October 7, 2025 • 41 mins
On today’s episode of Simply Money presented by Allworth Financial, Bob and Brian discuss the government shutdown, and dive into how diversification in the S&P 500 is quietly making a comeback as the so-called "Magnificent Seven" lose steam. Then, they explore how two families with the same wealth can have totally different outcomes—because of planning. Plus, your questions answered: structured notes, gold as a safe haven, and how to make tax-loss harvesting work for you.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I got a lot today. Do you I do got
to put up these Halloween decorations? Will it's time to
do it? Dude? The rest I do need to know
On fifty five KRC the talk station.
Speaker 2 (00:16):
Tonight, a look at the importance of the S and
P five hundred, how smart planning can totally change an outcome,
and we answer your questions. You're listening to Simply Money
presented by all Worth Financial on Bob Sponseller along with
Brian James.
Speaker 3 (00:31):
We want to.
Speaker 2 (00:31):
Start with the government shutdown that was still going on
today day six. I know that as we were getting
ready to come on the air tonight, the Senate was
actually seated in their chambers beginning at five point thirty
to supposedly vote on you know, the latest iteration of
this bill and try to get it past. We've got
(00:52):
all Worth Chief Investment Officer Andy Stout with us tonight.
Andy manages more than thirty billion dollars of investments for
are all Worth clients right here in Cincinnati.
Speaker 3 (01:03):
Andy.
Speaker 2 (01:03):
The Federal Reserve did not get the September jobs report
on Friday because of the shutdown. How significant was that
and what do you think is going to happen? Here tonight.
If anything with the Senate vote, well.
Speaker 4 (01:17):
When you look at the Federal Reserve and not getting
the data that they really need to get in order
to understand how the economy is working, you know, it
is a big deal, especially with the Josh Report that's
probably the single most important monthly report that.
Speaker 5 (01:32):
The Federal Reserve gets.
Speaker 4 (01:33):
I know they look at inflation as well, not discounting
that whatsoever, but given the fragility of the labor market
right now, it certainly is not one data point that
the Fed wants to be missed, essentially, you know, the
flying blind heading into their next meeting coming up here.
So we'll see how this all takes out. But there
(01:54):
is definitely a lot of uncertainty on top of the
normal uncertainty that we get with the Federal.
Speaker 2 (02:01):
All right, I'm seeing this morning when I was you know, scanning.
Speaker 3 (02:04):
The news and what have you.
Speaker 2 (02:05):
I think there's the markets pricing in what something like
a ninety six percent probability of a quarter point rate
cut here at the October meeting. If we get no
jobs report data between now and the next Fed meeting,
does that mean that they.
Speaker 3 (02:21):
Put this thing on hold?
Speaker 2 (02:22):
Because as we all, as they all like to say
all the time, they are quote unquote data dependent. If
they don't get any data in the form of a
job's report, do they just potentially put things on hold
here until this shutdown is over.
Speaker 5 (02:37):
No, I don't think so. I think you got to
shift to what the data looks at.
Speaker 4 (02:40):
One of the first things to consider is that the
Federal Reserve essentially becomes the data themselves. So I know
there's a fair amount of Federal Reserve speakers hitting the
trail this week.
Speaker 5 (02:51):
So assuming there is.
Speaker 4 (02:52):
No resolution, you know, that's what we really need to
pay attention to, is what the Fed officials are saying. Essentially,
every is going to be parsed determining how confident they
are about cutting rates later this month. And if let's
just say mint, it's unlikely to shut down last until
the Fed's next rate setting meeting, which is on October
(03:13):
twenty ninth. But if it does, in that instance, yeah,
I think they still cut. I mean just because it
adds to even further uncertainty. And if the government stays
shut down that long, that essentially adds to the economic
weakness that is out there now. To be fair, doesn't
impact GDP too much. Especially when you consider that once
these furloughed workers get back, you know, spending resumes and
(03:36):
all the back pay comes, it comes back in. But essentially,
you know, when you look at it, I mean pretty
much some mensa rate cut, it doesn't postpone it.
Speaker 6 (03:46):
So andy, I'm reminded of probably twenty whatever years ago,
when there used to be on CNBC there was a
there was always a clip of Alan Greenspan walking across
the street to the Fed Reserve meeting, and it was
the focus was on how big his briefcase was, because
that would impact what he would say. I am picturing
Jerome Powell walking across that Stame street with his hands
(04:07):
in his pockets and carrying nothing because he's got no
information to make this off of. So literally, how does
this work If we're not going to look at data,
If data is unimportant and there never was important apparently
according to some, then are we just going by gut feel?
Speaker 7 (04:21):
Is this?
Speaker 6 (04:21):
It seems it occurs to me that it sort of
like baseball, where there was a huge movement to sabermetrics,
and now we're going back to the baseball guys who
just get a who just kind of wing it with
a gut feel is that kind of where we are
with us.
Speaker 4 (04:34):
Well, when you think about the Sabermetrics Jerome Palell moneyball
sort of comparison and whether or not, you know, we
want to say Jerome Powell is Billy Bean or anything
as crazy as he as that because I could make
the argument, Brian that yeah, Billy Bean and Jerome Palell
(04:55):
Billy Bean. Today's world, they're probably not looking at piles
and piles of paper.
Speaker 5 (04:59):
It's on a computer, it's on their smartphone.
Speaker 4 (05:01):
So let's Brian, let's uh, let's step into the twenty
first century just a bit and reset.
Speaker 5 (05:07):
So all teasing aside.
Speaker 4 (05:10):
Uh, when you look at the Federal Reserve, when you
look at you know what their data they're looking at.
Speaker 5 (05:15):
We do have some private data coming through, you know.
Speaker 4 (05:17):
Last week we got the ADP data, which is one
of the biggest payroll processing companies in the world. They
told us what they're seeing out there. But there's other
data as well from some other private markets. We've got
some isms reports last week which give us a gauge
of what the manufacturing and service sector looks like. So
the Fed's not walking in completely blind. And let's just
(05:40):
also be clear you know, they're talking to people. You know,
they're gathering anecdotal evidence from various CEOs and business leaders
to see what's going on there. They they have their
ear to the to main street to know what's going on.
It doesn't mean that, you know, that would necessarily move it,
but they do know what's going on.
Speaker 5 (06:00):
But they are flying blind to a degree.
Speaker 4 (06:02):
So I don't think he's walking over empty pocketed, but
I would say I don't say it's half empty or
anything like that.
Speaker 5 (06:10):
But there is a partial data that will help guide
the FED.
Speaker 2 (06:14):
All right, Andy, speaking of not flying blind, I know
you and your team, you know, put together this recession
scorecard that looks at a multiple of different indicators, and
you guys track it all day every day.
Speaker 3 (06:26):
To be totally.
Speaker 2 (06:27):
Honest, I trust the data you and your team gather
for us every day much more than I trust the
Federal Reserve.
Speaker 3 (06:34):
That being said, with.
Speaker 2 (06:37):
A potential longer term shut down and the FED flying blind,
should long term investors be at all concerned right now
with what the recession scorecard is saying and any volatility
short term we might get because of any kind of
extended shutdown of the government.
Speaker 4 (06:56):
So the question is should you know, should clients or
should infest, you know, be concerned about, you know, what's
going on. I mean, of course people should be paying attention,
but you shouldn't be really basing any moves off of
what's going on.
Speaker 5 (07:07):
If you just look back over the past, you know, handful.
Speaker 4 (07:10):
Of years, the market, the large cap stocks are up
pretty good, and you can make an argument we're due
for a downturn if you just want to, you know,
look at just normal statistics where you know, ten percent
and drop occurs about once a year on average, give
or take a little bit. But you know, marcus don't
really care too much about calendars. What they really care
more about is earnings. They care about what the Fed
(07:32):
is doing to care about, like you were saying, about
what the economy is doing. That's why we look at
it is like the recession scorrecard. What is that recession
risk out there? And right now that recession risk, I'll
call it medium, not terribly high, but not definitely not
non zero, that's for sure.
Speaker 2 (07:45):
So are we still want a pretty healthy economy when
it's all said and done.
Speaker 4 (07:50):
Well, when you look at where the data has been
coming in, and again the data just went on a
big pause, so you know, take that with a grain
of salt. We can look at what like what we
call like a GDP tracking estimate and prior to essentially
or at least based on all the data water seed,
including or excluding things that we should have gotten in
the past a few weeks. Data for the third quarter
(08:11):
ending September thirtieth suggest that the economy was tracking at
a rate of around three point eight percent, which is
just mind boggling to think about everything is going on
when you look at the headlines, when you hear all
this scare tactics from wherever.
Speaker 5 (08:26):
I mean, they're everywhere.
Speaker 4 (08:27):
I'm not going to make any sort of the statements
one way or another, but they're everywhere.
Speaker 3 (08:31):
I mean.
Speaker 4 (08:31):
So we're tracking at a three point eight percent growth
right th and third quarter. Yes, the first quarter was negative.
Second quarter recovered all of that and then some because
we grew up about We grew about three point eight
percent from GDP to US economy in that second quarter.
So slight negative first quarter, three point eight, second quarter,
three point eight tracking so far, third quarter, and economists
(08:52):
are probably right around to two percent for the fourth quarter.
So when you put that all together for the calendar
year twenty twenty five.
Speaker 5 (08:58):
It's decent.
Speaker 4 (09:00):
It's not bad. It's not you know, screaming, you know,
the world is, you know, just gangbusters. It's and it's
certainly not screaming that the world is coming to an end.
It screams slightly healthier than expected overall economy when you
look at what people thought heading into this calendar year.
Speaker 5 (09:16):
So that's just really shows you that, you know.
Speaker 4 (09:19):
Patient investors, discipline investors when you don't pay attention to
all of the noise that's out there and you really
focus on your own goals and where you need to be,
where what you're trying to do, you know, that is
what really matters.
Speaker 5 (09:31):
To making sure you avoid any sort of really bad decisions.
Speaker 6 (09:34):
So Andy, obviously there are there are different parts of
the market in the economy. They are going to be
impacted differently here. So if you if you're somebody who's
investing on your own and maybe you haven't looked at
your portfolio in a while, what specific sectors or maybe
regions are most exposed if the shutdown drags on it
We think it like defense contractors or small businesses that
rely on federal contracts that kind of thing what comes
to mind for.
