go, yeah, you go compare that pe
to Navidia or you know, Tesla or something like that.
You know, you can make an argument pretty good value.
You know, the oil prices are coming down that tends
(18:27):
to be bullish for airline stock, you know, just an example.
And you mentioned some other stocks and sectors at the
beginning of the show where they're not even subject to tariffs,
and those stocks are actually up for the year.
Speaker 4 (18:40):
So again, the.
Speaker 3 (18:41):
Point is not to put all your eggs in one
basket and not get too overweighted to one sector so
that you're you're experiencing more volunt volatility and downward movement
in your portfolio than you might have bargained for.
Speaker 2 (18:56):
But don't you think, Bob, if you were someone who
was just starting a job, say January first, this year,
you were starting a new job, and you had the
Floral one k investment options ahead of you. So many
people come to me and they're like, well, I just
I just picked what was doing great last year.
Speaker 1 (19:11):
You would have not necessarily been like, you know, I
think large cat.
Speaker 2 (19:15):
Value is where it's at. You know, give me some
value companies. I like strong, you know, companies that are
fundamentally sound, but no one's talking about them in the headlines, right.
And it's like, if you if that's how you picked
your floral one k investment options based on what was
doing well last year, not so great this year, right,
(19:35):
So you know, for those who are like you know,
just laser focused on last year's returns.
Speaker 1 (19:41):
This is why you need to be well diversified.
Speaker 2 (19:44):
And I think if you are picking these things on
your own without the help of fiduciary, you may miss this.
Last year's winners are oftentimes this year's losers and vice versa,
and you could be missing that.
Speaker 1 (19:56):
Here's the all Worth advice.
Speaker 2 (19:57):
If your investments are highly diversified and also align with
your long term goals, please resist the urge to panic
sell coming up next. If you're losing sleep over the
stock market right now, you know there's an upside. We
do have some solutions for you. We spoke to actually
all Worth Chief Investment Officer Andy Stout last week about this,
(20:19):
but we're bringing it to you again tonight because it's
incredibly important. You're listening to Simply Money presented by all
Worth Financial here on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial.
Speaker 1 (20:34):
I mean you Wagner along with Bob Sponseller.
Speaker 2 (20:36):
We often talk about the price of admission into the markets,
meaning you get to take advantage of the upside of
when these companies are doing really well, but also there's
going to be a few times when you're checking that
four oh one K and that balance is going to
be down. But from time to time I come across
some investors who just struggle so much with the law.
(20:57):
I cannot sleep bitnight if they think they're going to
lose any money from their investments.
Speaker 1 (21:03):
Of course, no one wants to do that.
Speaker 2 (21:05):
But these, Bob are conversations we're having all the time.
Andy Stalder, chief investment Officer, coming back tonight, as we
talk about kind of investment solutions.
Speaker 1 (21:14):
Right if this is.
Speaker 2 (21:15):
Something that sounds familiar to you, maybe you lose sleep
over this.
Speaker 1 (21:19):
I want you to listen up.
Speaker 2 (21:20):
We have maybe some potential suggestions for you.
Speaker 1 (21:23):
Andy, several several years.
Speaker 2 (21:26):
Ago, we weren't necessarily talking about these things as options,
but we have some.
Speaker 1 (21:31):
We do have some options for investors right now.
Speaker 5 (21:35):
Yeah, there's quite a few.
Speaker 6 (21:36):
When you think about what's out there in terms of
investment solutions, there's a schmorgasbord. Now when you think about
client needs and client concerns, certainly the concerns of I
know I need to be invested, I know I want
to be invested, but I know the markets out to
(21:58):
get me, so as soon as I go, and the
market's going to go down and on sol right, I mean,
I think that's just a typical mindset that a lot
of people have. And you know it could happen, market
could go down, but obviously with the longer run, you're
better off staying invested regardless of those short term pullbacks. Now,
if you have some real concern and like you're losing
(22:19):
sleep at night, but you know you need to have it,
so you still want that stock market upside without the
full risk of the downside. You know, a couple of
solutions as that come to mind. One is what we
call structured notes and another is called buffer ETFs, and
they both behave very similarly. They both give you that
upside market participation participation, butmizes that downside risk. So you
(22:44):
may not get all of the market upside. If the
market goes up fifty to thirty percent in a year,
you may not get all of it. Conversely, the market
goes down ten twenty percent, you won't get all that well.
