October 14, 2025 • 41 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian talk with Allworth’s Chief Investment Officer Andy Stout about what caused Friday’s market sell-off — from tariff saber-rattling to China’s rare earth restrictions — and why none of it is truly “new.” Andy shares what to watch in the week ahead, including CPI data, earnings season, and a government shutdown. Plus, why separate portfolios in marriage might help or hurt your financial future, the behavioral traps of sudden wealth, and what to know before betting on Wall Street’s latest game: prediction markets.
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Transcript
Episode Transcript
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Speaker 1 (00:00):
You got a lot today, do you?
Speaker 2 (00:02):
I do got to put up these Halloween decorations. Will
It's time to do it, dude? The rest I do
need to know.
Speaker 3 (00:07):
On fifty five KRC the talk station tonight, New Tariff
Talk rattles the markets. You're listening to Simply Money, presented
by all Worth Financial on Bob Sponseller along with Brian James. Well,
everything had been pretty much smooth sailing for months now,
(00:31):
lots of green nearly every day, and then Friday happened. Brian,
you and I have been talking about people pulling profits
off the table, filling up their emergency fund, all the
important and responsible things that we're supposed to do, and
Friday's volatility is the reason why. But all Worst Chief
Investment Officer Andy Stout joins us tonight. Andy walk us
(00:55):
through what are not really new tariff threats. I mean,
President truck has been talking about this for a while,
but I guess no one thought he would actually do it,
and he kind of lowered the boom on Friday midday.
Speaker 4 (01:09):
Well yeah, he lowered the boom. However, the boom didn't
really quite land at least yet. So when you think
about what the threat was and what was going on
on Friday when he saw this massive stock market sell off.
What you really saw was the retaliation from President Trump
(01:29):
in regards to something that China did where they started
to talk about how they were going to essentially add
new export restrictions on.
Speaker 3 (01:38):
These rare earth minerals.
Speaker 4 (01:40):
Now rare earth minerals sound fancy, but it's really just
things that I might be using electronics, think like AI infrastructure.
It's also using a lot of defense areas, like you
know weapons as an example. Now this is something that's
not really new. China put some restrictions back in April.
Export restrict is on seven. There's fifteen rare earth minerals
(02:02):
that did on seven. They added five more. So now
twelve of the fifteen half some export restrictions. And this
just means they need to get some permission before exporting
it out, but it certainly makes it more challenging. So
what President Trump did in retaliation was essentially threatened one
hundred percent tariffs starting on November first. Next say, he threatened.
That's why I mentioned that the boom hasn't quiet landed.
But also keep in mind that President Trump and Chinese
(02:26):
President Jijiping are scheduled to meet later this month. In Korea,
the meetings are somewhere around either October thirty first or
November first. It's not necessarily set in stone yet, but
that's when they're scheduled to meet. So not really thinking
that this is anything at this time more than a
grand bargaining posturing.
Speaker 5 (02:48):
So any we've seen these kinds of things before, this
feels to me like just a bunch more saber rattling
because whenever we see these kinds of conflicts, and like
you said, we saw this back in April too, it
just seems like everybody's gonna threaten, take their ball and
go home, right up until the point where they don't
and we come to some kind of conclusion. Seems like
you can see this over hundreds of years worth of
(03:08):
history of trade negotiations. Is there anything going on here
really that we haven't seen before?
Speaker 3 (03:14):
Not really.
Speaker 4 (03:14):
I mean when you think about just market cycles and
how markets work, it really just follows your typical pattern.
You see things going smoothly, then all of a sudden
there is a catalyst. The only thing that really changes
too much from period to period is what that catalyst is.
So I think what's really critical for investors is to
understand how markets work. Understand the cycles of markets. If
(03:38):
you're if you know ahead of time, yeah, markets go
up over a period of time. Yes, there are going
to be these ten percent, twenty percent, even thirty percent pullbacks.
But when you look at the broad cycle, what you
see is how it works, and you start to understand that,
then that allows you to avoid panic selling because what
you see, you see these cadalines and you get freaked out,
(03:59):
and that's not something that is really conducive to making
smart decisions. When your emotions takeover, that's when bad things happen.
Because if you think about it, you know, one thing
we were talking about before the show was how you
look back over the past just ten years, but we've
seen about eight instances of you know, ten percent market pullbacks,
So it's common, it happens, and if you if you
(04:22):
reacted to every single one of those, you'd be in
a really bad position because you end up what you
usually would probably end up doing is essentially not buying
low and selling high, but essentially buying high and selling low,
which is the exact wrong thing you want to do.
And here's the one last thing to keep in mind,
we're only like three percent off of market highs. I mean,
let's just kind of put everything into into perspective, take
(04:44):
a step back, calm down. It's not as if you
know the world's coming to it, and it's not like,
you know, we're where the Bengals are, where they're on
their fifth quarterback of the year. And fortunately it looked
a little bit better on Sunday with Flago behind the helm.
Still didn't quite you know, finish it. Uh, but you
know we're not there yet, and you know, understanding how
(05:05):
things work, and that's really critical.
Speaker 3 (05:08):
All right, Andy, I was watching the market Friday afternoon.
I always like to watch the close of the market
rather than the open, and we did pretty much close
at session lows on Friday, which kind of surprised me
because any of this, you know, President Trump, you know,
Tara threatening stuff, has typically been a great buy the
dip kind of moment. Perhaps it didn't happen on Friday.
(05:30):
I'm just speculating here. I'd love to get your perspective
because we got two other things going on right now simultaneously.
One is a government shut down, which is entering its
second week, and then also we're moving into earning season,
you know, in earnest beginning this week. Does that have
anything to do with the fact that people just weren't
interested in buying stocks on the dip on Friday afternoon.
Speaker 4 (05:53):
I think the reason, and this is just anybody's speculation,
but my speculation for the reason clou closing near the
the lows on Friday was people people Wall Street traders
didn't want to carry risk into the weekend. So you
got a long period of time and they don't want
to have that risk on the books because who knows
what could happen over the weekend. It's a long period
(06:13):
of stretch, and when you have this high level of uncertainty,
that's when they don't want to essentially have too much
on the book. So they were essentially selling some position
so they would be coming into the week essentially, you know,
free and clear, if you will. Now what we saw
on Sunday, though, is President Trump and some words from
j Vice President jadvanced as well, was that essentially walking
(06:35):
back those threats, right, you know, President Trump said on
his truth social that everything's going to be fine now.
President g it was just basically having a bad day,
if you will. So they walk that back, so not
too material and to your point, Bob, it does open
the door for future negotiations, which is a good thing.
(06:56):
But then there's also the things we all need to
look at, which is corporate earning season coming up, which
is the ongoing government shut down. So there's definitely some
other things that are moving right now.
Speaker 5 (07:08):
So Okay, what should we be excited about? What should
we be terrified about? Is there any reason that it's
time to panic?
Speaker 3 (07:14):
Andy? I always want to know when does the calendar
turn to panic day? Right?
Speaker 5 (07:17):
Shouldn't we be out there really just worried about the
end of the world and everybody going over the cliff?
Speaker 3 (07:21):
Are we there yet? Are we there yet? Are we
there yet? Well, we'll sarcasm there for you. Andy.
Speaker 4 (07:26):
Wow, this is the worst than driving my kids down
to Hilton Tout.
Speaker 3 (07:30):
Are we there yet? Are the area?
Speaker 2 (07:32):
Wow?
Speaker 3 (07:33):
No, we're not there yet.
Speaker 4 (07:36):
And you know, even when we do get there, it's
probably an opportunity in all honesty, because that's when you
see some really good values and that's where you know
you want to sell before you're there, Ryan, right, you
want to, But knowing what to sell and when to
sell is tricky because you know, as one of the
(07:57):
most legendary investors economists of all times. Cain's one said
markets can remain irrational longer than you can remain solvent,
So you know.
Speaker 3 (08:06):
Good luck timing that.
Speaker 4 (08:07):
I would suggest just you know, sticking with that trip
and you know, not you know, going over the cliff
with any sort of decision making. So are we there yet? No,
we're not there yet. But you know, some things to
watch this week. You do have the ongoing government shut down.
You do have that entering its second full week, doesn't
(08:29):
look like there's any real progress yet. And you know,
with some of the things that have occurred over the weekend,
it certainly suggests that, you know, this might drag out
a bit longer. You know, one thing that we haven't
been getting during this whole time is some very important
economic data releases. However, uh, we are going to get
(08:49):
the CPI data. The BLS, the Bureau of Labor Statistics,
recalled back its workforce so they could get the CPI
out for the month of September. And the reason for
that is that data is actually needed for the cost
of living adjustments to calculate the twenty twenty six Social
Security checks. So that's why they're doing that. On a
positive side note, that's really great news for the Federal
(09:10):
Reserve because that gives them a very important piece of
data heading into its end of month meeting. So that's
something that's I guess good ish if you want to
focus on that. Another thing that's good is the earning season.
So heading into earning season, what Wall Street's looking for
about seven percent a year over year growth, and what
we normally see is a beat rate of you know,
(09:33):
seventy five eighty percent of companies reporting better than expected earnings,
and that essentially allows that spread over what the preseason
estimate is to what we actually see of around maybe
two to five percent. So I want to be shocked
at all if we get a ten percent a year
over year earnings growth, which would be just another you know,
(09:53):
essentially you know, notch in the Wall Streets cap if
you will, where to get consistently strong earnings. And if
you think about what drives markets, what drives your returns,
what drives your ability to retire, it's companies making money
and that's what they keep doing.