Speaker 4 (09:54):
You, So like for just a worker or from an
investor expert, from an investment standpoint. Yeah, so when you
look at you can look at at the different sectors
that you know, the you know, from a corporate standpoint,
I mean, they're all going to be hanging in there.
Speaker 5 (10:10):
It's really just more you're i'll.
Speaker 4 (10:11):
Call it your tertiary, uh, you know, fallout. So let's
just say you happen to have a bay Oel shop
in Washington.
Speaker 1 (10:19):
D C.
Speaker 4 (10:19):
You probably not doing too well right now with a
lot of the furloughed workers going on. But when you
look more bigger picture, when you look at the corporate profits,
the corporate earnings from you know, these large caps and
even small cap stocks, they are handling this just fine.
It's more about whether or not there is a prolonged
impact from the government's shutdown that affects corporate profits. And
(10:42):
history suggests that all we really normally see from shutdowns
is a lot of anxiety on on Main Street and
a lot of cautiousness in the news media. But when
you look at Wall Street, you know it's done all right.
You haven't really seen any sort of you know, major
negative reactions, and we haven't seen them on this. I mean,
we're posting rec highs, you know, very very recently, and
(11:02):
that suggests that Wall Street is looking through this and
doesn't really see a material impact on the economy.
Speaker 2 (11:08):
Andy, speaking of earnings, we've got all the bank earnings
starting to come out next week, you know in earnest
and some hot news here locally, fifth Third Bank acquiring
Comerica Bank this morning to create the ninth largest bank
in the United States. Uh, it looks like M and
A activity is starting to pick up in the financial space.
(11:29):
Is this a precursor for really healthy bank earnings coming
out next week?
Speaker 3 (11:34):
What? What? What does your crystal ball tell you?
Speaker 4 (11:38):
Well, I don't know if this one acquisition. With kudos
to to Fifth Third on that, I don't think this
one act is acquisition, is anything where we can say
this is a precursor or one thing, you.
Speaker 5 (11:49):
Know, positive or negative.
Speaker 4 (11:51):
I mean when you look at just a big picture,
I mean, corporate profits have.
Speaker 5 (11:54):
Been just really good.
Speaker 4 (11:55):
I mean the past you know, basically the past two years,
we've seen either high single digits or double digit earning growth.
When I say earnings growth, I'm talking about like year
over year earnings growth. So now when we head into
this next period coming up, you know, just like you
were asking here a second ago, Bob, what Wall Street
(12:16):
is expecting right now is about a seven percent year
of year growth rate. So comparing Q three earnings to
Q three twenty twenty five to Q three earnings twenty
twenty four, we're looking at seven percent. What you usually see, though,
in reality, is that the companies beat that by a
handful percentage points. So I would not be shocked whatsoever
(12:37):
if we once again see double digit earning growth. And
that's really what drives markets. And that's why you got
to put that political noise aside and focus on earnings
and profits, because if you're an investor in the stock market,
you're an investor in stocks.
Speaker 5 (12:48):
And stocks do well when they make more money, and
that's what we're seeing.
Speaker 3 (12:52):
Sounds good to me, all right?
Speaker 2 (12:53):
Coming up next, y, investing in the S and P
five hundred instead of throwing all your eggs in just
the mag magnificent seven will pay down the road, or
it should. You're listening to Simply Money, presented by Allworth
Financial on fifty five KRC the talk station.
Speaker 1 (13:11):
Yes he's a fifty five k available everywhere with the iHeartRadio.
Speaker 8 (13:16):
App now number one for podcasting fifty five KRC an
iHeartRadio station. Allworth Financial a registered investment advisory firm. Any
ideas presented during this program are not intended to provide
specific financial advice. You should consult your own financial advisor,
tax consultant or estate planning attorney to conduct your own
(13:36):
due diligence.
Speaker 2 (13:40):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Is gold really
the safe haven it's made out to be? Should you
consider structured notes for protection or answering real questions from
investors like you? Straight ahead at six forty three. They
have been called the darlings of the stock market for
(14:01):
a couple of years now, the so called Magnificent seven Amazon, Alphabet, Navidia, Tesla, Meta, Microsoft,
and Apple. But the landscape landscape could be changing. Brian,
give us some updated data. I know these Mags seven
companies make up thirty six percent now of the S
and p's total market capitalization. But the gains dry, the
(14:25):
gains that are coming this year are moving around a
little bit, and that bodes well, for the whole concept
of diversification.
Speaker 7 (14:33):
Yeah, that's why we talk about it all the time,
isn't it.
Speaker 6 (14:35):
So Yeah, the reason this is important is because the
S and P five hundred may be a little bit
more complicated than lots of people assume.
Speaker 7 (14:41):
Most people think, okay, that that's an index. I get it.
Speaker 6 (14:43):
It's just a group of stocks that we've declared, we've
collectively as a society declared as the United States Stock Market.
Well it's not quite that simple because that assumes that
all five hundred stocks have an equal weighting within that index,
and that's not the case with the S and P
five hundred. The thing that crawls across your TV screen
at the end of every day is capitalization weighted. What
that means is the bigger the company, the more of
(15:05):
the index it makes up. So that's what Bob meant
when he said that the Magnificent seven, which by the way,
that's Amazon, Alphabet which is Google, Nvidia, Tesla Meta which
is Facebook, Microsoft, and Apple.
Speaker 7 (15:16):
That's the magnificent seven stocks.
Speaker 6 (15:18):
They make up more than a third of the S
and P five hundred, even though they are only seven
out of those five hundred companies. So that's why it
drives the S and P five hundred mostly does what
they do, but those seven aren't driving the S and
P five hundreds gains the way they did in twenty
three and twenty four. In the past, they've been capable
of adding about five trillion dollars in market value every
year on average, but they've only managed three point one
(15:41):
trillion in market cap gains for the first three quarters
of twenty twenty five, so not nearly what they have
done in the past. That's coming from the Dow Jones organization.
That's still a massive presence in the market, but it
does suggest that their momentum might be dropping off just
a bit.
Speaker 3 (15:57):
Yeah.
Speaker 2 (15:57):
In other words, new darlings have emerged this year, and
this is how it always works over the longer term.
Speaker 3 (16:04):
Brian.
Speaker 2 (16:04):
For example, Broadcom. Most people have heard of Broadcom, but
it gets very little, you know, publicity or headlines. But
Broadcon this year has in a lot of chip stocks
have muscled its way to become the fourth biggest contributor
to the S ANDP in terms of market capitalization this year,
and their return has outpaced Meta, Tesla, Amazon and Apple,
(16:26):
and then don't forget about Oracle, and Pallanteer Technologies. They've
also cracked the top ten companies with the largest market
cap gain so far in twenty twenty five, and that's
according to dal Jones Market Data.
Speaker 3 (16:39):
So you know, this works the same way all the time.
Speaker 2 (16:44):
Over the longer term, people tend to have recency bias,
and they pile in and overallocate to things that have
done super super well over the last one two or
three years, and they get underdiversified, over concentrated, and they
forget about these other companies that by the time you've
actually heard of them and heard about their gains, you know,
(17:06):
the proverbial horse has left the barn and you missed
out if you're not fully diversified.
Speaker 6 (17:12):
Yeah, it used to be that those seven magnificent seven
of those magnificent seven stocks where again, like we said,
driving the market, and some of them still are. We're
not implying that there's no growth here. So Nvidia, Alphabet, Microsoft,
and Facebook are up anywhere from twenty to forty percent. However, Amazon, Apple,
and Tesla, Now those are three stocks that we haven't
thought twice about for decades now because they've been driving
(17:32):
the market. But those three are stumbling back behind, and
that is opening opportunities for those companies that Bob just
mentioned because we are hitting a point of the cycle
where investors are going, hey, these companies are great. However,
haven't heard much new or innovative out of Amazon or
Apple or Tesla, and they seem to have be coming
up with more competition than they used to have. So again,
(17:53):
the Oracle is not a newcomer to the overall investment scene.
Oracle has been, you know, ever since technology became a
thing about thirty years ago.
Speaker 7 (18:00):
Oracle has been in and out of it.
Speaker 6 (18:02):
But because they came up with their their three hundred
billion dollar cloud computing deal with open ai, that's that's
chatch GPT by the way, in that deal committed open
AAI to purchase computing power from Oracle for about five
years starting in twenty twenty seven. All of a sudden,
Oracles is on its i don't know, fifth or sixth
wave over the past thirty years of being a darling
(18:23):
of the industry. So therefore, these magnificent seven stocks are great,
But there could be a different number and a different
Cutz name for a different group of stocks here coming
up soon.
Speaker 2 (18:32):
Yeah, So whether you're somebody that has had tremendous success
owning some of these mags seven individual stocks, or someone
with just dry powder on the sidelines wondering what to do,
how to get involved in the stock market. Just keep
stories and fundamental data like this in mind, because if
you just follow the headlines and you follow the talking
(18:54):
heads on CNBC or whomever, you're likely to not diversify
soon or not get into the market soon enough in
some of these emerging upcoming winners, because you just pay
attention to what's being blabbed about on the news every night, yep.
Speaker 6 (19:13):
And so therefore it always comes back to let's make
sure we know why we're investing in what we own, right,
If we're just chasing performance, well that's eventually going to
blow up in your face. Understand why you have this
particular pile of money, whichever dollars you're using. Why are
you heavily invested in these companies if that's what you own.
Is it because of your buzz from the headlines you're
trying to keep up with? Is it a keeping up
with the Joneses kind of thing or fear of missing out?
(19:34):
Did you actually look at the fundamentals or are you
simply saying, well, this is the ones that have run
the most. Therefore I'll just continue to own them. But
most importantly, just understand what you're trying to accomplish. Is
this truly a growth portion of your portfolio or are
you simply chasing performance?
Speaker 2 (19:50):
Here's the all Worth advice. Diversification cannot only protect you
from major downturns, it also helps you capture those future winners.
Coming up next to families with the same wealth but
completely different outcomes, We'll show you how smart planning changes everything.
You're listening to Simply Money, presented by all Worth Financial
(20:11):
on fifty five KRC The Talk station.
Speaker 1 (20:15):
What's happening President Trump telling Hamas except peace deal by
Sunday or face all hell like no one has ever
seen before. Checking in each hour, it's likely going to
be in the thousands.
Speaker 2 (20:24):
The Trump administration has been firing since January twenty.
Speaker 1 (20:27):
And fifty five KRS The Talk see RC an iHeartRadio station.
