Kersten Wealth Management Group - Money Sense 4-12-25

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
Kirsten as we wade through what's going on in the markets. Brad,
I almost feel a little bit bad because we tape
the show typically a day or two, not a lot,
sometimes forty eight hours before the end of the week,
and obviously a lot happens our show that trying to.

Speaker 2 (00:22):
Do this as late as possible late on Thursday here
is to try to get all the news out there.
But yeah, we got a little bit more than a
day of market activity that could happen, so who knows.
And the market is really hanging on all of the
tariff relief news and if you don't get it, we've
had these days where you have a little bit of
positivity in the morning and it fades or the opposite,

(00:43):
which is what we had on Wednesday, which was no
news early and then by at one point thirty you
get this wild swing with the ninety day pause on Wednesday,
and you have the Dow surging biggest point gain ever
twenty nine hundred points for the Dow, the SMP having
its third biggest percentage gain ever and the Nasdaq having

(01:03):
its largest percentage gain ever all in one day. Twelve
and a half percent for the Nasdaq in one day.

Speaker 1 (01:10):
And I would say I would call it a precedented move,
not unprecedented. Yeah, it's a it's a precedented move. Did
anyone on TV in the last week talk about did
you hear a lot of this is unprecedented?

Speaker 2 (01:29):
Yeah? I heard a lot of that. Why are so many.

Speaker 1 (01:30):
People constantly on TV talking about things that are unprecedented
for which there is a precedent?

Speaker 2 (01:35):
I don't know. Okay, all right, so when you look
at what.

Speaker 1 (01:41):
What Sorry, I don't have the right I was going
to go through the precedence of how many times a year?

Speaker 2 (01:48):
Let's repeat that?

Speaker 1 (01:49):
And then when you have one of these selloffs, what
happens right after?

Speaker 2 (01:54):
You know, it's interesting when you do.

Speaker 1 (01:56):
Many people, too far away from my off here, too
many people ask us when's it? When's it gonna end?
When's it gonna end? When when's the volatility the downturn
going to be over?

Speaker 2 (02:07):
It does not matter, And that is the wrong go
After a little bit of a sell off, the batting
average goes up, and after a little bit more it
goes up to one hundred percent one year later, three
years later, five years later, and you get to the
point where you're even your three and five year average
in the returns, get to the point where the averages
double the normal market return. With that sort of batting

(02:30):
average and that sort of advantage, it doesn't matter if
it catch the bottom day and.

Speaker 1 (02:35):
The overall S and B five hundred got to a
little bit more than nineteen percent at the low, and
who knows where the eventual low will be. But closing,
closing nineteen point two, right, But at the same time, well,
you guys were calling for five to ten. Sure, by
the way, we weren't calling for five to ten. We
said that that would be normal and reasonable if that

(02:58):
were to happen. But when it happened, when it becomes more,
it's still not unprecedented. If you look at the S
and P five hundred from nineteen forty two, in the
post Great Depression era, five percent to ten percent is
three times a year, ten percent is once every year
and a half, fifteen percent drawdowns or more is once

(03:19):
every three years, and twenty percent more is once every
six years. Okay, what's happening in the last six, So
it's actually a little bit more often in the last
six because we have had infective. I'll maybe make it
seven years, because you go back to twenty eighteen and
nineteen point nine, so we'll call that one twenty, call
this one twenty, and then you have COVID. So that's

(03:42):
three and seven years.

Speaker 2 (03:43):
Oh, you had twenty twenty two. Excuse me, four and seven,
four and seven years, four to twenty percent off and
four years. So to think that we were going to
get another twenty would have been out of the ordinary,
and that's what we ended up getting. I mean, you're
not gonna get exactly twenty. You get nineteen point two.
That's fine, call it a twenty. That's four large sell offs,
but each one of them gives you precedent for what

(04:06):
happens next. But prior to twenty eighteen, there wasn't a
twenty percent sell off for seven years, so it's not perfect.
These are averages, But at the same time, anytime the
market sells off five, ten, fifteen, twenty, it's never a
huge surprise. It can and will happen. The question is

(04:27):
your reaction to it. We talk about retirement a couple
of weeks ago and We broke it down by things
that are in your control, things are partially in your control,
and things that are completely out of your control.

Speaker 1 (04:38):
What's happened in the last couple of weeks with markets
and tariffs is out of your control. What can you control.
You could control your risk profile going into it, and
you can control your risk profile going out of it.
You can control your emotions so that you don't panic
and make a huge mistake even making moves on our end,
I mean we we are being very very careful and

(04:59):
methodical in the adjustments we're making because markets can turn
around two thousand points in an hour, and if you're
out sometimes for even an hour, you can you can
do a lot of damage. So you have to be
really careful. Sometimes doing nothing is the right move in
these volatile times. And then you know, people will often
talk to me about, well, what if I just sit
on the sidelines and let me sit out for a

(05:20):
couple of days until things calm down a couple of days.
I mean, yesterday was a ten percent up move. You
have just ruined your long term performance. But one thing
you could do if you want to say, well, this
is a good time to maybe move my equity allocations
up a little bit, and even that can be a
risk depending on what you're doing in the day you're
doing it.

Speaker 2 (05:40):
Yeah, you can't. Sometimes you might say, well, let me,
I'll sell and then when I see my proceeds, i'll
buy tomorrow. Well, you would have missed out if you
did not.

Speaker 1 (05:48):
Wait until the volatility subsides a little bit and do nothing.
And then if in two or three weeks you want
to up, not reduce, up your equity allocation, and then
when the market to a new all time hi, you say,
I didn't like that downside. I want to be more cautious.
That's the strategy that makes sense. But let me go
back to the when we look at sort of the precedent,

(06:11):
the precedent for what has happened. And I gave you
a bunch of charts for biggest days up or down
of all time, and you can notice here there's three
distinct periods brand I didn't do nineteen eighty seven, and
we'll talk about that for a second. There's three distinct
periods that were very similar to because look at these days,
look what they're surrounded by. So we have twenty twenty

(06:32):
five in terms of best and worst days in the market.
What's it surrounded by? What period of time is it
surrounded by?

