Kersten Wealth Management Group - Money Sense 2-22-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money CENTCE. You're listening to the
advisors of Kirsten Wealth Management Group, Kevin Kirsten and Brad Kurston.
Happy to be with you today. Brad, We've had an
interesting week, continued news out of Washington, DC and DOGE
which we're going to touch on today, and the market's
having a good month overall, with the month of February
historically being one of the worst months of the year

(00:22):
performing pretty well. I saw some statistics on January and February.
We still have about a week right on, a week
of trading left in February. Here, let's see the last
trading day of the month is next Friday, and when
January and February is higher. There's only been one year
since nineteen eighty that finished lower, and that was twenty eleven.

(00:47):
It was just a slight negative on that year. And
the only other year that was negative from February through
the end of the year was nineteen eighty seven, even
though that year still finished higher. So if we do
hold in with gains in January and February, the seasonality

(01:07):
certainly looks pretty good. The other thing we had this
week was the five year anniversary of the COVID peak.
So COVID if we remember a little bit of a
sell off going into that peak of for February with
kind of broad based across some stocks. But the SMP's
peak in twenty twenty was February nineteenth, peaked in February nineteenth,

(01:31):
bottomed out five weeks later March twenty third, and that
was a thirty four percent sell off. It's worth talking
about because you know, it always is going to take
something that the market doesn't see to have a sell
off that much, and a lot of people are worried
about those big selloffs, but it takes something kind of unprecedented,
and when we're in the middle of those, like we

(01:51):
were five years ago, everyone thinks, oh, this time it's different,
it'll never recover. But the market went down in five
weeks thirty four percent and in five months recovered all
of it to go up fifty percent. And in that period,
just like all periods, when you're in that disruption period
where the market is selling off, if you didn't already
prepare for that, then then there's always this this fear

(02:16):
that it is just going to keep going and keep going,
instead of being patient with it and if you did
prepare for it. At some point you need to be
buying that dip because how quickly the markets can recover.
The quicker they go down, the quicker they come back sometimes,
And that's what COVID gave us five years ago. Fifty
percent up in five months, one hundred percent up in
twelve months. And during that whole twenty twenty period, you

(02:38):
were hearing people say, I'll wait till they open back
up the economy, I'll wait till this happens, I'll wait
till that happens. All the things people were waiting for
happened much later than they had planned. I'll wait for
the vaccine, I'll wait for news on something. And the
market just kept recovering the entire year and never really

(02:58):
had another blip in twenty twenty or twenty twenty one,
and so that kind of kicked off a bull market
that was a pretty short one. A year and eight
months of a bull market. Twenty twenty two was a selloff,
and now we're in year three of a new bowl market.
And interesting stats about when you get to past year

(03:20):
two of bull markets that normally it keeps going. The
average bull market's over five years and a lot of
people just have this memory of the COVID rally being
kind of swift and quick, but that's pretty uncommon to
then retest like we did in twenty twenty two, only
happened a few times. When you look at all bull markets,

(03:40):
the most recent ones are much longer. Yeah, I mean,
I I kind of discount the dates from the COVID
bear market just because it was so swift. But there's
no question that you can count twenty twenty two as
a full blown bear market. Yeah, so that's it was
almost like nineteen eighty seven. It's just this one off
event and you can just say those don't count. Yeah,

(04:02):
I mean, it's just just call that a bear market.
I mean, even in the eighties and nineties, what was
a bear market? I mean, the eighty one eighty two
sell off was a bear market, The nineteen nineties sell
off was a recession and a bear market. Of course,
two thousand and two thousand and one, two thousand and two,
so if but you definitely could have started the clock
on bull market bear market after twenty twenty two, and

(04:26):
when you look, when you get to year three, and
that doesn't mean you're not gonna have sell offs. Bear
market in this example is defined by a twenty percent loss,
so you could have a ten percent loss and you're
still in that bull market. And when you look at
it it on average, when it gets to year three,
when the bull market gets to year three, you have

(04:47):
five more years, right around eight years combined average average
on average. And it's not just the time. The time
is important, but the amount of move. And that's that's
kind of sort of why the COVID rally faded. We
had moved so far so fast, one hundred and fifteen
percent in just under two years for the S and

(05:08):
P five hundred off that bottom, and then one hundred
and fifteen percent before it it peaked out January third
of twenty two. But you look at how far things
moved in the prior rallies. The two thousand and nine
through twenty twenty rally four hundred percent, the one that
ended that was the two to seven rally one hundred
and one percent, five hundred and eighty two percent, for

(05:31):
the one that ended eighty seven through two thousand, two
hundred and twenty nine percent, the one that ended with
nineteen eighty seven, and then the seventy four through eighty
one hundred and twenty five percent. Today we're at seventy
one percent, right, So the even if it's length of time,
it seems like there's a long way to go. If
you look at history, could we get more volatility? We

(05:52):
sure could, because we haven't had much in a year
and a half. But every one of those bull markets,
by the way that you're describing, has ten to fifteen
percent in it, just not a twenty. Yeah, so just correct.
People need to remember that. Yeah, And I think that's
what people are worried about. Even when you get a ten,
you're worried about a twenty. But it's just not as
common as you think. So how do you use this
in terms of your guide? Well, if you're using this

(06:14):
as your guide and you're looking at historically historical bullmarket
bear markets, the only thing it really does for you
is if you're gonna get a little bit more cautious
it changes the degree. Okay, if you're in year three
and historically bull markets go eight years, your degree of
cautiousness needs to be thinking along the lines of five

(06:36):
to fifteen percent on the sell offs. If you're in
year nine of a bull market, your degree of cautiousness
should be higher, Okay, And so that's all it really does.
We are not trying to predict when the sell offs occur.
But if you're going to use history as your just
general guidelines, you're going to put these guardrails on. It is.