Speaker 2 (20:36):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Tonight, we want
to discuss how two families with the same wealth can
end up with completely different outcomes you know, years down
the road, just based on the planning choices they make.
And we'll call this segment two Paths, two outcomes. We're
(20:59):
gonna give you some real world examples and you'll see
how small decisions today can make as much as a
six figure difference or more down the road. Brian, let's
get into it. Example number one, how you use your rmds,
require require minimum distributions and whether people do wroth conversions
(21:22):
or don't even discuss it, you know, to say nothing
of planning and planning accordingly and proactively.
Speaker 6 (21:28):
So let's put some names on these fake people, right, So,
Bob and Mary, they're both seventy two years old.
Speaker 7 (21:33):
These are fake people, of course, but these are situations.
Speaker 6 (21:35):
We deal with every day at all Worth when we're
putting flames and plans together for people, because everybody's got
decisions to make. So Bob and Mary seventy two years old,
they're retired, a couple million dollars across their traditional pre
tax iras.
Speaker 7 (21:46):
This is a very common situation. So there's two things
they can do.
Speaker 6 (21:49):
If they do nothing and just let life happen to
them and let the irs happen to them, then they're
gonna hit shortly in the next few years, they'll they'll
hit their required minimum distribution age, which basically means the
irs says, hey, the gravy train has come to a halt.
Speaker 7 (22:02):
No more tax deferred growth.
Speaker 6 (22:04):
It's time to start paying a little bit of taxes
on these distributions. So these required minimum distributions, and if
you want a ballpark number, take roughly four to five
percent of your of whatever your closing balance of your
IROA was the prior year. That is roughly what you
have to take out. That's not your taxation. That's what
you have to take out that therefore will be taxed.
(22:24):
So these required minimum distributions can and will push you
into higher tax brackets, which can also trigger bigger medicare
premium via something called IERMAMAA for those of you are
keeping score out there, and so you're probably gonna wind
up giving away more in taxes than you expected.
Speaker 7 (22:39):
That's the default plan.
Speaker 6 (22:40):
So that's Bob and Mary not not having any kind
of plan in place. Now, let's take another couple, let's
call them Mob and Berry. If they do a little
bit of planning same situation. Let's pretend that they had
started some ROTH conversions back in their mid sixties, just
a few years ago, maybe just fifty thousand dollars a year,
steadily moving money from a pre tax.
Speaker 7 (22:59):
Eye to a ROTH.
Speaker 6 (23:01):
Now depending on their tax bracket, you know, so they
might let's pretend they're only maybe in a twenty five
percent tax bracket. Well, then they're going to pay you know,
say twenty percent federal and five percent state and their
writing checks voluntarily to that. So that's going to be
something like twelve thousand dollars per year. That's the sacrifice
they're making. However, by the time they hit URMD age,
those requirement of distributions are much smaller, and they can
(23:23):
also use qualified charitable distributions to replace any giving that
they're doing, which makes it a lot more tax efficient
and more of their money winds up in tax free accounts.
On the ROS side, the longest of long term benefits
there too, is that their kids are going to inherit
those dollars whatever's left.
Speaker 7 (23:39):
In those ROTH iras tax free.
Speaker 6 (23:41):
And while they have those inherited iras, they've got ten
years to continue to let that tax free growth go
after the death of mom and death, So definitely something
to consider there all.
Speaker 3 (23:52):
Right, Example number two.
Speaker 2 (23:53):
We want to highlight tonight concentrated stock positions. So our
next hypothetical person, Steve. Steve worked for a big tech
company and over the years his company stock position grew
to over eight hundred thousand dollars, almost half of his
one point eight million dollar total portfolio. Patha that Steve
(24:14):
could have taken no planning. He just hangs on because
he doesn't want to pay any capital gains taxes. And
then lo and behold, the stock takes a forty percent hit,
either in a market downturn or in a downward earning surprise. Overnight,
his retirement nest Eggs shrinks by hundreds of thousands of dollars.
Speaker 6 (24:34):
Yeah, and not having a plan is a plan. You're
just probably not gonna like it, all right.
Speaker 3 (24:39):
With planning, Steve takes a different route.
Speaker 2 (24:42):
He uses a strategy like charitable giving donor advice fund,
you know, chait remainder trust, just giving away, slicing off
some appreciated stock every year, to say nothing of using
a collarede strategy or a direct indexing strategy, something where
he has a plan to responsible, we maybe pay a
little bit of capital gains taxes along with some charitable
(25:04):
strategies and just slowly diversify that position, reduce his downside risk,
get his portfolio better diversified, and by doing so he
has the same starting point, but instead of watching things
crash and take his potential future with it, he's diversified
and protected. All right, Brian walk us through example number three,
(25:26):
the estate plan that's out of date.
Speaker 6 (25:29):
Right, and this is very common because the state plans
are no fun to talk about. They seem scary, and
they force us to talk about things that maybe we
don't necessarily want to.
Speaker 7 (25:38):
And so let's still use the example of John and Susan.
Speaker 6 (25:41):
So they've got about two and a half million dollars
and they haven't looked at their state plan since two
thousand and eight, back when the market crashed, and that
got everybody's attention.
Speaker 7 (25:47):
So what happens. How do we get surprised here?
Speaker 6 (25:50):
Well, if John passes away suddenly and Susan has to
sort throughout these outdated wills and old beneficiary designations, the
kids are going to wind up having to go through probate,
paying legal fees for that and fighting over unclear instructions.
Speaker 7 (26:02):
So probate is the easiest thing in the world to avoid.
Speaker 6 (26:04):
Just make sure everything that can have a best beneficiary
listed on it does and financial accounts are the easiest
things to do. You're gonna sign one piece of paper
that says, here's my three kids, and they get a
third of it each, and that's the end of it.
That you have wiped out probate for that specific account.
So but anyway, so this causes a lot of stress
and costs and delays, all because nobody took a look
at this stuff. So let's look at the the alternative
(26:26):
with a little bit of planning. You know, this is
the same couple, but let's pretend that they did sit
down once every couple of years or so and just
make sure that nothing has really changed. Their wills, trust
beneficiary designations are all lined up in place. I've got
an email in my inbox today from somebody who had
a heart attack figuratively speaking over the weekend, wondering this
exact thing.
Speaker 7 (26:45):
Is everything in order?
Speaker 6 (26:46):
And it is, and I haven't responded yet, but that's
what they're going to hear, that they've got things in place.
But I'm glad that the thought is occurring to them
to double check. So then when we do have that
death in the family, it's a very sad situation for
the family, of course, but the transition goes smoothly. So
the difference between the two no probate, no fighting, and
no guessing. It was all laid out in advance. The
(27:07):
family stays intact and the money transfers efficiently.
Speaker 3 (27:10):
All right.
Speaker 2 (27:10):
The last example we want to touch on tonight, the
too much cash on the sideline scenario. Let's talk about Linda.
She and her husband have about two million dollars save,
but nearly four hundred thousand dollars of it is parked
in cash, earning next to nothing in the way of
interest or.
Speaker 3 (27:27):
Return, no planning at all. They feel safe keeping into
the bank.
Speaker 2 (27:32):
But over the next ten years, inflation let's say averages
three percent on average every year, believe it or not,
that four hundred thousand dollars in cash loses about one
hundred thousand dollars or twenty five percent of its purchasing power.
Speaker 3 (27:47):
Again, these people.
Speaker 2 (27:48):
Feel great, but they're actually moving backwards in terms of
what their heart earned assets can purchase. With planning and said,
Linda and her husband keep an emergency cash reserve. You know,
in cash where it belongs, but the rest is allocated
into a diversified portfolio, maybe just a mix of short
term bonds for stability and a little bit of stock
(28:10):
for growth. Ten years later, instead of losing ground to inflation,
that money has grown meaningfully and it's funding and keeping
up with their lifestyle needs. Here's the all Worth advice.
The difference between no planning and smart planning is often
six figures or more in terms of taxes, stress, or
(28:30):
lost opportunities. If you recognize yourself in any of these examples,
that's a sign to maybe get proactive and perhaps sit
down with a good fiduciary advisor who can help you.
All Right, buzzwords like gold and direct indexing sounds smart,
but are they. We're answering your questions. Coming up next,
(28:51):
you're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station.
Speaker 1 (28:57):
A series of events. The most important events make for
eventful days happening every day. The political violence in this country.
You're seeing more and more events like this.
Speaker 3 (29:07):
This is a Trump shut day.
Speaker 1 (29:09):
Refusers, She's fired. In these eventful times, very serious times
all the time. It's time for action in any event.
We're following these events.
Speaker 5 (29:19):
On and off the field on the streets of our city.
Speaker 1 (29:21):
Check in, we'll check it out, checking into it fifty
five krs the talk station. More than a few of
our patients are welcome to here.
Speaker 7 (29:30):
I do think he is too old to run in
twenty twenty.
Speaker 1 (29:33):
Four, fifty five krs the talk station.
Speaker 2 (29:40):
You're listening to Simply Money present up by all Worth
Financial on Bob Sponseller along with Brian James. Do you
have a financial question you'd like for us to answer.
There is a red button you can click while you're
listening to the show right on the iHeart app. Simply
record your question and it will come straight to us.
All right, Jeff and fort Wright leads us off tonight
in Jeff says, we've harvested some tax losses last year,
(30:04):
but I'm not sure we did it right. How do
you make tax loss harvesting actually work without just churning
your investments?
Speaker 7 (30:12):
All right?
Speaker 6 (30:12):
So this is a great question, it really is, and
it's great to hear people being proactive and just using
the tax code as it's designed.
Speaker 7 (30:19):
Good on you, Jeff.
Speaker 6 (30:20):
All right, So for the uninitiated, let's talk about what
this is so tax loss harvesting one oh one. Obviously,
when we buy something and it goes up, most people
know that if this is outside of a tax advantaged account,
then we're gonna pick capital gains taxes on it. Well,
the opposite is true too. You get to take deductions
if you take a loss. And again this is money
outside of an IRA or WROTH or four oh one
K or whatever. When an investment is down, you can
(30:42):
sell it to actually incur the loss and use that
to offset capital gains elsewhere, or up to three thousand
dollars can just be straight up deducted off your ordinary income.
That's what Jeff is talking about with tax loss harvesting here,
and so what.
Speaker 7 (30:56):
We're talking about.
Speaker 6 (30:57):
One thing you got to avoid here is though something
called the walk sale trap. You can't simply sell it
because a lot of people just heard, Hey, I just
bought something and it's down. I'll sell it and buy
it right back within ten minutes and then everything will
be wonderful.