Speaker 2 (06:39):
Previously? I'm sorry you two thousand and eight, twenty twenty
are those are? You got a little bit of two
in there, okay? And I on the four day declines,
which we had the twelfth worst four day decline ever,
there's some nineteen eighty seven, so the four day decline
of twelve percent, and there's quite a few of them
that are right at that twelve percent. And like you said,

(07:02):
you take the eighty seven out because it's a different
world now with computerized trading and even the market closing
down when you get to certain levels, you really are
only looking at that two thousand and eight, twenty twenty
and the current.

Speaker 1 (07:16):
So if you look at two thousand and eight, the
market bottomed a little over seven hundred in October, and
then in March it went a little bit lower, okay,
about ten percent lower. So people say, what if it's eight, Okay, what.

Speaker 2 (07:33):
If it's eight.

Speaker 1 (07:33):
Now the extremes with O eight are much worse because
of the amount of debt and leverage that made the
downside much much worse. But if you're looking at the
days there's some similarities to October of eight. What if
it's eight, people might call you up, Brad, What if
this is eight.

Speaker 2 (07:47):
Okay?

Speaker 1 (07:47):
If it's eight, market will go about from the low,
go about eight percent lower, not the end of the world, okay,
and will bottom four months from now at about eight
percent lower. But here's the key. If it is eight,
and if it's twenty twenty, it's even better. But even
if it is eight, okay, if it is eight, one
year later, the market is up sixty eight point six percent,

(08:10):
not from.

Speaker 2 (08:11):
The low, not from the day that you you bought early,
from the peak volatility day, because the low and eight
was was actually the following year, March of nine.

Speaker 1 (08:21):
But peak volatility where the vics, that's the volatility in now.

Speaker 2 (08:25):
You had the biggest four day decline. Correct one year
from there you were even though you went lower, you
were still up sixty eight percent. Even though you went
almost ten percent lower, you were still up sixty eight percent.
So if you extrapolate that out to the current time,
SMP bottoms at about forty five hundred in the next
four or five months and you make only sixty eight

(08:45):
percent in the next year. If it is eight, Okay,
in a three year period, you would have made one
hundred and two point eight percent if this is eight,
and in a five year period you would have made
one hundred and seventy eight percent return. If this is eight, okay.
What if it's COVID. What if it's COVID and COVID
had two different four day sellofs, one that ended on
or yeah, that ended on the twelfth of March, one

(09:07):
that ended on the sixteenth of March, and they were
sixteen and a half percent four day and seventeen and
a half percent four day.

Speaker 1 (09:15):
So the low for COVID was March twenty third, Okay,
So you have approximately one to two more weeks of
volatility if it's COVID. Market will probably bottom sometime in
the third week of April, if it's COVID not guaranteeing it,
and it'll be a little lower from the low one.

(09:35):
If you bought the bottom day the twenty third, you're
up seventy eight percent yep. If you bought about a
week before that, you're up sixty nine percent, And if
you bought a week before that, you're up sixty two percent.
In one year and five years later, which is actually
right now. Strange enough, we're five years from COVID huh,
and we're down significantly from the peak. And I did today,

(09:56):
but you're up. But one hundred and fifty eight percent
through yesterday, those charts might be a little bit old, Brad.
One hundred and fifty eight percent, even with the drop
from the March lows of COVID.

Speaker 2 (10:08):
H So people will often say to me, what if
this is COVID, what if this is eight? What if
it goes lower by another day or two? And especially
if you're doing it on your own, at some point
you turn those dials a little bit, and that's saying
you're gonna ask yourself the same thing on the way up.
Oh we got back to an all time high again.
Oh we're ten percent above an all time high. But
everything looks great. You have to do it then, too,

(10:30):
to turn the dials back down. So we have these
stats up here, so let's go through them. Ready.

Speaker 1 (10:35):
So we have the biggest four day declines in history.
The one recently was twelfth. Okay, number one was nineteen
eighty seven. Number two was also in nineteen eighty seven.
But here's what I find most interesting about this chart,
Brad out of the top fifteen worst four day declines.

(10:58):
What do you find most interesting about what's on the
right side.

Speaker 2 (11:03):
That every one of them has one hundred percent plus
on their five year How about the fact that not
one single one batting average is one hundred percent. Yeah,
there's no negatives on a one year even. Yeah, there's
no negatives for one year. There's no negatives for three years.
There's no negatives for five years. So if you want
a time to say, what's the best time to invest, Well,

(11:24):
if you if you get a four day decline that
ranks in the top twenty, that's that's a good time
to invest because it's never never had even close to
a negative. The worst one year is eleven percent, and
that's if you bought early and o eight because you
still had some time to go down.

Speaker 1 (11:40):
The best one year is seventy percent, which is COVID.
The worst five year is well, that timings a little
suspect because that is August of ninety eight to August
of eight. Sure even that's thirteen to five year. Yeah,
after that, the worst one is eighty six percent is
the worst. Yeah, but there's not a single negatives. Say so,

(12:05):
if you bought any of the top fifteen worst four
day declines in market history. Not one time, one three
and five years later did you lose money?

Speaker 2 (12:15):
And I will say, you have a lot of friends
to say, you know what's you got a lot of
people calling you on that biggest down day? I can
I think it was one hundred percent. Every call I
got was asking us, what are you doing to buy
the dip? And can you do more? It was pretty consistent.
I can't remember getting one biggest down day.

