November 19, 2025 • 38 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian ask the question every long-term investor should be thinking about right now: while the headlines fixate on the Fed, are we focusing on the wrong thing? Plus, what a major move involving a Cincinnati-based company can teach us about handling company stock. Career expert Julie Bauke also joins to explain why helping your kids prepare for a career has never been more complicated—and what really matters in an AI-driven world. And don’t miss answers to your biggest financial questions, from capital gains strategy to whether ETFs really beat mutual funds in a taxable account.
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Episode Transcript
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Speaker 1 (00:06):
Tonight what most Wall Street money managers are probably watching
versus what actually matters to you, plus what to do
with company stock when speculation hits, and we answer as
always your questions. You're listening to Simply Money presented by
Allword Financial on Bob Sponsller along with Brian James. Right now,
I'm guessing if you walked into most Wall Street money
(00:28):
manager meetings or analyst meetings, you'd hear one thing being
talked about over and over right now this week, and
that's interest rates. In other words, the will the Fed
cut in December? What's the latest on inflation? Are wages
too hot? Is the labor market cooling too fast? Are
we going to get a soft landing? Or you know,
God forbid a recession? But here's the truth, and what
(00:51):
Wall Street's watching has very little to do with what's
actually driving your personal long term finanie success. And that's
what Brian and I want to get into tonight because
this is important. Brian, let's walk through a couple of
these things.
Speaker 2 (01:07):
Wall Street is always looking for what's going to happen
in the next minute, right That is not how we
need to be thinking about our own personal financial planning.
And same with the financial media right exactly, it's financial pornography.
Speaker 1 (01:18):
Let's call it what it is.
Speaker 2 (01:19):
Keeps our attention for a while, and all they're really
trying to do at that point is keep your eyeballs
glued to the screen in between the commercials. So let's
start with a Wall Street list. So fed rate cut timing.
This is a big thing right now because we're hearing
NonStop noise about weather Chair Powell is going to cut
in December or March.
Speaker 1 (01:36):
Ooh, this is big stuff. But here's the truth.
Speaker 2 (01:39):
The quarter point move does affect short term bond prices,
and it moves algorithmic trading. But that said, I if
you're a long term investor, really the bigger concern is
how do these interest rates affect my income plan, my
bond ladder, my taxes, and more importantly, how does it
affect my debt.
Speaker 1 (01:53):
If I've got debt that's a tied.
Speaker 2 (01:56):
Two interest rates, then right now I should be in
the mode of maybe looking for opportunity unities and finding
the right entry point to refinance my mortgage. Or maybe
if I've got if I've got credit cards out there
that haven't forbid I'm paying interest on, then you really
ought to be paying attention to that anyway, and a
quarter point cut next month is not going to be
the pivot point as to whether you should take action.
You should be paying attention to these things anyway. And
(02:18):
if the time is right to again refinance that mortgage,
then do it.
Speaker 1 (02:22):
Yeah. And and to your point, I mean, look as
a reminder, and I think a lot of people know this,
but it's worth repeating. I mean, what moves mortgage rates
most of the time is the ten year bond yield,
not short term interest rates. And oftentimes, and we've seen
this happen whin the last year, Brian short term rates
have moved, mortgage rates didn't move at all. So you
(02:43):
got to look at the longer term here, like a
lot of things we're going to talk about tonight, when
making financial decisions, and you know, the speculation about interest rates.
I mean, let's face it, I think that's why small
cap stocks have really taken a beating here in the
last you know, relatively speaking, over the last week or so,
because they have more debt. A lot of these small
(03:05):
companies are borrowing money on a short term basis, So
depending on the price of that borrowing that is going
to move the needle in terms of how they're planning.
And that's that's those are the type of things that
we see, you know, impacted by short term rates, to
say nothing of money market yields and you know interest
rates you're getting on a bank account. But give us
(03:25):
a hypothetical mistake here, Brian, of what could happen to
somebody that just listens to all this short term news
and then makes big, massive moves in their portfolio as
a result. So let's take a hypothetical Darren. So Darren
is fifty eight years old.
Speaker 2 (03:40):
And by the way, all these names are fake, but
these all these stories are based off of war stories
that we have the Bob and I and all the
other advisors at all Worth have sitting down talking with
people and figuring out how they make decisions. So anyway,
so Darren heard a strategist online say that the Fed
is going to cut rates by December. So his decision
was to pull about three quarters of a million dollars
out of his long term portfolio and park it in
(04:02):
a money market fund to wait it out. But unfortunately,
what happens here is rates don't fall as fast as
he expected. Market ends up bouncing nine percent in the
next six months, and Darren misses out on about sixty
seven thousand dollars worth of potential growth, and now worse,
he's got to decide when to get back in, which
he adds even more emotional risk timing the market like this,
(04:22):
and people don't really refer to it as timing. When
we point out that that's what they're doing, that they'll
say is no, no, no, I'm just I'm protecting my assets.
I'm not trying to time the market. It's the same thing.
Whether it's out of greed or fear. We're still trying
to be in at the right time and out at
the wrong time. And that's that that is not a
recipe for financial success because it's a two step process.
(04:43):
Darren's next step he's got to try to time it again,
and by the way, he's over one now he's got
to decide when he's going to get back in. If
I missed, we had a peak again, and he'll do
this for years. I have a couple of clients that
sat in cash Bob from two thousand and eight until
they met us in the early twenty twenties, and we
finally put a plan together and taught about market history
and helped everybody understand.
Speaker 1 (05:04):
I haven't had the heart.
Speaker 2 (05:04):
To tell them that they've they've left literally millions of
dollars on the table by sitting out of the market
ever since two thousand and eight because they got spooked.
Speaker 1 (05:12):
Yeah, Brian, we all have a few clients like this,
and I think you bring up a great point, this
emotional risk of being wrong once and then you just freeze.
It's a deer in the headlights, you know. And I
think this happens to men way more often than women
because men, we tend to have our ego tied to
everything and it's like, man, we were wrong about that move,
(05:34):
and I got to make sure I don't do anything
until I can absolutely right about the future direction of
the market. And to your point, it's virtually impossible to
pull that off in the short term, and that's what
can leave people just frozen and not making any money
for years and years. And boy, you miss out. We
(05:54):
talk about missing the best ten days in the market
over a twenty thirty year period. This is where it
manifests itself during these these these periods where people are
just emotionally frozen because they're afraid of being wrong in
the next seven days instead of over the next seven years.
And it really can cost people a ton of money.
(06:15):
All right, let's pivot into trying to guess where inflation
is heading next. You want to talk about a fool's game,
get into this one.
Speaker 2 (06:24):
Yeah, so this is this is another you know, with
these these big numbers that we look at all the time.
So Wall Street just devours these CPI and PPI numbers.
Those are inflationary numbers depending on whether you are the
consumer or the producer, and also wage growth numbers. So
we're we're tearing apart used car prices and and and
housing inflation. Just like it's the Zapruder film from the
Kennedy assassination.
Speaker 1 (06:44):
Even a tenth of a.
Speaker 2 (06:46):
Percent surprise can send stocks flying or crashing because of
the way all these algorithms work and the way program
training happens.
Speaker 1 (06:52):
Here's in the short term, right of course, yes, absolutely
the short term.
Speaker 2 (06:56):
And in other words, when the headline comes out, it
can be one reaction, and then after lunch it's another reaction. Entirely,
none of this affects what you the average consumer, the
average person with a looking for financial stability, and making
sure you can keep up with inflation and all that
kind of stuff.
Speaker 1 (07:11):
None of that day to day stuff matters. Here's what
really matters to you. Has your spending change?
Speaker 2 (07:16):
Have you updated your plan to reflect what your grocery budget,
your travel budget, and your healthcare cost? Now notice that
word your that I said over and over again. Do
you know what you spend in the first place?
Speaker 1 (07:27):
And a lot of people.
Speaker 2 (07:28):
Simply don't because they've never been forced to have a budget.
And I'm not advocating that everybody has to go out
there and have a budget and put money in envelopes
and stick to it, but it's a good idea to
have it, just to have a vague idea of what
it costs you to be you for a month or
for a year, because that will help you understand exactly
what you need to have an emergency fund, that kind
of thing for the short term needs, and then you
can leave your medium and long term ass that's alone
(07:50):
and ignore this day to day noise.
Speaker 1 (07:53):
All right, Well, let's put another hypothetical example to this
case scenario. We'll take Kathy. She's sixty three years old.
She sees a hotter than expected inflation number and assumes
bonds are going to get crushed again. She sells, She
goes to cash out of all her intermediate bond fund
holdings in a panic and lo and behold. The FED
(08:13):
ends up holding steady inflation cools. The next month, bond
values rebound. They stabilize, not only stabilized, but rebound. But Kathy,
she locked in all those losses, making them permanent, and
now she's sitting holding cash and is frozen emotionally and
missing out on steady income she originally wanted from that
(08:36):
bond fund. Just another example of really throwing your long
term financial plan and income strategy off all because of
trying to time or predict what's going to happen next,
or listening to, as you say, financial pornography in the media.
Speaker 2 (08:53):
And this is just reacting to the headlines that are,
but more importantly, reacting to the headlines that might be.