Speaker 7 (31:08):
Can't do that.
Speaker 6 (31:09):
You've got to stay out of a security with for
thirty days. And this is across accounts in technically your
household too, if you're filing jointly and so forth. So
but again let's get specific to Jeff's question here. Churning
is not the goal here. Tax loss harvesting is going
to be most efficient as a strategic, infrequent move, not
constantly jumping in and out of things, which can create
higher transaction costs, mess up your overall asset allocation, make
(31:31):
it really hard to keep track of your record. So
be thinking long term tax efficiency. Don't don't eat or
don't incur every last tiny little loss and stack them
all up. That's going to consume a lot of time
and energy and probably dollars too. Look at your larger
positions and you might even confirm you might even combine
this with roth conversions. If you've got significant losses you
can take.
Speaker 7 (31:51):
That's great.
Speaker 6 (31:52):
Look at your calculate your tax savings that you're going
to generate, and then use those to offset some some
significant roth conversions. Now you're kind of putting your tax
planning on steroids, So hope that helps you. Jeff, there's
little nitrous oxide there for your financial planning and tax
planning needs.
Speaker 3 (32:07):
All right.
Speaker 6 (32:08):
Mark and Lovelin says they've got about two million dollars invested.
But he's started to worry about inflation eating away at
his returns. He's apparently aware of Treasury inflation protected securities,
so he's asking and beyond those tips, what strategies actually
hedge against inflation?
Speaker 2 (32:22):
Bob well Mark, I have to assume you know from
your question that you're a fairly conservative investor, and there
is nothing wrong with that as long as all your
long term financial goals are being met, and so I
think you're smart in at least raising the potential issue
of inflation eroding your return.
Speaker 3 (32:41):
So what do we do about that?
Speaker 2 (32:43):
How do we stay relatively conservative but get enough growth
in the portfolio to outpace inflation. A couple of potential
strategies to think about and maybe discussed with a good
fiduciary advisor are structured notes and a buffered strategy buffer
ETF strategy. And in both of those strategies you can
get some exposure to the stock market, which is going
(33:05):
to outpace inflation over the long term, always has, probably
always will. But with the stock market, as I'm sure
you're aware, comes some short term potential volatility. So using
structured notes and buffer at ETFs, we can have some
protection in place on the front end to protect some
(33:25):
or even all of the downside risk.
Speaker 3 (33:28):
Along with that protection, some.
Speaker 2 (33:30):
Of your upside gets capped, but again, you got a
good chance of out pacing inflation with those strategies. It
doesn't sound like you're looking for all the upside in
the stock market, just enough to make sure your overall
portfolio keeps pace with inflation and protects your purchasing power.
So those are two strategies that I consider and have
(33:50):
somebody walk you through and see if it's a good
fit for your situation. All right, let's go to Tim
and Mason, and speaking of structured notes, Tim says, our
advisor just mentioned structured notes with downside buffers. How do
you evaluate whether they're worth the complexity compared to just
holding stocks and bonds? Brian, this gives you a chance
(34:13):
to just shoot take shots at everything I just said.
Speaker 6 (34:16):
Well, it's kind of funny that these questions are kind
of related. Tim and Mark in Loveland and Mason maybe
they spend some time over at the monkey bar chatting
with all this stuff out.
Speaker 7 (34:25):
So anyway, so let's talk about structured notes.
Speaker 6 (34:28):
Structured notes are basically a custom built investment there usually
issued by big banks, and they'll they'll tie returns to
somewhat arbitrarily to an index, they come with a downside buffer.
In other words, they have a floor your investments can
only go down so far. But that also means there's
a ceiling too. So you might be offered a note
that says it'll pay up to twelve percent if the
s and P arises, but it might protect you against
(34:50):
the first fifteen percent of losses. If the market drops
more than that, then then you have kind of a
buffer there. So the buffer can sound like a say net,
but you're really trading simplicity and liquidity for that protection.
This is something you're you generally gonna want to commit
to for two to five years. If you sell early,
the pricing might not be, you know, very opaque and
not in your favor. So complexity means you have less
(35:13):
control over these. But at the same time, if you
want to participate in the upside of the market, and
but you're you're a little spooked by the downside, this
might be something to consider. At the same time, if
you are somebody who just doesn't worry about the headlines,
and and you're willing to let things roll, and you
realize that the market has recovered each and every time
it has it has dropped, including the most recent drops.
Because we are sitting here now at an all time
(35:34):
high once again, then you might not need these things.
I think they're good in certain situations, but if you
believe in the long term veracity of the market, then
maybe not something to lose too much sleep about. So
let's move on to one more so, Chris and Montgomery
says he keeps hearing about gold being used as a
safe haven. He's wondering if you should have a slice
of it in his portfolio to offset some of the
ups and downs.
Speaker 7 (35:54):
And if so, what's the smartest way to do that?
Speaker 2 (35:56):
Bob, Well, Chris, in the short amount of time we
have to deal with this question. It you know my
answer it depends. The thing I always ask people when
they come and ask me about gold is why do
you want to hold it? And depending on what people's
answers are. You know, some people think we're headed toward
armageddon where you know, ATM machines won't work, or the
(36:17):
Internet goes down or whatever. Versus people that just want
to hedge against inflation. That's going to dictate in what
form you own gold.
Speaker 3 (36:26):
So it's a loaded question, very difficult topic.
Speaker 2 (36:30):
I see nothing wrong with holding gold as an inflation hedge.
It has certainly worked out well this year. Just be
clear with yourself and hopefully with your advisor if you
have one, on what the purpose of owning gold is
for your specific situation.
Speaker 3 (36:47):
All Right.
Speaker 2 (36:47):
If FED chair Jerome Pale a swiftye, he may want
to consider it as he factors in not getting data
that he needs to have to make a decision on
interest rates.
Speaker 3 (36:58):
We'll explain next.
Speaker 2 (36:59):
You're listening to Simply Money presented by all Worth Financial
on fifty five KRC the talk station.
Speaker 1 (37:06):
It's become a big story. Big things are happening. We
are in a government shutdown, a big fight in Congress.
It's some might even say huge, huge news.
Speaker 6 (37:16):
And to keep up with government layoffs and continuing negotiation.
Speaker 1 (37:19):
You'll need massive amounts of information.
Speaker 6 (37:22):
Massive the impact that's going to have on every Americans.
Speaker 1 (37:25):
All funded by a healthcare fighter. Again for the latest
on every big store from very big things. This is
no small matter. Fifty five krs the talk station.
Speaker 7 (37:36):
This absolutely reliable information and of course not just one
sided view.
Speaker 2 (37:41):
News that affects you at the top end to bottom
of the hour fifty five krs.
Speaker 1 (37:45):
The talk station.
Speaker 2 (37:52):
You're listening to simply Money, presented by all Worth Financial
on Bob spon Seller along with Brian James. You might
think the Federal Reserve chair has little to do with
pop music, but hear us out.
Speaker 3 (38:02):
Taylor Swift just dropped her twelfth.
Speaker 2 (38:05):
Studio album called the Life of a show Girl, and
Brian I saw she sold a boatload of movie tickets
over the weekend too. And that's what seems like just
a headline for music blogs could actually carry signals for
the US economy, Brian, I say, if we are not
getting employment data, uh, maybe the Fed just should just
(38:27):
track the economic impact of Taylor Swift in deciding whether
to cut interest rates later this month.
Speaker 7 (38:34):
Well, Bob, let's not bury the lead here.
Speaker 6 (38:36):
I think all of our loyal listeners want to know
exactly what time you got in line for your Life
of a Showgirl out. Oh, give the people what they want, Bob,
All right, so we all remember the eras I did not.
Speaker 3 (38:47):
I did not participate, nor will I ever. How about
that I have. I have a deep respect for her though.
Speaker 2 (38:54):
She's wonderful entertainer and an even better business person. So
I respect, you know, I respect the world out of her.
Really all choking.
Speaker 6 (39:02):
Aside, I think you have an alter ego that tears
up when these things happen.
Speaker 7 (39:06):
But anyway, we all remember the Eras tour.
Speaker 6 (39:08):
It was a juggernaut, one hundred and fifty shows across
five continents, and we spoke about it here in these airways,
and yes, an immense amount of respect for this woman
who has created basically almost an industry of a different
type of concert experience. So analysts estimate that generated about
five billion dollars in US custom consumer spending hotels, restaurants, flights,
retail and from people hanging around cities that have the
(39:31):
concerts and so forth. So if this new one leads
to another tour like that, that basically makes it a
stimulus event, which is why we're talking about it on
a financial radio show here, because it'll mobilize disposable income,
it gets local economies moving, and this is the kind
of stuff that does get the attention of something like
the Federal Reserve because it will move the needle and
we can use, especially when we seem to be lacking
(39:53):
data from our traditional sources. People's willingness to spend money
on something that historically has been very popular, can an
indicator in and of itself so on its own that
don't look for this. You know, the album's release did
not move the stock markets. We're not looking for anything
like that. This would be, you know, a bigger, longer
term type of a thing to look for here.
Speaker 2 (40:12):
What will what will potentially move the stock market is
how much Life of a Show Girl merchandise you've already purchased, Brian,
how much? How much of it do you own? And
I see you have a beautiful T shirt on today.
That's what's going to move the needle.
Speaker 5 (40:28):
Right.
Speaker 7 (40:28):
You're making me tier up now.
Speaker 6 (40:29):
And I had to clear out my closet to make
room for all my new merch and I just can't
I can't wait. I'll wear it in the office today
and I'll do a little hatwalk thing down the hallway
and you can you can critique me.
Speaker 3 (40:39):
Awesome, Thanks for listening. Tune in tomorrow and.
Speaker 2 (40:42):
We'll talk about the four letter word that's draining your retirement.
And know it's not what you say when you open
your monthly brokerage statement. You've been listening to Simply Money
presented by all Worth Financial on fifty five KRC the
Talk station.
Speaker 1 (40:57):
Something is happening. It's time to end held experiment of
open borders. Your countries are going to hell.
Speaker 4 (41:04):
Something in our country, Charlie Kirk, I forgive him.
Speaker 1 (41:07):
Antifa across this country would be Trump assess and Ryan
Ruth guilty on all five charges. Something in our world.
Speaker 2 (41:13):
NATO countries should shoot down Russian aircraft sky in all
day they enter their airspace.