So essentially you're getting a floor on the downside and
a bit of a ceiling on the upside and ideally
this help you know, reduce your daily stress, right, so
you don't have to worry about those market swings. You
(23:04):
don't have to really worry about, oh, what are our
futures doing today, or what's going on with the economy.
Speaker 5 (23:10):
It's a little bit more of a set it and
forget it approach.
Speaker 6 (23:12):
So on the structured note side of things and the
buffered ETFs they behave similarly from that perspective where you
have a cap and a floor. Now the big difference
is i'll call liquidity and maybe also knowing what you're
going to get.
Speaker 5 (23:29):
So structured notes those are really.
Speaker 6 (23:33):
More than anything else or like a note issued by
a bank, I think like JP Morgan as an example.
Then they're essentially guaranteeing you that you'll get the floor
and the ceiling based on whatever underlying stock market that
structure note is tied to. So it could be like
the S and P five hundred, right, So if that's
and five hundred goes up ten percent, maybe you get
(23:54):
all ten percent. If it goes up twenty percent, maybe
some only get ten percent. But if it goes down
ten percent, maybe only lose two percent. So there's going
to be like a floor in the ceiling, and it's
going to you'll get that payout, you know, assuming JP
Morgan doesn't go wonder because nothing's ever guaranteed. But when
you look at it from that perspective, it's pretty safe
and you know what you're going to get, and it
had the set start date in a set end date. Now,
(24:16):
the difference with a buffered ETF is that it's you
get daily liquidity I meaning you can go trade it
on a stock exchange and get in and out and
don't have similar terms. However, to really enjoy that buffer
of the floor and the ceiling, you need to hold
it for. You need to look at i should say
over one year time horizons and you'll see a little
(24:38):
bit more wiggle room, but you should be getting pretty
close to what you're expecting.
Speaker 3 (24:44):
So Andy, when you when you talk about you know
the fact that the buffer ETFs do have daily liquidity,
but you strongly suggest and especially with the strategy that
you and your team developed here at all worth, when
you get into that strategy holding it for at least
one year, talk about the why behind that. You know,
usually when people have the option for daily liquidity, the.
Speaker 4 (25:06):
Next question is well, why should I hold that for
a year? Talk about the benefits of that.
Speaker 6 (25:11):
Well, when you think about the holding it for a
one year period, you have to understand what the ETF
is actually invested in. And it's invested in stock options,
which can be very complex. But they're going to have
time frames depending on the ETF, but they're going to
have time frames that roll for every year. Could be
(25:32):
March to March, April to April.
Speaker 5 (25:34):
May to May.
Speaker 6 (25:35):
So the point of these ETFs is to capture that
floor and ceiling over that one year interval. Now you
know one of the things that you know can add
some value and I think is really interesting. One way
that we look at it from like a i'll call
it a tactical rebalancing position, is that we look to
essentially optimize upside potential while keeping that downside protection in place.
(25:59):
So you know, for example, as the market rises in value,
you know what you could do is reallocate those ETFs,
so you could have like a May s and P
five hundred series, and two you might move it to
a July series. So what you're trying to do, because
we do this here internally, just you know, it's an
(26:19):
algorithmic smart trading process that we have built in, we
can reallocate the ETFs to essentially reset that downside buffer
and lock in games and allow us to maintain whatever
downside buffer we were looking at, maybe it's ten percent,
maybe it's fifteen percent, while at the same time taking
advantage of market growth. So as the market rises, we're
(26:41):
going to reallocate the ETFs to reset the buffer and
lock and gas.
Speaker 5 (26:46):
Now, if the market declines.
Speaker 6 (26:48):
What we would do is we would stay invested for
a bit to exhaust the majority of that buffer and
then reallocate the ETFs to increase participation in the upside. Now,
I know that can sound somewhat complicated and complex because.