She assumed that her in that her, the bonds were
going to get smashed again, and so she was looking
forward to a headline that didn't yet exist, and she
wound up in the same problem that Darren has, which
is now I'm sitting in cash and I'm zero for
one on timing. But now I have to do it
again because I'm gonna have to decide when to get
(09:13):
back in there.
Speaker 1 (09:14):
So so here some other things.
Speaker 2 (09:15):
That the tend to to to throw us for a
loop are big tech earnings, right, so, the big technology
companies have been driving the market, of course for a
few decades.
Speaker 1 (09:22):
Now, we said this before, We bring this up all
the time.
Speaker 2 (09:25):
There are seven companies out there that make up almost
forty percent of the S and P five hundred right now.
So you know, yes, when when Nvidia and Apple miss
earnings by a penny, remember what, Well, it doesn't matter
what they actually earn, It matters how close to the
the how close they get to what the analysts thought
they were going to earn, because the analysts are the
ones with out there with the opinions first, and then
the companies have to follow.
Speaker 1 (09:46):
Yeah, Brian, can you believe that Navidia? I mean, who
comes out with earnings on Wednesday? They make up almost
eight percent of the S and P five hundred right now,
one company and you know Wall Street money managers they
trade on that short term news for sure. But for you,
the more important question to ask is am I too
concentrated in all of those magnificent seven companies, and if so,
(10:11):
don't try to time the market, take an opportunity when
the market's at a high and diversify. Take some money
off the table. God forbid. You might even have to
pay a little bit in taxes, but last time I checked,
paying fifteen percent in capital gains taxes by trimming some
gains is way better than seeing the whole dollar go
(10:32):
down in value because you know, a stock falls out
of bed on a bad earnings announcement. Again, it's not
trying to predict what's going to happen next. It's doing,
you know, basic solid financial planning to get yourself out
of potential harm's way. You know, ahead of all this
potential news and headlines that most of us, I would say,
(10:54):
you know, almost all of us. None of us can
see this stuff coming in advance. That's why you got
to do. You got to make good decisions based on
your the fundamentals of your financial plan, not trying to
predict what's going to happen next.
Speaker 2 (11:06):
So another thing that tends to get our attention and
drag us in ways we shouldn't necessarily go is the catalyst, right,
the occasional thing in the market that everybody gets excited about,
and right now, of course that's AI, that's artificial intelligence.
Speaker 1 (11:18):
On Wall Street is basically in a love affair with it.
Speaker 2 (11:21):
But that means that when this happens, when we get
this excited about one of these catalyst type events, they're
not looking at current earnings. The market is pricing in
five to ten years of hypothetical future growth, assuming that
these headlines are going to stay stay the way they are.
And we're not saying that artificial intelligence isn't real. This
is very big. We use it every day and it
is going to touch an awful lot of things that
(11:43):
everybody uses every day. But the investment mistake that people make,
you know, it was Take another example, so we have
sixty one year old Stacy. She read a couple of
articles about how great artificial intelligence is and it's going
to be the next great catalyst to create a bunch.
Speaker 1 (11:55):
Of money for everybody.
Speaker 2 (11:56):
So she takes three hundred thousand dollars, that throws it
into one hot artificial intil Eeligent stock, and for diversification
quote unquote, purposes a theme based ETF that focuses on
artificial intelligence companies. So initially that stock jumps for her
and she's convinced she's a genius. But then it drops
twenty five percent on weak forward guidance, meaning that they
didn't bring forward as many as much in earnings as
(12:16):
the analyst thought they were going to.
Speaker 1 (12:18):
That ETF also starts to drop down a little bit.
Speaker 2 (12:20):
So now she's sitting in a position where she's gotten
speculative positions and really no plan and no income generation
as a person who's about to step into retirement. So again,
real stories from real interactions we've had based off of
us reacting in a very human manner to where we
think profits can be had.
Speaker 1 (12:36):
Here's the all Worth advice. Don't let Wall Street's headlines
become your strategy. Focus on what you can control, because
that's what leads to real financial freedom. When is the
right time to sell company stock? Speculation over a big
local company has us posing this question, and we'll explain
what we're talking about next. You're listening to Simply Money
(12:59):
presented by All Words financeel on fifty five KRC, the
talk station. You're listening to some point money to Buy
All Work Financial on Bob Spondseller along with Brian James.
Should you mix ETFs and mutual funds and a taxable account,
(13:20):
is your roth IRA being used the right way? And
can a portfolio optimizer really deliver better results? We've got
answers that could help you save on taxes, avoid some
common pitfalls with your investment plan, and invest with confidence.
All of that's coming up at straight Ahead at six
forty three. Well tonight, the ninth largest publicly traded company
(13:43):
in Cincinnati is in the news, and the news is massive.
TV station owner Sinclair has been in talks with Cincinnati's
own ew Scripts company about merging. According to a new
regulatory filing, give us the details, Brian.
Speaker 2 (14:01):
So ew Scripts has been here for a long time
and Sinclair is based a little bit north of us,
is talking about picking them up. Sinclair owns Just to
kind of set the table here, Sinclair owns Channel twelve
and they've bought already six point three million shares worth
of Scripts, which represents about an eight percent share in
the company. And Scripts owns Channel nine, so this will
(14:21):
be Channel nine and Channel twelve being part of the
same company. They recently traded from the ABC to CBS.
They swapped those a few years ago, and I'm not
sure I'm ever going to keep that straight in my head.
Channel twelve is ABC forever, in Channel nine is CBS
in my brain because I'm born and raised here anyways. So,
according to this filing, Sinclair is the saying that a
transaction is going to result in Script shareholders getting an
(14:42):
ownership stake in the combined company that's valued at about
three times the Script's recent stock price. So in other words, yes,
if you're a Script shareholder, then they are purporting that
you'll get about three times return if this thing goes through.
And so that's what we want to talk about. When
is the right time to sell this stock? If you're
not married to it and it sieves a windfall like that,
that might be something you're thinking about. So here's a
(15:03):
little bit of history, and early twenty two, scripstock was
above twenty bucks a share.
Speaker 1 (15:08):
Last week it was below three.
Speaker 2 (15:10):
So it's been a bit of a bumpy ride, and
of course it has written quite a bit since Monday's news,
and that's probably leading some of you out there to
think they need to pull the trigger if you do own.
Speaker 1 (15:18):
Some you know. So the question everybody asked is should
I do something? And we'll use Scripts as an example,
say you had a lot of money in script stock
when it was above twenty and you did nothing with
it because you didn't have to, or maybe because you
know you can't time the market, and you said, yeah,
it'll come back, it'll come back long term holding in
my portfolio. Then you watched it continue to drop and
(15:41):
drop to where it was last week, you know, at
or below three dollars a share, But since you had
other assets and you didn't need the money, you still
did nothing. Perhaps over this time you periodically asked, well,
maybe I should sell before it goes down further again
from above twenty to below three, but you still did
nothing because you didn't need the money. That could be
(16:04):
a good thing, you know, based on this news we
just got sounds like a smart decision. You know, you
can't time the market. But now, for the first time
in a couple of years, the stock is finally heading
in the right direction. There's a lot of attention being
given to it, and you might once again ask yourself,
should I do something with it now? Brian, I feel
(16:26):
obligated to say here. Oftentimes in our industry, people use
market timing like it's you know, a sin or a
dirty word or something you should never do. And I
vehemently disagree with that. And let me give you an example.
If you've got you know, a company like Scripts or
any other individual stock, the decision to buy seller holds
(16:49):
should be based on your financial plan, not trying to
predict what's going to happen to the stock. But be
that as it may. You can still put you know,
orders around this stock. You can you can put a
bracket order on it saying, hey, if it gets to
this price on the upside, I'm gonna sell it, and
if it falls below a certain price on the downside,
I've got a stop loss order on it. I mean,
(17:10):
it's not that hard to do. Any good financial advisor
can set you know, an order structure like that. You're
not predicting or timing the market. You're just protecting your
investment so something doesn't fall to from twenty two dollars
a share down to below three What say you? Yeah?
Speaker 2 (17:28):
And I think when you when you when you talk
about market timing in that particular example, I think I
think that's a little bit different because you're not really
timing the market. You're kind of timing an individual stock,
which the individual stocks move like a flock of birds.
Speaker 1 (17:40):
They're gonna move one direction and then the other direction.
You're not gonna be.
Speaker 2 (17:43):
Able to predict any of it versus a diversified portfolio,
which is gonna be a lot more steady and a
lot more predictable. So I don't think you're talking about
when when you say that you're vehemently opposed that to
the idea that timing the market is a bad idea.
I think you're just talking about what an individual stock
can do, and you should pay attention to that company
and get to know it and protect yourself on the
upside of the downside. I think that's a great idea,
(18:06):
And like you say, it's not hard to do. You
just have to be okay with the idea that I
may not be right. This stock can go to the moon,
it can go through the floor, and I would spend
some time picturing what will it feel like if this
stock goes up twenty five percent here in the relative
short term, which is an extremely good return, How will
I feel? Will I feel more passionately positive? Then I
(18:27):
will be angry if it drops by fifty percent? Because
both of those outcomes are very possible with any individual
stock over relatively short period of time. A diversified portfolio
not so much, because you got a little bit of
everything doing its own thing, on and on. So you
have to think about what will I be more passionate about.