Speaker 1 (41:18):
It's always something.
Speaker 4 (41:20):
Yes, I do.
Speaker 1 (41:20):
It's a very important moment. Fifty five KRC, The Talk
Station
I got a lot today. Do you I do got
to put up these Halloween decorations? Will it's time to
do it? Dude? The rest I do need to know
On fifty five KRC the talk station.
Speaker 2 (00:16):
Tonight, a look at the importance of the S and
P five hundred, how smart planning can totally change an outcome,
and we answer your questions. You're listening to Simply Money
presented by all Worth Financial on Bob Sponseller along with
Brian James.
Speaker 3 (00:31):
We want to.
Speaker 2 (00:31):
Start with the government shutdown that was still going on
today day six. I know that as we were getting
ready to come on the air tonight, the Senate was
actually seated in their chambers beginning at five point thirty
to supposedly vote on you know, the latest iteration of
this bill and try to get it past. We've got
(00:52):
all Worth Chief Investment Officer Andy Stout with us tonight.
Andy manages more than thirty billion dollars of investments for
are all Worth clients right here in Cincinnati.
Speaker 3 (01:03):
Andy.
Speaker 2 (01:03):
The Federal Reserve did not get the September jobs report
on Friday because of the shutdown. How significant was that
and what do you think is going to happen? Here tonight.
If anything with the Senate vote, well.
Speaker 4 (01:17):
When you look at the Federal Reserve and not getting
the data that they really need to get in order
to understand how the economy is working, you know, it
is a big deal, especially with the Josh Report that's
probably the single most important monthly report that.
Speaker 5 (01:32):
The Federal Reserve gets.
Speaker 4 (01:33):
I know they look at inflation as well, not discounting
that whatsoever, but given the fragility of the labor market
right now, it certainly is not one data point that
the Fed wants to be missed, essentially, you know, the
flying blind heading into their next meeting coming up here.
So we'll see how this all takes out. But there
(01:54):
is definitely a lot of uncertainty on top of the
normal uncertainty that we get with the Federal.
Speaker 2 (02:01):
All right, I'm seeing this morning when I was you know, scanning.
Speaker 3 (02:04):
The news and what have you.
Speaker 2 (02:05):
I think there's the markets pricing in what something like
a ninety six percent probability of a quarter point rate
cut here at the October meeting. If we get no
jobs report data between now and the next Fed meeting,
does that mean that they.
Speaker 3 (02:21):
Put this thing on hold?
Speaker 2 (02:22):
Because as we all, as they all like to say
all the time, they are quote unquote data dependent. If
they don't get any data in the form of a
job's report, do they just potentially put things on hold
here until this shutdown is over.
Speaker 5 (02:37):
No, I don't think so. I think you got to
shift to what the data looks at.
Speaker 4 (02:40):
One of the first things to consider is that the
Federal Reserve essentially becomes the data themselves. So I know
there's a fair amount of Federal Reserve speakers hitting the
trail this week.
Speaker 5 (02:51):
So assuming there is.
Speaker 4 (02:52):
No resolution, you know, that's what we really need to
pay attention to, is what the Fed officials are saying. Essentially,
every is going to be parsed determining how confident they
are about cutting rates later this month. And if let's
just say mint, it's unlikely to shut down last until
the Fed's next rate setting meeting, which is on October
(03:13):
twenty ninth. But if it does, in that instance, yeah,
I think they still cut. I mean just because it
adds to even further uncertainty. And if the government stays
shut down that long, that essentially adds to the economic
weakness that is out there now. To be fair, doesn't
impact GDP too much. Especially when you consider that once
these furloughed workers get back, you know, spending resumes and
(03:36):
all the back pay comes, it comes back in. But essentially,
you know, when you look at it, I mean pretty
much some mensa rate cut, it doesn't postpone it.
Speaker 6 (03:46):
So andy, I'm reminded of probably twenty whatever years ago,
when there used to be on CNBC there was a
there was always a clip of Alan Greenspan walking across
the street to the Fed Reserve meeting, and it was
the focus was on how big his briefcase was, because
that would impact what he would say. I am picturing
Jerome Powell walking across that Stame street with his hands
(04:07):
in his pockets and carrying nothing because he's got no
information to make this off of. So literally, how does
this work If we're not going to look at data,
If data is unimportant and there never was important apparently
according to some, then are we just going by gut feel?
Speaker 7 (04:21):
Is this?
Speaker 6 (04:21):
It seems it occurs to me that it sort of
like baseball, where there was a huge movement to sabermetrics,
and now we're going back to the baseball guys who
just get a who just kind of wing it with
a gut feel is that kind of where we are
with us.
Speaker 4 (04:34):
Well, when you think about the Sabermetrics Jerome Palell moneyball
sort of comparison and whether or not, you know, we
want to say Jerome Powell is Billy Bean or anything
as crazy as he as that because I could make
the argument, Brian that yeah, Billy Bean and Jerome Palell
(04:55):
Billy Bean. Today's world, they're probably not looking at piles
and piles of paper.
Speaker 5 (04:59):
It's on a computer, it's on their smartphone.
Speaker 4 (05:01):
So let's Brian, let's uh, let's step into the twenty
first century just a bit and reset.
Speaker 5 (05:07):
So all teasing aside.
Speaker 4 (05:10):
Uh, when you look at the Federal Reserve, when you
look at you know what their data they're looking at.
Speaker 5 (05:15):
We do have some private data coming through, you know.
Speaker 4 (05:17):
Last week we got the ADP data, which is one
of the biggest payroll processing companies in the world. They
told us what they're seeing out there. But there's other
data as well from some other private markets. We've got
some isms reports last week which give us a gauge
of what the manufacturing and service sector looks like. So
the Fed's not walking in completely blind. And let's just
(05:40):
also be clear you know, they're talking to people. You know,
they're gathering anecdotal evidence from various CEOs and business leaders
to see what's going on there. They they have their
ear to the to main street to know what's going on.
It doesn't mean that, you know, that would necessarily move it,
but they do know what's going on.
Speaker 5 (06:00):
But they are flying blind to a degree.
Speaker 4 (06:02):
So I don't think he's walking over empty pocketed, but
I would say I don't say it's half empty or
anything like that.
Speaker 5 (06:10):
But there is a partial data that will help guide
the FED.
Speaker 2 (06:14):
All right, Andy, speaking of not flying blind, I know
you and your team, you know, put together this recession
scorecard that looks at a multiple of different indicators, and
you guys track it all day every day.
Speaker 3 (06:26):
To be totally.
Speaker 2 (06:27):
Honest, I trust the data you and your team gather
for us every day much more than I trust the
Federal Reserve.
Speaker 3 (06:34):
That being said, with.
Speaker 2 (06:37):
A potential longer term shut down and the FED flying blind,
should long term investors be at all concerned right now
with what the recession scorecard is saying and any volatility
short term we might get because of any kind of
extended shutdown of the government.
Speaker 4 (06:56):
So the question is should you know, should clients or
should infest, you know, be concerned about, you know, what's
going on. I mean, of course people should be paying attention,
but you shouldn't be really basing any moves off of
what's going on.
Speaker 5 (07:07):
If you just look back over the past, you know, handful.
Speaker 4 (07:10):
Of years, the market, the large cap stocks are up
pretty good, and you can make an argument we're due
for a downturn if you just want to, you know,
look at just normal statistics where you know, ten percent
and drop occurs about once a year on average, give
or take a little bit. But you know, marcus don't
really care too much about calendars. What they really care
more about is earnings. They care about what the Fed
(07:32):
is doing to care about, like you were saying, about
what the economy is doing. That's why we look at
it is like the recession scorrecard. What is that recession
risk out there? And right now that recession risk, I'll
call it medium, not terribly high, but not definitely not
non zero, that's for sure.
Speaker 2 (07:45):
So are we still want a pretty healthy economy when
it's all said and done.
Speaker 4 (07:50):
Well, when you look at where the data has been
coming in, and again the data just went on a
big pause, so you know, take that with a grain
of salt. We can look at what like what we
call like a GDP tracking estimate and prior to essentially
or at least based on all the data water seed,
including or excluding things that we should have gotten in
the past a few weeks. Data for the third quarter
(08:11):
ending September thirtieth suggest that the economy was tracking at
a rate of around three point eight percent, which is
just mind boggling to think about everything is going on
when you look at the headlines, when you hear all
this scare tactics from wherever.
Speaker 5 (08:26):
I mean, they're everywhere.
Speaker 4 (08:27):
I'm not going to make any sort of the statements
one way or another, but they're everywhere.
Speaker 3 (08:31):
I mean.
Speaker 4 (08:31):
So we're tracking at a three point eight percent growth
right th and third quarter. Yes, the first quarter was negative.
Second quarter recovered all of that and then some because
we grew up about We grew about three point eight
percent from GDP to US economy in that second quarter.
So slight negative first quarter, three point eight, second quarter,
three point eight tracking so far, third quarter, and economists
(08:52):
are probably right around to two percent for the fourth quarter.
So when you put that all together for the calendar
year twenty twenty five.
Speaker 5 (08:58):
It's decent.
Speaker 4 (09:00):
It's not bad. It's not you know, screaming, you know,
the world is, you know, just gangbusters. It's and it's
certainly not screaming that the world is coming to an end.
It screams slightly healthier than expected overall economy when you
look at what people thought heading into this calendar year.
Speaker 5 (09:16):
So that's just really shows you that, you know.
Speaker 4 (09:19):
Patient investors, discipline investors when you don't pay attention to
all of the noise that's out there and you really
focus on your own goals and where you need to be,
where what you're trying to do, you know, that is
what really matters.
Speaker 5 (09:31):
To making sure you avoid any sort of really bad decisions.
Speaker 6 (09:34):
So Andy, obviously there are there are different parts of
the market in the economy. They are going to be
impacted differently here. So if you if you're somebody who's
investing on your own and maybe you haven't looked at
your portfolio in a while, what specific sectors or maybe
regions are most exposed if the shutdown drags on it
We think it like defense contractors or small businesses that
rely on federal contracts that kind of thing what comes
to mind for.
Speaker 4 (09:54):
You, So like for just a worker or from an
investor expert, from an investment standpoint. Yeah, so when you
look at you can look at at the different sectors
that you know, the you know, from a corporate standpoint,
I mean, they're all going to be hanging in there.
Speaker 5 (10:10):
It's really just more you're i'll.