Speaker 3 (10:12):
All right, Andy, I trust your recession scorecard that you
and your team put together way more than the Federal
Bureau of Labor Statistics. So that being said, any data,
I know, you guys collect data all the time and
you update that scorecard. Any changes over the last week,
good or bad, when you factor all the real data
(10:33):
out there into your recession scorecard, any changes over the
last week that we need to be made aware of. Yeah.
Speaker 4 (10:40):
One of the nice things about, you know, some of
the indicators we look at is that they're not all
based on data from the government. We're looking at some
real time market indicators that we're looking at a few other.
Speaker 3 (10:52):
Factors. You know.
Speaker 4 (10:53):
With that said, you know, there are certainly some reliance
on data coming from the government, So a little bit
on pause for some of those indicators. That said, when
you look at just the data as a whole, including
some of the market related data, you know, we're still
I've called it medium risk. So when we look out
over the next six to nine months, yeah, not high risk,
(11:15):
certainly not a non zero riscovery session.
Speaker 3 (11:17):
But when you when you say, sorry to interrupt, no,
sorry to interrupting, but when you say medium risk, talk
to us about what that means in terms of data.
And here here's the context of my question. We're I
think we're going to get good earnings this quarter. The
Fed is starting to lower interest rates. Inflation seems to
be you know, under control. Uh, what are the risks
(11:37):
out there in the economy, you know, as you pull
you know, take all the all the biases and whatever aside.
What are the risks to the economy right now that
maybe we're not thinking about.
Speaker 4 (11:49):
So first off, to answer your first question, I say
medium risk. I would say there's less than a fifty
percent chance that we see a recession in the next
six to nine months now when we look you know,
the different factors out there that are concerning you know,
certainly the labor market has shown some cracks here recently
with the data coming from the government, which is now
(12:11):
on pause because we haven't really seen that, but the
payrolls from employers before the shutdown showed someone like the
weakest stretch essentially since since COVID we look at like
a four month period, the last four months it's been shaky.
So what that suggests from the federal reserves perspective, and
this is why they are cutting rates, is that the
(12:33):
you can't look at the labor market as coming from
a position of strength, but more a position of fragility,
and that's really going to allow them to cut race
despite inflation being higher than where it is. So you
see some weakness there. You see some weakness. The housing
markets you know, not strong, Manufacturing isn't strong. These are
areas that continue to i'll call it stagnate more than
(12:55):
anything else. And when you look at it all together,
you know it's certainly some stagnation across in some areas,
but there's strength in other areas. And that's like consumer
spending continues to be strong, and certainly part of that's
due to your top income earners. They represent forty nine
point two percent of total consumer spending, and where the
market's going higher, that just emboldens the upper cohort essentially
(13:17):
to keep spending because they have a large portion. They
are well tied up into the stock market, and they
feel better and they're going to keep spending and that's
going to keep the economy growing. So it's good in
the near term, but we would like to see a
little bit more broad based growth.
Speaker 3 (13:28):
And all honesty, all right, good stuff, Andy, thanks as
always for joining us tonight. Here's the all Worth Advice
Market swings. Ah, they come and go but they shouldn't
change your long term investment strategy and your overall financial plan.
New research suggests more couples are keeping their portfolios separate.
Is that independence or a warning sign? We'll explore that
(13:52):
coming up next. You're listening to Simply Money, presented by
all Worth Financial on fifty five KRC the talk station.
Speaker 4 (14:00):
Day.
Speaker 3 (14:00):
This guy's are calm, the guns are silent in a
new Middle East.
Speaker 2 (14:03):
You are the President of peace. The day's news hostages
being released. Who's going to be the International Security forces?
On Open the Government, Day thirteen of the shutdown, fifty
five KRC, the talk station.
Speaker 1 (14:15):
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
a state planning attorney to conduct your own due diligence.
Speaker 3 (14:35):
You're listening to Simply Money, presented a Allworth Financial on
Bob sponseller along with Brian James. Pay off the house
or let the low rate ride? What if your spouse
totally disagrees and does paying off debt always make you
feel richer? Or could it cost you in the long run,
we'll sort all that stuff out straight ahead. At six
(14:55):
forty three. Well, it used to be when you got
married you e merged everything, the dishes, the dog, and
the money. But that's changing, Brian. According to a new
study from Schwab and Fidelity have come out with what
separate studies on this issue, and I see an anecdotally
in some of the client's idea with this is interesting stuff.
Speaker 5 (15:18):
Yeah, it's a different approach. You don't have to have
all your money smushed together. Some people do prefer to, uh,
to kind of keep things separate. So we're we're not
talking about hiding assets from each other or secret offshore
accounts those kinds of things. We're talking about people that
did generally communicate and there aren't really any problems going on,
just kind of prefer to have their own finances independent
(15:38):
of each other. You could kind of call this a
pre nup for retirement if you will.
Speaker 2 (15:43):
Uh.
Speaker 5 (15:43):
The things that does have to stay the same though,
is the goals, because at the end of the day,
you're sharing your you're sharing a household and that has
its own expenses, and presumably there's some kind of connection
between what you each are trying to accomplish. So when
I have requests occasionally have somebody to come in, they'll say,
you know, my spouse really wants to their own thing.
They're not really interested in the financial planning process and
so on and so forth. And I kind of say, well,
(16:05):
that's great, but we have to identify what of their resources.
And it doesn't mean that, you know, you have to
do anything different with their resources. We got we got
to know a little bit about what they are, what
goals is that spouse covering, so that we know what
we're truly, I can't build a plan, you know, with
only half the information. This is kind of like telling
your doctor only half your symptoms and expecting a solution.
We got to know what all the resources are and
all the goals so that we can coordinate everything. Doesn't
(16:26):
mean things need to change. Sometimes we're just going to
work around whatever the other half of those things is
are and.
Speaker 3 (16:34):
Address the stuff that we can control more readily. Yeah,
I'd say, Brian, the key word here is communication, and
it's a word you and I talk about all the
time on this show. Communication. Communication. And what I find is,
you know, there might be good reasons for the spouses
to keep some assets separate, especially in a second marriage
(16:54):
situation or blended families. But I do find, Brian, when
all the money is separate, communication around finances tends to dwindle,
and that impacts I think, the relationship and the goals
and even having any goals. And you know, so it
really is important. And I've had this happen this year
(17:16):
with one couple in particular, where the wife has a
good financial advisor, a good money manager. I'll say things
are working well, she's comfortable, she doesn't want to make
any changes, and that's fine, but they have not communicated
about some major life goals like how much to travel,
you know, how to give to the kids, a state
(17:38):
planning consideration. So thankfully she was able. She was willing
to come into the office and sit down with me,
even though you know I put on the table right away.
This is not a play to move all your assets
from your other investment advisor. We just need to get
both spouses in a room to talk and set some
goals together. And thankfully she was willing to do that
(18:01):
and ended up being a productive couple of sessions. But man,
the communication, you know, that's what that's what this money
is for. You know, to spend it and deploy it
in ways that are fulfilling for both spouses and their family.
Speaker 5 (18:15):
Yeah, and I would say for for a lot of
people in this situation. You're probably also in a tax
situation where it makes the most financial sense to file jointly.
So some of your stuff is going to be the
same no matter how much you want to keep it apart.
And that has everything to do with roth conversion strategies,
for example, or or can coordinating your required minimum distributions.
If you've reached that age. There's a lot of things
(18:37):
that are connected, whether you want them to be or not,
so you really have to have a plan that governs
all those things. And again, it has nothing to do
with where your assets are located or whether you're making
decisions on your own or you have some other outside advisor.
But if you're going to keep things separate, then that
makes you at some level, you yourself. Even though you've
got two advisors in the mix, you yourself are the
ultimate advisor because you're going to be getting information from
(18:58):
two different sources, and you do have to decide which
you're most comfortable with or.
Speaker 3 (19:02):
Not getting information from two separate advisors. It's funny you
bring that up about the RMD strategy. I mean this lady,
and it's not a knock on her, it's kind of
a knock on her investment advisor. She had never heard
of a ROTH conversion. She had never heard of a
qualified charitable distribution from an IRA. So we're able to
talk through those concepts, and when I had the data available,
(19:26):
just model some of those concepts. And yeah, when you've
got two separate you know, households in terms of money,
and two separate advisors, there tends to be no coordination.
And then a lot of these most effective strategies never
get talked about in the first place, much less implemented.
Speaker 5 (19:46):
Yeah, and these again, this is why it's important to
the communication. I don't think we can say it quite enough.
We need to need to be in a situation where
the communication lines are clear, everyone is comfortable. Because this
has much more to do with an overall how do
we connect all the puzzle pece than it does with
just where's all the money? Because there's the money, there's
the resources, and there's the needs, the goals, and that's
(20:07):
what has to be coordinated. You've got income sources and
piles of money and you've got goals.
Speaker 3 (20:11):
Whether you've clearly.
Speaker 5 (20:12):
Identified them, that's a different question, but those exist for everybody.
Speaker 3 (20:16):
Here's the all Worth advice. A little financial independence in
retirement isn't a bad thing at all, as long as
it comes with a lot of communication. Coming up next,
why sudden money can actually make you broke over time
and how to make sure your windfall doesn't just blow away.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the Talk Station. It's one policy
(20:40):
going to take our capital back.
Speaker 2 (20:42):
We're taking it back after another.
Speaker 3 (20:44):
You burn a flag, you get one year in jail
and it goes on your record.
Speaker 2 (20:47):
Who knows what he'll check off next? On fifty five
KRC the Talk Station. I've KRC an iHeartRadio station.
Speaker 3 (21:00):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Well, everyone dreams
of a big financial windfall, a sudden inheritance, a business sale,
maybe that stock you've been sitting on that finally goes
through the roof. But new research shows that suddenly sudden money,
you know, money that you can get your hands on
(21:22):
quickly can actually destroy wealth faster than it creates it. Brian,
there's some new research out there, and walk us through
it today. Yep, newsflash, new research.