Speaker 3 (27:02):
Well, and as you explained to it, you know, the
thought that comes to my mind is the old kids
don't try this at home exactly. You know, this is
what it's great to have you and a team you know,
that are monitoring this all day, every day, and you
know when to make the adjustments, and you do it
for these strategies that we have in place, and so
(27:22):
the client doesn't have to think about it.
Speaker 4 (27:24):
It's being done for them. And I love that.
Speaker 6 (27:28):
Yeah, and it's a it can be really powerful and
provide that peace of mind, and that's key. So with
these buffer ETFs, I mean that's where when I mentioned
the liquidity, So you can if you want, if you
choose like, hey, I don't want these buffer etf anymore
for whatever reason, maybe you need to go, you know,
buy a house or whatever it is, you can sell
them that day and they trade just like a stock.
(27:51):
So it's very easy to get in and out with
a structured note. You know, I think the advantage of
a structure note is it's more certain what you're going
to get at the end of the day because you're
not looking to see the inter day volatility.
Speaker 5 (28:02):
With that being said, they do have.
Speaker 6 (28:04):
Maturity dates because technically they're a note or a bond,
if you will, issued by a bank, So you can
sell them, but it might you might not be able
to sell them as quickly as you could the ETF.
So if you value liquidity, that's where the buffer ETFs
come into play.
Speaker 5 (28:23):
If you value.
Speaker 6 (28:25):
Significantly significant certainty, I should say, that's where the structured
notes come to play.
Speaker 5 (28:30):
But they do the same thing.
Speaker 6 (28:31):
It just kind of depends whether or not you want
to have that certainty A little bit higher, or that
liquidity a little bit better.
Speaker 2 (28:36):
Yeah, I don't think you have to be a sophisticated
investor right for this to make sense for you. But
I will go back to the point of don't try
this at home. Either one of these could be fantastic options,
and this is a look yourself in the mirror.
Speaker 1 (28:49):
Kind of proposition.
Speaker 2 (28:51):
If you do loose sleep when there's volatility in the markets,
there are options. I would suggest finding a financial advisor
that you can trust, a.
Speaker 1 (28:59):
Fiduciary to partner with.
Speaker 2 (29:00):
But certainly if you're working with someone, bring up these
options if you are someone who really really cannot just
ride the waves of when the markets are down. Great perspective,
as always from our Chief investment Officer, Andy Stout. You're
listening to Simply Money presented by all Worth Financial here
in fifty five KRC the talk station. You're listening to
(29:21):
Simply Money presented by all Worth Financial. I mean when
you're along with Bob sponseller. You might have some financial
questions right now, and if you do, you are not alone.
There's a red button you can click on where you're
listening to our show. It's right there on the iHeart app.
Record your question. Whatever you are trying to figure out,
it's coming straight to us. We'll help you figure it
out right here on the show. Speaking of those questions,
(29:43):
let's get to them, Bob. First question comes from John
and Madeira and he's saying, hey, listen, could this crazy
market volatility impact my tax planning.
Speaker 3 (29:56):
I would say to John, it absolutely could, and I
would say it should in a positive in a positive way,
not a year day where yeah, in the spirit of hey,
let's control what we can control. Now's a great time
to take a look at how this market volatility is
impacting your portfolio. And what I'm talking about specifically now
(30:17):
are two things. Doing some tax loss harvesting, which you
can harvest those losses indefinitely to use against future gains,
and then roth conversions. If that's something that makes sense
for you, you know, now's a great time. If we're
going to do it anyway and twenty twenty five, do
it when the market's down, because it doesn't impact the
amount of money that has to come out of your IRA.
(30:38):
But let's get it into the wroth now, so when
the ultimate recovery comes, you're getting that recovery completely tax
free on those dollars. So now's a great time to
do tax planning.
Speaker 5 (30:49):
Okay.
Speaker 1 (30:50):
I feel like we've been trying to make that point.
Speaker 2 (30:52):
So you know, whenever there are obviously bad things happening,
there's often silver linings.
Speaker 1 (30:57):
And I think the silver.
Speaker 2 (30:58):
Lining right now is that you have some opportunities in
your tax planning that aren't always available to you, and
you should absolutely be researching those with your fiduciary financial
advisor to see if they make sense for you.