And if you're going to set stop lost orders, like
Bob says.
Speaker 1 (18:45):
Break it into chunks. If you've got five hundred excuse.
Speaker 2 (18:48):
Me, five hundred shares is something, then maybe you have
five different orders selling one hundred shares at a time
at various prices, and don't get married to any one
of them.
Speaker 1 (18:56):
Don't get greedy.
Speaker 2 (18:57):
If it's been on a good run, don't try to
squeeze another couple bucks out of it because it may
just hit its peak. You know, you can sell a
little bit now and then hang on to another chunk
for a better time.
Speaker 1 (19:06):
Yeah. The only point I'm trying to make in this
specific example is the person that sold their script stock
at twenty two dollars a share. They've moved on. They
don't care what's going to happen next with the stock
at three and hopefully coming back. They've moved on to
something else, and they're probably have been making money for
several years in a diversified portfolio. So let's talk about
(19:27):
quickly when it does make sense to sell a stock.
It's when your financial goals maybe have changed. You need
to fund your retirement, pay for college, you know, buy
a vacation home, or just shift from growth to income. Again,
it's financial planning based, not prediction based. And another example
is if the stock no longer fits your strategy. If
your portfolio is now overweight in one sector let's say technology,
(19:50):
for example, or if a stock you bought for growth
is now stagnant, it might be time to simply trim
some and rebalance. Or the fundamentals of the company change,
the reason you bought the stock no longer exists, or
that's changed, maybe the leadership of the company has changed,
Earnings have now become inconsistently poor or inconsistently good, you know,
(20:12):
or there's a major disruption in the industry. That's a
sign it might be time to exit. Here's the all
Worth advice. Sell based on strategy, not speculation. Let your goals,
your risk tolerance, and the reason you bought the stock
in the first place, not the current headlines tell you
when it's time to walk away. Coming up next, how
(20:33):
to actually prepare your kids for a future where AI
changes potentially everything about work. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC The
Talk Stam. You're listening to Simply Money, presented by all
(20:54):
Worth Financial on Bob Sponseller along with Brian James. Joined
tonight by our career expert Bouch and Julie. Thanks as
always for joining us tonight. And you've got a pretty
important topic to cover. I'm real interested in your thoughts
and the topic is, let's face it, giving career advice
to kids has never been more difficult. Walk us through
(21:15):
what's going on out there in the real world with
respect to helping our kids get gainfully employed.
Speaker 3 (21:23):
No, I had to laugh when I saw that title
because my first thought was, as if they listen anyway,
my kids. I know what I'm doing, and my kids
don't listen. One of them does, one of them doesn't.
But yeah, it's it's.
Speaker 1 (21:34):
And hopefully they're both listening this morning.
Speaker 3 (21:39):
So the back in the day, it was it was
very easy to say go to college, something great will
be waiting for you. It's the path, it's the firm
path to success and to having the life you want.
And that is completely smashed at this point. And so
now as parents have kids in high school, kids thinking
(22:02):
about what sort of post high school education do I want,
be it trade school or just something post high school,
which pretty much everyone needs, we're at a loss as
to how to be helpful in that conversation because that
path has completely been smashed. Whether it is just gigantic debt,
(22:24):
a job market disconnect between what your kids want to
do and what's available, just lack of job search skills.
So it's everything has changed when it comes to this area.
But I think it's an opportunity because what is going
to allow us to do is allow our kids to
(22:45):
be more involved in the conversation. And the challenge here
is going to be as parents believing that they know themselves,
understanding that we may have this dream. If they're really
great with their hands, it might be the Boomer or
gen X response might be, oh great, you could be
(23:05):
a mechanical engineer. And I think what we've got to
say as an example in that case is or you
could be a technician, you could be an hvac you
could own an HVAC company. You could be an he
back repair person, you could be an auto repair you could,
you know, So there's to not just pigeonhole your kids
into something that feels like a path that felt safe
(23:29):
to us. Is going to be really critical because you
shouldn't be giving advice that worked decades ago or even
a decade ago to today because it's entirely different and so,
you know, it's I think the first thing in this
in this is to recognize that the advice that we
(23:50):
got that worked for us and worked for many others
isn't necessarily as relevant anymore. It's not that it's irrelevant,
but it's not as relevant. The kids have more options
than they used to and it's exciting, but it can
also be overwhelming. So I think our role as a
parent can be exposed them to as many opportunities, conversations,
(24:11):
and places and people as possible and help them start
to discern what sounds interesting, what they might want to
learn more about, and then explore all the various education
paths and experience paths to get there, because it's not
it's not a one and done anymore that these those
days are gone.
Speaker 2 (24:29):
Hey, Julie, So one of the topics that I wanted
to hear from you on and that's great that I
appreciate that update.
Speaker 1 (24:37):
But with regard to AI, so that's everywhere.
Speaker 2 (24:39):
And I kind of feel like, yeah, you can identify
some jobs they clearly could be done by AI right now.
But I have a feeling that that label is getting
slapped on a lot of jobs where you know, maybe
parents are kind of prematurely discouraging their kids.
Speaker 1 (24:52):
Do you see that happening.
Speaker 2 (24:54):
Do you find yourself, you know, a position where you've
got to say no, hold on, there are still paths
to go do this for a living without aibing factor or.
Speaker 1 (25:00):
Yeah, yeah.
Speaker 3 (25:01):
So here's what I think is true. When we hear
the phrase all these jobs are going to be replaced
by AI, I think it's more. I think it's more
true to say almost every job or every job will
be affected in some way by AI, and it might
just affect the way you do the job. It might
not take the job, but it might affect the way
you do the job. So when you look at what
(25:22):
are the things that we know to be true as
we look forward, everyone entering the job market, in the
job market has to have a comfort level with technology,
with learning technology. They have to have really strong people skills,
soft skills listening, communicating, presenting, influencing, working across, working with customers.
(25:48):
They have to have those what we call soft skills. Now,
really those saft skills are becoming the most important. And
so as you look at how do you prepare your
son or daughter for what's next. The three buckets I
would focus on is technology. Now they're digital natives, but
you are not. Everybody is as comfortable as everybody else.
(26:09):
But are they getting exposed to the different ways that
technology help us work and do and live our lives better.
And the second is really, you know, the soft skills
of communicating, getting along with people. You can be brilliant,
but if you're difficult to work with, you know you're
not going to have the career you want. And the
third is really an openness to learning, to taking feedback,
(26:32):
to getting excited about what else can I learn? What
else can I do? Those are the kind of people
and really that applies to us of all ages. The
companies are really looking for anything that smacks up I've
always done it this way. No matter how old you are,
is going to you know, is going to is really
going to limit I would say, you're your opportunities for growth.
Speaker 1 (26:52):
Julie. When I listen to you talk here, I think,
you know, I agree with you. I think the whole
paradigm here for the last five, ten, fifteen, twenty years
has been this specialization into certain areas. And what I
mean by that is we tell our kids to, you know,
get a STEM degree. Well, you know you mentioned technology.
What can tend to happen is people bury themselves behind
(27:13):
a computer screen and just work with numbers all day
and they have zero people skills. They've never interacted with
a customer, They've never had to critically think and engage
in God forbid, a disagreement with another human being, and
how to resolve that. That kind of stuff is not
going to get solved by AI. You got to get
out there and mix it up in the world. I mean, shoot,
(27:35):
even standing behind a cash register at McDonald's for a
couple of years when you're in high school, you learn
incredible skills that are transferable to any job moving forward.
I think we've lost sight of that in society today.
Speaker 3 (27:51):
We have and I just you know it's we have aired.
We have moved over to the side of I want
my kids to take as many AP classes as possible. Yes,
and then we send them off to a prestigious college
and say, Okay, they're good now, No they're not. And
I think we see the numbers of how young people
are really struggling. They're struggling because they don't know how
(28:12):
to navigate this world right now and it is very challenging.
It's easy for us as boomers to say a toughen up,
but it's bigger than that. And so what anything you
can do to expose your kids to difficult conversations. Don't
order their food for them, don't call their teachers, don't
make them step out and step into uncomfortable situations, and
(28:34):
don't get in there with a rag and try to
clean up messas that's the kind of stuff that employers
are really struggling with. You might be making yourself feel
better in the moment, but you're really hurting your child's
chances for career success.
Speaker 1 (28:46):
All right, good stuff as always, Julie, thanks again for
joining us. You're listening to Simply Money presented by all
Worth Financial on fifty five KRC, the talk station. You're
listening to Simply Money about all Worth Financial. I'm Bob
Sponseller along with Brian James. If you have a financial
question you'd like for us to answer. There is a
(29:07):
red button you can click while you're listening to the show.
If you're listening on the iHeart app, simply record your
question and it will come straight to us. Mark in
Lovelin leads us off tonight Brian. He says, we've held
on to a lot of our winners for years, but
now we're worried they'll become quote unquote too big to sell.
(29:27):
How do you unwind games without blowing up your tax return? Brian, Yeah,
that's a very common problem.
Speaker 2 (29:32):
And we're talking about a taxable account here, so not
an IRA, not a ROTH, not any kind of retirement plan,
just a just a regular old brokers account that spits
out of ten ninety nine every year.