Speaker 5 (21:33):
One in five people who inherit a million dollars or
more lose half of it within five years. Well, every now,
we hear these stories every now and then from people
who you know, win the lottery, those kinds of things,
and you hear the horror stories about how they just
weren't prepared for it and just couldn't their brains simply
couldn't handle that situation. That's not bad luck, it's normally
bad behavior, bad decision making. This isn't just lottery winners though, Bob.
(21:55):
It's people who sell a business, you know, really anybody
who has some kind of a assive windfall where a
bunch of cash falls out of the sky with no
strings attached at a relatively short period of time. This
can be cashing out of a career, getting a large inheritance,
those kinds of things. The faster the money comes, Bob,
and all the faster it can leave. So we're gonna
kind of jump into the different effects here that can
(22:16):
happen and how to handle it. So if you're in
the situation we're gonna we'll start off with the first
one of the windfall effect here. What really happens when
you get a windfall, Well, psychologists have actually done some
work on this. They call it sudden wealth syndrome, which
sounds completely fake, but this is a real thing. You
literally go from thinking in terms of thousands of dollars
to thinking in millions overnight, and this will give your
brain whiplash.
Speaker 3 (22:37):
Think of it this way.
Speaker 5 (22:37):
You've been driving a nice, compact, reasonable car for twenty years,
and all of a sudden, you have the keys to
a Formula one race car that you have all the
complete freedom to go do whatever you want to do with.
Obviously it's pretty powerful and fast, but if you don't
know how to drive that kind of car, you're gonna
you're gonna have some kind of accident. So it happens financially,
the rains come off, and all of a sudden, you
don't have the same sets of habits and the guardrail
(23:00):
because everything just drops. You think I can afford it,
and you can. We see this all the time with
this kind of a windfall, it's very easy to throw
money at problems when there is money around with which
to do so. But then if that gets baked into
the ongoing spending, you know, that can come alongside the investment,
start to get riskier because I feel like I've got
a bigger cushion, I can afford some riskier stuff, and
(23:22):
a lot of the discipline that you had that got
you to this pace starts to go away. So eventually
you get to a point where that money is controlling
you instead of vice versa.
Speaker 3 (23:30):
It's funny you brought up that Formula one race car analogy,
because that reminds me of an actual client situation. You know,
business sale, millions of dollars coming in the door, and
this client went from buying one kind of exotic collector
car to now they own like eight to ten. Well,
what happened after that? They needed to build a big
(23:51):
barn or garage to hold all the cars, and then
you've got the trips going to custom car shows transporting these.
You know, it becomes a lifestyle. You're hanging out with
people that can afford you know, eight ten different cars
and shipping them all over the country, and it leads
to our less our, our next example, which is just
(24:12):
lifestyle creep or lifestyle inflation. You treat yourself a little bit,
and then all of a sudden you've really ramped up
into an overall lifestyle that costs thousands and thousands more
dollars per year, and some people forget to just check
and say, can we really afford this? Is this sustainable? Brian?
Speaker 5 (24:33):
Yeah, that that that big house comes along a lot
of times with maybe it's a it's a homeowner's association
fee that you didn't really account for. Definitely, property taxes
can sneak up. And I'll throw another one out there.
I ever spent fifteen thousand dollars on a tractor to
mow your your new acreage. You know, there are lots
of things out there that can that you don't You
don't really see coming, uh and until you're actually living
(24:54):
in this situation. So we've seen people spend like that
when the lottery, except they really didn't. They inherited a
million or more and it came ten million in their minds.
And then not to mention, you have to pay taxes
on all these things. So it's not nearly you know,
is a bottomless supply of money, as it seems like
it's kind of like eating your Thanksgiving dinner every night.
It sounds great at first, but eventually it's gonna make
you throw up. So indulging ourselves too much can can
(25:17):
kind of ruin the fund that comes along with it.
Speaker 3 (25:19):
All Right, here's another big behavioral area to look out for.
Speaker 2 (25:23):
It.
Speaker 3 (25:23):
It's just the area of overconfidence. People that make a
lot of money or have sold a business for a
big chunk of money. You know, their mind says, hey,
I made a fortune, I'm really good with money. But Brian,
you and I know this all too well. There is
a big difference between the ability to make money in
some other industry versus actually managing money once you've got
(25:47):
it in your account, and a lot of people have
to learn that lesson the hard way. They jump into
a bunch of private investment deals, you know, get over
allocated to crypto or high risk startups. They forget that
we both. Preservation is a completely different skill set, and
I think sometimes, Brian, these people are bored by just
(26:07):
you know, traditional act allocation stuff. They're addicted to the
adrenaline rush, and they always constantly need to be going
out and taking risk. And you just got to put
the governor switch on that sometimes to keep from losing
something that you've spent a lifetime building.
Speaker 5 (26:25):
Making money is not the same as keeping money. It's
two different, very two different mindsets, two different approaches. So
people who build wealth over decades, these might be entrepreneurs, savers,
or just disciplined investors pumping money into their four oh
one case four or three b's for years. They tend
to respect money more because they know how hard it
was to earn. Then we see, you know, sometimes it's
generation too that doesn't have that same benefit of having
(26:47):
built it from nothing and so doesn't value it as much.
It appears to them to have been easy to acquire,
therefore they treat it as such.
Speaker 3 (26:54):
So what should we do? First step up, build a team.
Speaker 5 (26:57):
Make sure you've got people around you, a financial plann at,
a quarterback everything, a CPA or a some kind of
accounting outlet to help you with the taxes, and an
estate planning attorney. If this is truly a significant pile
of money, not the people selling you something. These are
people who behave in fiduciary manners on what will help
you with their future. So the next step is figure
out what you want. Once you've got your team in place. Now,
(27:17):
think about what it is that you want. And this
also assumes that we didn't go out and do a
bunch of things immediately. Really, i'm gonna call it step
zero is don't do anything, just stop and think before
you build that team. Then you need to have that
discussion about what is it that I want. Do I
want to use this to retire earlier? Do I want
to benefit myself my family? You know, maybe charities or
something like that. Generational wealth without some kind of purpose,
(27:40):
money tends to get spent just because it's sitting there.
Speaker 3 (27:43):
Here's the all Worth advice. Wealth is not a finish line.
It's a responsibility. The more you have, the more discipline
it takes to keep it. You've built up two million dollars,
how do you protect it without missing growth? We'll cover risk,
income and a little peace of mind coming up next.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station.
Speaker 2 (28:06):
A series of events. The most important events.
Speaker 3 (28:09):
Make for eventful days happening every day. The political violence
in this country.
Speaker 2 (28:14):
I'm seeing more and more events like this. This is
a Trump shut down refusal. He's fired.
Speaker 3 (28:19):
In these eventful times, very serious times all the time.
Speaker 2 (28:23):
It's time for action in any event. We're following these
events on and off the field on the streets of
our city.
Speaker 3 (28:30):
Check in, We'll check it out, checking into it fifty
five krs.
Speaker 2 (28:33):
The talk station.
Speaker 3 (28:35):
Hey is Brian Thomas with Steve from USA and Kenyons
are welcome to here. I do think he is too
old to run in twenty twenty.
Speaker 2 (28:42):
Four fifty five KRC the talk station.
Speaker 3 (28:50):
You're listening to Simply Money, presented 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's
a red button you can click while you're listening to
the show right on the iHeart apps. Simply record your
question and it will come straight to us, all right.
Brian Derek in Oakley leads us off tonight. He says,
our advisor keeps suggesting private equity and private credit. How
(29:14):
do we tell if these alternatives are true diversification or
just higher risk? Along with a sales pitch yep.
Speaker 5 (29:22):
So we want to make sure that whenever these things
are coming up more and more often lately, and we
want to make sure we understand the moving parts that
are involved when these types of questions come up. So
private equity, what are we talking about While we're talking
about investing in small businesses that are not publicly traded,
kind of sort of the same thing as buying stocks,
but these are not out there on markets. You're just
literally connecting with somebody who has run a business. There
(29:44):
are funds and things that will do this for you,
and that's presumably what Derek is referring to here.
Speaker 3 (29:50):
So private equity.
Speaker 5 (29:51):
Fundraising hit over one point two trillion dollars globally in
twenty four, slowing down a little bit, but still probably
going to be out there. So the kind of questions
you want to ask, you want to make sure you
understand what the lock up period is?
Speaker 3 (30:02):
Can you get your money back out?
Speaker 5 (30:03):
Liquidity is always going to be a gonna be a
factor for these things.
Speaker 3 (30:08):
What is the fee structure? These are going to be expensive.
Speaker 5 (30:11):
Don't look for the no load version of private equity
doesn't exist. These things are expensive because there's a lot
going into them, and there's a lot of people wanting
to make money off of them, and so how do
you verify the returns? Are these audited self reported valuations
are there default rates, recovery rates on the private credit side.
What information can you get so that you can understand
what you're looking at. These can be very valuable tools,
(30:32):
but you can also hurt yourself with them, so just
do your research, be careful what you're what you're getting into.
All Right, We're going to move south to Marty down
in Florence who says they have a big unrealized gain
on the in their brokeer's account. First off, congratulations, that's
a common problem these days. Uh, And Marty wants to
know if there's anything they can do to trim those
positions without taking that huge hit tax hit all at once.
Speaker 3 (30:53):
What do you think, Bob, Well, Marty, there's definitely ways
to trim the positions without taking a huge tax hit.