Speaker 1 (12:37):
Dozens and dozens, if not hundreds of conversations with clients
over the years, and people talking about market history and
knowing the track record and knowing the history and by
the way, but it's different.

Speaker 2 (12:48):
This time will often be something.

Speaker 1 (12:51):
Well, nineteen eighty seven, we didn't even have circuit breakers
back then and the market broke. It was different. That
time still was a time to buy. Oh eight financial crisis.
It's different this time. We've never had this meltdown and
lending and loans and housing still a time to buy.

Speaker 2 (13:08):
One hundred year pandemic. It's different this time. It's always
different this time. Yeah, and yet it's not yeah right,
Even if you don't like Trump, you'd say, oh, he's different.
You know, his shock and awe approach is not with
the market lights That's fine. Well, that's why you got
this four day sell off, and then you got the
reprieve because the market thinks there's never going to be
any kind of glimmer of hope. And then when you

(13:29):
get it, there's there's a relief rally that ranks amongst
the best one days ever.

Speaker 1 (13:33):
So you have the four day decline top was it
twelveth you get the third best day on the rebound.

Speaker 2 (13:41):
If you're looking at the S and P five one.

Speaker 1 (13:42):
If you're looking at the S and P five hundred
and third best day ever since nineteen fifty.

Speaker 2 (13:47):
Okay, what if you bought at the end of that
best day ever, That's I think what you need to
look at. Because some people would say, well, I missed
the big messed up yep, yep, I was out and
I missed the big day. I can't be in.

Speaker 1 (13:58):
By the way, the two days that were better were
October thirteenth, oh eight and October twenty eighth, oh eight,
uh eleven point six and ten point eight up days.

Speaker 2 (14:07):
Recently we had nine point five yep.

Speaker 1 (14:09):
But if you bought after that best day, you think,
oh I missed it once again. So buying after the
worst four day decline no negatives on a one, three
and five basis, yep, buying after one of the top fifteen.
By the way, any one of these top fifteens if
you had bought on the upside, not one negative, one,

(14:30):
three and five years.

Speaker 2 (14:31):
And the worst one is ten percent positive on the year,
which is better than the market's averaged since nineteen fifty.
Just had two data points that both tell you to
buy that historically give you one hundred percent chance of success,
no guarantee, but one hundred percent chance of success on
a one year, three year, five year basis for stocks,

(14:53):
and that is buying after one of the top fifteen
worst four day declines and buying after one of the
top fifteen one days. Yeah, one day increase. So the
five year here is really interesting too, because it's almost
better than buying after the DECLs. Yeah, it's so much
more consistent. The average of all fifteen is better. The
worst is ninety percent. It's the number one one day decline.

(15:15):
So you bought after an eleven point six percent one
day increase, and your five year average annual is ninety
percent there's only a few under one hundred. The bulk
of these twelve out of the fifteen are over one
hundred percent, and I for just a glance, I would
say about eight or above one hundred and fifty percent
on a five year. So yeah, this volatility is concerning.

(15:38):
The volatility makes you nervous, But volatility means we're at
inflection points for the market. And sometimes it happens as
we muddle around the bottom, a spike down, spike up,
spike back down. And even looking at that biggest day,
you know, we had the April second announcement for the tariffs,
we had we had a down day, then a follow

(15:59):
on big down day on Friday, and then Monday and
Tuesday give you some down days. And yet the NASTAQ
was only one percent down from that April second. We
almost erased the entire thing and the market, you know,
nine point eight percent and one day. You erased half
of the downturn in a single day. So a lot
of people say, you know, I'm retired, I'm seventy something

(16:20):
years old. Will I even be alive to see this
market back in an all time high? Well, you erased
half of the downturn in a single day, and the
last in COVID and COVID it only took five months
and in two thousand and eight. Okay, yes it was
a five and a half year round trip, but it
was only four years if you are buying from the low,

(16:42):
which is a lot closer where we are today, and
that's one of the longer periods of time where you
kind of went sideways before you made a new all
time high. The longest that we've had here recently was
twenty twenty, where it took ten months to bottom out,
and it took about a year and four months to
get all the way back to that all time high.
So not as long as most people think.

Speaker 1 (17:02):
Another chart I found rad talks about volatility in the market.
There is an index that measures volatility. Okay, typically it's
in a range. Highest ever was March sixteenth of twenty
twenty at eighty three. Low readings would be around ten
ending under twenty, and you'd say we're not getting much volatility.

Speaker 2 (17:23):
If you looked that.

Speaker 1 (17:24):
It is only closed above fifty seventy five times since
the VICS was even created. It was created in the
early nineties, so.

Speaker 2 (17:33):
Seventy five trading days where it closed above fifty.

Speaker 1 (17:37):
We closed recently at fifty two to thirty three, so
pretty fair amount of data points here.

Speaker 2 (17:43):
Okay.

Speaker 1 (17:43):
The highest level of volatility is fifty or older over
and that's only happened seventy five times.

Speaker 2 (17:51):
Okay, I can't.

Speaker 1 (17:52):
Believe these stats that I'm looking at. When it closes
over fifty, there are zero, three, four or five year
negative numbers. That is unbelievable to look at. So if
you see the the volatility index trade above fifty, and
you have bought since this index was created, you did

(18:15):
not lose money buying that close on the S and
P any period of time one, two, three, four or five.

Speaker 2 (18:21):
Years, and the returns are pretty dramatic. The average one
year is thirty five, the average two years fifty three,
the average three years fifty five, the average four year
is eighty eight percent, and the average five years one
twenty nine.

Speaker 1 (18:36):
The other thing this chart shows you, Brad, is how
much of the bounce you get in the first year.

Speaker 2 (18:42):
Yeah, because it levels off.