(06:58):
If I'm going to get negative and I see a
ten percent pull up pullback, I should get more positive.
If I'm in year three, okay. If I'm in year
nine and I see a ten percent pullback, maybe this
is going to go farther. Yeah, And so that's where
you can use that in your portfolio management. Even in
the shorter term though, Brad, the numbers look pretty good.

(07:19):
And I just want to touch back on this. I
mentioned for the year January and February higher right now February,
you know, February looks it looks like it's what what
are we on in the month here? Well, I don't
have the actual I have the one month figure on
the S and P, which is two point six, but
that's not the full month. Yeah, you're almost getting inauguration

(07:40):
to for the one month, right, But when this is
kind of some amazing stats I mentioned since nineteen eighty
you can also go back to nineteen fifty on these
numbers as well, when January and February are positive, you know,
all years since nineteen fifty or nine and a half
percent all years years where January and February positive is
nineteen point eight percent average, And I mentioned the only

(08:04):
negatives being twenty eleven. Nineteen eighty seven was negative for
the rest of the year, but not negative for the
full calendar year. That's it. Before eighty seven. If January
and February were positive, it never happened that you were
back thirty seven years and you never had a negative
rest of the year. The average for the rest of
the year is twelve point three, which would kind of

(08:27):
based on where we're sitting right now, would put us
right smack dab on the average. So once again, even
in the short term, you know I mentioned you mentioned
the long term bullmarket eight years. If we're in year three,
it changes your degree of negativity. Well, even in the
shorter term, meaning the next ten months, when if January
and February turn out to be positive, that would also

(08:47):
change your degree of negativity. To say, well, historically, when
January and February positive, it ends up being a pretty
good year. So if I get a ten percent pullback
or even close to it, especially want ten doesn't need
to be the lion this, especially especially one that you
got out in front of and maybe you reduce risks
leading into you're probably gonna want to buy that. So

(09:08):
you know, if you were able to have an advisor
like ourselves that was in there making the moves where
we we got portfolios a little bit more conservative and
we did have that correction, history tells us you probably
should buy that this year. Yeah. Absolutely, And if you're
doing it on your own, you need to be aware
of what that feels like. Okay, there's not it's going

(09:28):
to be more pessimistic when you turn on the TV.
It is things are going to look worse than they
look today, because today they look pretty good and we're
fully invested. You know, I think that there's a lot
of good things to come. However, we're kind of preparing
ourselves for if this pace continues, increments of de risking portfolios.
But then when you get the dip, be aware we

(09:50):
will be in a negative news cycle. There will be
something that that whether you turn on the TV or
pick up the newspaper, they'll be telling you this is
the big one, and that's what they that's what every
even five percent sell off looks like. So when you
look at that, the way to do that and the
way that looks is I think a lot different than
almost any time in the last twenty years, Brad. Because

(10:12):
historically it's go to cash, go to short term bonds.
And obviously you can do that, that will work. Uh,
but even some of the buffered investments that are out
there now where you can get downside protection and buffer
the downside of the S and P through exchange traded funds. Yeah,
you're not talking about an annuity here, you're talking about
products inside your portfolios. Why traded like an index ETFs

(10:35):
traded daily minute minute to minute, not something with a
ten year surrender, right, And this is this is why
it's so much more useful than the annuity strategy because
once you're in a buffer or an indexed annuity strategy
and the market corrects, that's nice. You won't lose in
that calendar year if it stays down, but you have

(10:56):
no ability to take advantage, so you won't know, how
are you going to advantage of COVID. You won't lose,
but you can't take advantage okay. COVID's a perfect example.
If you had bought one of those buffered annuities before COVID,
actually in a year, you actually may have been positive.
But if you were in a liquid buffered product like

(11:16):
an exchange traded fun in a managed portfolio, you could
flip that over to the regular s and P or
the Nasdaq one hundred. When there is a drop, you
cannot do that. You're stuck in the annuity. And you
know you obviously can always go out and buy short
term treasuries as you're downside protection. But I think these
buffered UH investments, you're going to see more and more

(11:40):
of these ets brands. I think you're gonna see buffered
investments on virtually every single asset class, whether it be
small caps and mid caps, whether whether it be emerging
markets in China. You're going to see a buffered investment
on everything. And I think we're not that far away
from AI and all the technology involved creating buffered investments
on in vigil stocks. You're gonna be able to go

(12:01):
out and say, not a recommendation to buy or sell.
I want to own in Vidia, okay, But I look
at this volatility, it goes up or down forty percent.
I want exposure to Invidia. You're gonna be able to
get a buffered investment as an ETF on in Vidia,
and I think that that could be an attractive investment
for people that are further along towards retirement wants some

(12:23):
exposure to those names, but don't like the upside the
downside potential that they could provide. So I don't think
we're that far away from virtually every name in the
S and P five hundred having a buffer ETV and
if you are an individual stock order, I think it's
a way more useful tool than even setting limits, buying
covered calls, doing any of that. Well, what's interesting. You're