So good of you to ask the question before you
just took the tax hit. So you know, I don't
know from your question whether this big gain is in
one heavily concentrated position or whether you've just been sitting
on a bunch of you know, mutual funds and ETFs
(31:13):
over years that you know, you got a bunch of
positions with a lot of unrealized capital gains. So depending
on what your situation is the first thing, get that
stuff into a tax managed a count where you've got
some tax loss harvesting going on in the background. Direct
indexing strategies are out there, and indexed exchange programs are
(31:34):
out there, And what this really means is you can
go slow. You can harvest some short term losses in
a diversified portfolio and use that to gradually trim those
gains in your positions. If you are sitting on one
big concentrated stock positions, that's where things like collars UH,
selling a covered call and buying a protective put on
(31:57):
the downside might come into play. And that way you
could protect your gains in that position and kind of
have the options market pay to do that for you.
So a lot of different options out there. The best
thing to do is probably sit down with a good
fiduciary advisor and walk through some of those options and
get you set up. Hope that helps all right. Eric
(32:19):
in Westchester says, our kids are in their thirties and
they're successful, but they don't know much about money. What's
the best way to start involving them in family financial discussions? Brian,
this is a great question.
Speaker 5 (32:31):
More and more common question these days as wealth is
reaching new heights, and you know a lot of people
who are in their fifties and sixties and that have
been themselves successful now have kids who are doing okay
and successful as well. But they're starting to worry that
these kids are not have not quite been through the
wealth management you know, and training and you know, financial planning,
(32:52):
those kinds of things that they themselves have. So why
this is important, Well, there's trillions of dollars are going
to change hands the next twenty years. About eighty trillion
is going to move from Baby boomers to Gen X
and millennials by twenty forty five. And so this often
comes along with people change. Either the kids will change
who they want to talk to in terms of working
with a financial advisor or if they want to at all,
(33:14):
because those conversations haven't simply haven't occurred. So here's here's
a couple steps to start bringing them in. Start with
values and not the numbers. Talk about how you built,
what you built, why it's important to you, and it connect.
Speaker 3 (33:27):
Them to their history.
Speaker 5 (33:28):
They're going to remember some of the stories you told
them because it would have affected them along the way.
Sometimes it's good to have a family state of the
Union meeting. A lot of families do this around the holidays,
just to talk about here's what we've built, here's here's
the goals that mom and I have, or Dad and
I have, Here's what we're thinking about, and here's why
we're thinking it. And let them share in the in
the feedback of that, and they'll they'll start to hear
(33:49):
how you've gotten to that point, and you know, eventually
get to the point where you do show them open
the vault, show them what's in there. If you trust
that they can handle it, then I think it's really
valuable to understand why it is that you are able
to live the way that you do, what is behind
all that, rather than having them assume it's just plain easy.
So in any case, I hope that helps. And big
discussions here coming up during the holidays. One more here
(34:12):
from from Janet down in Fort Thomas. Thank you for
defending our forts. Down there, Janet and her husband are
having a discussion about their mortgage. He apparently wants to
just offload the debt, not think about it anymore, and
she wants to keep those dollars free to invest. So
how do we think about that in terms of financial planning,
how do you evaluate that trade off?
Speaker 3 (34:30):
Bob well Janet used the word how do we evaluate
the trade off logically? And that's always that's always an
interesting topic logically because listen, there's a logical way to
handle this stuff, and there's always an emotional reason why
people make any kind of decisions. So I tend to
look at this two ways. One, if you do want
(34:50):
to look at it logically, look at the after tax
rate of return that you can expect based on your
personal risk tolerance you're in your husband, on how you
and money, and then compare that to your mortgage rate.
So you know, if you're a growth investor, and even
if you're netting on average, you know, say seven eight
(35:10):
percent a year, and you're sitting on a two and
a half two point seventy five two point eight percent mortgage,
you know, it doesn't logically make sense to pay that
off because you're earning more money keeping your money invested. However,
if the psychological part of this is just causing one
spouse to lose sleep at night, it it, you know,
(35:32):
to keep marital harmony and keep peace in the family,
it might make sense to just knock this thing out.
So I think it's important to look at it logically
from a net rate of return standpoint, and then also
discuss risk tolerance and hopefully you can come up with
a good decision together. All Right, Wall Street's newest game,
lets you bet on real world events. Is it investing
(35:54):
or just high stakes fun? We'll sort all that out next.
You're listening to simply Money is thated by all Worth
Financial on fifty five KRC the talk station.
Speaker 2 (36:03):
It's become a big story. Big things are happening. We
are in a government shutdown, a big fight in Congress.
It's big, some might even say huge, huge news. And
to keep it with government.
Speaker 1 (36:15):
Layoffs and continuing negotiation.
Speaker 2 (36:17):
You'll need massive amounts of information. Massive the impact that's
going to have on every American. This is a funding
by a healthcare fighter. Again for the latest on every
big store, Some very big things. This is no small matter.
Speaker 3 (36:30):
Fifty five krs the talk station, the most comprehensive, and
the countries are going to hell.
Speaker 2 (36:36):
Something is happening.
Speaker 4 (36:37):
Would be Trump assess and Ryan Ruth guilty.
Speaker 3 (36:40):
Shop, Trump shutdown, Antifa, shreky in all day, Charlie Kirk.
Speaker 2 (36:44):
It's always something. I forgive him fifty five krs. The
talk station.
Speaker 3 (36:53):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Well, for decades,
if you wanted to place a bet, you had to
go to Las Vegas flashing lights, free drinks in a
weekend you probably don't tell your accounting about. But now
you don't even have to leave the couch. Vegas might
still have the shows and the buffets, but the action,
(37:15):
the real betting action, it's all moving online, and not
just to sports betting sites like DraftKings or fan duels.
It's actually moving right into Wall Street's neighborhood. Brian, Hey,
I've seen commercials on this often in recent days, I
think on interactive brokerages running these commercials tell us about
(37:36):
what's going on, about the opportunity to make bets on
what's gonna happen next in the economy.
Speaker 5 (37:42):
Well, first off, we're not calling them bets, Bob, that's
a dirty world. We're calling these prediction markets. Come on,
get with the times, all right. This is a whole
new word. I mean, it's betting, it's gambling, just like
anything else. You're betting on a certain outcome. I think
it's gonna be a not B and I'm going to
bet twenty bucks on it. This is a whole new
world where people are trading contracts on just these real
world events. Who wins an election, uh, when or if
(38:04):
the FED is going to cut rates, how far they're
going to cut rates, or even who takes home the
Super Bowl? That last one's pretty common. But these, these,
these next, these other ones come from just playing the headlines.
Speaker 3 (38:13):
Can't this be while why Jerome Palell is not cutting
interest rates because he's got some futures bets.
Speaker 5 (38:19):
I've already placed that could very well be bob and
and maybe that's something that we should have a We
should have an election or an elected committee investigate to
make sure.
Speaker 3 (38:29):
All right, well, I digress, Please walk us through what
what the actual topics these are.
Speaker 5 (38:34):
These aren't technically bets, right, this is the the the
regulatory bodies don't don't consider this gambling. These are financial
instruments called event contracts. They sound like bets to me anyway, Uh.
Regular These aren't regulated by the gaming boards, but rather
by the Commodity Futures Trading Commission, which is really the
closest government body to uh. Since since things like oil,
(38:54):
corn and currency futures are really only worth what people
think they're worth, there aren't they don't have their own profits,
they don't bit out dividends, they don't create their own products.
This is as close to these these types of events
as we can possibly get. Therefore, that's why it's the
same folks who oversee oil, corn and currency futures are
the ones who are looking at this.
Speaker 3 (39:12):
So, for example, there's there's just how big this is.
Speaker 5 (39:14):
The Intercontinental Exchange, which is which happens you probably never
heard of, same company that owns the New York Stock Exchange,
which probably have heard of. They're investing up to two
billion dollars in a platform called Polymarket, and one you
may have heard of. Another one out there is Robinhood.
Robinhood is already pretty popular with with the with the
smaller investors already trading more than four billion of these
(39:35):
event contracts.
Speaker 3 (39:36):
So so think of this way.
Speaker 5 (39:37):
The reason that they're doing this, Well, you can open
your Robinhood app, buy some stock and Apple or whatever
other company in the exact same session, invest in whether
the FED is going to cut rates next quarter via
these these event type bets.
Speaker 3 (39:49):
Well, look, while the horse has seemingly already left the
barn here, the Commodities, Futures and Trading Commission is still
trying to figure out how to regulate these things. So
imagine that let's let's let let's get everybody involved in
this and then add the regulation later. What could possibly
go wrong? I'm thinking back to the housing crisis, but
(40:09):
again one company, Calshe tried to launch a political event
market and got stopped cold by regulators. But in terms
of the risk here, the thing we got to call
out is liquidity and pricing. These aren't like stocks with
billions of dollars in daily volume. These are pretty low
volume trades and positions you can get in and out
(40:33):
at bad prices. In other words, there's big spreads between
the bid and ass on these things, and you might
not realize that, you know, when you get into it.
Speaker 5 (40:41):
Yeah, and remember the taxation is also a question. It's
unclear how this is going to be tax These are
short term types of things. I'm gonna bet that the
Fed's gonna do something this or that next week, and
that may or may not happen. Well, that's a short
term hold and there are plenty of examples where the IRS.
Speaker 3 (40:55):
Taxes obscure things a little differently than what you expect.
Here's the all Worth advice. When Wall Street's art to
look like Vegas, remember the house usually always wins. Don't
make your retirement part of the show. Thanks for listening tonight.
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC the talk station.
Speaker 2 (41:14):
Something is happening.
Speaker 3 (41:15):
It's time to end the failed experiment of open borders.
Your countries are going to hell. Something in our country,
Charlie Kirk, I forgive him.
Speaker 2 (41:23):
Antifa across this country.
Speaker 1 (41:25):
Would be Trump ass and Ryan Ruth guilty on all
five charges.