Speaker 1 (18:43):
Do you get thirty five percent on average in the
first year, then it's fifty three fifty five, it starts
to fade. So uh, last chart will point out and
then we'll take our first pause is continuing to look
at the volatility index.

Speaker 2 (18:58):
UH.

Speaker 1 (19:00):
A lot of technical analysis people will look at the
weekly closed, so the close on a Friday as being
a little bit more significant. I mentioned that that fifty
two level we got to this week on volatility was
the seventieth highest day, which interesting people said unprecedented.

Speaker 2 (19:16):
There were sixty nine, so very precedented, just sixty nine
other times that you had it that you had that
much volatility. But on a weekly basis we closed at
forty five, which was a little was in the top
twenty roughly also precedented, also precedented, but when you looked
at closing at the end of the week, still very

(19:37):
powerful returns. Once again, no zeros yep on a one, two, three,
four or five year basis, and I think it's worth
pointing out the worst the worst again on a one
year is ten. The next verse is eighteen. So if
you were to say to somebody from this point from today,
well say from yesterday, historically you're gonna historically your one
year is going to be thirty nine percent average anneal

(19:58):
and the worst ever from this point point is positive ten.
Most people would say, sign me up, but they're not
a lot of times not aware or comfortable with making
that decision because of what all the noise is out there.

Speaker 1 (20:11):
We have checked many, if not double digits on boxes
of were at.

Speaker 2 (20:19):
Or near a low.

Speaker 1 (20:21):
Okay, whether it's what the volatility index spike two, having
the worst four days followed by the best one day,
We've checked a lot of boxes. Does that mean that
yesterday was the bottom?

Speaker 2 (20:32):
No. We looked at COVID, We looked at eight.

Speaker 1 (20:35):
Volatility over the next week, two or even a month
more than likely will continue. But investors who bought in
and around October of eight, even if you didn't hit
the low, investors who bought in and around March of
twenty twenty, yep, Yeah, you.

Speaker 2 (20:50):
Didn't catch the absolute low, but you were close. And
that's really all that matters, is that the market had
had a significant downturn and you dialed up risk. It's
all that matters. When we get back, let's take our
first pause, Brad, we get back, let's talk a little
bit more policy with some of the other numbers we're
getting and some of the other things that might come
up in the next week.

Speaker 1 (21:05):
Or two, tariffs, inflation, taxes, and what the Fed's gonna
do you're listening to money Sents Kevin and Brad Kirsten will.

Speaker 2 (21:12):
Be right back and welcome back. You're listening. Advice is
a Kristen Wealth Management Group. Brad and Kevin here with you. Ken.
I'll talk a little bit more about tariffs. We didn't
talk much about it last week because we had to
take the show a little earlier, and I think we
both really thought when we got to the April second date,
it was not just going to be this hammer and
it was also not going to be more than what

(21:33):
the market expected for tariffs, and it was both of those.

Speaker 1 (21:36):
The market actually expected the ten percent level, which is
where we.

Speaker 2 (21:41):
We now ended up. But before that we had to
do this kind of shock and awe approach. What I
really thought was going to happen with countries reaching out
was we were going to get to April second, and
prior to saying what the tariff news was going to be,
we would have said X, Y and Z comp and
he's reached out to us. Now, I you know, some

(22:02):
of these countries didn't have very big tarists to begin with,
but you know, say, you know, we have a deal
with Vietnam, we have a deal with you know some
of our other you know, call them allies, Argentina, Israel,
South Korea. They want they are going to zero. We're
going to zero. This is how this is gonna work.
We're also they're also lifting trade barriers for other things

(22:23):
that we weren't allowed to sell. They're on a complete
pause and while we ink out the deal, the rest
of you better get on the phone quickly because here's
what's coming. That's what they should have done. Now, what
they did was they gave everyone the tariffs. They gave
everyone the bad news. Let seventy five countries have to
scramble to call. You don't even have enough manpower to

(22:45):
get the deals all done because you hammered seventy five countries.
So then you have to a week later backtrack into
a ninety day pause, and then the market goes down
and shoots back up. Well, what do you think is
going to happen in the next ninety days? Everyone's gonna say, oh,
we have to plan for tariffs. No, you should be
planning for no tariffs, because that's what's going to happen.

(23:05):
Are we gonna ened up with tariffs on China? Yeah? Probably.
I don't even know if we're going to talk to
him the next ninety days because they're gonna be busy
making all these deals and Trump is going to go
on the we win a parade with all of these
deals that they're making, and hopefully it's not Trump making
the announcements because he's it gets a little off track

(23:26):
with things you were noticing today. He's a little off
track and mentions Babe Ruth for some unknown reason. We're
stay focused, stay on track, stay on point. Tell us
the deal that's being made. Tell us the country that
made that deal and why it's going to improve things,
and maybe what their tariff was and what it goes to.
That'll all be a market relief every time.

Speaker 1 (23:46):
They're going to continuously refer to, in addition to the
tariff levels, the non tariff barriers. Be very specific with
the American public about what those are, because all I'm
hearing is non tariff barriers, and then no one's.

Speaker 2 (23:58):
Specific with some countries, with your Europe, it's a lot
of the vat taxes, it's the other taxes that aren't
just the tariffs. With some countries, it's things that just
aren't allowed to be sold into the country. I know
Australia doesn't allow us to send any of our beef there,
and there's other countries that just don't allow us to
send certain products in and all they're doing is trying
to protect their own industries. But if those are getting lifted,

(24:21):
be specific on what we're allowed to sell more freely
now into that country and why it's going to be
a good thing to the US. We've done almost none
of that. There's all the speculation, and most of the
speculation is negative and unjustifiably so. And so that is
what I think everyone should expect over the next maybe
not in the next week. If we were going to
get in the next week, I think we would have

(24:41):
already had to deal with Japan because they came here
and we still haven't announced a deal.