Speaker 1 (29:41):
And so this is a good problem to have.
Speaker 2 (29:43):
Of course, Mark and his family owned some investments that
have done well, and obviously they've gotten to a point
where they're just concerned about.
Speaker 1 (29:50):
How to unwind them. So what referring to here is
capital gains tax.
Speaker 2 (29:53):
Capital gains tax isn't as painful and scary as you
might be thinking.
Speaker 1 (29:56):
Nobody wants to pay taxes.
Speaker 2 (29:57):
But once you get over the idea that that's not
ever gonna happen, and that's not a not an option.
Then you can kind of look a little more in
depth at this. So what you can do here in
terms of taking some of this risk off the table, right,
we've got big positions in individual stocks.
Speaker 1 (30:12):
Well, then what you can do is.
Speaker 2 (30:14):
First of all, make sure you understand what your actual
capital gains hit will be. It's possible if you arrange
your finances the right way. We don't know much about
mark situation other than this question, but remember it's always
possible to sell things, possibly without having any capital gains
at all, if your income is relatively low. And this
happens for people who are who maybe have retired, there's
no salary anymore. They're living off of savings accounts for
(30:35):
a little while before they turn on social Security and
pensions and things, and they're just in a lower bracket.
There can be a window, depending on Mark's age, which
we don't know, where he might be able to escape
without paying much in capital gains.
Speaker 1 (30:47):
Worst case scenario, most.
Speaker 2 (30:48):
People are going to wind up paying a fixed fifteen
percent If you've got over four hundred some five hundred
one thousand dollars in income, then you might sneak up
into the twenty percent bracket. But regardless, most people are
going to wind up paying fifteen percent on the gain alone.
And remember we are sitting here in November. You're only
six weeks away from another tax here. So if you
do want to back off on a position, you could
(31:08):
sell some now, in a month and a half later,
sell another chunk, and you now spread that gain into
two tax hears. And there's always charitable donations. If you
are charitably inclined, donate some of those shares. If you're
doing if you are doing things anyway to benefit charities,
then don't write them a check, give them shares of
the company. Trust me, they know what to do with them.
They're going to send you a brochure with their church
logo or whatever on it and something called a DTC number,
(31:30):
which is how you're going to get those shares to
their account. So you'll be on something, you'll be on
their mailing list from here to eternity exactly.
Speaker 1 (31:37):
They'll love you.
Speaker 2 (31:38):
But but if this is where, if you're already giving anyway,
it's just a more efficient way to do it. You
can dodge the gain, not give up some of your
cash and also reduce your risk at the same time.
Speaker 1 (31:46):
So let's move on to Dan and Anderson.
Speaker 2 (31:48):
Dan says, hey, hey, Bob, We've always invested in these
broad indices, but I'm starting to wonder if we're missing
opportunities in these smaller, you know, less followed areas. How
do you know when to go off the beaten path
and when to stick to the main road.
Speaker 1 (32:01):
Well, Dan, a couple things you know off the top
of my head here, and Brian, you know, did a
great job of covering this yesterday on the show. I mean,
I think where a lot of investors that don't work
with a good advisor have been underweighted for years now,
I would say is international stocks, and you know, take
a look at how those have done this year. So
don't don't abandon those broad large cap US bond or
(32:24):
US stock indices. Obviously, those are what have carried the
weight here for return wise for decades and decades and
will likely continue to do so. But if you're talking
about other opportunities or just diversifying some of your risk away,
I would look at international stocks. And I think another
area to start to look at, if you have not already,
is private equity tread lightly in that area, get with
(32:48):
a good fiduciary advisors who can give you the pros
and cons and do some research on where to venture
into private equity. But those are a couple of areas,
you know, off the proverbial beaten path, as you say,
which might you know, make some sense to take a
look at here, you know, as we close out twenty
twenty five and head into twenty twenty six. All right,
(33:08):
Brian and Florence says, we own both ETFs and mutual
funds in a taxable account. Is it worth it to
switch entirely to ETFs for tax efficiency or are there
hidden trade offs?
Speaker 2 (33:20):
Brian, lots of capital gains tax questions without being specifically
named capital gains tax questions. But that's really what we're
talking about, So so a mutual fund, those are these are.
Speaker 1 (33:29):
The kind of things, of course, we've had for a
very long time.
Speaker 2 (33:31):
If you own them outside of a retirement plan, outside
an IRA roth Ara four O one K, then they
spit out capital gain distributions and dividends and things like that.
Speaker 1 (33:41):
Those are good things, of course.
Speaker 2 (33:42):
That's if I have a capital gain distribution, it means
I must have had a capital gain, so we want that.
But what happens is with a mutual fund structure, if
that fund decides to sell off a position that it
has owned for decades, and you've owned that fund for
six months, well congratulations, you get that decade long gain
passed along through to you. That is the capital gain distribution.
(34:04):
And this is the time of year that it happens.
And there's a lot of people out there nodding their
heads because they have PTSD from these capital gain distributions.
Speaker 1 (34:11):
You don't see it coming.
Speaker 2 (34:12):
It doesn't necessarily profit you instantly, but it does hit
your ten ninety nine, meaning you got to pay taxes
on it. So the benefit of exchange traded fund is
it has a different structure. Exchange traded funds have a
different way of building themselves where you do not bring
on the gain that that fund has had for thirty years.
When you purchase an exchange traded fund, it is created
(34:34):
and all the assets underneath it are purchased at the
moment that you purchase it in your account, So therefore
you don't have that risk. Anyway, back to Brian's question,
Brian probably gets this and he's saying, should I bother
switching to all this, and I think the answer is yes,
we've got a sizeable enough account. It is definitely worth
looking at. Don't go cold turkey, though, you don't want
to do this all at once. Remember you could, just
(34:55):
as we were saying earlier, you could slowly change this
over over a fourteen month period. You can get into
three tax years. So if you figure out what your
overall gains hit is, do a little bit now, a
little bit anytime in twenty six, and then a little
bit in twenty seven. I do think that he exchange
traded funds are a better way to go for the
coming decades than mutual funds, but not so badly that
I want you to tear off.
Speaker 1 (35:15):
The band aids.
Speaker 2 (35:16):
Spread out that tax hit quick one. For Melissa and Madisonville,
she says they've got a wroth, Ira, Bob. They haven't
touched it in years.
Speaker 1 (35:22):
Should it be.
Speaker 2 (35:23):
Higher growth oriented or higher risk maybe in the wroth
to amplify that tax free growth.
Speaker 1 (35:26):
What do you think, well, in the spirit of not
fixing it if it ain't broken, Melissa, I think you're
spot on here. The answer is yes, put your higher
growth stuff in your wrath. These are probably the last
assets you're going to touch. If you're a long term investor,
I think you are spot on here. That's exactly what
you should be doing with your wroth Ira. Great question,
(35:49):
and I think you're already on the right track. Good job, Melissa. Next,
I've got my two cents for folks that might be
retiring from a company where they company stop between now
and the end of the year. You're listening to Simply
Money presented by Allworth Financial and fifty five KRC the
talk station. You're listening to Simply Money to buy Allworth
(36:13):
Financial lumppspond seller along with Brian James. Tonight, I want
to talk to folks that might be retiring between now
and the end of the year, especially if you own
company stock in your retirement plan. And I'm just going
to give you an actual case example with a lady
that I have been working with over the last few months,
and she just retired from a local company and has
(36:36):
a bunch of company stock in her retirement plan. She
mates a good income, had a almost her full salary
this year because she worked through the middle of November,
and is actually getting a fairly large severance check that's
also going to be coming in twenty twenty five. So,
needless to say, she's going to be in a much
lower tax bracket in twenty twenty six than she is
(36:58):
in twenty twenty five. So the question came up in
our meetings, what do I do about rolling over my
four oh one K plan? And we were able to
take a look at that, and she has some company
stock with very low basis in it, so you know.
The concept here for those that don't already know about it,
is something called net unrealized appreciation, meaning you can pull
(37:19):
that company stock, do not roll it to an IRA.
You can move that company stock to a taxable brokerage
account and your only tax liabilities. You have to pay
ordinary income taxes on your basis in that stock, in
other words, what you paid for the stock. It's a
tremendous opportunity to save on income taxes. However, you still
(37:41):
do have to pay the taxes on your cost basis
in that stock. So you know, this lady was asking me, Bob,
are we ready to do this? Open up the accounts,
get everything rolled over, and I said, nope, we're going
to wait till January. She's like what I said, Yeah,
you're going to be in a very low tax bracket
next year, wouldn't you rather pay you know, taxes on
the cost basis that stock in you know, twenty twenty
(38:03):
six versus twenty twenty five. Showed her the reasons why
with you know, actual tax software, and the light bulb
went off. She was worried about, you know, getting started,
and she's like, Bob, how am I going to pay you?
You know, don't you need to be paid for what
you do? And I'm like, we're good. You've already made
an agreement to come over and work with us. Our
job is a fiduciary is wait to move this money over,
(38:25):
you know, to a timeframe that is your best interest,
not ours. Brian, I know you run into situations like this,
you know all the time as well all the time.