Speaker 2 (41:28):
Something in our world. Jato countries should shoot down Russian
ear crash in all.
Speaker 1 (41:33):
Day they enter their ear speed.
Speaker 2 (41:35):
It's always something, yes, I do. It's a very important moment.
Fifty five KRC the talk station. You ever wonder why
Veron
You got a lot today, do you?
Speaker 2 (00:02):
I do got to put up these Halloween decorations. Will
It's time to do it, dude? The rest I do
need to know.
Speaker 3 (00:07):
On fifty five KRC the talk station tonight, New Tariff
Talk rattles the markets. You're listening to Simply Money, presented
by all Worth Financial on Bob Sponseller along with Brian James. Well,
everything had been pretty much smooth sailing for months now,
(00:31):
lots of green nearly every day, and then Friday happened. Brian,
you and I have been talking about people pulling profits
off the table, filling up their emergency fund, all the
important and responsible things that we're supposed to do, and
Friday's volatility is the reason why. But all Worst Chief
Investment Officer Andy Stout joins us tonight. Andy walk us
(00:55):
through what are not really new tariff threats. I mean,
President truck has been talking about this for a while,
but I guess no one thought he would actually do it,
and he kind of lowered the boom on Friday midday.
Speaker 4 (01:09):
Well yeah, he lowered the boom. However, the boom didn't
really quite land at least yet. So when you think
about what the threat was and what was going on
on Friday when he saw this massive stock market sell off.
What you really saw was the retaliation from President Trump
(01:29):
in regards to something that China did where they started
to talk about how they were going to essentially add
new export restrictions on.
Speaker 3 (01:38):
These rare earth minerals.
Speaker 4 (01:40):
Now rare earth minerals sound fancy, but it's really just
things that I might be using electronics, think like AI infrastructure.
It's also using a lot of defense areas, like you
know weapons as an example. Now this is something that's
not really new. China put some restrictions back in April.
Export restrict is on seven. There's fifteen rare earth minerals
(02:02):
that did on seven. They added five more. So now
twelve of the fifteen half some export restrictions. And this
just means they need to get some permission before exporting
it out, but it certainly makes it more challenging. So
what President Trump did in retaliation was essentially threatened one
hundred percent tariffs starting on November first. Next say, he threatened.
That's why I mentioned that the boom hasn't quiet landed.
But also keep in mind that President Trump and Chinese
(02:26):
President Jijiping are scheduled to meet later this month. In Korea,
the meetings are somewhere around either October thirty first or
November first. It's not necessarily set in stone yet, but
that's when they're scheduled to meet. So not really thinking
that this is anything at this time more than a
grand bargaining posturing.
Speaker 5 (02:48):
So any we've seen these kinds of things before, this
feels to me like just a bunch more saber rattling
because whenever we see these kinds of conflicts, and like
you said, we saw this back in April too, it
just seems like everybody's gonna threaten, take their ball and
go home, right up until the point where they don't
and we come to some kind of conclusion. Seems like
you can see this over hundreds of years worth of
(03:08):
history of trade negotiations. Is there anything going on here
really that we haven't seen before?
Speaker 3 (03:14):
Not really.
Speaker 4 (03:14):
I mean when you think about just market cycles and
how markets work, it really just follows your typical pattern.
You see things going smoothly, then all of a sudden
there is a catalyst. The only thing that really changes
too much from period to period is what that catalyst is.
So I think what's really critical for investors is to
understand how markets work. Understand the cycles of markets. If
(03:38):
you're if you know ahead of time, yeah, markets go
up over a period of time. Yes, there are going
to be these ten percent, twenty percent, even thirty percent pullbacks.
But when you look at the broad cycle, what you
see is how it works, and you start to understand that,
then that allows you to avoid panic selling because what
you see, you see these cadalines and you get freaked out,
(03:59):
and that's not something that is really conducive to making
smart decisions. When your emotions takeover, that's when bad things happen.
Because if you think about it, you know, one thing
we were talking about before the show was how you
look back over the past just ten years, but we've
seen about eight instances of you know, ten percent market pullbacks,
So it's common, it happens, and if you if you
(04:22):
reacted to every single one of those, you'd be in
a really bad position because you end up what you
usually would probably end up doing is essentially not buying
low and selling high, but essentially buying high and selling low,
which is the exact wrong thing you want to do.
And here's the one last thing to keep in mind,
we're only like three percent off of market highs. I mean,
let's just kind of put everything into into perspective, take
(04:44):
a step back, calm down. It's not as if you
know the world's coming to it, and it's not like,
you know, we're where the Bengals are, where they're on
their fifth quarterback of the year. And fortunately it looked
a little bit better on Sunday with Flago behind the helm.
Still didn't quite you know, finish it. Uh, but you
know we're not there yet, and you know, understanding how
(05:05):
things work, and that's really critical.
Speaker 3 (05:08):
All right, Andy, I was watching the market Friday afternoon.
I always like to watch the close of the market
rather than the open, and we did pretty much close
at session lows on Friday, which kind of surprised me
because any of this, you know, President Trump, you know,
Tara threatening stuff, has typically been a great buy the
dip kind of moment. Perhaps it didn't happen on Friday.
(05:30):
I'm just speculating here. I'd love to get your perspective
because we got two other things going on right now simultaneously.
One is a government shut down, which is entering its
second week, and then also we're moving into earning season,
you know, in earnest beginning this week. Does that have
anything to do with the fact that people just weren't
interested in buying stocks on the dip on Friday afternoon.
Speaker 4 (05:53):
I think the reason, and this is just anybody's speculation,
but my speculation for the reason clou closing near the
the lows on Friday was people people Wall Street traders
didn't want to carry risk into the weekend. So you
got a long period of time and they don't want
to have that risk on the books because who knows
what could happen over the weekend. It's a long period
(06:13):
of stretch, and when you have this high level of uncertainty,
that's when they don't want to essentially have too much
on the book. So they were essentially selling some position
so they would be coming into the week essentially, you know,
free and clear, if you will. Now what we saw
on Sunday, though, is President Trump and some words from
j Vice President jadvanced as well, was that essentially walking
(06:35):
back those threats, right, you know, President Trump said on
his truth social that everything's going to be fine now.
President g it was just basically having a bad day,
if you will. So they walk that back, so not
too material and to your point, Bob, it does open
the door for future negotiations, which is a good thing.
(06:56):
But then there's also the things we all need to
look at, which is corporate earning season coming up, which
is the ongoing government shut down. So there's definitely some
other things that are moving right now.
Speaker 5 (07:08):
So Okay, what should we be excited about? What should
we be terrified about? Is there any reason that it's
time to panic?
Speaker 3 (07:14):
Andy? I always want to know when does the calendar
turn to panic day? Right?
Speaker 5 (07:17):
Shouldn't we be out there really just worried about the
end of the world and everybody going over the cliff?
Speaker 3 (07:21):
Are we there yet? Are we there yet? Are we
there yet? Well, we'll sarcasm there for you. Andy.
Speaker 4 (07:26):
Wow, this is the worst than driving my kids down
to Hilton Tout.
Speaker 3 (07:30):
Are we there yet? Are the area?
Speaker 2 (07:32):
Wow?
Speaker 3 (07:33):
No, we're not there yet.
Speaker 4 (07:36):
And you know, even when we do get there, it's
probably an opportunity in all honesty, because that's when you
see some really good values and that's where you know
you want to sell before you're there, Ryan, right, you
want to, But knowing what to sell and when to
sell is tricky because you know, as one of the
(07:57):
most legendary investors economists of all times. Cain's one said
markets can remain irrational longer than you can remain solvent,
So you know.
Speaker 3 (08:06):
Good luck timing that.
Speaker 4 (08:07):
I would suggest just you know, sticking with that trip
and you know, not you know, going over the cliff
with any sort of decision making. So are we there yet? No,
we're not there yet. But you know, some things to
watch this week. You do have the ongoing government shut down.
You do have that entering its second full week, doesn't
(08:29):
look like there's any real progress yet. And you know,
with some of the things that have occurred over the weekend,
it certainly suggests that, you know, this might drag out
a bit longer. You know, one thing that we haven't
been getting during this whole time is some very important
economic data releases. However, uh, we are going to get
(08:49):
the CPI data. The BLS, the Bureau of Labor Statistics,
recalled back its workforce so they could get the CPI
out for the month of September. And the reason for
that is that data is actually needed for the cost
of living adjustments to calculate the twenty twenty six Social
Security checks. So that's why they're doing that. On a
positive side note, that's really great news for the Federal
(09:10):
Reserve because that gives them a very important piece of
data heading into its end of month meeting. So that's
something that's I guess good ish if you want to
focus on that. Another thing that's good is the earning season.
So heading into earning season, what Wall Street's looking for
about seven percent a year over year growth, and what
we normally see is a beat rate of you know,
(09:33):
seventy five eighty percent of companies reporting better than expected earnings,
and that essentially allows that spread over what the preseason
estimate is to what we actually see of around maybe
two to five percent. So I want to be shocked
at all if we get a ten percent a year
over year earnings growth, which would be just another you know,
(09:53):
essentially you know, notch in the Wall Streets cap if
you will, where to get consistently strong earnings. And if
you think about what drives markets, what drives your returns,
what drives your ability to retire, it's companies making money
and that's what they keep doing.
Speaker 3 (10:12):
All right, Andy, I trust your recession scorecard that you
and your team put together way more than the Federal
Bureau of Labor Statistics. So that being said, any data,
I know, you guys collect data all the time and
you update that scorecard. Any changes over the last week,
good or bad, when you factor all the real data
(10:33):
out there into your recession scorecard, any changes over the
last week that we need to be made aware of. Yeah.