Speaker 1 (31:11):
But yeah, there are actually some opportunities right now.
Speaker 3 (31:15):
All right, Amy, Mary and Fort Mitchell's coming up coming
to us with this question. The stock market definitely has
me spooked. Should I be looking at private markets or
alternative investments right now?
Speaker 1 (31:27):
So, Mary, I have a few thoughts on this.
Speaker 2 (31:29):
First of all, the good thing for investors is that
UH investment options like alts like private markets are becoming
more and more accessible to normal investors.
Speaker 1 (31:43):
And I like when you have more choices, I would say, this.
Speaker 4 (31:46):
Is a normal investor in.
Speaker 2 (31:48):
You know someone who's not Warren Buffett, That's what I'm saying, Like.
Speaker 1 (31:51):
You know someone who is saved. Regular folks, Yes, normal
normal folks, right.
Speaker 2 (31:56):
I mean, you weren't talking about all investments necessarily or
access to private equity or private debt. And also on
the flip side, what you have to keep in mind
too is what are the expenses associated.
Speaker 1 (32:09):
With these kinds of investments? But I would say I.
Speaker 2 (32:11):
Wouldn't make any decision about what I'm invested in based
on the market volatility right now, because if it doesn't
make sense for you when markets are up, then it
pridly doesn't make sense to you when for you when
markets are down. Don't make this decision just based on
this volatility. However, I think it's worth a discussion right
with your fiduciary financial advisor of are these something that
(32:33):
do make sense to me for me long term?
Speaker 1 (32:36):
Talk through the pros and the cons.
Speaker 2 (32:37):
There are definitely both and these kinds of investments and
if this does make part make sense for you as
part of a long term plan, then absolutely.
Speaker 1 (32:47):
Let's get to Brad now and Anderson. He says, are.
Speaker 2 (32:50):
There hedging strategies Everyone's looking for an option here, Bob,
hedging strategies I should be considering right now?
Speaker 3 (32:57):
Well, Brad, I would say, Amy, you know, cover this
topic pretty well when she's talked about alternative investments hedge
funds are a form of alternative investments, and by that
we mean looking just to add non related asset classes
to your portfolio to cushion volatility. Depending on your individual situation,
now might be a time to evaluate that moving forward
(33:20):
and add that to your portfolio. The only thing I
would add is if it means, you know, dumping a
ton of stock positions now after the market has gone down.
Speaker 4 (33:31):
Now might not be the.
Speaker 3 (33:32):
Right time to make wholesale changes in order to add
a hedging strategy, But I think it's something to start
to learn more about when we get on more of
a back to what i'd call a normal market, and
then responsibly maybe consider adding some of those strategies as
a protection against volatility moving forward.
Speaker 1 (33:53):
Yeah, absolutely, I agree.
Speaker 3 (33:56):
Here's one amy I'm interested in your answer on this,
Jeff and Day and is saying, Hey, is the market
reacting to fundamentals or just emotion right now?
Speaker 2 (34:06):
I think a lot of what we're seeing right now
is emotion. Market hates uncertainty. And I was actually just
saying this to a client yesterday. It almost feels like
we're on a little bit of a chessboard right now,
and that we can only see the last move that
was made. Right as investors, there's probably an overall strategy
that's happening in this game, but we don't know what
(34:28):
it is, and markets don't know what it is, and
we don't know whether by next Friday we're no longer
going to be talking about tariffs, or if we're going
to be in a full blown trade war over the
next few months. We don't know, and that uncertainty is
driving markets. And I think, Bob, we've seen it in
the daily fluctuations. Right someone leaks a rumor on Twitter
(34:51):
or x or whatever it is, and all of a sudden,
markets are markets are going up fully based on emotion
at that point, So I think it's important not to
make vestment decisions based on emotion. I think the economy
going into this was pretty much fundamentally sound, right. We've
got our chief investment officer, Andy Stout looking at economic
indicators all the time, and you know, now, could this
(35:14):
change how the economy is fundamentally doing over time? Absolutely,
if we do get into a full full blown trade war,
I think that could affect our economy long term, But
we're not there yet, and I think at this point
we're looking at emotion.