(12:47):
just flipping the switch to say I want a little protection.
They've already done the two times three times, which I
think are terrible because the way that math works. I
don't you don't even want to be involved in those, okay,
because it's only gearing on the day the count. You
don't be very very careful of those. They have two
times Tesla for example, they have three times Tesla ETFs Okay,

(13:10):
But I think where they've missed the boat is not
on the upside. I think we're where these companies are
creating these products have missed. The boat is on the downside.
People want the downside protection, but they want the exposure. Okay.
If in Vidia goes up one hundred percent and I
go up fifty, I'm okay with that. Okay, because I'm
getting downside protection. You're starting to see it mostly start

(13:32):
in ETFs connected to big indexes, but I think you're
gonna see it at the individual stock level. But back
to our original point. When you want to reduce risk
this year, for example, and you want to be able
to have one lever to pull, that's a great thing
where you can look at and say, all right, I
own the Vanguard SMP five hundred. Give me the exposure
to the SMP with half the downside. Okay, you're not

(13:57):
gonna be able to Vanguard doesn't offer that. Okay, you're
gonna have to buy. And there's a lot of different
companies that offer an S and P with that downside protection.
But then if we get that ten percent sell off
and you went down five, you can roll right back
into the S and P and take advantage. Or if
we don't get it at all and the market just rips, fine,
We're still participated. You're still participating. I've just sat on

(14:19):
the sideline and waited and waited and waited, because right then,
what's the entry point, you know, after the market's moved
up one hundred. It's a tough call to make, that's right,
and so a lot of different ways to do it,
probably more different ways to do it than ever before,
given the new investment products that are out there. But
one way you don't need to do that is tying

(14:40):
your money up in some big long surrender period in
an annuity, and market moves too quick for that. I mean,
it's okay. I always tell people, well, the good news
is you won't lose money. Yeah, okay, and that is true,
you won't lose after But most people are in it
thinking they're getting something else. They think they're getting a
market like return, right, and it's just never going to
be that. No, you're you're adding an entire higher extra

(15:01):
layer with the insurance company on top of it. And
if you if you beat treasuries, that would be great.
If you do the same as treasuries, that's probably more topical. Yeah,
they're not creating something out of thin air, folks when
they do this they take your money and they go
buy treasuries. Yeah, and then they take a little part

(15:22):
of it and they buy upside calls on the on
the SMP, think logically, how how an insurance company works.
They take your money in, they're going to give you something.
They have to invest it. Well. They can't buy the
overall market because that's too much risk because they've guaranteed
your losses. So the only thing they can buy is
options with a very long date of maturity or treasury bonds,

(15:42):
and they usually do both well. In the end, you're
not going to do much better than those treasury bonds. Yeah,
So what did we add to it? Then we added
to it the insurance companies costs and fees for the product,
the commission and the commission for the person that sold
it to you. And you could take both of that
out and just what they're doing in the wrapper of
an ETF that's right, And so the layer of all

(16:05):
that other costs is stripped out, and you're you're definitely
going to outperform over time. So with the SMP up
four point six already this year, Brad, we're not even
two months into the year. This is what we're talking about.
Do you need to take a look at some point
in the first quarter. You know, the first quarter is
still looking pretty good, but at some point in the
first quarter at moderating your risk overall. Boy, it is

(16:26):
really broad based though. This is one of the more
encouraging things to see. If you look at the S
and P five hundred brad at four point six, I
have one, two, three, four, five, six, seven, eight sectors
beating the S and P. Okay, what we've had for
twenty four only two sectors beat the SMP. In twenty

(16:48):
twenty four, eight sectors are beating the S and P.
On top of that, and you look here to date
on the S and P at four point six emerging
market six percent, large four and nine percent small, foreign
five percent, all beating the S and P. Mid cap
mid caps both blend and growth four point nine and

(17:10):
eight point six both beating the S and P. So
that's very encouraging theme. And then I'll just close with this.
Dennis printed this out for me, and I think Ryan
Dietrich may have posted on this too. If you look
at the bull Bear Index, this is kind of a
crazy figure. The American Association of Individual Investors were their

(17:32):
most bearish in recent history in November of twenty three
at almost forty eight percent, very rarely over fifty. I
mean the market generally goes up over time. Okay, forty
seven point three percent of responded saying they were pessimistic
about stocks over the next six months, only twenty eight bullish.
The historical average is thirty seven bullish. Okay, thirty one

(17:56):
bearish a month ago, the most recent reading forty three
point four bearish with the SMP at an all time high.
It is the first time in history we have had
consecutive months of forty percent bearish or more with the
SMP at at all time high. In both of those
months never happened. So here we have a market now.