Speaker 4 (10:40):
One of the nice things about, you know, some of
the indicators we look at is that they're not all
based on data from the government. We're looking at some
real time market indicators that we're looking at a few other.
Speaker 3 (10:52):
Factors. You know.
Speaker 4 (10:53):
With that said, you know, there are certainly some reliance
on data coming from the government, So a little bit
on pause for some of those indicators. That said, when
you look at just the data as a whole, including
some of the market related data, you know, we're still
I've called it medium risk. So when we look out
over the next six to nine months, yeah, not high risk,
(11:15):
certainly not a non zero riscovery session.
Speaker 3 (11:17):
But when you when you say, sorry to interrupt, no,
sorry to interrupting, but when you say medium risk, talk
to us about what that means in terms of data.
And here here's the context of my question. We're I
think we're going to get good earnings this quarter. The
Fed is starting to lower interest rates. Inflation seems to
be you know, under control. Uh, what are the risks
(11:37):
out there in the economy, you know, as you pull
you know, take all the all the biases and whatever aside.
What are the risks to the economy right now that
maybe we're not thinking about.
Speaker 4 (11:49):
So first off, to answer your first question, I say
medium risk. I would say there's less than a fifty
percent chance that we see a recession in the next
six to nine months now when we look you know,
the different factors out there that are concerning you know,
certainly the labor market has shown some cracks here recently
with the data coming from the government, which is now
(12:11):
on pause because we haven't really seen that, but the
payrolls from employers before the shutdown showed someone like the
weakest stretch essentially since since COVID we look at like
a four month period, the last four months it's been shaky.
So what that suggests from the federal reserves perspective, and
this is why they are cutting rates, is that the
(12:33):
you can't look at the labor market as coming from
a position of strength, but more a position of fragility,
and that's really going to allow them to cut race
despite inflation being higher than where it is. So you
see some weakness there. You see some weakness. The housing
markets you know, not strong, Manufacturing isn't strong. These are
areas that continue to i'll call it stagnate more than
(12:55):
anything else. And when you look at it all together,
you know it's certainly some stagnation across in some areas,
but there's strength in other areas. And that's like consumer
spending continues to be strong, and certainly part of that's
due to your top income earners. They represent forty nine
point two percent of total consumer spending, and where the
market's going higher, that just emboldens the upper cohort essentially
(13:17):
to keep spending because they have a large portion. They
are well tied up into the stock market, and they
feel better and they're going to keep spending and that's
going to keep the economy growing. So it's good in
the near term, but we would like to see a
little bit more broad based growth.
Speaker 3 (13:28):
And all honesty, all right, good stuff, Andy, thanks as
always for joining us tonight. Here's the all Worth Advice
Market swings. Ah, they come and go but they shouldn't
change your long term investment strategy and your overall financial plan.
New research suggests more couples are keeping their portfolios separate.
Is that independence or a warning sign? We'll explore that
(13:52):
coming up next. You're listening to Simply Money, presented by
all Worth Financial on fifty five KRC the talk station.
Speaker 4 (14:00):
Day.
Speaker 3 (14:00):
This guy's are calm, the guns are silent in a
new Middle East.
Speaker 2 (14:03):
You are the President of peace. The day's news hostages
being released. Who's going to be the International Security forces?
On Open the Government, Day thirteen of the shutdown, fifty
five KRC, the talk station.
Speaker 1 (14:15):
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
a state planning attorney to conduct your own due diligence.
Speaker 3 (14:35):
You're listening to Simply Money, presented a Allworth Financial on
Bob sponseller along with Brian James. Pay off the house
or let the low rate ride? What if your spouse
totally disagrees and does paying off debt always make you
feel richer? Or could it cost you in the long run,
we'll sort all that stuff out straight ahead. At six
(14:55):
forty three. Well, it used to be when you got
married you e merged everything, the dishes, the dog, and
the money. But that's changing, Brian. According to a new
study from Schwab and Fidelity have come out with what
separate studies on this issue, and I see an anecdotally
in some of the client's idea with this is interesting stuff.
Speaker 5 (15:18):
Yeah, it's a different approach. You don't have to have
all your money smushed together. Some people do prefer to, uh,
to kind of keep things separate. So we're we're not
talking about hiding assets from each other or secret offshore
accounts those kinds of things. We're talking about people that
did generally communicate and there aren't really any problems going on,
just kind of prefer to have their own finances independent
(15:38):
of each other. You could kind of call this a
pre nup for retirement if you will.
Speaker 2 (15:43):
Uh.
Speaker 5 (15:43):
The things that does have to stay the same though,
is the goals, because at the end of the day,
you're sharing your you're sharing a household and that has
its own expenses, and presumably there's some kind of connection
between what you each are trying to accomplish. So when
I have requests occasionally have somebody to come in, they'll say,
you know, my spouse really wants to their own thing.
They're not really interested in the financial planning process and
so on and so forth. And I kind of say, well,
(16:05):
that's great, but we have to identify what of their resources.
And it doesn't mean that, you know, you have to
do anything different with their resources. We got we got
to know a little bit about what they are, what
goals is that spouse covering, so that we know what
we're truly, I can't build a plan, you know, with
only half the information. This is kind of like telling
your doctor only half your symptoms and expecting a solution.
We got to know what all the resources are and
all the goals so that we can coordinate everything. Doesn't
(16:26):
mean things need to change. Sometimes we're just going to
work around whatever the other half of those things is
are and.
Speaker 3 (16:34):
Address the stuff that we can control more readily. Yeah,
I'd say, Brian, the key word here is communication, and
it's a word you and I talk about all the
time on this show. Communication. Communication. And what I find is,
you know, there might be good reasons for the spouses
to keep some assets separate, especially in a second marriage
(16:54):
situation or blended families. But I do find, Brian, when
all the money is separate, communication around finances tends to dwindle,
and that impacts I think, the relationship and the goals
and even having any goals. And you know, so it
really is important. And I've had this happen this year
(17:16):
with one couple in particular, where the wife has a
good financial advisor, a good money manager. I'll say things
are working well, she's comfortable, she doesn't want to make
any changes, and that's fine, but they have not communicated
about some major life goals like how much to travel,
you know, how to give to the kids, a state
(17:38):
planning consideration. So thankfully she was able. She was willing
to come into the office and sit down with me,
even though you know I put on the table right away.
This is not a play to move all your assets
from your other investment advisor. We just need to get
both spouses in a room to talk and set some
goals together. And thankfully she was willing to do that
(18:01):
and ended up being a productive couple of sessions. But man,
the communication, you know, that's what that's what this money
is for. You know, to spend it and deploy it
in ways that are fulfilling for both spouses and their family.
Speaker 5 (18:15):
Yeah, and I would say for for a lot of
people in this situation. You're probably also in a tax
situation where it makes the most financial sense to file jointly.
So some of your stuff is going to be the
same no matter how much you want to keep it apart.
And that has everything to do with roth conversion strategies,
for example, or or can coordinating your required minimum distributions.
If you've reached that age. There's a lot of things
(18:37):
that are connected, whether you want them to be or not,
so you really have to have a plan that governs
all those things. And again, it has nothing to do
with where your assets are located or whether you're making
decisions on your own or you have some other outside advisor.
But if you're going to keep things separate, then that
makes you at some level, you yourself. Even though you've
got two advisors in the mix, you yourself are the
ultimate advisor because you're going to be getting information from
(18:58):
two different sources, and you do have to decide which
you're most comfortable with or.
Speaker 3 (19:02):
Not getting information from two separate advisors. It's funny you
bring that up about the RMD strategy. I mean this lady,
and it's not a knock on her, it's kind of
a knock on her investment advisor. She had never heard
of a ROTH conversion. She had never heard of a
qualified charitable distribution from an IRA. So we're able to
talk through those concepts, and when I had the data available,
(19:26):
just model some of those concepts. And yeah, when you've
got two separate you know, households in terms of money,
and two separate advisors, there tends to be no coordination.
And then a lot of these most effective strategies never
get talked about in the first place, much less implemented.
Speaker 5 (19:46):
Yeah, and these again, this is why it's important to
the communication. I don't think we can say it quite enough.
We need to need to be in a situation where
the communication lines are clear, everyone is comfortable. Because this
has much more to do with an overall how do
we connect all the puzzle pece than it does with
just where's all the money? Because there's the money, there's
the resources, and there's the needs, the goals, and that's
(20:07):
what has to be coordinated. You've got income sources and
piles of money and you've got goals.
Speaker 3 (20:11):
Whether you've clearly.
Speaker 5 (20:12):
Identified them, that's a different question, but those exist for everybody.
Speaker 3 (20:16):
Here's the all Worth advice. A little financial independence in
retirement isn't a bad thing at all, as long as
it comes with a lot of communication. Coming up next,
why sudden money can actually make you broke over time
and how to make sure your windfall doesn't just blow away.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the Talk Station. It's one policy
(20:40):
going to take our capital back.
Speaker 2 (20:42):
We're taking it back after another.
Speaker 3 (20:44):
You burn a flag, you get one year in jail
and it goes on your record.
Speaker 2 (20:47):
Who knows what he'll check off next? On fifty five
KRC the Talk Station. I've KRC an iHeartRadio station.
Speaker 3 (21:00):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Well, everyone dreams
of a big financial windfall, a sudden inheritance, a business sale,
maybe that stock you've been sitting on that finally goes
through the roof. But new research shows that suddenly sudden money,
you know, money that you can get your hands on
(21:22):
quickly can actually destroy wealth faster than it creates it. Brian,
there's some new research out there, and walk us through
it today. Yep, newsflash, new research.