Speaker 2 (38:34):
And remember what you're doing is you're swapping income taxation
for capital gains taxation, A much more efficient way to go.
Great thing to look at if you have the opportunity
in your four o one.
Speaker 1 (38:41):
Kay, thanks for listening tonight. You've been listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
talk station
Tonight what most Wall Street money managers are probably watching
versus what actually matters to you, plus what to do
with company stock when speculation hits, and we answer as
always your questions. You're listening to Simply Money presented by
Allword Financial on Bob Sponsller along with Brian James. Right now,
I'm guessing if you walked into most Wall Street money
(00:28):
manager meetings or analyst meetings, you'd hear one thing being
talked about over and over right now this week, and
that's interest rates. In other words, the will the Fed
cut in December? What's the latest on inflation? Are wages
too hot? Is the labor market cooling too fast? Are
we going to get a soft landing? Or you know,
God forbid a recession? But here's the truth, and what
(00:51):
Wall Street's watching has very little to do with what's
actually driving your personal long term finanie success. And that's
what Brian and I want to get into tonight because
this is important. Brian, let's walk through a couple of
these things.
Speaker 2 (01:07):
Wall Street is always looking for what's going to happen
in the next minute, right That is not how we
need to be thinking about our own personal financial planning.
And same with the financial media right exactly, it's financial pornography.
Speaker 1 (01:18):
Let's call it what it is.
Speaker 2 (01:19):
Keeps our attention for a while, and all they're really
trying to do at that point is keep your eyeballs
glued to the screen in between the commercials. So let's
start with a Wall Street list. So fed rate cut timing.
This is a big thing right now because we're hearing
NonStop noise about weather Chair Powell is going to cut
in December or March.
Speaker 1 (01:36):
Ooh, this is big stuff. But here's the truth.
Speaker 2 (01:39):
The quarter point move does affect short term bond prices,
and it moves algorithmic trading. But that said, I if
you're a long term investor, really the bigger concern is
how do these interest rates affect my income plan, my
bond ladder, my taxes, and more importantly, how does it
affect my debt.
Speaker 1 (01:53):
If I've got debt that's a tied.
Speaker 2 (01:56):
Two interest rates, then right now I should be in
the mode of maybe looking for opportunity unities and finding
the right entry point to refinance my mortgage. Or maybe
if I've got if I've got credit cards out there
that haven't forbid I'm paying interest on, then you really
ought to be paying attention to that anyway, and a
quarter point cut next month is not going to be
the pivot point as to whether you should take action.
You should be paying attention to these things anyway. And
(02:18):
if the time is right to again refinance that mortgage,
then do it.
Speaker 1 (02:22):
Yeah. And and to your point, I mean, look as
a reminder, and I think a lot of people know this,
but it's worth repeating. I mean, what moves mortgage rates
most of the time is the ten year bond yield,
not short term interest rates. And oftentimes, and we've seen
this happen whin the last year, Brian short term rates
have moved, mortgage rates didn't move at all. So you
(02:43):
got to look at the longer term here, like a
lot of things we're going to talk about tonight, when
making financial decisions, and you know, the speculation about interest rates.
I mean, let's face it, I think that's why small
cap stocks have really taken a beating here in the
last you know, relatively speaking, over the last week or so,
because they have more debt. A lot of these small
(03:05):
companies are borrowing money on a short term basis, So
depending on the price of that borrowing that is going
to move the needle in terms of how they're planning.
And that's that's those are the type of things that
we see, you know, impacted by short term rates, to
say nothing of money market yields and you know interest
rates you're getting on a bank account. But give us
(03:25):
a hypothetical mistake here, Brian, of what could happen to
somebody that just listens to all this short term news
and then makes big, massive moves in their portfolio as
a result. So let's take a hypothetical Darren. So Darren
is fifty eight years old.
Speaker 2 (03:40):
And by the way, all these names are fake, but
these all these stories are based off of war stories
that we have the Bob and I and all the
other advisors at all Worth have sitting down talking with
people and figuring out how they make decisions. So anyway,
so Darren heard a strategist online say that the Fed
is going to cut rates by December. So his decision
was to pull about three quarters of a million dollars
out of his long term portfolio and park it in
(04:02):
a money market fund to wait it out. But unfortunately,
what happens here is rates don't fall as fast as
he expected. Market ends up bouncing nine percent in the
next six months, and Darren misses out on about sixty
seven thousand dollars worth of potential growth, and now worse,
he's got to decide when to get back in, which
he adds even more emotional risk timing the market like this,
(04:22):
and people don't really refer to it as timing. When
we point out that that's what they're doing, that they'll
say is no, no, no, I'm just I'm protecting my assets.
I'm not trying to time the market. It's the same thing.
Whether it's out of greed or fear. We're still trying
to be in at the right time and out at
the wrong time. And that's that that is not a
recipe for financial success because it's a two step process.
(04:43):
Darren's next step he's got to try to time it again,
and by the way, he's over one now he's got
to decide when he's going to get back in. If
I missed, we had a peak again, and he'll do
this for years. I have a couple of clients that
sat in cash Bob from two thousand and eight until
they met us in the early twenty twenties, and we
finally put a plan together and taught about market history
and helped everybody understand.
Speaker 1 (05:04):
I haven't had the heart.
Speaker 2 (05:04):
To tell them that they've they've left literally millions of
dollars on the table by sitting out of the market
ever since two thousand and eight because they got spooked.
Speaker 1 (05:12):
Yeah, Brian, we all have a few clients like this,
and I think you bring up a great point, this
emotional risk of being wrong once and then you just freeze.
It's a deer in the headlights, you know. And I
think this happens to men way more often than women
because men, we tend to have our ego tied to
everything and it's like, man, we were wrong about that move,
(05:34):
and I got to make sure I don't do anything
until I can absolutely right about the future direction of
the market. And to your point, it's virtually impossible to
pull that off in the short term, and that's what
can leave people just frozen and not making any money
for years and years. And boy, you miss out. We
(05:54):
talk about missing the best ten days in the market
over a twenty thirty year period. This is where it
manifests itself during these these these periods where people are
just emotionally frozen because they're afraid of being wrong in
the next seven days instead of over the next seven years.
And it really can cost people a ton of money.
(06:15):
All right, let's pivot into trying to guess where inflation
is heading next. You want to talk about a fool's game,
get into this one.
Speaker 2 (06:24):
Yeah, so this is this is another you know, with
these these big numbers that we look at all the time.
So Wall Street just devours these CPI and PPI numbers.
Those are inflationary numbers depending on whether you are the
consumer or the producer, and also wage growth numbers. So
we're we're tearing apart used car prices and and and
housing inflation. Just like it's the Zapruder film from the
Kennedy assassination.
Speaker 1 (06:44):
Even a tenth of a.
Speaker 2 (06:46):
Percent surprise can send stocks flying or crashing because of
the way all these algorithms work and the way program
training happens.
Speaker 1 (06:52):
Here's in the short term, right of course, yes, absolutely
the short term.
Speaker 2 (06:56):
And in other words, when the headline comes out, it
can be one reaction, and then after lunch it's another reaction. Entirely,
none of this affects what you the average consumer, the
average person with a looking for financial stability, and making
sure you can keep up with inflation and all that
kind of stuff.
Speaker 1 (07:11):
None of that day to day stuff matters. Here's what
really matters to you. Has your spending change?
Speaker 2 (07:16):
Have you updated your plan to reflect what your grocery budget,
your travel budget, and your healthcare cost? Now notice that
word your that I said over and over again. Do
you know what you spend in the first place?
Speaker 1 (07:27):
And a lot of people.
Speaker 2 (07:28):
Simply don't because they've never been forced to have a budget.
And I'm not advocating that everybody has to go out
there and have a budget and put money in envelopes
and stick to it, but it's a good idea to
have it, just to have a vague idea of what
it costs you to be you for a month or
for a year, because that will help you understand exactly
what you need to have an emergency fund, that kind
of thing for the short term needs, and then you
can leave your medium and long term ass that's alone
(07:50):
and ignore this day to day noise.
Speaker 1 (07:53):
All right, Well, let's put another hypothetical example to this
case scenario. We'll take Kathy. She's sixty three years old.
She sees a hotter than expected inflation number and assumes
bonds are going to get crushed again. She sells, She
goes to cash out of all her intermediate bond fund
holdings in a panic and lo and behold. The FED
(08:13):
ends up holding steady inflation cools. The next month, bond
values rebound. They stabilize, not only stabilized, but rebound. But Kathy,
she locked in all those losses, making them permanent, and
now she's sitting holding cash and is frozen emotionally and
missing out on steady income she originally wanted from that
(08:36):
bond fund. Just another example of really throwing your long
term financial plan and income strategy off all because of
trying to time or predict what's going to happen next,
or listening to, as you say, financial pornography in the media.
Speaker 2 (08:53):
And this is just reacting to the headlines that are,
but more importantly, reacting to the headlines that might be.
She assumed that her in that her, the bonds were
going to get smashed again, and so she was looking
forward to a headline that didn't yet exist, and she
wound up in the same problem that Darren has, which
is now I'm sitting in cash and I'm zero for
one on timing. But now I have to do it
again because I'm gonna have to decide when to get
(09:13):
back in there.