(18:17):
I think it's for some. For some it's Donald Trump related.
For others it's Donald Trump is a bullish indicator. But
it's amazing to see the pessimism. But the pessimism is
a bullish indicator. Is the fuel for the fire? Yeah? Yeah.
If everyone is bullish, if everyone is positive, there's no
one left to buy. So these when they try to

(18:38):
make headlines out of these consumer sentiment figures, they're missing
what the historical is, which is when you have more bears,
it's bullish for the market. When you have all bulls,
it's very negative for the market. There's no one left
to buy. There's no fuel left for the fire, as
you put it. Twelve months after the November low of
forty seven point three percent bears, keep in mind, we're
at forty three right now. The SMP was up to

(18:59):
twenty one and a half percent. One of the drivers
of the fear right now is the global trade war.
Forty two percent of managers fund managers say that's the
biggest risk right now, up from thirty percent a month ago.
Fifty eight percent say gold would be the best performing
asset in a trade war. So I guess I mean,

(19:20):
I mean gold's gun fine. It's done fine. The batting
average is just horrible, and so you only see these
headlines after it's done fine recently, and it's such a
up a pile on and boy, go look at a
long term chart and start zooming into how how long
these goldys. Gold was at four hundred and nineteen eighty. Yeah,
the Dow was at one thousand. The Dow's at forty

(19:40):
five thousand, and golds at twenty nine hundred. It's not
close on the performance plus the Dow paide you a
dividend if you owned it, Yeah, and Gold and Gold
did not. Let's take our first pause here we come back.
I want to talk a little bit about Doge, the
cuts and maybe a few things that are making me nervous.
Most of the things I think are great, but there
are a few things that make me nervous with some

(20:00):
of the cuts that we're going to make. Let's talk
about that when come back from the Blake break. You're
listening to Kevin and Brad Kurston, We'll be right back.
Welcome back to the show. You're listening to the advisors
of Kirsten Wealth Manager Group, Kevin Kirsten and Brad Kirsten.
As a reminder, we are financial advisors and our offices
are in Perrysburg. Give us a call throughout the week
if you want to set up a consultation to review
your financial plan. Whether you're just getting started, well on

(20:24):
your way to retirement, or already in retirement, be happy
to sit down and review what you have going on.
Four one nine eight seven two zero zero sixty seven
or check us out online at Kirstenwealth dot com. I
did have two weeks ago market commentary that we didn't
get to nice summary of twenty twenty five Brad things
that we're looking for. It'd be one week old in

(20:47):
on our website Kristen wealth dot com. But it's pillars
of the bulbear case for twenty twenty five, and we
might get to it on this show. We might not, but
it's a good read for if this happens. This obvious
is bullish. If this happen, this happens, it could be
what triggers a correction. And we're talking about feeling pretty
good about twenty twenty five, but also knowing that there

(21:10):
will more than likely be a correction at some point,
and so we go in that market commentary and look
for the things that we're looking for that might cause
that hiccup. A little bit longer of a market commentary
than normal. So yeah, definitely worth a print out. One
from February tenth. Yeah, yep, so Kevin. Before the break,
I was mentioning the doche cuts. If anybody is not
on xeting, you're getting a partial story from networks like Fox,

(21:34):
and you're getting zero of this story from the other networks.
You know, it's amazing. These a lot of these networks
and news organizations were on the take and they cut
off these payments. And now the headlines from not actually
not necessarily The New York Times, but Politico and Reuter's
is that the cuts are all bad and we're hearing
from people and everyone hates it. Well, I don't think

(21:56):
that's the case. I think most people eighty twenty and
the only twenty that that don't like it are ones
that were probably doing things they shouldn't have been doing
in the first place, and now they've gotten caught. But
what came out this week, you got to get on.
You have to get on X. Department of a Government
Efficiency is posting about every four hours something that they're

(22:17):
finding or cutting. But also the other agencies are too,
the Treasury, the EPA, they're all posting all of their
cuts screen shots. You know, at first everyone's saying, where's
the evidence. They're posting the screen shots of exactly what
they're halting, stopping clawing back. Every night, Yeah, I wake
up in the morning and there's something new that's pretty large.

(22:38):
The ones that were coming out yesterday were everything that
was going to to migrants, going to non US citizens,
and so everyone is saying you can't cut SOID security. Well,
are their immigrants getting SOID security? Nope, but they're getting
disability to the tune of four billion. There are illegal immigrants,
I mean illegal illegal immigrants. U yeah, undocumented, Uh yeah,

(23:05):
somebody without a Social Security number. They sign them up
for disability, give them a social Security number. They're not
a US citizen, and they're understand how that happens. Well,
there's a whistleblower out there. You can see the interview
on AX and she's she walks you through exactly how
they were instructed over the last four years to basically
recruit illegal immigrants to uh teach them how to get

(23:26):
on disability, social Security and then once they're on it,
they're on it for life, and they are also on Medicare.
For that four billion dollars is going out to illegal immigrants, migrants,
four billion from social security disability and along with that
forty billion and this is annually going for Medicaid and

(23:47):
the chip that chill chill child program. Whatever that's good
I think with yeah, it doesn't even matter. Forty billion,
another forty billion for another program, fifty nine billion for
tax credits for Obamacare. So to get your free healthcare,
fifteen billion for food stamps, and thirteen billion for another

(24:12):
child program. So all told, it's like one hundred and
eighty billion going to people who are not US citizens,
who are here illegally, and so I think they're cutting
all of that off this week. Now you cut all
that off, the incentive for coming here and the incentive
for staying goes down. And that's part of what we

(24:33):
did in twenty sixteen, seventeen eighteen, is take the incentive
away for say, companies to do tax inversions and leave
the US and domicile somewhere else to get lower taxes.
If we take the incentive away for people to come
here and get free money, then you'd have less people
that even want to come. So that was out this week,

(24:54):
and it's one of the many things with Medicare and
Social Security where people are trying to fear monger saying, oh,
you can't make any cut. Oh they're making cuts. They're
gonna cut your social security. And then they will have
to come out and say we are not cutting anyone's
social security who's a US citizen getting soid security. But
here we have all this fraud from old people. Maybe
I mean if it was a fat finger mistake and