Speaker 1 (24:45):
Right, And if you're going to announce things like the Australian,
bring a major beef producer into a press conference with
you and have him talk about how he could sell
to Australia. Are we even sure they want to sell
to Australia.

Speaker 2 (24:59):
That's my shoo with it, right, right? Is it feasible?
Do we want to ship beef? Do they even want
to halfway around the world? Yeah, I don't know if they,
So you could give those examples, but give me real
world person that this is affecting. Yeah, okay, Now, some
of that is just a marketing campaign to sell it.
But listen, this is something that is new that you

(25:20):
need to sell a little bit to the American people
and to investors. Yeah, but you better go quick on
it too, because China's going to try to make deals
with these countries too, and you better go first and
quicker with any of the countries that might partner with China.
That way, you're shutting China out. Otherwise there's no point. Well,
China is the worst defender if we're looking at the

(25:40):
trade surplus, which is a silly thing to look at anyway,
but they are the worst defender on pretty much everything,
even the non tariff barriers. And if China sits there
and thinks that it's the rest of the world against
the United States, they feel.

Speaker 1 (25:56):
Like they're sitting pretty good. Where we ended up the
ninety day pause, hopefully is if it's the rest of
the world against China and they feel ganged up on,
they're more likely to compromise. And so that's where we
should have been from day one. We should have been more.
Let's get a coalition together, get other countries on our
side as opposed to us sticking it to everybody, and

(26:20):
then China feels more.

Speaker 2 (26:21):
Pressure every time. And I'm saying this so that if
we have listeners that think the same thing, that they
know that we agree with them every time they talk
about trade deficits instead of the actual trade barriers and tariffs.
To me, it's nails on the chalkboard. I heard this
are not money loss. No. I heard somebody say yesterday
that at every dollar that every Vietnamese citizen makes they

(26:43):
bought a US good, we would still have a trade deficit.
So there isn't enough money and people in the countries
to have enough dollars to spend every dollar that everyone
makes to not have a trade deficit. I mean, we're
just bigger than most countries.

Speaker 1 (26:58):
We're a country not only of three hundred fifty million people,
but also the average consumption per person is like eighty
five thousand dollars a year per person on the consumption.

Speaker 2 (27:08):
I just heard that the other day. Well, if you
ever I think the average salary of Vietnam is seven
thousand dollars a year.

Speaker 1 (27:12):
If you're trading with a country, and Vietnam has a
lot of people. But whether it's people or how much
money they make, And like you said, even if they
spend all of their money on us products, you'd still
have a deficit.

Speaker 2 (27:24):
Then why are we talking about? Why is this your
negotiating Yeah, and it's just I have there are so
many things that us in our lives. I have a
trade deficit with. I don't think they're stealing from me. Okay,
I currently have a trade deficit with Kroger. I do
all my shopping there and they buy nothing from me.
Is that wrong? S Kroger stealing from you? No, they're

(27:45):
not stealing from me. But I have a trade deficit
with them right right, and they're not doing anything about it. Right?
What are we talking? Somebody needs to be the grown
up in the room that says enough of that. Okay,
that's never going to get fixed, and we don't want
it to.

Speaker 1 (28:01):
Trump is acting as if whatever billion or so, I
think it's close to a trillion the trade deficit that
if we get rid of that, that's somehow a trillion
dollars that goes into the coffers of the government. That
doesn't make it. That does not make any sense. Yeah,
a trade deficit is not a number that we can
just take back.

Speaker 2 (28:22):
Okay, it's not. Now. Our aructs become more competitive when
the tariffs go away over there, so that's good. And
if the trade barriers that exist in some countries go away,
we're also at least that's all you can hope for.

Speaker 1 (28:36):
That's the bigger deal, the win move on. That's the
bigger deal is to say everyone's for free trade, Republicans,
even Democrats probably, But at the same time, you can't
be for free trade and also be for all these
other countries. Just do whatever they want and we follow
a set of rules when it comes to the trail

(28:58):
and they don't.

Speaker 2 (28:58):
But here we have. You know, Trump tried to get
tariff's lowered in Europe by just talking. Last time around.
They said no, Biden never attempted it. They kept them up.
And now they're here saying we'll go to zero and
we're not taking the win. What are we doing? Yeah,
just take the win. Also, you can tack on you
guys need to increase your NATO spend so that we

(29:19):
don't have to do so much. Great, take that, take
the win, move on. There's too many countries to deal
with for you to everybody be digging in on, especially
smaller countries that are so insignificant. Right, make the press conference,
take the win, pat yourself on the back, and move
on to other things like taxes and getting that that'll

(29:40):
matter more to corporations than a lot of this stuff
where you have companies with small amounts of imported goods
and large amounts of corporate tax. If the average company
is going to be affected by two percent, you take
the corporate tax down by two percent, it's a win.
Let's get that done.

Speaker 1 (29:57):
And in terms of the messaging and the marketing of it,
get Howard Lutnik and Peter Navarro off TV and put
Scott Bessett, the treasurer, your secretary out there more period.
And also Kevin Hasset. Those are the press secretary.

Speaker 2 (30:14):
What's her Caroline Leve, Carolyn Levit, she's great too.

Speaker 1 (30:17):
Navarro and Lutnik needed not be on. I mean, Lutnik
was on the other day talking about how we're going
to make all these jobs because there's going to be
people screwing in screws for iPhones.

Speaker 2 (30:26):
Oh, that's a wonderful job.

Speaker 1 (30:27):
Everybody wants that job, So it's not even real because
even if we brought it back, there would be no people.
There's not there's not even Chinese people, by the way,
screwing and screws and iPhones. It's all automated. So it's
a ridiculous comment. He should have been literally taken off
TV permanently after that. But at the same time, you're right,
you're going to get smaller victories. Great ninety day reprieve,

(30:50):
the market bounce back, it's still going to stay volatile.