Speaker 4 (35:28):
I think that's well said.
Speaker 2 (35:29):
Coming up next, how legendary investor Warren Buffett thinks about
market volatility. You're listening to simply money, because why all
worth financially Mimi Wagner along with clop sponsor. Or. If
you've been listening to the show for any amount of time,
and I were to ask you, like, who am I
the largest fan of, the biggest fan of, maybe president
(35:50):
of their fan club. When it comes to investors, it
is absolutely Warren Buffett. I just think, you know, and
I think he's earned it, right, He's he's built himself
up from nothing.
Speaker 1 (36:00):
He is such a smart investor.
Speaker 2 (36:01):
And I also think now we are drawing from years
of wisdom, right. I mean he's in his late nineties
at this point, so he's been doing this.
Speaker 1 (36:09):
He's seen a market cycle or two. You know what
I'm saying, Bob.
Speaker 3 (36:12):
Absolutely, And this is a good time to interject, why
has Warren Buffett been so successful for so many deco decades?
Is Warren Buffett a day trader? Is Warren Buffett a
swing trader?
Speaker 5 (36:25):
No?
Speaker 4 (36:26):
He is a long term.
Speaker 3 (36:28):
Fundamentally based investor that has a ton of patience, and
patience is not necessarily a word that people like to
hear during times that we're going through right now. And yeah,
the key is long term and patience. And that's why
mister Buffett has been so successful.
Speaker 1 (36:47):
I've said it this week.
Speaker 2 (36:48):
One of his best quotes is so pertinent right now
right be fearful when others are greedy, and greedy when
others are fearful. We know those are the two emotions
that drive so many decisions with people's mind. And so
I think it's important to keep that one at the
edge of the top of your head. But you know,
here's another quote, and I think this one is so
(37:08):
grateful right now. If you can keep your head when
all all about you, when others are losing theirs, it
can wait.
Speaker 1 (37:14):
And not be tired by waiting.
Speaker 2 (37:15):
If you can think and not make thoughts your aim,
if you can trust yourself when all mends out you
yours is the earth and everything that's in it.
Speaker 6 (37:22):
Right.
Speaker 1 (37:23):
This is from Rudyard Kipling's classic poem.
Speaker 2 (37:25):
If in Buffet quotes this poem all the time is hey,
this is someone saying, keep your wits about you when
everyone else is losing their minds.
Speaker 1 (37:34):
And so if you.
Speaker 2 (37:35):
Are at a I don't know, a baseball game this
weekend or out with friends or whatever, and they're losing
their minds.
Speaker 1 (37:43):
Please, as an investor, keep your wits about you.
Speaker 3 (37:47):
Well, you talked about earlier in the show. You know
how the economy in the market always moves in cycles,
and talking about mister Buffett reminds me of that.
Speaker 4 (37:55):
Amy.
Speaker 3 (37:55):
I can recall recently, within the last eighteen months, articles
were saying, hey, has Warren Buffett lost his touch? You know,
is his are his methods outdated?
Speaker 4 (38:06):
Why was that? Magnificent? Says seven stocks.
Speaker 3 (38:10):
Were going through the roof, and Warren Buffett's sitting there
with you know, low pe dividend paying stocks that gradually
rise their earnings over decades and decades. Fast forward to today.
He's not looking like so much of an idiot today.
Speaker 1 (38:27):
Yeah, and I think it's so smart. And listen, if
you are someone who's nervous.
Speaker 2 (38:32):
Please just google Warren Buffett quotes Warren Beauffett Buffett investing wisdom.
You know, I mean, I think, of gosh, how many
times I have pulled a Warren Buffett quote out of
my back pocket When everyone's talking about crypto and if
they should be in bitcoin right. He was saying, can
you explain it to other people? Then you can be
invested in it.
Speaker 5 (38:49):
Right.
Speaker 1 (38:50):
Look at what Warren Buffett.
Speaker 2 (38:51):
Says, keep your witz about you great advice for times
such as this.
Speaker 1 (38:55):
Thanks for listening.
Speaker 2 (38:56):
You've been listening to Simply Money, presented by all Worth
Financial here in fifty five I k r C the
talk station
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