(25:16):
you're not really one hundred and fifty, but you're you're
sixty five and they put your birthday in as one
hundred and fifty, they stop it for one month, you
call and you get it fixed. That's fine. But how
many people are either deceased or shouldn't be getting it
in the first place and are getting Social Security? That's
the other fraud. So are they going to cut out
of the Social Security? What's going out? You bet it's

(25:37):
gonna come on the fraud or for the illegal immigrants
that are getting solid security disability, and that's a big
savings for you who have paid into Social Security to
preserve your social security. Everyone should be happy. Anyone who's
getting Social Security and sees what these cuts are should
be mad that it's happening in the first place, and
happy that it's finally getting cut because it was going

(25:57):
to eat in to the soci Security Trust Fund and
make it and solve it even quicker. So yeah, I mean,
we got to find more though, I mean the running
tally's only like fifty five or sixty billion at the moment.
It's not enough. We got to find more. We are
cut only one month in. I know, and and listen,
and they're going, I've heard Kevin O'Leary from Shark Tank
on CNN's you know, keep Pushing, Keep Pushing, and I

(26:19):
completely agree with that. But they're talking about this doge
dividend of twenty percent. So I was gonna say, the
two things that make me nervous or I don't want
the dose dividend is an absolute ridiculous thing. Well here's
the thing. Okay. For one, you could only give it
to people who paid taxes. Yeah, okay, and it would
it would be required to be pro rated, in my opinion,

(26:41):
so a lot of people will expect a free handout,
because that's what happened after COVID. If you're not paying taxes,
you can't get a doze dividen at number one. Number two,
if it's twenty percent of say one hundred billion, okay,
that's twenty billion dollars, okay, and there's what one hundred
million taxpayers probably, yeah okay, So ten dollars per one

(27:01):
hundred million of taxpayers, kid is a billion? Yeah, okay,
is a billion. So if we do twenty times that,
that's two hundred dollars of a doze dividend per taxpayer. Well,
and what's it cost to administer and figure all that out?
Don't worry about that, Go make more cuts. Put it

(27:22):
right back to the current annual How about a set
of a doze dividend. Okay, but here's what's going to
happen with the tax cuts, Brad, that the tax cuts
extending the current tax plan. Yeah, okay, they're going to
do this Congressional Budget Office thing, and they're saying, well,
you know, if we extend these Trump tax cuts over
ten years, it's going to cost a trillion dollars. Now

(27:46):
they can say to me, it pays for itself. Doze
is finding one hundred billion a year. Yeah, well, if
you're going to extrapolate the tax cuts over ten years,
then let's extrapolate the DOGE thing ten years. If they're
going to find a hundred million of ways per year
over ten years, that's a trillion dollars. Okay. Use the
DOGE money as the negotiating tool to make the tax

(28:09):
cuts go through. Okay. If you start sending money out,
then the numbers that we run on the tax cuts
don't look as good. Use this money as the fuel
to be able to keep and expand. What I'd rather
see is cut another percent off all the brackets. Yeah, okay,

(28:31):
extend the standard deduction, Extend the state and local tax
deduction that was stuck at ten way more So, I
think if they pull it, and I think they're going
to see some feedback, they're already already. You can see
the feedback on AX if you get on there and look,
nobody wants it. I don't care if your low income

(28:52):
tax bracket or high. Nobody wants the dose dividends, So
don't do it. I think they thought it was going
to be really popular. I think they're going to find
that it's not. And if it's coming in and in
lieu of bigger tax cuts, it really will be unpopular.
So that's the one thing I think is we should
not be talking about. They just started this talk today.
The other that they're starting to talk is auditing Fort Knox,

(29:12):
And like I told you yesterday, to me, there's three scenarios.
It's all there, and we're in the same boat we're
in now. Some of it's gone and that's bad. All
of it's gone and that's horrible. I don't think there's
anything good that can come of it. Let's just drop it.
Let's just assume it's there. And I don't know why
that makes you nervous. I mean, number one, it's a
conspiracy theory. Number two, just like all these conspiracy theories

(29:34):
that have been proven true. There's not that much money there.
There's not that much there, Okay, I know, But what
will the market think. They'll think it's the end of
the world. I think it's more likely that they have
gold in Fort Knox marked it five hundred dollars an
ounce and it's worth three thousand. Well, that is true.
That is true. So it is more gold than you think.
If it's all there, it's way more gold. Well e

(29:55):
because they're not marketing it to market. Even if it's
one fifth the gold that we thought, it still has
the same value on the government balance sheet. That's true.
I'm worried about the market reaction. Okay, I know it's
not a big deal if it's all gone, it's not
a big deal because it was never there. But the
market will react, and that that I don't like. Yeah,

(30:16):
Wall Street Journal is picking up on this too, because
CNN and MSNBC are where's the proof, where's the proof
of the fraud. Where's the proof of They're not on
X looking it's all there New York Times. Oval Office
must makes broad claims of federal fraud without proof. What
do you want? And it's a strange thing. I wish

(30:38):
when Elon and Trump were getting interviewed by Hannity this week,
they would have said, you know, this is really easy.
And what I mean by that is it's not that
hard to do exactly what the American people want, like
getting rid of fart what is that pulled ninety nine
percent to one, getting rid of waste, fraud and abuse.
You want people to steal tax dollars? Yeah, no, I