Speaker 1 (09:14):
So so here some other things.
Speaker 2 (09:15):
That the tend to to to throw us for a
loop are big tech earnings, right, so, the big technology
companies have been driving the market, of course for a
few decades.
Speaker 1 (09:22):
Now, we said this before, We bring this up all
the time.
Speaker 2 (09:25):
There are seven companies out there that make up almost
forty percent of the S and P five hundred right now.
So you know, yes, when when Nvidia and Apple miss
earnings by a penny, remember what, Well, it doesn't matter
what they actually earn, It matters how close to the
the how close they get to what the analysts thought
they were going to earn, because the analysts are the
ones with out there with the opinions first, and then
the companies have to follow.
Speaker 1 (09:46):
Yeah, Brian, can you believe that Navidia? I mean, who
comes out with earnings on Wednesday? They make up almost
eight percent of the S and P five hundred right now,
one company and you know Wall Street money managers they
trade on that short term news for sure. But for you,
the more important question to ask is am I too
concentrated in all of those magnificent seven companies, and if so,
(10:11):
don't try to time the market, take an opportunity when
the market's at a high and diversify. Take some money
off the table. God forbid. You might even have to
pay a little bit in taxes, but last time I checked,
paying fifteen percent in capital gains taxes by trimming some
gains is way better than seeing the whole dollar go
(10:32):
down in value because you know, a stock falls out
of bed on a bad earnings announcement. Again, it's not
trying to predict what's going to happen next. It's doing,
you know, basic solid financial planning to get yourself out
of potential harm's way. You know, ahead of all this
potential news and headlines that most of us, I would say,
(10:54):
you know, almost all of us. None of us can
see this stuff coming in advance. That's why you got
to do. You got to make good decisions based on
your the fundamentals of your financial plan, not trying to
predict what's going to happen next.
Speaker 2 (11:06):
So another thing that tends to get our attention and
drag us in ways we shouldn't necessarily go is the catalyst, right,
the occasional thing in the market that everybody gets excited about,
and right now, of course that's AI, that's artificial intelligence.
Speaker 1 (11:18):
On Wall Street is basically in a love affair with it.
Speaker 2 (11:21):
But that means that when this happens, when we get
this excited about one of these catalyst type events, they're
not looking at current earnings. The market is pricing in
five to ten years of hypothetical future growth, assuming that
these headlines are going to stay stay the way they are.
And we're not saying that artificial intelligence isn't real. This
is very big. We use it every day and it
is going to touch an awful lot of things that
(11:43):
everybody uses every day. But the investment mistake that people make,
you know, it was Take another example, so we have
sixty one year old Stacy. She read a couple of
articles about how great artificial intelligence is and it's going
to be the next great catalyst to create a bunch.
Speaker 1 (11:55):
Of money for everybody.
Speaker 2 (11:56):
So she takes three hundred thousand dollars, that throws it
into one hot artificial intil Eeligent stock, and for diversification
quote unquote, purposes a theme based ETF that focuses on
artificial intelligence companies. So initially that stock jumps for her
and she's convinced she's a genius. But then it drops
twenty five percent on weak forward guidance, meaning that they
didn't bring forward as many as much in earnings as
(12:16):
the analyst thought they were going to.
Speaker 1 (12:18):
That ETF also starts to drop down a little bit.
Speaker 2 (12:20):
So now she's sitting in a position where she's gotten
speculative positions and really no plan and no income generation
as a person who's about to step into retirement. So again,
real stories from real interactions we've had based off of
us reacting in a very human manner to where we
think profits can be had.
Speaker 1 (12:36):
Here's the all Worth advice. Don't let Wall Street's headlines
become your strategy. Focus on what you can control, because
that's what leads to real financial freedom. When is the
right time to sell company stock? Speculation over a big
local company has us posing this question, and we'll explain
what we're talking about next. You're listening to Simply Money
(12:59):
presented by All Words financeel on fifty five KRC, the
talk station. You're listening to some point money to Buy
All Work Financial on Bob Spondseller along with Brian James.
Should you mix ETFs and mutual funds and a taxable account,
(13:20):
is your roth IRA being used the right way? And
can a portfolio optimizer really deliver better results? We've got
answers that could help you save on taxes, avoid some
common pitfalls with your investment plan, and invest with confidence.
All of that's coming up at straight Ahead at six
forty three. Well tonight, the ninth largest publicly traded company
(13:43):
in Cincinnati is in the news, and the news is massive.
TV station owner Sinclair has been in talks with Cincinnati's
own ew Scripts company about merging. According to a new
regulatory filing, give us the details, Brian.
Speaker 2 (14:01):
So ew Scripts has been here for a long time
and Sinclair is based a little bit north of us,
is talking about picking them up. Sinclair owns Just to
kind of set the table here, Sinclair owns Channel twelve
and they've bought already six point three million shares worth
of Scripts, which represents about an eight percent share in
the company. And Scripts owns Channel nine, so this will
(14:21):
be Channel nine and Channel twelve being part of the
same company. They recently traded from the ABC to CBS.
They swapped those a few years ago, and I'm not
sure I'm ever going to keep that straight in my head.
Channel twelve is ABC forever, in Channel nine is CBS
in my brain because I'm born and raised here anyways. So,
according to this filing, Sinclair is the saying that a
transaction is going to result in Script shareholders getting an
(14:42):
ownership stake in the combined company that's valued at about
three times the Script's recent stock price. So in other words, yes,
if you're a Script shareholder, then they are purporting that
you'll get about three times return if this thing goes through.
And so that's what we want to talk about. When
is the right time to sell this stock? If you're
not married to it and it sieves a windfall like that,
that might be something you're thinking about. So here's a
(15:03):
little bit of history, and early twenty two, scripstock was
above twenty bucks a share.
Speaker 1 (15:08):
Last week it was below three.
Speaker 2 (15:10):
So it's been a bit of a bumpy ride, and
of course it has written quite a bit since Monday's news,
and that's probably leading some of you out there to
think they need to pull the trigger if you do own.
Speaker 1 (15:18):
Some you know. So the question everybody asked is should
I do something? And we'll use Scripts as an example,
say you had a lot of money in script stock
when it was above twenty and you did nothing with
it because you didn't have to, or maybe because you
know you can't time the market, and you said, yeah,
it'll come back, it'll come back long term holding in
my portfolio. Then you watched it continue to drop and
(15:41):
drop to where it was last week, you know, at
or below three dollars a share, But since you had
other assets and you didn't need the money, you still
did nothing. Perhaps over this time you periodically asked, well,
maybe I should sell before it goes down further again
from above twenty to below three, but you still did
nothing because you didn't need the money. That could be
(16:04):
a good thing, you know, based on this news we
just got sounds like a smart decision. You know, you
can't time the market. But now, for the first time
in a couple of years, the stock is finally heading
in the right direction. There's a lot of attention being
given to it, and you might once again ask yourself,
should I do something with it now? Brian, I feel
(16:26):
obligated to say here. Oftentimes in our industry, people use
market timing like it's you know, a sin or a
dirty word or something you should never do. And I
vehemently disagree with that. And let me give you an example.
If you've got you know, a company like Scripts or
any other individual stock, the decision to buy seller holds
(16:49):
should be based on your financial plan, not trying to
predict what's going to happen to the stock. But be
that as it may. You can still put you know,
orders around this stock. You can you can put a
bracket order on it saying, hey, if it gets to
this price on the upside, I'm gonna sell it, and
if it falls below a certain price on the downside,
I've got a stop loss order on it. I mean,
(17:10):
it's not that hard to do. Any good financial advisor
can set you know, an order structure like that. You're
not predicting or timing the market. You're just protecting your
investment so something doesn't fall to from twenty two dollars
a share down to below three What say you? Yeah?
Speaker 2 (17:28):
And I think when you when you when you talk
about market timing in that particular example, I think I
think that's a little bit different because you're not really
timing the market. You're kind of timing an individual stock,
which the individual stocks move like a flock of birds.
Speaker 1 (17:40):
They're gonna move one direction and then the other direction.
You're not gonna be.
Speaker 2 (17:43):
Able to predict any of it versus a diversified portfolio,
which is gonna be a lot more steady and a
lot more predictable. So I don't think you're talking about
when when you say that you're vehemently opposed that to
the idea that timing the market is a bad idea.
I think you're just talking about what an individual stock
can do, and you should pay attention to that company
and get to know it and protect yourself on the
upside of the downside. I think that's a great idea,
(18:06):
And like you say, it's not hard to do. You
just have to be okay with the idea that I
may not be right. This stock can go to the moon,
it can go through the floor, and I would spend
some time picturing what will it feel like if this
stock goes up twenty five percent here in the relative
short term, which is an extremely good return, How will
I feel? Will I feel more passionately positive? Then I
(18:27):
will be angry if it drops by fifty percent? Because
both of those outcomes are very possible with any individual
stock over relatively short period of time. A diversified portfolio
not so much, because you got a little bit of
everything doing its own thing, on and on. So you
have to think about what will I be more passionate about.
And if you're going to set stop lost orders, like
Bob says.
Speaker 1 (18:45):
Break it into chunks. If you've got five hundred excuse.