Speaker 2 (30:53):
You can't go to.

Speaker 1 (30:53):
Eleven fifty nine pm on on the ninety sevuntry the
eighty ninth day. Yeah, okay, this better not be like
the debt ceiling or the government shutdown situations that we
always get. You need to come up with some wins. Now,
here's some other wins, tax cuts. They passed the budget bill,
so over the weekend it came through the Senate. Just

(31:15):
here on Thursday midday it passes by one vote the House,
and you and I are shaking our heads because there's
so many steps in Congress. All this does is basically, you've.

Speaker 2 (31:26):
Laid out the framework for the dollar amount of the budget,
and the dollar amount that the tax cut can be.
And now they're going to iron out what parts of
the tax cut they're going to put into place, and
where they're gonna make cuts and where they're going to
make increases. I think they're going to end up with
a higher marginal rate on the top two brackets, so
that they can give on salt, and they can give

(31:47):
on no taxes on tips, and maybe no saxes on
Social Security. I don't think they're gonna end up lowering
the corporate it'd be great if they even just went
down a point or two, but I don't think they'll
end up doing it. But there's gonna be a little
massaging here of the numbers. If they can tack in
anything that they've collected in tarifts or future tariffs that
they're anticipating onto the corporate tax reduction, I think that's

(32:11):
a win. But again, the messaging here has been pretty
bad as well, because I have no idea what they're
trying to get accomplished.

Speaker 1 (32:17):
Yeah, I don't know where this where we are in
the process of you know, extending, not only extending what
we have but hopefully building upon it in terms of Congress.
I mean, today seem like oh, we have this vote.
It's a budget vote, but it's somehow tied to the
tax cut plan.

Speaker 2 (32:38):
I think at the very least, we don't have to
talk about debt ceiling or the budget coming up in
whatever it was thirty or sixty days. Those are that's done, right,
But now it'll just be ironing out the taxes. But
you're talking about the next ninety days here, we're going
to have the potential for all these countries to be
making deals and announcements for that. That's a market mover.
You have the tax cut deal getting done likely in
the next ninety days. That's a market mover. And the

(32:59):
next one is inflation continues to be lower. And so
let's take a pause here and talk about what this
CPI report.

Speaker 1 (33:05):
Was really quick before we take the pause, hold on,
it sounds like a lot. It seems like something someone
might say, Boy, that's a lot of unknown and uncertainty,
and what if I should just sit out every one
of those other periods that we talked about. Uh, when
it was two thousand and eight, we had the tart plan,

(33:27):
will that get approved?

Speaker 2 (33:28):
We had Lehman failing, Yes, we we we didn't know
what was going to happen. We had another after TARP
there was another stimulus package that came out, I believe
right after Obama took office. What's going to happen there?
I think it was the original q E brackage during COVID.
We have the shutdown? When are we going to open up?
When are we going to have a vaccine? Which obviously
turned out to be not that great? But when are

(33:51):
we going to have a vaccine? Oh, you want to
buy the vaccine? You want to buy the opening if
you bought any of those periods. You're buying after the
market has already recovered, since before we take our next break.
I just want you just you pointed out a bunch
of unknowns, and I can think it more to the
individual investor with a long term plan.

Speaker 1 (34:10):
Okay, it doesn't mean anything. Okay, we're gonna follow it here,
We're gonna talk to you about it. We're gonna talk
to our clients about it. But it doesn't mean anything. Okay,
as I said, unprecedented time. As I said, two dozens
of clients this week. When this kind of stuff happens,
you have two choices do nothing, which is just fine.

(34:31):
You put a plan in place, you have some stocks,
you have some bonds, you have some diversification with international,
which is helping this year. Do nothing or buy, and
if you're not comfortable buying, do nothing is fine.

Speaker 2 (34:42):
And I think one more on the buy and this
is a buy, is you could also rebalance to where
you were three months ago or three weeks ago or
three weeks ago. Because what that's gonna do. And when
we were doing that this week for a lot of
accounts that didn't get one of the buys over the
last month ended up being about a two and a
hal half percent out of bonds indecible one that was bigger.
I'd have one that was ten percent. Oh okay, Well,

(35:04):
so this this was two and a half out of
bonds into stocks, but it was also another two and
a half out of the better performing categories of international
and value back to growth. So it's kind of a
five percent just rebounce to where you were a month ago.
And that also is a proper way to kind of
manage the volatility.

Speaker 1 (35:21):
Yeah, and that's something on the margins that we as
advisors do all the time for clients to say, you know,
when you're buying. Sometimes a rebalance is a form of
buying the dip and so we did a lot of
that this week as well. We'll take our next pause.
You're listening to money since Kevin and Brad Kurston will
be right back, Welcome back to the show. You're listening

(35:42):
to the advisors of Kirsten Wealth Manager Group, Kevin Kirsten
and Brad Kurston. 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
time to review your plan. Whether you're just getting started,
well on your way, or already in retirement, be happy
to sit down and review things with you four one
nine eight zero zero sixty seven or check us out

(36:03):
online at Kirstenwealth dot com. Brad, we had a CPI
inflation number today, lowest number since April of twenty twenty,
over four years, over four years, kind of ignored in
the market, definitely ignored among Fed officials. Better than expected.
And I don't know why the expectations are so off.
And this one was off by two tents because it

(36:25):
was the expectation which one week ago the expectation was
point three. They brought it down to point one and
it ends up being negative point one.

Speaker 2 (36:32):
Well, it's a.

Speaker 1 (36:32):
Pretty powerful chart when you look at the one I
printed out for you. When you look at it going
back three years, there's some fits and starts. There was
a little bit of an uptick in early twenty three,
a little bit of an uptick in the middle part
of twenty four.