(31:00):
don't who I see these people on CNN. It's like
they're fighting for the fraud. It's weird. Yeah, what is
it eighty twenty or eighty five fifteen? Uh? Doing something
about the border and the rampant illegal immigration. To me,
it's like if I were Trump, It'd be like, you
guys are making this easy on me. All I'm doing
is doing exactly what the American people want. Okay. And

(31:22):
so when it comes to that, Ukraine not popular, No,
no one wants it. And yet Lindsey Graham put out
a bill on Tuesday Night that included Ukraine funding through
twenty thirty, and it is one hundred percent on the
comments on X one hundred percent say don't do it,
so they better be looking. No one wants that, not

(31:43):
a say. American people are sick of wars, they're sick
of wasting money, They're sick of illegal immigration. This is easy,
this is easy. Why do you think Donald Trump's approval
rating is the highest it's ever been. Well, let's do
the math here. If the American people want something and
then as president you do it, they like it's the

(32:04):
toughest thing in the world. Why do we have presidents
that come in that don't do what the American people want?
You have presidents running on things all the time and
they get voted in and then they don't do it.
No new taxes for Bush, and then he did taxes
and then he didn't get reelected. I just don't think
people believe anything they hear about Ukraine, and they're just like,

(32:26):
I don't want to give him my money. That's it.
That's it. I mean, everybody in America scrutinizes for the
most part the money they spent. But yet twenty or
thirty percent of their money is going out to taxes
and it's like, Eh, I'm not gonna gonna worry about that,
Like now we finally are. The Government Accountability Office report
last spring estimated that the federal government could lose between

(32:48):
two hundred and thirty three billion and five hundred and
twenty one billion annually to fraud. This was before Doge Brad.
This is the GAO. Before Doge saying this, a federal
auditor said a government WIDEPPRO, which is required to address it.
That's what DOJ is doing and recommended that to Treasury
leverage data analytics capabilities to stop questionable payments. This is

(33:09):
exactly what DOJ's doing. This was a report from last spring,
a year ago. So all they're doing is exactly what
the Biden administration under the Government Accountability Office had pointed out. Okay,
I'm not gonna get a Biden credit, but I'm saying,
why are you upset? They've been talking about fraud and
abuse for years. They did a report out of the

(33:31):
Government Accountability Office to talk about what the fraud was.
Now Elon and Trump are pointing it out and you're
mad about it. Not just pointing it out, they're actually
cutting it off and just stopping those payments. So it's
fixing itself. So they want proof, they want proof. Last year,
this GAO said eleven to fifteen percent of all unemployment
benefits are fraud. This is one hundred to one hundred

(33:54):
and thirty five billion per year. Some went to transnational gangs, prisoners,
state sponsored hack The Labor Department as a spector General
estimated one hundred and ninety one billion in proper pandemic
unemployment payment. Well, we know that that was a complete,
complete fraud across the board. Secret Service found hackers linked
to a Chinese government stole at least twenty million in
COVID benefits. The Pandemic Employee Retention Credit ERTC has been

(34:17):
another ripe target. According to the IRS, a California prisoner
claimed more than five hundred and fifty million dollars from
the Employment Retention Tax Credit IRS plause processing of ERTC
and twenty twenty three because of rampant fraud. It was
initially estimated at fifty five billion. The program for EERTC.
You hear these commercials, Yeah, how do you know it's fraud?

(34:40):
You hear these commercials? You're spending money on a commercial
and a whole law department is dedicated to getting you
through the application process. The government IT systems are one
of the culprits. They lack fraud controls such as identity verification.
Agencies also don't internally share data with each other to
identify the red flags. So in twenty twenty one, Congress

(35:04):
authorized a pilot program that gave Treasury access to the
Social Security Administration's full death master file to prevent payments
to dead people. This is what Musk is talking about. Democrats,
knock it off. You support this, You just don't like
who decided to do it. Biden had his chance, he
didn't do it right. So everyone supports this, you just

(35:25):
don't like the mouthpiece of where it's coming. Don't have
to be a partisan issue. If they just said, yes,
we all know we need to do this. Who's the
biggest lib billionaire out there. I don't even know who
sorrows If someone from Soros organization was saying this, they'd
all be going, rah rah, this is great. Yeah, okay.
Better financial controls, technology and data sharing could produce irs.

(35:47):
Improper payments include the including the earned income tax credit,
estimated to be thirty three percent fraudulent, Obamacare Net Premium
Tax Credit twenty six percent estimated to be fraudulent, the
refundal portion of the Child Tax Credit fourteen percent estimated
to be fraudulent, and the Educated Tax Credit Education tax
Credit thirty one percent estimated to be fraudulent. Those estimates

(36:11):
came from the Biden Treasury Inspector General for Tax Administration.
So once again, why are they complaining? And so it's
not Trump and Elon saying these things. It is Trump
and Elon finding them and cutting them off. But it
was kind of universal that everyone knew it was there.
It's just one side's doing something about it. The other

(36:32):
side wasn't. Health and Human Services under Biden last year
estimated eighty five billion in improper payments for Medicare. That's
the Biden administration. Elon is just executing what Biden suggested,
suggested that and didn't do. He had a chance, he
didn't do it. So it's like they put all these