Speaker 5 (21:33):
One in five people who inherit a million dollars or
more lose half of it within five years. Well, every now,
we hear these stories every now and then from people
who you know, win the lottery, those kinds of things,
and you hear the horror stories about how they just
weren't prepared for it and just couldn't their brains simply
couldn't handle that situation. That's not bad luck, it's normally
bad behavior, bad decision making. This isn't just lottery winners though, Bob.
(21:55):
It's people who sell a business, you know, really anybody
who has some kind of a assive windfall where a
bunch of cash falls out of the sky with no
strings attached at a relatively short period of time. This
can be cashing out of a career, getting a large inheritance,
those kinds of things. The faster the money comes, Bob,
and all the faster it can leave. So we're gonna
kind of jump into the different effects here that can
(22:16):
happen and how to handle it. So if you're in
the situation we're gonna we'll start off with the first
one of the windfall effect here. What really happens when
you get a windfall, Well, psychologists have actually done some
work on this. They call it sudden wealth syndrome, which
sounds completely fake, but this is a real thing. You
literally go from thinking in terms of thousands of dollars
to thinking in millions overnight, and this will give your
brain whiplash.
Speaker 3 (22:37):
Think of it this way.
Speaker 5 (22:37):
You've been driving a nice, compact, reasonable car for twenty years,
and all of a sudden, you have the keys to
a Formula one race car that you have all the
complete freedom to go do whatever you want to do with.
Obviously it's pretty powerful and fast, but if you don't
know how to drive that kind of car, you're gonna
you're gonna have some kind of accident. So it happens financially,
the rains come off, and all of a sudden, you
don't have the same sets of habits and the guardrail
(23:00):
because everything just drops. You think I can afford it,
and you can. We see this all the time with
this kind of a windfall, it's very easy to throw
money at problems when there is money around with which
to do so. But then if that gets baked into
the ongoing spending, you know, that can come alongside the investment,
start to get riskier because I feel like I've got
a bigger cushion, I can afford some riskier stuff, and
(23:22):
a lot of the discipline that you had that got
you to this pace starts to go away. So eventually
you get to a point where that money is controlling
you instead of vice versa.
Speaker 3 (23:30):
It's funny you brought up that Formula one race car analogy,
because that reminds me of an actual client situation. You know,
business sale, millions of dollars coming in the door, and
this client went from buying one kind of exotic collector
car to now they own like eight to ten. Well,
what happened after that? They needed to build a big
(23:51):
barn or garage to hold all the cars, and then
you've got the trips going to custom car shows transporting these.
You know, it becomes a lifestyle. You're hanging out with
people that can afford you know, eight ten different cars
and shipping them all over the country, and it leads
to our less our, our next example, which is just
(24:12):
lifestyle creep or lifestyle inflation. You treat yourself a little bit,
and then all of a sudden you've really ramped up
into an overall lifestyle that costs thousands and thousands more
dollars per year, and some people forget to just check
and say, can we really afford this? Is this sustainable? Brian?
Speaker 5 (24:33):
Yeah, that that that big house comes along a lot
of times with maybe it's a it's a homeowner's association
fee that you didn't really account for. Definitely, property taxes
can sneak up. And I'll throw another one out there.
I ever spent fifteen thousand dollars on a tractor to
mow your your new acreage. You know, there are lots
of things out there that can that you don't You
don't really see coming, uh and until you're actually living
(24:54):
in this situation. So we've seen people spend like that
when the lottery, except they really didn't. They inherited a
million or more and it came ten million in their minds.
And then not to mention, you have to pay taxes
on all these things. So it's not nearly you know,
is a bottomless supply of money, as it seems like
it's kind of like eating your Thanksgiving dinner every night.
It sounds great at first, but eventually it's gonna make
you throw up. So indulging ourselves too much can can
(25:17):
kind of ruin the fund that comes along with it.
Speaker 3 (25:19):
All Right, here's another big behavioral area to look out for.
Speaker 2 (25:23):
It.
Speaker 3 (25:23):
It's just the area of overconfidence. People that make a
lot of money or have sold a business for a
big chunk of money. You know, their mind says, hey,
I made a fortune, I'm really good with money. But Brian,
you and I know this all too well. There is
a big difference between the ability to make money in
some other industry versus actually managing money once you've got
(25:47):
it in your account, and a lot of people have
to learn that lesson the hard way. They jump into
a bunch of private investment deals, you know, get over
allocated to crypto or high risk startups. They forget that
we both. Preservation is a completely different skill set, and
I think sometimes, Brian, these people are bored by just
(26:07):
you know, traditional act allocation stuff. They're addicted to the
adrenaline rush, and they always constantly need to be going
out and taking risk. And you just got to put
the governor switch on that sometimes to keep from losing
something that you've spent a lifetime building.
Speaker 5 (26:25):
Making money is not the same as keeping money. It's
two different, very two different mindsets, two different approaches. So
people who build wealth over decades, these might be entrepreneurs, savers,
or just disciplined investors pumping money into their four oh
one case four or three b's for years. They tend
to respect money more because they know how hard it
was to earn. Then we see, you know, sometimes it's
generation too that doesn't have that same benefit of having
(26:47):
built it from nothing and so doesn't value it as much.
It appears to them to have been easy to acquire,
therefore they treat it as such.
Speaker 3 (26:54):
So what should we do? First step up, build a team.
Speaker 5 (26:57):
Make sure you've got people around you, a financial plann at,
a quarterback everything, a CPA or a some kind of
accounting outlet to help you with the taxes, and an
estate planning attorney. If this is truly a significant pile
of money, not the people selling you something. These are
people who behave in fiduciary manners on what will help
you with their future. So the next step is figure
out what you want. Once you've got your team in place. Now,
(27:17):
think about what it is that you want. And this
also assumes that we didn't go out and do a
bunch of things immediately. Really, i'm gonna call it step
zero is don't do anything, just stop and think before
you build that team. Then you need to have that
discussion about what is it that I want. Do I
want to use this to retire earlier? Do I want
to benefit myself my family? You know, maybe charities or
something like that. Generational wealth without some kind of purpose,
(27:40):
money tends to get spent just because it's sitting there.
Speaker 3 (27:43):
Here's the all Worth advice. Wealth is not a finish line.
It's a responsibility. The more you have, the more discipline
it takes to keep it. You've built up two million dollars,
how do you protect it without missing growth? We'll cover risk,
income and a little peace of mind coming up next.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station.
Speaker 2 (28:06):
A series of events. The most important events.
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Make for eventful days happening every day. The political violence
in this country.
Speaker 2 (28:14):
I'm seeing more and more events like this. This is
a Trump shut down refusal. He's fired.
Speaker 3 (28:19):
In these eventful times, very serious times all the time.
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It's time for action in any event. We're following these
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Speaker 3 (28:30):
Check in, We'll check it out, checking into it fifty
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Speaker 2 (28:33):
The talk station.
Speaker 3 (28:35):
Hey is Brian Thomas with Steve from USA and Kenyons
are welcome to here. I do think he is too
old to run in twenty twenty.
Speaker 2 (28:42):
Four fifty five KRC the talk station.
Speaker 3 (28:50):
You're listening to Simply Money, presented 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's
a red button you can click while you're listening to
the show right on the iHeart apps. Simply record your
question and it will come straight to us, all right.
Brian Derek in Oakley leads us off tonight. He says,
our advisor keeps suggesting private equity and private credit. How
(29:14):
do we tell if these alternatives are true diversification or
just higher risk? Along with a sales pitch yep.
Speaker 5 (29:22):
So we want to make sure that whenever these things
are coming up more and more often lately, and we
want to make sure we understand the moving parts that
are involved when these types of questions come up. So
private equity, what are we talking about While we're talking
about investing in small businesses that are not publicly traded,
kind of sort of the same thing as buying stocks,
but these are not out there on markets. You're just
literally connecting with somebody who has run a business. There
(29:44):
are funds and things that will do this for you,
and that's presumably what Derek is referring to here.
Speaker 3 (29:50):
So private equity.
Speaker 5 (29:51):
Fundraising hit over one point two trillion dollars globally in
twenty four, slowing down a little bit, but still probably
going to be out there. So the kind of questions
you want to ask, you want to make sure you
understand what the lock up period is?
Speaker 3 (30:02):
Can you get your money back out?
Speaker 5 (30:03):
Liquidity is always going to be a gonna be a
factor for these things.
Speaker 3 (30:08):
What is the fee structure? These are going to be expensive.
Speaker 5 (30:11):
Don't look for the no load version of private equity
doesn't exist. These things are expensive because there's a lot
going into them, and there's a lot of people wanting
to make money off of them, and so how do
you verify the returns? Are these audited self reported valuations
are there default rates, recovery rates on the private credit side.
What information can you get so that you can understand
what you're looking at. These can be very valuable tools,
(30:32):
but you can also hurt yourself with them, so just
do your research, be careful what you're what you're getting into.
All Right, We're going to move south to Marty down
in Florence who says they have a big unrealized gain
on the in their brokeer's account. First off, congratulations, that's
a common problem these days. Uh, And Marty wants to
know if there's anything they can do to trim those
positions without taking that huge hit tax hit all at once.
Speaker 3 (30:53):
What do you think, Bob, Well, Marty, there's definitely ways
to trim the positions without taking a huge tax hit.
So good of you to ask the question before you
just took the tax hit. So you know, I don't
know from your question whether this big gain is in
one heavily concentrated position or whether you've just been sitting
on a bunch of you know, mutual funds and ETFs
(31:13):
over years that you know, you got a bunch of
positions with a lot of unrealized capital gains. So depending
on what your situation is the first thing, get that
stuff into a tax managed a count where you've got
some tax loss harvesting going on in the background. Direct
indexing strategies are out there, and indexed exchange programs are
(31:34):
out there, And what this really means is you can
go slow. You can harvest some short term losses in
a diversified portfolio and use that to gradually trim those
gains in your positions. If you are sitting on one
big concentrated stock positions, that's where things like collars UH,
selling a covered call and buying a protective put on
(31:57):
the downside might come into play. And that way you
could protect your gains in that position and kind of
have the options market pay to do that for you.