Speaker 2 (36:46):
But when you start making legs down like we just did,
it's pretty it's pretty stable.

Speaker 1 (36:50):
If you look at this chart. And I showed this
to Jerome Pole because he says, we need to make
sure the trajectory of inflation.

Speaker 2 (36:56):
Yeah, what is the trajectory is straight down? Now for
three years, you go, you make spikes down, then you
go sideways, then you make another spike down, you go sideways,
you make a spike down in the middle of about
a year ago, last year, and then you stay sideways
about in the low threes. And now for three straight
months you have gone from three point three to three
point one, two point eight to two point four, which

(37:17):
is where we are now, and next month will also
be lower because the Fed is six weeks behind as
they report right now today their February number. There are
a lot of different I mean, it's I don't know
if it's AI or just modern computing power versus what
the Fed is looking at. You can find on Trueflation
updated three times a day, every single day, eighty million

(37:41):
data points which will tell you what the current inflation is.
And that went down about six weeks ago and it
stayed down with the annual number being in the low ones.
Right now it's one point three to four. Now next
month will likely be another negative. But what are they
projecting again point three positive? Why are they projecting point
three because they're looking one too far back, They're looking

(38:05):
at what the annual has been and they're just they're
just kind of plugging that number in and now they'll
they'll come down a little bit, but likely when we
get there a month from now, they'll probably be at
point one positive or point two positive. It'll come in
at flat or negative. And this number is going from
two point four we are today to probably the bare
minimum point two point two, and one month later you

(38:27):
could see it down into the twos. Now. The reason
I'm bringing all this up is the pettiness of the Fed.
Obviously not liking Trump is the reason that they're not
going to cut in the main meeting. They're going to
push it off till June. And they're gonna say it's
because they don't know how teriffs are going to affect it.

Speaker 1 (38:44):
Well, no other way to explain their their reaction other
than they just don't like Trump.

Speaker 2 (38:48):
It doesn't make any They're always saying that they're data dependent,
and the only data we currently have is that we
have very low inflation and it's tracking low. They will
also say they're dual mandate is employment? Well, guess what
else came out the last couple of weeks and again
today negative uh continuing claims today at a at a
level that is the lowest that we've been in years.

Speaker 1 (39:11):
On some of the things you're thinking of that wrong though.
You're talking about what would be the reason they would.

Speaker 2 (39:17):
Cut rates or raise rates.

Speaker 1 (39:19):
They would raise rates if if inflation was high and
unemployment was low.

Speaker 2 (39:26):
They would cut rates if they need to stimulate. Yeah,
you're right.

Speaker 1 (39:30):
Yeah, So if anything, the the employment numbers being too
strong the reason gives they we can stay high.

Speaker 2 (39:38):
Yeah, you're right, you're right. Yeah.

Speaker 1 (39:40):
So but on the inflation front, here's my biggest issue.
They already admitted they messed up. They screwed up the
inflation of twenty twenty one.

Speaker 2 (39:51):
They kept saying transitory. Everyone forgets their first cut, their
first race. The day they raised, the current CPI was
seven point five percent, so they were low, late to
the ball, and it had been rising for six months, six
months to a year. It went pretty rapidly. It was
about it was in the ones. But they had four
or five meetings they could have raised prior and they did.

(40:13):
And the and what they were saying in twenty twenty
one and twenty two, this is the FED Jerome Powell
is we know the data that's right in front of
our face says there's inflation, but we think that the
future will be lower, and so we're not doing it.
They have nothing to back that up.

Speaker 1 (40:28):
Well, they were guessing yep, and and and by the way,
they've now admitted that that was a colossal mistake. Okay,
now here we are today when the data in front
of you says we're low and going lower. But they're
going to project what they think is going to happen
with no data other than their own opinion of what

(40:50):
potential tariffs are going to do to inflation.

Speaker 2 (40:54):
Yeah, so they are. They are. They're mapping out the
maximum amount of tariffs and assuming that sometime in the
future we're gonna have inflation because of it, even though
it didn't happen in eighteen and it is happening.

Speaker 1 (41:06):
They're literally making the exact same mistake when cutting rates
that they made when raising rates, and that is refusing
to look at the data that's.

Speaker 2 (41:16):
Right in front of their faces.

Speaker 1 (41:18):
And I cannot believe in these press conferences someone hasn't
asked him this, he because he will. Powell will often
say I'm data dependent. No, you're not.

Speaker 2 (41:28):
If you were dead a dependent you would erase sooner,
and if you were dead independent, you would right now
be lower it there.

Speaker 1 (41:34):
Historically, there's been a lot of people economists and people
involved with the FED who have said that we should.

Speaker 2 (41:40):
Just literally follow the two year Treasury.

Speaker 1 (41:41):
Yeah, the two year Treasury says that the FED should
be at three point seventy five yep. Okay, they're at
four two five YEP. So they're currently half a percent
two half a percent higher than what the market is saying.
But don't worry, Joe Powell. You know better. Well, you
didn't know better into only twenty one when you said
inflation would be transitory, even though the data in front

(42:04):
of you said we had inflation, and now you're saying,
I guess the low inflation is transitory.

Speaker 2 (42:11):
He wouldn't use that word, but they're not going to
use that word anymore. But that's basically what he's saying this.
It's only temporarily low. It's only temporarily. We know from
looking at current data that the next CPI report comes
out will also be lower than we are today.

Speaker 1 (42:24):
Here's what I don't understand about the Fed. There is
this insistence on interest rates that we either have to
be raising rates for a period of time and then
lowering rates for here's an idea, Jerome cut the rates
to match where inflation is.