Speaker 2 (18:48):
Me, five hundred shares is something, then maybe you have
five different orders selling one hundred shares at a time
at various prices, and don't get married to any one
of them.
Speaker 1 (18:56):
Don't get greedy.
Speaker 2 (18:57):
If it's been on a good run, don't try to
squeeze another couple bucks out of it because it may
just hit its peak. You know, you can sell a
little bit now and then hang on to another chunk
for a better time.
Speaker 1 (19:06):
Yeah. The only point I'm trying to make in this
specific example is the person that sold their script stock
at twenty two dollars a share. They've moved on. They
don't care what's going to happen next with the stock
at three and hopefully coming back. They've moved on to
something else, and they're probably have been making money for
several years in a diversified portfolio. So let's talk about
(19:27):
quickly when it does make sense to sell a stock.
It's when your financial goals maybe have changed. You need
to fund your retirement, pay for college, you know, buy
a vacation home, or just shift from growth to income. Again,
it's financial planning based, not prediction based. And another example
is if the stock no longer fits your strategy. If
your portfolio is now overweight in one sector let's say technology,
(19:50):
for example, or if a stock you bought for growth
is now stagnant, it might be time to simply trim
some and rebalance. Or the fundamentals of the company change,
the reason you bought the stock no longer exists, or
that's changed, maybe the leadership of the company has changed,
Earnings have now become inconsistently poor or inconsistently good, you know,
(20:12):
or there's a major disruption in the industry. That's a
sign it might be time to exit. Here's the all
Worth advice. Sell based on strategy, not speculation. Let your goals,
your risk tolerance, and the reason you bought the stock
in the first place, not the current headlines tell you
when it's time to walk away. Coming up next, how
(20:33):
to actually prepare your kids for a future where AI
changes potentially everything about work. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC The
Talk Stam. You're listening to Simply Money, presented by all
(20:54):
Worth Financial on Bob Sponseller along with Brian James. Joined
tonight by our career expert Bouch and Julie. Thanks as
always for joining us tonight. And you've got a pretty
important topic to cover. I'm real interested in your thoughts
and the topic is, let's face it, giving career advice
to kids has never been more difficult. Walk us through
(21:15):
what's going on out there in the real world with
respect to helping our kids get gainfully employed.
Speaker 3 (21:23):
No, I had to laugh when I saw that title
because my first thought was, as if they listen anyway,
my kids. I know what I'm doing, and my kids
don't listen. One of them does, one of them doesn't.
But yeah, it's it's.
Speaker 1 (21:34):
And hopefully they're both listening this morning.
Speaker 3 (21:39):
So the back in the day, it was it was
very easy to say go to college, something great will
be waiting for you. It's the path, it's the firm
path to success and to having the life you want.
And that is completely smashed at this point. And so
now as parents have kids in high school, kids thinking
(22:02):
about what sort of post high school education do I want,
be it trade school or just something post high school,
which pretty much everyone needs, we're at a loss as
to how to be helpful in that conversation because that
path has completely been smashed. Whether it is just gigantic debt,
(22:24):
a job market disconnect between what your kids want to
do and what's available, just lack of job search skills.
So it's everything has changed when it comes to this area.
But I think it's an opportunity because what is going
to allow us to do is allow our kids to
(22:45):
be more involved in the conversation. And the challenge here
is going to be as parents believing that they know themselves,
understanding that we may have this dream. If they're really
great with their hands, it might be the Boomer or
gen X response might be, oh great, you could be
(23:05):
a mechanical engineer. And I think what we've got to
say as an example in that case is or you
could be a technician, you could be an hvac you
could own an HVAC company. You could be an he
back repair person, you could be an auto repair you could,
you know, So there's to not just pigeonhole your kids
into something that feels like a path that felt safe
(23:29):
to us. Is going to be really critical because you
shouldn't be giving advice that worked decades ago or even
a decade ago to today because it's entirely different and so,
you know, it's I think the first thing in this
in this is to recognize that the advice that we
(23:50):
got that worked for us and worked for many others
isn't necessarily as relevant anymore. It's not that it's irrelevant,
but it's not as relevant. The kids have more options
than they used to and it's exciting, but it can
also be overwhelming. So I think our role as a
parent can be exposed them to as many opportunities, conversations,
(24:11):
and places and people as possible and help them start
to discern what sounds interesting, what they might want to
learn more about, and then explore all the various education
paths and experience paths to get there, because it's not
it's not a one and done anymore that these those
days are gone.
Speaker 2 (24:29):
Hey, Julie, So one of the topics that I wanted
to hear from you on and that's great that I
appreciate that update.
Speaker 1 (24:37):
But with regard to AI, so that's everywhere.
Speaker 2 (24:39):
And I kind of feel like, yeah, you can identify
some jobs they clearly could be done by AI right now.
But I have a feeling that that label is getting
slapped on a lot of jobs where you know, maybe
parents are kind of prematurely discouraging their kids.
Speaker 1 (24:52):
Do you see that happening.
Speaker 2 (24:54):
Do you find yourself, you know, a position where you've
got to say no, hold on, there are still paths
to go do this for a living without aibing factor or.
Speaker 1 (25:00):
Yeah, yeah.
Speaker 3 (25:01):
So here's what I think is true. When we hear
the phrase all these jobs are going to be replaced
by AI, I think it's more. I think it's more
true to say almost every job or every job will
be affected in some way by AI, and it might
just affect the way you do the job. It might
not take the job, but it might affect the way
you do the job. So when you look at what
(25:22):
are the things that we know to be true as
we look forward, everyone entering the job market, in the
job market has to have a comfort level with technology,
with learning technology. They have to have really strong people skills,
soft skills listening, communicating, presenting, influencing, working across, working with customers.
(25:48):
They have to have those what we call soft skills. Now,
really those saft skills are becoming the most important. And
so as you look at how do you prepare your
son or daughter for what's next. The three buckets I
would focus on is technology. Now they're digital natives, but
you are not. Everybody is as comfortable as everybody else.
(26:09):
But are they getting exposed to the different ways that
technology help us work and do and live our lives better.
And the second is really, you know, the soft skills
of communicating, getting along with people. You can be brilliant,
but if you're difficult to work with, you know you're
not going to have the career you want. And the
third is really an openness to learning, to taking feedback,
(26:32):
to getting excited about what else can I learn? What
else can I do? Those are the kind of people
and really that applies to us of all ages. The
companies are really looking for anything that smacks up I've
always done it this way. No matter how old you are,
is going to you know, is going to is really
going to limit I would say, you're your opportunities for growth.
Speaker 1 (26:52):
Julie. When I listen to you talk here, I think,
you know, I agree with you. I think the whole
paradigm here for the last five, ten, fifteen, twenty years
has been this specialization into certain areas. And what I
mean by that is we tell our kids to, you know,
get a STEM degree. Well, you know you mentioned technology.
What can tend to happen is people bury themselves behind
(27:13):
a computer screen and just work with numbers all day
and they have zero people skills. They've never interacted with
a customer, They've never had to critically think and engage
in God forbid, a disagreement with another human being, and
how to resolve that. That kind of stuff is not
going to get solved by AI. You got to get
out there and mix it up in the world. I mean, shoot,
(27:35):
even standing behind a cash register at McDonald's for a
couple of years when you're in high school, you learn
incredible skills that are transferable to any job moving forward.
I think we've lost sight of that in society today.
Speaker 3 (27:51):
We have and I just you know it's we have aired.
We have moved over to the side of I want
my kids to take as many AP classes as possible. Yes,
and then we send them off to a prestigious college
and say, Okay, they're good now, No they're not. And
I think we see the numbers of how young people
are really struggling. They're struggling because they don't know how
(28:12):
to navigate this world right now and it is very challenging.
It's easy for us as boomers to say a toughen up,
but it's bigger than that. And so what anything you
can do to expose your kids to difficult conversations. Don't
order their food for them, don't call their teachers, don't
make them step out and step into uncomfortable situations, and
(28:34):
don't get in there with a rag and try to
clean up messas that's the kind of stuff that employers
are really struggling with. You might be making yourself feel
better in the moment, but you're really hurting your child's
chances for career success.
Speaker 1 (28:46):
All right, good stuff as always, Julie, thanks again for
joining us. You're listening to Simply Money presented by all
Worth Financial on fifty five KRC, the talk station. You're
listening to Simply Money about all Worth Financial. I'm Bob
Sponseller along with Brian James. If you have a financial
question you'd like for us to answer. There is a
(29:07):
red button you can click while you're listening to the show.
If you're listening on the iHeart app, simply record your
question and it will come straight to us. Mark in
Lovelin leads us off tonight Brian. He says, we've held
on to a lot of our winners for years, but
now we're worried they'll become quote unquote too big to sell.
(29:27):
How do you unwind games without blowing up your tax return? Brian, Yeah,
that's a very common problem.
Speaker 2 (29:32):
And we're talking about a taxable account here, so not
an IRA, not a ROTH, not any kind of retirement plan,
just a just a regular old brokers account that spits
out of ten ninety nine every year.
Speaker 1 (29:41):
And so this is a good problem to have.
Speaker 2 (29:43):
Of course, Mark and his family owned some investments that
have done well, and obviously they've gotten to a point
where they're just concerned about.