(36:52):
reports out and they handed him the body and then
nothing happens. Yes, okay, it's ironic to say the least
that Democrats have lambased to peer to peer payment app
Zell for not doing enough to prevent fraud. Zell's estimated
fraud rate, and this is one of the things on
Capitol they were saying, you know, oh, we got to
protect people. Zell's estimated fraud rate was point one ninety

(37:14):
nine percent lower than the goal for government programs, which
many agencies don't achieve. Maybe they need to know your
Customer rule so they don't send money to criminals. We
all have these know your customer rules, right, Yeah, we
do here. Hm, we don't have a know your customer
rule for the money that we send out of the
federal government. Yet if you're a financial advisor or a

(37:35):
banker or or in the banking business, you have to
jump through a million hoops to make sure you know
your customer and who's getting the money and where it's
going and verifying. And that's why we're finding out now
that the government payments are going out to organizations that
have a generic name and then who's running it, and
it turns out to be people that are basically just
getting a kickback out of the Treasury. Yeah, I mean,

(37:57):
it's we know it's there. They have the proof. But
you're in a situation now because it's Trump and it's Musk.
If he says the sky is blue. They would say,
prove it, and it just doesn't work. The American people
don't buy it any more. Brad and I think that
I hope that they keep pushing. I hope that they really,
you know, keep pushing on this because if it goes

(38:17):
three months and then fit fades away, the government's going
to go right back to what they have a lot
more work to do. Absolutely, take our next pause. You're
listening to Money Cents, Kevin and Brad. Kirsten will be
right back and welcome back. You're listening to the advisors
of Kirsten Wealth manage Re Group. Brad and Kevin here
with you this morning. If you're listening on Ihearten didn't
hear it or on the podcast and didn't hear any
of our ads We are professional financial advisors in Perrysburg, Ohio,

(38:40):
and you can find a lot of information about us
on our website Kirstenwealth dot com. Kevin wrapping up a
lot of this doge discussion. I did see a Columbus
I think it was Columbus Dispatch article about two different
government offices in Columbus not extending the leases, and one
of them was a social security office that apparently nobody
was ever going to. The newspaper went knocked on the door,

(39:03):
there was nobody there, and the person next door said,
we never we go weeks at a time without seeing
anybody in that office. And it was one that was
costing at tax payers over the new least term four
hundred and fifty thousand, I'm sorry, four hundred and five thousand.
And then also a bankruptcy court, a US bankruptcy court
office that they were barely using that was gonna cost

(39:25):
seven and a half million dollars over the next five
years canceling that one was four thousand square feet. The
other one's sixty one thousand scare feet. But that's gonna happen.
That's just Columbus, Ohio. That's gonna happen all over the country.
So talk about another savings that people would say, oh,
that's only eight million of savings. Well eight million times
five hundred cities where this could potentially happen. All of

(39:48):
it adds up, and it's every year. And it's one
of those where you'll hear the initial number on savings,
but when the government wants to do it, they'll say, well,
over ten years, that's gonna cost this. But when you're saving,
they just say what the savings is this year or
this month. Well, over ten years, it would have cost
ten times more. And so that's exactly what they're doing

(40:08):
with those right now. Yes, all the savings seem like
one offs, but these were things that the government was
spending money on year or after year after year. Yeah,
so you could you could do it on one hundred
year savings if you wanted to. They all add up,
they compound, they're all savings. There is not there's none
of it that is too small, especially when it's it's
it's month after month payment and annual savings. So it's

(40:30):
all important. Hey, in the Wall Street Journal, I saw
a headline that seems very typical almost of tops, but
I think it's a it's typical of our times and
it and the headline said this, some younger Americans are
embracing risky investments like options in crypto and making purchases
on margin. Okay, this is this is nothing new you

(40:53):
and I've read several Wall Street Journal articles where when
I read that the you've had these huge runs in
various things like crypto and and and then investors don't
want plain old stocks. They want, you know, things that
are more exciting, like crypto because they go up one
thousand percent in the last six months. Yeah, and you
can't lose, and you can't lose, and so here we are.
And I saw that do options and margin. Okay, this

(41:15):
get rich quick is more an obsession because of social media.
And I think, by the way, it's also nothing new.
This has been true since the beginning of time, that oh,
my parents are dumb and old and they do things
the old fashioned way. That was true thirty years ago,
it's true fifty years ago, it's true hundred years ago.

(41:36):
And what happens is the same cycle of fear and greed.
The only difference is the young people haven't gone through
a bust and then when they do. But they're also
not posting on social media their busts because there are
a million mean coins out there that go up, somebody
buys them, and then they go straight back down, go
to zero. In some cases, nobody's posting those essential gambling losses.

(41:58):
I saw And it's probably a book I'm gonna listen to.
Andrew Ross Sorkin has a new book. He did a
big book on the crash of two thousand and eight,
and he's doing a big book about nineteen twenty nine,
and they were talking about it this morning on CNBC
and he said, what struck me about all the research
I did for the book is nothing changes. Everything is

(42:21):
the same in the end in terms of panic and
greed and fear, in terms of investing. When the people
get in the room, they're the same people in nineteen
twenty nine as they are in twenty twenty five. And
so you get the top ruins them and fear at
the bottom ruins them, and you need to be doing
the opposite. In the late nineteen twenties, all of people's

(42:43):
parents they didn't know about the stock market. Okay, when
you were a twenty year old in nineteen twenty eight,
your parents didn't know about the stock market. What do
they do with their money? They put it in a safe,
or they put it in a bank. They didn't invest
in the stock market. Then the stock market does this
huge run up, and what are all the young people
in nineteen twenty eight say, I'm not predicting a twenty
nine style crash. Oh this is the new thing. This