Speaker 2 (42:41):
This is going to be shocking, Brad. Then if inflation
goes up, then raise the rates, and then six months
later goes down, you can lower them again. But there's
this meeting eight times a year. But there's this idea
that we need to be in this like to declare
that we're in the cycle. We're in a two to
three year cycle of up and then we're in a
two to three year cycle of down. Why yeah, go

(43:01):
up a quarter and then if next month it changes,
go down a quarter. Yeah. Oh my goodness, that would
end life as we know it. It is what we
got with with a green span in the nineties. I'm sorry.
This is why we need to create formulas, formulas and
just and use AI and.

Speaker 1 (43:18):
We don't need We don't need a fed chair. I
don't need a fed chair. Someone who doesn't like Trump
doesn't like tariffs. You know, philosophically, these fed chairs clearly
don't like tariffs, and they have a personal they have
a personal reason why they don't like it. Philosophically, they
don't like it, and they're blaming Trump. So they're refusing
to cut rates even though the market itself, the bond

(43:40):
market itself, is screaming that they need.

Speaker 2 (43:43):
To cut rates.

Speaker 1 (43:44):
Let's take our last pause. You're listening to Money Cents
Kevin and Brad. Kirsten will be right back, Welcome back
to the show. You're listening to the advisors of Kirsten
Wealth Management Group, Kevin Kirsten and Brad Kirstin. Brad, just
just wrap up the market conversation.

Speaker 2 (43:58):
Kind of historic week, right, you get these big historic days.
I think it is worth spending a little bit more
time on this because when you get you get boring markets, right,
you get seventeen and nineteen where the biggest sell us
we're two three percent, get twenty three, twenty four. Yeah,
you get, You get consistent positive months, and everybody gets complacent.
When you get the volatility coming. People get nervous, yes,

(44:20):
but you also should get excited right when you find
your bottom on the way back up. You have these
wild upside swings as people get back in, as people
take shorts off. I think the volatility we always talk
about you gotta draw a line in the sand after
eighty seven, or you gotta draw a line in the
sand after the Internet. I think another line in the

(44:40):
sand is probably Robin Hood or some of the online
trading platforms. It's so easy for everyone to short the market,
but also easy for people to take those shorts off.
It's why the wild swings are probably not over with
up and down.

Speaker 1 (44:54):
That's why we talk about missing the two best days,
missing the three best days a year, and what happens
to your performing Since nineteen fifty excuse me, since nineteen ninety,
the S and P is averaged nine point eight percent
per year. Missing the best day per year takes you
down to six point one. Missing the two best days
per year takes you down to three, and missing the
three best days per year means you don't make any money.

(45:15):
So the point is is, if you're going to be
the type of investor that's prone to panicking and getting out,
then you probably should just own treasuries because your return
is going to be the same.

Speaker 2 (45:25):
Yeah, and it's even more exaggerated in these volatile years.
And this is going to be one. I don't think
it's even over with in the first half of the year.
This whole year is going to be volatile. Take a
look at the eight period that you had six days
that had performance of six point three percent or greater
in a single day. Six days like that, Okay, we
just had one. In twenty twenty, you had five days

(45:48):
that were six percent or greater in a single day. Okay,
think about if you were in and out, in and out.
You're talking about missing two days. You could miss two
days that would have accounted for thirteen to fourteen percent.
If the year finished positive ten, you'd be negative fourteen.

Speaker 1 (46:03):
We'll look at yesterday alone. I mean, it's still gonna
be a tough climb for the market to have a
decent positive year. But imagine trying to do that after
having missed a ten percent update, right, it's virtually impossible.
So the market sits today, the S and P five
hundred is negative six point eight nine, not bad, not badly.
What if it was positive point six point eight nine

(46:24):
before we get to the end of the year. Fine,
good year after two positive years, But you missed out
on nine and a half percent, you're negative, right, So
it is unique. Assuming that's the best day of the year.
That's the person who missed the one best day of
the year, right, So it expect the volatility. It's not
over with just it's it's going up and down. We're

(46:44):
gonna get it. You can't time it. We often talk
about this on this show, brand but I'll repeat it.
The people who panic and try to time it, they
think they're making a decision. I often think it's a
bad decision. Obviously, if someone had too much risk bought
put all their money in Nvidia, sure, But if you're
in a diversified portfolio of stocks and bonds, it's a

(47:04):
bad decision to bail. But what they don't realize, and
I'll I will ask people this question, what's your plan
to get back in Nobody has a plan, and you
have to if you're gonna have it be a successful trade,
you have to get two calls, right, Yeah, you have
to hopefully sell out, and you better hope that it

(47:25):
goes lower, and then you also better hope that once
it goes lower, you'll have the guts to pull the train.

Speaker 2 (47:30):
Because what you're saying is you better be prepared to
get in when the news looks worse. And that's all.
That's a harder thing ever gonna happen, never gonna it's
never gonna happen. If it gets worse after you're gonna
put yourself on the bat, that's right, and then it'll
get better and you'll you'll you'll think, oh, shoot, why
did I do that? That's right? So I'm it's I'm.
People cannot do that successfully over time. It's impossible to

(47:52):
try to time that we mentioned, the best days and
the worst days are all clustered together. It is impossible
to determine what the market's gonna do. I'm gonna ge
out because it's gonna go down tomorrow or up tomorrow.

Speaker 1 (48:03):
I'm gonna get out for one day. Who knows. Nobody
can do that successfully. If you hear anyone on TV
or read anyone on the internet that.

Speaker 2 (48:11):
Says we got out for two days and back end.

Speaker 1 (48:12):
Run away, they're not telling you the truth. Thanks for
listening everyone, We'll talk to you next week.

Speaker 2 (48:21):
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
LPL dot com and their website is Kirstenwealth dot com.

(48:42):
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 has

(49:04):
out