Speaker 1 (29:50):
How to unwind them. So what referring to here is
capital gains tax.
Speaker 2 (29:53):
Capital gains tax isn't as painful and scary as you
might be thinking.
Speaker 1 (29:56):
Nobody wants to pay taxes.
Speaker 2 (29:57):
But once you get over the idea that that's not
ever gonna happen, and that's not a not an option.
Then you can kind of look a little more in
depth at this. So what you can do here in
terms of taking some of this risk off the table, right,
we've got big positions in individual stocks.
Speaker 1 (30:12):
Well, then what you can do is.
Speaker 2 (30:14):
First of all, make sure you understand what your actual
capital gains hit will be. It's possible if you arrange
your finances the right way. We don't know much about
mark situation other than this question, but remember it's always
possible to sell things, possibly without having any capital gains
at all, if your income is relatively low. And this
happens for people who are who maybe have retired, there's
no salary anymore. They're living off of savings accounts for
(30:35):
a little while before they turn on social Security and
pensions and things, and they're just in a lower bracket.
There can be a window, depending on Mark's age, which
we don't know, where he might be able to escape
without paying much in capital gains.
Speaker 1 (30:47):
Worst case scenario, most.
Speaker 2 (30:48):
People are going to wind up paying a fixed fifteen
percent If you've got over four hundred some five hundred
one thousand dollars in income, then you might sneak up
into the twenty percent bracket. But regardless, most people are
going to wind up paying fifteen percent on the gain alone.
And remember we are sitting here in November. You're only
six weeks away from another tax here. So if you
do want to back off on a position, you could
(31:08):
sell some now, in a month and a half later,
sell another chunk, and you now spread that gain into
two tax hears. And there's always charitable donations. If you
are charitably inclined, donate some of those shares. If you're
doing if you are doing things anyway to benefit charities,
then don't write them a check, give them shares of
the company. Trust me, they know what to do with them.
They're going to send you a brochure with their church
logo or whatever on it and something called a DTC number,
(31:30):
which is how you're going to get those shares to
their account. So you'll be on something, you'll be on
their mailing list from here to eternity exactly.
Speaker 1 (31:37):
They'll love you.
Speaker 2 (31:38):
But but if this is where, if you're already giving anyway,
it's just a more efficient way to do it. You
can dodge the gain, not give up some of your
cash and also reduce your risk at the same time.
Speaker 1 (31:46):
So let's move on to Dan and Anderson.
Speaker 2 (31:48):
Dan says, hey, hey, Bob, We've always invested in these
broad indices, but I'm starting to wonder if we're missing
opportunities in these smaller, you know, less followed areas. How
do you know when to go off the beaten path
and when to stick to the main road.
Speaker 1 (32:01):
Well, Dan, a couple things you know off the top
of my head here, and Brian, you know, did a
great job of covering this yesterday on the show. I mean,
I think where a lot of investors that don't work
with a good advisor have been underweighted for years now,
I would say is international stocks, and you know, take
a look at how those have done this year. So
don't don't abandon those broad large cap US bond or
(32:24):
US stock indices. Obviously, those are what have carried the
weight here for return wise for decades and decades and
will likely continue to do so. But if you're talking
about other opportunities or just diversifying some of your risk away,
I would look at international stocks. And I think another
area to start to look at, if you have not already,
is private equity tread lightly in that area, get with
(32:48):
a good fiduciary advisors who can give you the pros
and cons and do some research on where to venture
into private equity. But those are a couple of areas,
you know, off the proverbial beaten path, as you say,
which might you know, make some sense to take a
look at here, you know, as we close out twenty
twenty five and head into twenty twenty six. All right,
(33:08):
Brian and Florence says, we own both ETFs and mutual
funds in a taxable account. Is it worth it to
switch entirely to ETFs for tax efficiency or are there
hidden trade offs?
Speaker 2 (33:20):
Brian, lots of capital gains tax questions without being specifically
named capital gains tax questions. But that's really what we're
talking about, So so a mutual fund, those are these are.
Speaker 1 (33:29):
The kind of things, of course, we've had for a
very long time.
Speaker 2 (33:31):
If you own them outside of a retirement plan, outside
an IRA roth Ara four O one K, then they
spit out capital gain distributions and dividends and things like that.
Speaker 1 (33:41):
Those are good things, of course.
Speaker 2 (33:42):
That's if I have a capital gain distribution, it means
I must have had a capital gain, so we want that.
But what happens is with a mutual fund structure, if
that fund decides to sell off a position that it
has owned for decades, and you've owned that fund for
six months, well congratulations, you get that decade long gain
passed along through to you. That is the capital gain distribution.
(34:04):
And this is the time of year that it happens.
And there's a lot of people out there nodding their
heads because they have PTSD from these capital gain distributions.
Speaker 1 (34:11):
You don't see it coming.
Speaker 2 (34:12):
It doesn't necessarily profit you instantly, but it does hit
your ten ninety nine, meaning you got to pay taxes
on it. So the benefit of exchange traded fund is
it has a different structure. Exchange traded funds have a
different way of building themselves where you do not bring
on the gain that that fund has had for thirty years.
When you purchase an exchange traded fund, it is created
(34:34):
and all the assets underneath it are purchased at the
moment that you purchase it in your account, So therefore
you don't have that risk. Anyway, back to Brian's question,
Brian probably gets this and he's saying, should I bother
switching to all this, and I think the answer is yes,
we've got a sizeable enough account. It is definitely worth
looking at. Don't go cold turkey, though, you don't want
to do this all at once. Remember you could, just
(34:55):
as we were saying earlier, you could slowly change this
over over a fourteen month period. You can get into
three tax years. So if you figure out what your
overall gains hit is, do a little bit now, a
little bit anytime in twenty six, and then a little
bit in twenty seven. I do think that he exchange
traded funds are a better way to go for the
coming decades than mutual funds, but not so badly that
I want you to tear off.
Speaker 1 (35:15):
The band aids.
Speaker 2 (35:16):
Spread out that tax hit quick one. For Melissa and Madisonville,
she says they've got a wroth, Ira, Bob. They haven't
touched it in years.
Speaker 1 (35:22):
Should it be.
Speaker 2 (35:23):
Higher growth oriented or higher risk maybe in the wroth
to amplify that tax free growth.
Speaker 1 (35:26):
What do you think, well, in the spirit of not
fixing it if it ain't broken, Melissa, I think you're
spot on here. The answer is yes, put your higher
growth stuff in your wrath. These are probably the last
assets you're going to touch. If you're a long term investor,
I think you are spot on here. That's exactly what
you should be doing with your wroth Ira. Great question,
(35:49):
and I think you're already on the right track. Good job, Melissa. Next,
I've got my two cents for folks that might be
retiring from a company where they company stop between now
and the end of the year. You're listening to Simply
Money presented by Allworth Financial and fifty five KRC the
talk station. You're listening to Simply Money to buy Allworth
(36:13):
Financial lumppspond seller along with Brian James. Tonight, I want
to talk to folks that might be retiring between now
and the end of the year, especially if you own
company stock in your retirement plan. And I'm just going
to give you an actual case example with a lady
that I have been working with over the last few months,
and she just retired from a local company and has
(36:36):
a bunch of company stock in her retirement plan. She
mates a good income, had a almost her full salary
this year because she worked through the middle of November,
and is actually getting a fairly large severance check that's
also going to be coming in twenty twenty five. So,
needless to say, she's going to be in a much
lower tax bracket in twenty twenty six than she is
(36:58):
in twenty twenty five. So the question came up in
our meetings, what do I do about rolling over my
four oh one K plan? And we were able to
take a look at that, and she has some company
stock with very low basis in it, so you know.
The concept here for those that don't already know about it,
is something called net unrealized appreciation, meaning you can pull
(37:19):
that company stock, do not roll it to an IRA.
You can move that company stock to a taxable brokerage
account and your only tax liabilities. You have to pay
ordinary income taxes on your basis in that stock, in
other words, what you paid for the stock. It's a
tremendous opportunity to save on income taxes. However, you still
(37:41):
do have to pay the taxes on your cost basis
in that stock. So you know, this lady was asking me, Bob,
are we ready to do this? Open up the accounts,
get everything rolled over, and I said, nope, we're going
to wait till January. She's like what I said, Yeah,
you're going to be in a very low tax bracket
next year, wouldn't you rather pay you know, taxes on
the cost basis that stock in you know, twenty twenty
(38:03):
six versus twenty twenty five. Showed her the reasons why
with you know, actual tax software, and the light bulb
went off. She was worried about, you know, getting started,
and she's like, Bob, how am I going to pay you?
You know, don't you need to be paid for what
you do? And I'm like, we're good. You've already made
an agreement to come over and work with us. Our
job is a fiduciary is wait to move this money over,
(38:25):
you know, to a timeframe that is your best interest,
not ours. Brian, I know you run into situations like this,
you know all the time as well all the time.
Speaker 2 (38:34):
And remember what you're doing is you're swapping income taxation
for capital gains taxation, A much more efficient way to go.
Great thing to look at if you have the opportunity
in your four o one.
Speaker 1 (38:41):
Kay, thanks for listening tonight. You've been listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
talk station
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