Speaker 4 (10:11):
Call it your tertiary, uh, you know, fallout. So let's
just say you happen to have a bay Oel shop
in Washington.
Speaker 1 (10:19):
D C.
Speaker 4 (10:19):
You probably not doing too well right now with a
lot of the furloughed workers going on. But when you
look more bigger picture, when you look at the corporate profits,
the corporate earnings from you know, these large caps and
even small cap stocks, they are handling this just fine.
It's more about whether or not there is a prolonged
impact from the government's shutdown that affects corporate profits. And
(10:42):
history suggests that all we really normally see from shutdowns
is a lot of anxiety on on Main Street and
a lot of cautiousness in the news media. But when
you look at Wall Street, you know it's done all right.
You haven't really seen any sort of you know, major
negative reactions, and we haven't seen them on this. I mean,
we're posting rec highs, you know, very very recently, and
(11:02):
that suggests that Wall Street is looking through this and
doesn't really see a material impact on the economy.
Speaker 2 (11:08):
Andy, speaking of earnings, we've got all the bank earnings
starting to come out next week, you know in earnest
and some hot news here locally, fifth Third Bank acquiring
Comerica Bank this morning to create the ninth largest bank
in the United States. Uh, it looks like M and
A activity is starting to pick up in the financial space.
(11:29):
Is this a precursor for really healthy bank earnings coming
out next week?
Speaker 3 (11:34):
What? What? What does your crystal ball tell you?
Speaker 4 (11:38):
Well, I don't know if this one acquisition. With kudos
to to Fifth Third on that, I don't think this
one act is acquisition, is anything where we can say
this is a precursor or one thing, you.
Speaker 5 (11:49):
Know, positive or negative.
Speaker 4 (11:51):
I mean when you look at just a big picture,
I mean, corporate profits have.
Speaker 5 (11:54):
Been just really good.
Speaker 4 (11:55):
I mean the past you know, basically the past two years,
we've seen either high single digits or double digit earning growth.
When I say earnings growth, I'm talking about like year
over year earnings growth. So now when we head into
this next period coming up, you know, just like you
were asking here a second ago, Bob, what Wall Street
(12:16):
is expecting right now is about a seven percent year
of year growth rate. So comparing Q three earnings to
Q three twenty twenty five to Q three earnings twenty
twenty four, we're looking at seven percent. What you usually see, though,
in reality, is that the companies beat that by a
handful percentage points. So I would not be shocked whatsoever
(12:37):
if we once again see double digit earning growth. And
that's really what drives markets. And that's why you got
to put that political noise aside and focus on earnings
and profits, because if you're an investor in the stock market,
you're an investor in stocks.
Speaker 5 (12:48):
And stocks do well when they make more money, and
that's what we're seeing.
Speaker 3 (12:52):
Sounds good to me, all right?
Speaker 2 (12:53):
Coming up next, y, investing in the S and P
five hundred instead of throwing all your eggs in just
the mag magnificent seven will pay down the road, or
it should. You're listening to Simply Money, presented by Allworth
Financial on fifty five KRC the talk station.
Speaker 1 (13:11):
Yes he's a fifty five k available everywhere with the iHeartRadio.
Speaker 8 (13:16):
App now number one for podcasting fifty five KRC an
iHeartRadio station. Allworth Financial a registered investment advisory firm. Any
ideas presented during this program are not intended to provide
specific financial advice. You should consult your own financial advisor,
tax consultant or estate planning attorney to conduct your own
(13:36):
due diligence.
Speaker 2 (13:40):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Is gold really
the safe haven it's made out to be? Should you
consider structured notes for protection or answering real questions from
investors like you? Straight ahead at six forty three. They
have been called the darlings of the stock market for
(14:01):
a couple of years now, the so called Magnificent seven Amazon, Alphabet, Navidia, Tesla, Meta, Microsoft,
and Apple. But the landscape landscape could be changing. Brian,
give us some updated data. I know these Mags seven
companies make up thirty six percent now of the S
and p's total market capitalization. But the gains dry, the
(14:25):
gains that are coming this year are moving around a
little bit, and that bodes well, for the whole concept
of diversification.
Speaker 7 (14:33):
Yeah, that's why we talk about it all the time,
isn't it.
Speaker 6 (14:35):
So Yeah, the reason this is important is because the
S and P five hundred may be a little bit
more complicated than lots of people assume.
Speaker 7 (14:41):
Most people think, okay, that that's an index. I get it.
Speaker 6 (14:43):
It's just a group of stocks that we've declared, we've
collectively as a society declared as the United States Stock Market.
Well it's not quite that simple because that assumes that
all five hundred stocks have an equal weighting within that index,
and that's not the case with the S and P
five hundred. The thing that crawls across your TV screen
at the end of every day is capitalization weighted. What
that means is the bigger the company, the more of
(15:05):
the index it makes up. So that's what Bob meant
when he said that the Magnificent seven, which by the way,
that's Amazon, Alphabet which is Google, Nvidia, Tesla Meta which
is Facebook, Microsoft, and Apple.
Speaker 7 (15:16):
That's the magnificent seven stocks.
Speaker 6 (15:18):
They make up more than a third of the S
and P five hundred, even though they are only seven
out of those five hundred companies. So that's why it
drives the S and P five hundred mostly does what
they do, but those seven aren't driving the S and
P five hundreds gains the way they did in twenty
three and twenty four. In the past, they've been capable
of adding about five trillion dollars in market value every
year on average, but they've only managed three point one
(15:41):
trillion in market cap gains for the first three quarters
of twenty twenty five, so not nearly what they have
done in the past. That's coming from the Dow Jones organization.
That's still a massive presence in the market, but it
does suggest that their momentum might be dropping off just
a bit.
Speaker 3 (15:57):
Yeah.
Speaker 2 (15:57):
In other words, new darlings have emerged this year, and
this is how it always works over the longer term.
Speaker 3 (16:04):
Brian.
Speaker 2 (16:04):
For example, Broadcom. Most people have heard of Broadcom, but
it gets very little, you know, publicity or headlines. But
Broadcon this year has in a lot of chip stocks
have muscled its way to become the fourth biggest contributor
to the S ANDP in terms of market capitalization this year,
and their return has outpaced Meta, Tesla, Amazon and Apple,
(16:26):
and then don't forget about Oracle, and Pallanteer Technologies. They've
also cracked the top ten companies with the largest market
cap gain so far in twenty twenty five, and that's
according to dal Jones Market Data.
Speaker 3 (16:39):
So you know, this works the same way all the time.
Speaker 2 (16:44):
Over the longer term, people tend to have recency bias,
and they pile in and overallocate to things that have
done super super well over the last one two or
three years, and they get underdiversified, over concentrated, and they
forget about these other companies that by the time you've
actually heard of them and heard about their gains, you know,
(17:06):
the proverbial horse has left the barn and you missed
out if you're not fully diversified.
Speaker 6 (17:12):
Yeah, it used to be that those seven magnificent seven
of those magnificent seven stocks where again, like we said,
driving the market, and some of them still are. We're
not implying that there's no growth here. So Nvidia, Alphabet, Microsoft,
and Facebook are up anywhere from twenty to forty percent. However, Amazon, Apple,
and Tesla, Now those are three stocks that we haven't
thought twice about for decades now because they've been driving
(17:32):
the market. But those three are stumbling back behind, and
that is opening opportunities for those companies that Bob just
mentioned because we are hitting a point of the cycle
where investors are going, hey, these companies are great. However,
haven't heard much new or innovative out of Amazon or
Apple or Tesla, and they seem to have be coming
up with more competition than they used to have. So again,
(17:53):
the Oracle is not a newcomer to the overall investment scene.
Oracle has been, you know, ever since technology became a
thing about thirty years ago.
Speaker 7 (18:00):
Oracle has been in and out of it.
Speaker 6 (18:02):
But because they came up with their their three hundred
billion dollar cloud computing deal with open ai, that's that's
chatch GPT by the way, in that deal committed open
AAI to purchase computing power from Oracle for about five
years starting in twenty twenty seven. All of a sudden,
Oracles is on its i don't know, fifth or sixth
wave over the past thirty years of being a darling
(18:23):
of the industry. So therefore, these magnificent seven stocks are great,
But there could be a different number and a different
Cutz name for a different group of stocks here coming
up soon.
Speaker 2 (18:32):
Yeah, So whether you're somebody that has had tremendous success
owning some of these mags seven individual stocks, or someone
with just dry powder on the sidelines wondering what to do,
how to get involved in the stock market. Just keep
stories and fundamental data like this in mind, because if
you just follow the headlines and you follow the talking
(18:54):
heads on CNBC or whomever, you're likely to not diversify
soon or not get into the market soon enough in
some of these emerging upcoming winners, because you just pay
attention to what's being blabbed about on the news every night, yep.
Speaker 6 (19:13):
And so therefore it always comes back to let's make
sure we know why we're investing in what we own, right,
If we're just chasing performance, well that's eventually going to
blow up in your face. Understand why you have this
particular pile of money, whichever dollars you're using. Why are
you heavily invested in these companies if that's what you own.
Is it because of your buzz from the headlines you're
trying to keep up with? Is it a keeping up
with the Joneses kind of thing or fear of missing out?
(19:34):
Did you actually look at the fundamentals or are you
simply saying, well, this is the ones that have run
the most. Therefore I'll just continue to own them. But
most importantly, just understand what you're trying to accomplish. Is
this truly a growth portion of your portfolio or are
you simply chasing performance?
Speaker 2 (19:50):
Here's the all Worth advice. Diversification cannot only protect you
from major downturns, it also helps you capture those future winners.
Coming up next to families with the same wealth but
completely different outcomes, We'll show you how smart planning changes everything.
You're listening to Simply Money, presented by all Worth Financial
(20:11):
on fifty five KRC The Talk station.
Speaker 1 (20:15):
What's happening President Trump telling Hamas except peace deal by
Sunday or face all hell like no one has ever
seen before. Checking in each hour, it's likely going to
be in the thousands.
Speaker 2 (20:24):
The Trump administration has been firing since January twenty.
Speaker 1 (20:27):
And fifty five KRS The Talk see RC an iHeartRadio station.
Speaker 2 (20:36):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Tonight, we want
to discuss how two families with the same wealth can
end up with completely different outcomes you know, years down
the road, just based on the planning choices they make.