So a lot of different options out there. The best
thing to do is probably sit down with a good
fiduciary advisor and walk through some of those options and
get you set up. Hope that helps all right. Eric
(32:19):
in Westchester says, our kids are in their thirties and
they're successful, but they don't know much about money. What's
the best way to start involving them in family financial discussions? Brian,
this is a great question.
Speaker 5 (32:31):
More and more common question these days as wealth is
reaching new heights, and you know a lot of people
who are in their fifties and sixties and that have
been themselves successful now have kids who are doing okay
and successful as well. But they're starting to worry that
these kids are not have not quite been through the
wealth management you know, and training and you know, financial planning,
(32:52):
those kinds of things that they themselves have. So why
this is important, Well, there's trillions of dollars are going
to change hands the next twenty years. About eighty trillion
is going to move from Baby boomers to Gen X
and millennials by twenty forty five. And so this often
comes along with people change. Either the kids will change
who they want to talk to in terms of working
with a financial advisor or if they want to at all,
(33:14):
because those conversations haven't simply haven't occurred. So here's here's
a couple steps to start bringing them in. Start with
values and not the numbers. Talk about how you built,
what you built, why it's important to you, and it connect.
Speaker 3 (33:27):
Them to their history.
Speaker 5 (33:28):
They're going to remember some of the stories you told
them because it would have affected them along the way.
Sometimes it's good to have a family state of the
Union meeting. A lot of families do this around the holidays,
just to talk about here's what we've built, here's here's
the goals that mom and I have, or Dad and
I have, Here's what we're thinking about, and here's why
we're thinking it. And let them share in the in
the feedback of that, and they'll they'll start to hear
(33:49):
how you've gotten to that point, and you know, eventually
get to the point where you do show them open
the vault, show them what's in there. If you trust
that they can handle it, then I think it's really
valuable to understand why it is that you are able
to live the way that you do, what is behind
all that, rather than having them assume it's just plain easy.
So in any case, I hope that helps. And big
discussions here coming up during the holidays. One more here
(34:12):
from from Janet down in Fort Thomas. Thank you for
defending our forts. Down there, Janet and her husband are
having a discussion about their mortgage. He apparently wants to
just offload the debt, not think about it anymore, and
she wants to keep those dollars free to invest. So
how do we think about that in terms of financial planning,
how do you evaluate that trade off?
Speaker 3 (34:30):
Bob well Janet used the word how do we evaluate
the trade off logically? And that's always that's always an
interesting topic logically because listen, there's a logical way to
handle this stuff, and there's always an emotional reason why
people make any kind of decisions. So I tend to
look at this two ways. One, if you do want
(34:50):
to look at it logically, look at the after tax
rate of return that you can expect based on your
personal risk tolerance you're in your husband, on how you
and money, and then compare that to your mortgage rate.
So you know, if you're a growth investor, and even
if you're netting on average, you know, say seven eight
(35:10):
percent a year, and you're sitting on a two and
a half two point seventy five two point eight percent mortgage,
you know, it doesn't logically make sense to pay that
off because you're earning more money keeping your money invested. However,
if the psychological part of this is just causing one
spouse to lose sleep at night, it it, you know,
(35:32):
to keep marital harmony and keep peace in the family,
it might make sense to just knock this thing out.
So I think it's important to look at it logically
from a net rate of return standpoint, and then also
discuss risk tolerance and hopefully you can come up with
a good decision together. All Right, Wall Street's newest game,
lets you bet on real world events. Is it investing
(35:54):
or just high stakes fun? We'll sort all that out next.
You're listening to simply Money is thated by all Worth
Financial on fifty five KRC the talk station.
Speaker 2 (36:03):
It's become a big story. Big things are happening. We
are in a government shutdown, a big fight in Congress.
It's big, some might even say huge, huge news. And
to keep it with government.
Speaker 1 (36:15):
Layoffs and continuing negotiation.
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You'll need massive amounts of information. Massive the impact that's
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by a healthcare fighter. Again for the latest on every
big store, Some very big things. This is no small matter.
Speaker 3 (36:30):
Fifty five krs the talk station, the most comprehensive, and
the countries are going to hell.
Speaker 2 (36:36):
Something is happening.
Speaker 4 (36:37):
Would be Trump assess and Ryan Ruth guilty.
Speaker 3 (36:40):
Shop, Trump shutdown, Antifa, shreky in all day, Charlie Kirk.
Speaker 2 (36:44):
It's always something. I forgive him fifty five krs. The
talk station.
Speaker 3 (36:53):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Well, for decades,
if you wanted to place a bet, you had to
go to Las Vegas flashing lights, free drinks in a
weekend you probably don't tell your accounting about. But now
you don't even have to leave the couch. Vegas might
still have the shows and the buffets, but the action,
(37:15):
the real betting action, it's all moving online, and not
just to sports betting sites like DraftKings or fan duels.
It's actually moving right into Wall Street's neighborhood. Brian, Hey,
I've seen commercials on this often in recent days, I
think on interactive brokerages running these commercials tell us about
(37:36):
what's going on, about the opportunity to make bets on
what's gonna happen next in the economy.
Speaker 5 (37:42):
Well, first off, we're not calling them bets, Bob, that's
a dirty world. We're calling these prediction markets. Come on,
get with the times, all right. This is a whole
new word. I mean, it's betting, it's gambling, just like
anything else. You're betting on a certain outcome. I think
it's gonna be a not B and I'm going to
bet twenty bucks on it. This is a whole new
world where people are trading contracts on just these real
world events. Who wins an election, uh, when or if
(38:04):
the FED is going to cut rates, how far they're
going to cut rates, or even who takes home the
Super Bowl? That last one's pretty common. But these, these,
these next, these other ones come from just playing the headlines.
Speaker 3 (38:13):
Can't this be while why Jerome Palell is not cutting
interest rates because he's got some futures bets.
Speaker 5 (38:19):
I've already placed that could very well be bob and
and maybe that's something that we should have a We
should have an election or an elected committee investigate to
make sure.
Speaker 3 (38:29):
All right, well, I digress, Please walk us through what
what the actual topics these are.
Speaker 5 (38:34):
These aren't technically bets, right, this is the the the
regulatory bodies don't don't consider this gambling. These are financial
instruments called event contracts. They sound like bets to me anyway, Uh.
Regular These aren't regulated by the gaming boards, but rather
by the Commodity Futures Trading Commission, which is really the
closest government body to uh. Since since things like oil,
(38:54):
corn and currency futures are really only worth what people
think they're worth, there aren't they don't have their own profits,
they don't bit out dividends, they don't create their own products.
This is as close to these these types of events
as we can possibly get. Therefore, that's why it's the
same folks who oversee oil, corn and currency futures are
the ones who are looking at this.
Speaker 3 (39:12):
So, for example, there's there's just how big this is.
Speaker 5 (39:14):
The Intercontinental Exchange, which is which happens you probably never
heard of, same company that owns the New York Stock Exchange,
which probably have heard of. They're investing up to two
billion dollars in a platform called Polymarket, and one you
may have heard of. Another one out there is Robinhood.
Robinhood is already pretty popular with with the with the
smaller investors already trading more than four billion of these
(39:35):
event contracts.
Speaker 3 (39:36):
So so think of this way.
Speaker 5 (39:37):
The reason that they're doing this, Well, you can open
your Robinhood app, buy some stock and Apple or whatever
other company in the exact same session, invest in whether
the FED is going to cut rates next quarter via
these these event type bets.
Speaker 3 (39:49):
Well, look, while the horse has seemingly already left the
barn here, the Commodities, Futures and Trading Commission is still
trying to figure out how to regulate these things. So
imagine that let's let's let let's get everybody involved in
this and then add the regulation later. What could possibly
go wrong? I'm thinking back to the housing crisis, but
(40:09):
again one company, Calshe tried to launch a political event
market and got stopped cold by regulators. But in terms
of the risk here, the thing we got to call
out is liquidity and pricing. These aren't like stocks with
billions of dollars in daily volume. These are pretty low
volume trades and positions you can get in and out
(40:33):
at bad prices. In other words, there's big spreads between
the bid and ass on these things, and you might
not realize that, you know, when you get into it.
Speaker 5 (40:41):
Yeah, and remember the taxation is also a question. It's
unclear how this is going to be tax These are
short term types of things. I'm gonna bet that the
Fed's gonna do something this or that next week, and
that may or may not happen. Well, that's a short
term hold and there are plenty of examples where the IRS.
Speaker 3 (40:55):
Taxes obscure things a little differently than what you expect.
Here's the all Worth advice. When Wall Street's art to
look like Vegas, remember the house usually always wins. Don't
make your retirement part of the show. Thanks for listening tonight.
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC the talk station.
Speaker 2 (41:14):
Something is happening.
Speaker 3 (41:15):
It's time to end the failed experiment of open borders.
Your countries are going to hell. Something in our country,
Charlie Kirk, I forgive him.
Speaker 2 (41:23):
Antifa across this country.
Speaker 1 (41:25):
Would be Trump ass and Ryan Ruth guilty on all
five charges.
Speaker 2 (41:28):
Something in our world. Jato countries should shoot down Russian
ear crash in all.
Speaker 1 (41:33):
Day they enter their ear speed.
Speaker 2 (41:35):
It's always something, yes, I do. It's a very important moment.
Fifty five KRC the talk station. You ever wonder why
Veron
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