(43:05):
is the new thing, just like cryptos the new thing.
Oh yeah, the crash is going to come in the
new thing. It's not gonna come in the old, boring thing. Well,
and the reality is whatever you're talking about. If it's
the crash of twenty nine, if it's the rise of
the nifty to fifty, if it's the dot com stocks,
if it's me Ai, if it's meme stocks, there's always

(43:26):
a sliver of reality in it. In that was the
Internet not a game changing technology, of course it was.
Was Is ai not going to be a game shaging technology?
Of course it is. But people get the idea right
and the investment wrong, as we always say, And you
may get the idea right, but in the meantime you
might lose sixty seventy eighty percent. And the only reason

(43:48):
there's articles out there with young people talking about, oh well,
I just prefer meme stocks or crypto is because it's working. Okay,
because it's working, and it's very easy and can convenient
to say that you love the thing that's done. Great.
Oh aren't you unique? Okay? The moment we go through
a correction, how you define yourself as an as an

(44:11):
investor is not how you do in the bullmarket run ups. Okay,
it's not only how you do in the downturns, and
maybe not so much your performance, but how you behave
in the downturns. It's much more important. I've had people
who ask me about individual stocks and leveraged individual stocks
and options, and as soon as a crash comes, I'll

(44:32):
get a question about, Hey, have you heard of this
thing called high yield savings accounts? That is that thing
I should be looking at. Yes, weren't you just asking
me about margining your account? I just had it recently
where somebody with a pretty low risk profile is asking
me about some mailer they got that talked about some
startup private equity company. Okay, how can we talk about

(44:57):
conservative being and then come with capital that could go
to zero? Right? Is in the I mean to me,
it's like ordering the salad and let me change my mind.
Let's go with French fries. Like those aren't the same things. So, yes,
you have to be careful. And what is it A
buffet quote talks about don't confuse your brilliance with a

(45:20):
bull market, and that is very true as we go.
I certainly think that this bull market is pretty healthy
at the moment, but it can change on a dime
and people need to be prepared. Take our last pause.
You're listening to money Sents. Kevin and Brad Kurston will
be right back. Welcome back to the show. You're listening
to the advisors of Kirsten Wealth Manager Group. Kevin Kirsten
and Brad Kirsten just have a couple of minutes left. Brad,

(45:42):
is I want to hit on something that that comes
up a lot, in particular with retirement accounts. Iras. They're
very they're great vehicles in retirement to create steady, stable,
long term income. They are not a good vehicle either
in retirement or quite frankly before retirement, which we see
a lot of too, of taking one time withdrawals for

(46:04):
things that you need, whether it be a car, whether
it be a second home, second home, whatever it is.
Because of it's all ordinary income. It can send you
into the next tax bracket. It can send you into
a situation where you're paying more for the next two
years on your medicare. There's a lot of different things
that happened, So just a warning out there about be

(46:25):
careful in retirement, about thinking of your retirement account as
a good place for these one off, one time withdraws
like thirty thousand dollars for a car, because you're gonna
end up taking out forty to get thirty. I did
have a situation recently, for example, there are accounts that
are good for this. Someone that I had as a

(46:46):
client recently inherited some money. It was in an after
tax account. There was a step up in basis and
they had just purchased a car, and of course they
weren't expecting this inheritance. They had just purchased a car
with over a six percent interest rate. There's a perfect
example of us. The ideal time to do that, that's
when you went can either pay a no tax or

(47:08):
we're saving all the dollars on the interest because it's
not a first mortgage we're paying off. It's a it's
just like a credit card that the amortization is flat
across all payments. Every extra payment you make your saving right.
So you just have to be careful. There's a there's
a right type of account and a wrong type of
account to pull those lumps some withdraws from. And unfortunately,
if somebody has one hundred percent of their money wrapped

(47:30):
up in IRA type retirement accounts that are pre tax.
You may be better off with the monthly payment as
opposed to just paying whether it's the lease or just
getting the the the interest and taking it out monthly
and just take it a little bit more out but
not a big chunk so that you're jumping up a
bracket and just having to take so much out. Yeah,

(47:50):
and then pre retirement, I mean, we'll talk about this
on the next show. Pre retirement, it's even worse because
of the penalties that are involved with taking withdrawals before
fifty nine and a half. And I see that mistake
as well. Got a quick article on that. We'll cover
that in the next show because it is a mistake
that everyone who's preparing for retirement needs to be careful of.
Is big lump sum withdrawals either pre retirement or after

(48:11):
retirement from those IRA accounts. Thanks for listening everyone, we'll
talk to you next week.

Speaker 2 (48:20):
You've been listening to Money since brought to you each
week by Kirsten Wealth Management Group. To contact Dennis brad
or Kevin professionally, call four one nine eight seven to
two zero zero six seven or eight hundred eight seven
five seventeen eighty six. Their email address is Kirstenwealth at
LPO dot com and their website is Kirstenwealth dot com.

(48:41):
Opinions voiced in this show are for general information only
and are not intended to provide specific advice or recommendations
for any individual. To determine which investments may be appropriate
for you, consult with your financial advisor prior to investing.
Securities are offered through LPL Financial member FINRA SIPC.

Speaker 1 (49:01):
I don't know, I don't all