And we'll call this segment two Paths, two outcomes. We're
(20:59):
gonna give you some real world examples and you'll see
how small decisions today can make as much as a
six figure difference or more down the road. Brian, let's
get into it. Example number one, how you use your rmds,
require require minimum distributions and whether people do wroth conversions
(21:22):
or don't even discuss it, you know, to say nothing
of planning and planning accordingly and proactively.
Speaker 6 (21:28):
So let's put some names on these fake people, right, So,
Bob and Mary, they're both seventy two years old.
Speaker 7 (21:33):
These are fake people, of course, but these are situations.
Speaker 6 (21:35):
We deal with every day at all Worth when we're
putting flames and plans together for people, because everybody's got
decisions to make. So Bob and Mary seventy two years old,
they're retired, a couple million dollars across their traditional pre
tax iras.
Speaker 7 (21:46):
This is a very common situation. So there's two things
they can do.
Speaker 6 (21:49):
If they do nothing and just let life happen to
them and let the irs happen to them, then they're
gonna hit shortly in the next few years, they'll they'll
hit their required minimum distribution age, which basically means the
irs says, hey, the gravy train has come to a halt.
Speaker 7 (22:02):
No more tax deferred growth.
Speaker 6 (22:04):
It's time to start paying a little bit of taxes
on these distributions. So these required minimum distributions, and if
you want a ballpark number, take roughly four to five
percent of your of whatever your closing balance of your
IROA was the prior year. That is roughly what you
have to take out. That's not your taxation. That's what
you have to take out that therefore will be taxed.
(22:24):
So these required minimum distributions can and will push you
into higher tax brackets, which can also trigger bigger medicare
premium via something called IERMAMAA for those of you are
keeping score out there, and so you're probably gonna wind
up giving away more in taxes than you expected.
Speaker 7 (22:39):
That's the default plan.
Speaker 6 (22:40):
So that's Bob and Mary not not having any kind
of plan in place. Now, let's take another couple, let's
call them Mob and Berry. If they do a little
bit of planning same situation. Let's pretend that they had
started some ROTH conversions back in their mid sixties, just
a few years ago, maybe just fifty thousand dollars a year,
steadily moving money from a pre tax.
Speaker 7 (22:59):
Eye to a ROTH.
Speaker 6 (23:01):
Now depending on their tax bracket, you know, so they
might let's pretend they're only maybe in a twenty five
percent tax bracket. Well, then they're going to pay you know,
say twenty percent federal and five percent state and their
writing checks voluntarily to that. So that's going to be
something like twelve thousand dollars per year. That's the sacrifice
they're making. However, by the time they hit URMD age,
those requirement of distributions are much smaller, and they can
(23:23):
also use qualified charitable distributions to replace any giving that
they're doing, which makes it a lot more tax efficient
and more of their money winds up in tax free accounts.
On the ROS side, the longest of long term benefits
there too, is that their kids are going to inherit
those dollars whatever's left.
Speaker 7 (23:39):
In those ROTH iras tax free.
Speaker 6 (23:41):
And while they have those inherited iras, they've got ten
years to continue to let that tax free growth go
after the death of mom and death, So definitely something
to consider there all.
Speaker 3 (23:52):
Right, Example number two.
Speaker 2 (23:53):
We want to highlight tonight concentrated stock positions. So our
next hypothetical person, Steve. Steve worked for a big tech
company and over the years his company stock position grew
to over eight hundred thousand dollars, almost half of his
one point eight million dollar total portfolio. Patha that Steve
(24:14):
could have taken no planning. He just hangs on because
he doesn't want to pay any capital gains taxes. And
then lo and behold, the stock takes a forty percent hit,
either in a market downturn or in a downward earning surprise. Overnight,
his retirement nest Eggs shrinks by hundreds of thousands of dollars.
Speaker 6 (24:34):
Yeah, and not having a plan is a plan. You're
just probably not gonna like it, all right.
Speaker 3 (24:39):
With planning, Steve takes a different route.
Speaker 2 (24:42):
He uses a strategy like charitable giving donor advice fund,
you know, chait remainder trust, just giving away, slicing off
some appreciated stock every year, to say nothing of using
a collarede strategy or a direct indexing strategy, something where
he has a plan to responsible, we maybe pay a
little bit of capital gains taxes along with some charitable
(25:04):
strategies and just slowly diversify that position, reduce his downside risk,
get his portfolio better diversified, and by doing so he
has the same starting point, but instead of watching things
crash and take his potential future with it, he's diversified
and protected. All right, Brian walk us through example number three,
(25:26):
the estate plan that's out of date.
Speaker 6 (25:29):
Right, and this is very common because the state plans
are no fun to talk about. They seem scary, and
they force us to talk about things that maybe we
don't necessarily want to.
Speaker 7 (25:38):
And so let's still use the example of John and Susan.
Speaker 6 (25:41):
So they've got about two and a half million dollars
and they haven't looked at their state plan since two
thousand and eight, back when the market crashed, and that
got everybody's attention.
Speaker 7 (25:47):
So what happens. How do we get surprised here?
Speaker 6 (25:50):
Well, if John passes away suddenly and Susan has to
sort throughout these outdated wills and old beneficiary designations, the
kids are going to wind up having to go through probate,
paying legal fees for that and fighting over unclear instructions.
Speaker 7 (26:02):
So probate is the easiest thing in the world to avoid.
Speaker 6 (26:04):
Just make sure everything that can have a best beneficiary
listed on it does and financial accounts are the easiest
things to do. You're gonna sign one piece of paper
that says, here's my three kids, and they get a
third of it each, and that's the end of it.
That you have wiped out probate for that specific account.
So but anyway, so this causes a lot of stress
and costs and delays, all because nobody took a look
at this stuff. So let's look at the the alternative
(26:26):
with a little bit of planning. You know, this is
the same couple, but let's pretend that they did sit
down once every couple of years or so and just
make sure that nothing has really changed. Their wills, trust
beneficiary designations are all lined up in place. I've got
an email in my inbox today from somebody who had
a heart attack figuratively speaking over the weekend, wondering this
exact thing.
Speaker 7 (26:45):
Is everything in order?
Speaker 6 (26:46):
And it is, and I haven't responded yet, but that's
what they're going to hear, that they've got things in place.
But I'm glad that the thought is occurring to them
to double check. So then when we do have that
death in the family, it's a very sad situation for
the family, of course, but the transition goes smoothly. So
the difference between the two no probate, no fighting, and
no guessing. It was all laid out in advance. The
(27:07):
family stays intact and the money transfers efficiently.
Speaker 3 (27:10):
All right.
Speaker 2 (27:10):
The last example we want to touch on tonight, the
too much cash on the sideline scenario. Let's talk about Linda.
She and her husband have about two million dollars save,
but nearly four hundred thousand dollars of it is parked
in cash, earning next to nothing in the way of
interest or.
Speaker 3 (27:27):
Return, no planning at all. They feel safe keeping into
the bank.
Speaker 2 (27:32):
But over the next ten years, inflation let's say averages
three percent on average every year, believe it or not,
that four hundred thousand dollars in cash loses about one
hundred thousand dollars or twenty five percent of its purchasing power.
Speaker 3 (27:47):
Again, these people.
Speaker 2 (27:48):
Feel great, but they're actually moving backwards in terms of
what their heart earned assets can purchase. With planning and said,
Linda and her husband keep an emergency cash reserve. You know,
in cash where it belongs, but the rest is allocated
into a diversified portfolio, maybe just a mix of short
term bonds for stability and a little bit of stock
(28:10):
for growth. Ten years later, instead of losing ground to inflation,
that money has grown meaningfully and it's funding and keeping
up with their lifestyle needs. Here's the all Worth advice.
The difference between no planning and smart planning is often
six figures or more in terms of taxes, stress, or
(28:30):
lost opportunities. If you recognize yourself in any of these examples,
that's a sign to maybe get proactive and perhaps sit
down with a good fiduciary advisor who can help you.
All Right, buzzwords like gold and direct indexing sounds smart,
but are they. We're answering your questions. Coming up next,
(28:51):
you're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station.
Speaker 1 (28:57):
A series of events. The most important events make for
eventful days happening every day. The political violence in this country.
You're seeing more and more events like this.
Speaker 3 (29:07):
This is a Trump shut day.
Speaker 1 (29:09):
Refusers, She's fired. In these eventful times, very serious times
all the time. It's time for action in any event.
We're following these events.
Speaker 5 (29:19):
On and off the field on the streets of our city.
Speaker 1 (29:21):
Check in, we'll check it out, checking into it fifty
five krs the talk station. More than a few of
our patients are welcome to here.
Speaker 7 (29:30):
I do think he is too old to run in
twenty twenty.
Speaker 1 (29:33):
Four, fifty five krs the talk station.
Speaker 2 (29:40):
You're listening to Simply Money present up by all Worth
Financial on Bob Sponseller along with Brian James. Do you
have a financial question you'd like for us to answer.
There is a red button you can click while you're
listening to the show right on the iHeart app. Simply
record your question and it will come straight to us.
All right, Jeff and fort Wright leads us off tonight
in Jeff says, we've harvested some tax losses last year,
(30:04):
but I'm not sure we did it right. How do
you make tax loss harvesting actually work without just churning
your investments?
Speaker 7 (30:12):
All right?
Speaker 6 (30:12):
So this is a great question, it really is, and
it's great to hear people being proactive and just using
the tax code as it's designed.
Speaker 7 (30:19):
Good on you, Jeff.
Speaker 6 (30:20):
All right, So for the uninitiated, let's talk about what
this is so tax loss harvesting one oh one. Obviously,
when we buy something and it goes up, most people
know that if this is outside of a tax advantaged account,
then we're gonna pick capital gains taxes on it. Well,
the opposite is true too. You get to take deductions
if you take a loss. And again this is money
outside of an IRA or WROTH or four oh one
K or whatever. When an investment is down, you can
(30:42):
sell it to actually incur the loss and use that
to offset capital gains elsewhere, or up to three thousand
dollars can just be straight up deducted off your ordinary income.
That's what Jeff is talking about with tax loss harvesting here,
and so what.
Speaker 7 (30:56):
We're talking about.
Speaker 6 (30:57):
One thing you got to avoid here is though something
called the walk sale trap. You can't simply sell it
because a lot of people just heard, Hey, I just
bought something and it's down. I'll sell it and buy
it right back within ten minutes and then everything will
be wonderful.
Speaker 7 (31:08):
Can't do that.
Speaker 6 (31:09):
You've got to stay out of a security with for
thirty days. And this is across accounts in technically your
household too, if you're filing jointly and so forth. So
but again let's get specific to Jeff's question here. Churning
is not the goal here. Tax loss harvesting is going
to be most efficient as a strategic, infrequent move, not
constantly jumping in and out of things, which can create
higher transaction costs, mess up your overall asset allocation, make
(31:31):
it really hard to keep track of your record. So
be thinking long term tax efficiency. Don't don't eat or
don't incur every last tiny little loss and stack them
all up. That's going to consume a lot of time
and energy and probably dollars too. Look at your larger
positions and you might even confirm you might even combine
this with roth conversions. If you've got significant losses you
can take.
Speaker 7 (31:51):
That's great.
Speaker 6 (31:52):
Look at your calculate your tax savings that you're going
to generate, and then use those to offset some some
significant roth conversions. Now you're kind of putting your tax
planning on steroids, So hope that helps you. Jeff, there's
little nitrous oxide there for your financial planning and tax
planning needs.
Speaker 3 (32:07):
All right.
Speaker 6 (32:08):
Mark and Lovelin says they've got about two million dollars invested.
But he's started to worry about inflation eating away at
his returns. He's apparently aware of Treasury inflation protected securities,
so he's asking and beyond those tips, what strategies actually
hedge against inflation?
Speaker 2 (32:22):
Bob well Mark, I have to assume you know from
your question that you're a fairly conservative investor, and there
is nothing wrong with that as long as all your
long term financial goals are being met, and so I
think you're smart in at least raising the potential issue
of inflation eroding your return.
Speaker 3 (32:41):
So what do we do about that?
Speaker 2 (32:43):
How do we stay relatively conservative but get enough growth
in the portfolio to outpace inflation. A couple of potential
strategies to think about and maybe discussed with a good
fiduciary advisor are structured notes and a buffered strategy buffer
ETF strategy. And in both of those strategies you can
get some exposure to the stock market, which is going
(33:05):
to outpace inflation over the long term, always has, probably
always will. But with the stock market, as I'm sure
you're aware, comes some short term potential volatility. So using
structured notes and buffer at ETFs, we can have some
protection in place on the front end to protect some
(33:25):
or even all of the downside risk.
Speaker 3 (33:28):
Along with that protection, some.
Speaker 2 (33:30):
Of your upside gets capped, but again, you got a
good chance of out pacing inflation with those strategies. It
doesn't sound like you're looking for all the upside in
the stock market, just enough to make sure your overall
portfolio keeps pace with inflation and protects your purchasing power.
So those are two strategies that I consider and have
(33:50):
somebody walk you through and see if it's a good
fit for your situation. All right, let's go to Tim
and Mason, and speaking of structured notes, Tim says, our
advisor just mentioned structured notes with downside buffers. How do
you evaluate whether they're worth the complexity compared to just
holding stocks and bonds? Brian, this gives you a chance
(34:13):
to just shoot take shots at everything I just said.
Speaker 6 (34:16):
Well, it's kind of funny that these questions are kind
of related. Tim and Mark in Loveland and Mason maybe
they spend some time over at the monkey bar chatting
with all this stuff out.
Speaker 7 (34:25):
So anyway, so let's talk about structured notes.
Speaker 6 (34:28):
Structured notes are basically a custom built investment there usually
issued by big banks, and they'll they'll tie returns to
somewhat arbitrarily to an index, they come with a downside buffer.
In other words, they have a floor your investments can
only go down so far. But that also means there's
a ceiling too. So you might be offered a note
that says it'll pay up to twelve percent if the
s and P arises, but it might protect you against
(34:50):
the first fifteen percent of losses. If the market drops
more than that, then then you have kind of a
buffer there. So the buffer can sound like a say net,
but you're really trading simplicity and liquidity for that protection.
This is something you're you generally gonna want to commit
to for two to five years. If you sell early,
the pricing might not be, you know, very opaque and
not in your favor. So complexity means you have less
(35:13):
control over these. But at the same time, if you
want to participate in the upside of the market, and
but you're you're a little spooked by the downside, this
might be something to consider. At the same time, if
you are somebody who just doesn't worry about the headlines,
and and you're willing to let things roll, and you
realize that the market has recovered each and every time
it has it has dropped, including the most recent drops.
Because we are sitting here now at an all time
(35:34):
high once again, then you might not need these things.
I think they're good in certain situations, but if you
believe in the long term veracity of the market, then
maybe not something to lose too much sleep about. So
let's move on to one more so, Chris and Montgomery
says he keeps hearing about gold being used as a
safe haven. He's wondering if you should have a slice
of it in his portfolio to offset some of the
ups and downs.
Speaker 7 (35:54):
And if so, what's the smartest way to do that?
Speaker 2 (35:56):
Bob, Well, Chris, in the short amount of time we
have to deal with this question. It you know my
answer it depends. The thing I always ask people when
they come and ask me about gold is why do
you want to hold it? And depending on what people's
answers are. You know, some people think we're headed toward
armageddon where you know, ATM machines won't work, or the
(36:17):
Internet goes down or whatever. Versus people that just want
to hedge against inflation. That's going to dictate in what
form you own gold.
Speaker 3 (36:26):
So it's a loaded question, very difficult topic.
Speaker 2 (36:30):
I see nothing wrong with holding gold as an inflation hedge.
It has certainly worked out well this year. Just be
clear with yourself and hopefully with your advisor if you
have one, on what the purpose of owning gold is
for your specific situation.
Speaker 3 (36:47):
All Right.
Speaker 2 (36:47):
If FED chair Jerome Pale a swiftye, he may want
to consider it as he factors in not getting data
that he needs to have to make a decision on
interest rates.
Speaker 3 (36:58):
We'll explain next.
Speaker 2 (36:59):
You're listening to Simply Money presented by all Worth Financial
on fifty five KRC the talk station.
Speaker 1 (37:06):
It's become a big story. Big things are happening. We
are in a government shutdown, a big fight in Congress.
It's some might even say huge, huge news.
Speaker 6 (37:16):
And to keep up with government layoffs and continuing negotiation.
Speaker 1 (37:19):
You'll need massive amounts of information.
Speaker 6 (37:22):
Massive the impact that's going to have on every Americans.
Speaker 1 (37:25):
All funded by a healthcare fighter. Again for the latest
on every big store from very big things. This is
no small matter. Fifty five krs the talk station.
Speaker 7 (37:36):
This absolutely reliable information and of course not just one
sided view.
Speaker 2 (37:41):
News that affects you at the top end to bottom
of the hour fifty five krs.
Speaker 1 (37:45):
The talk station.
Speaker 2 (37:52):
You're listening to simply Money, presented by all Worth Financial
on Bob spon Seller along with Brian James. You might
think the Federal Reserve chair has little to do with
pop music, but hear us out.
Speaker 3 (38:02):
Taylor Swift just dropped her twelfth.
Speaker 2 (38:05):
Studio album called the Life of a show Girl, and
Brian I saw she sold a boatload of movie tickets
over the weekend too. And that's what seems like just
a headline for music blogs could actually carry signals for
the US economy, Brian, I say, if we are not
getting employment data, uh, maybe the Fed just should just
(38:27):
track the economic impact of Taylor Swift in deciding whether
to cut interest rates later this month.
Speaker 7 (38:34):
Well, Bob, let's not bury the lead here.
Speaker 6 (38:36):
I think all of our loyal listeners want to know
exactly what time you got in line for your Life
of a Showgirl out. Oh, give the people what they want, Bob,
All right, so we all remember the eras I did not.
Speaker 3 (38:47):
I did not participate, nor will I ever. How about
that I have. I have a deep respect for her though.
Speaker 2 (38:54):
She's wonderful entertainer and an even better business person. So
I respect, you know, I respect the world out of her.
Really all choking.
Speaker 6 (39:02):
Aside, I think you have an alter ego that tears
up when these things happen.
Speaker 7 (39:06):
But anyway, we all remember the Eras tour.
Speaker 6 (39:08):
It was a juggernaut, one hundred and fifty shows across
five continents, and we spoke about it here in these airways,
and yes, an immense amount of respect for this woman
who has created basically almost an industry of a different
type of concert experience. So analysts estimate that generated about
five billion dollars in US custom consumer spending hotels, restaurants, flights,
retail and from people hanging around cities that have the
(39:31):
concerts and so forth. So if this new one leads
to another tour like that, that basically makes it a
stimulus event, which is why we're talking about it on
a financial radio show here, because it'll mobilize disposable income,
it gets local economies moving, and this is the kind
of stuff that does get the attention of something like
the Federal Reserve because it will move the needle and
we can use, especially when we seem to be lacking
(39:53):
data from our traditional sources. People's willingness to spend money
on something that historically has been very popular, can an
indicator in and of itself so on its own that
don't look for this. You know, the album's release did
not move the stock markets. We're not looking for anything
like that. This would be, you know, a bigger, longer
term type of a thing to look for here.
Speaker 2 (40:12):
What will what will potentially move the stock market is
how much Life of a Show Girl merchandise you've already purchased, Brian,
how much? How much of it do you own? And
I see you have a beautiful T shirt on today.
That's what's going to move the needle.
Speaker 5 (40:28):
Right.
Speaker 7 (40:28):
You're making me tier up now.
Speaker 6 (40:29):
And I had to clear out my closet to make
room for all my new merch and I just can't
I can't wait. I'll wear it in the office today
and I'll do a little hatwalk thing down the hallway
and you can you can critique me.
Speaker 3 (40:39):
Awesome, Thanks for listening. Tune in tomorrow and.
Speaker 2 (40:42):
We'll talk about the four letter word that's draining your retirement.
And know it's not what you say when you open
your monthly brokerage statement. You've been listening to Simply Money
presented by all Worth Financial on fifty five KRC the
Talk station.
Speaker 1 (40:57):
Something is happening. It's time to end held experiment of
open borders. Your countries are going to hell.
Speaker 4 (41:04):
Something in our country, Charlie Kirk, I forgive him.
Speaker 1 (41:07):
Antifa across this country would be Trump assess and Ryan
Ruth guilty on all five charges. Something in our world.
Speaker 2 (41:13):
NATO countries should shoot down Russian aircraft sky in all
day they enter their airspace.
Speaker 1 (41:18):
It's always something.
Speaker 4 (41:20):
Yes, I do.
Speaker 1 (41:20):
It's a very important moment. Fifty five KRC, The Talk
Station
Simply Money News
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.