The Fagan Financial Report

December 8th, 2024

Episode Transcript

Speaker 1 (00:00):
Good morning, and welcome to the Capital District's Money and
Investment program. You're listening to the Fagan Financial Report. It's
Sunday morning, a little slushy outside.

Speaker 2 (00:07):
It is slush It was like two inches of snow
on my way here.

Speaker 3 (00:10):
I was surprised too, like I didn't know really snowed
until you go out this morning. And he barely went
outside two steps out.

Speaker 1 (00:19):
How old is he now, you're well it was a
French bulldog, right, he's such a good dog. He was
at one point, he was at one point, he was
at one point in time.

Speaker 3 (00:27):
Yeah, but he got a little inches up in Brunswick. Yeah,
they haven't really plowed yet either. So I got here though,
you did.

Speaker 1 (00:34):
Get here, so and I got here as well. So
so here, So here we go. So so I think,
you know, as we sit here, I don't know a
couple of meetingful trading weeks left to the year, and
we start out with our weekly with investors are heading
into those last couple of meaningful trading weeks on a
high note. You got the SMP, the Dow, the NASDAC,

(00:55):
the Total Market Index, all basically closed out or within
an earshot of their time.

Speaker 3 (01:00):
Nine in fact, fifty seven new all time highs this
year something like that. I think the record is seventy
without a ten percent collection, ninety five really yeah, nineteen
eighty six or nineteen. I was reading that this weekend.

Speaker 1 (01:15):
Record all time highs in nineteen.

Speaker 2 (01:17):
So do you think will beat that this year? Is
thirteen trading?

Speaker 3 (01:22):
Yeah?

Speaker 1 (01:22):
No, no, no, I don't you know. In fact, at
some point in time, and who knows when it happens,
but at some point in time, it's almost like musical
chairs at the end of a run. And I'm not
talking on a secular run. I'm talking like a little
bit of a boost that we've gotten. And the S
and P five hund's only up two point seven two
percent since the election, so it's not its going crazy,
you know. That said it was up in anticipation of

(01:44):
the election as president like Trump's numbers improved, the market
did well leading up to the election, kind of forecasting
his victory. But at two point seven two percent, you know,
with maybe four or five percent prior to that, the
month prior, and I think the mark it's due for
a breathing, like I said, is like musical chairs all
the all of a sudden people say, you know what,

(02:04):
that's enough for the year. I want to get out
and I want to enjoy the holiday or this or that.
And those are mostly professional investors above our pay grade,
you know what I mean. The real heavy hitters, the
hedge fund managers in the Lake and the Hamptons. They
decide that that's enough. Now. Maybe won't happen this year.
Maybe we'll chase it right to the end.

Speaker 2 (02:22):
But I think, yeah, I think that's possible.

Speaker 1 (02:25):
You know, yeah, it is possible.

Speaker 3 (02:27):
Like so's they don't mean they get right into it.
But there's this thing called the KPE ratio. It's the
Shiller PE ratio, right, the six Chiller, the cyclically adjusted
price to earnings ratio. And you know, it's calculated by
divide in company stock priced by the average of the
company's earnings in the last ten years. And it's only
been higher two times before and December of nineteen ninety nine,

(02:50):
in December of twenty twenty one. So you know, you
saw pullbacks after both of those. And I'm not saying
we're due for a pullback. I think that I am.
I think cape ratio is double. It's like thirty nine.
The averages like a nineteen or something like that. And
these are rough numbers because I was reading this the
other day. I don't have it right in front of me.
But yeah, I mean the market's a little expensive right here.

(03:12):
I think I think you are seeing some euphoria in
some of these names. And I guess like Fomo, you know,
like if you just look at it's like the artificial
intelligence fomo.

Speaker 2 (03:23):
You know, the five day for that SoundHound. AI.

Speaker 3 (03:25):
Don't even know what they do. They were a penny
stock at the beginning of the year. Now it's training
at fifteen dollars, and it was up sixty seven percent
over five days, so I think C three AI. You know,
I don't know exactly what they did, but you know,
past five days up twelve percent. That's not as bad obviously,
but twelve percent still a lot. So you know, I
think what you're seeing is a little bit of fomo

(03:46):
with this artificial intelligence.

Speaker 2 (03:49):
So, you know, I don't know.

Speaker 3 (03:50):
I just wouldn't go chasing these things if I if
I were investing, if you're investing your own money, because yeah,
things are a little bit expensive, and you.

Speaker 1 (04:00):
Know, I certainly wouldn't chase some of those issues. But
but I think and how does the market correct. How
does the market correct? The market can correct in one
of two ways. There's either a time one of three
ways really, you know. And there's either a time correction
where we move sideways okay, there's a price correction where
we get a quick correction, or there's a combination of

(04:22):
the two where you have a glide down you know,
at what's at what uh you know degree you know
is then offset by time. And I think some of
if you look at like a company like Microsoft, it's
lagged the S and P a little bit over the
past three months. I think if you take a look
at the last six months, it's lagged. Uh, let me

(04:43):
see here, it's lagged over the past six months. No,
it's that, Yeah, it's lagged over the past six months.
The S and P five hundreds up fifteen percent. Microsoft's
up five percent. So I think you know that's those
are companies that you're thinking to yourself, Okay, here's here's
a time and price correction for like a Microsoft, and
I think that's what you're looking for some of the
some of the larger companies. I think what you were

(05:04):
saying earlier, and it's indicative of really investor enthusiasm is
a lot of the second tier companies have have really excelled,
and I think those second tier companies are a sign
of speculation generally speaking, rather than rather than real fundamental

(05:24):
improvements in their business prospects. You know, app Loven is
a good example. It was sixty six and now it's
three ninety, you know, and we're talking just a few
months ago now. Now maybe that's maybe it's different that
what I'm not saying it is or it is and
all I'm saying that, you know, usually with that type
of speculation. And I've been in this business forty years,
and you've been in this business forty two years actually
in nineteen eighty three, forty one years. And you've been

(05:46):
in this business for thirteen years now almost to the day.
Actually right you started December eleventh.

Speaker 2 (05:52):
I started December twenty seventh.

Speaker 1 (05:53):
Is you're really yeah, of two of twenty eleven, so
thirteen years. So in your big history, fan of the market,
in history, fan in general. So you what you usually
see during the ex specative times is some of the
second tier companies. Now what do we think, We think
that that enthusiasm is kind of limited, It's it's it's

(06:15):
broadly with consumer discretionary I T and communication services, but
mostly it's the second tier company. So I really wouldn't
worry that much. Yeah, you can trim some of the
larger companies and and and we we have and or
and or will for some some portfolios where it's where
it's appropriate. But you know, with these indices that are

(06:37):
nearing record highs, an enthusiasm high, bullish sentiment is high. Uh,
And yet you know I think that so so correction
is a correction either, like I said, price time and
price or time are are are is likely.

Speaker 3 (06:54):
Much And you know, I think a couple of ways
that you can, I guess combat time and prices. You know,
we're really not huge fans of jumping in and out
of the stock market.

Speaker 2 (07:04):
We don't do that.

Speaker 3 (07:05):
We work within you know, a portfolio allocation, let's say
seventy five to one hundred percent in the market for
a growth account. So you know, I think you can
you can. A prudent thing to do would be trim,
you know, if you're looking at like a time correction. Though,
you know, I really love the you know, JP Morgan
Equity income funds and the JP Morgan Nasdaq Equity premium funds.

(07:25):
So you know, the JP Morgan Nasdaq Income Fund right
now is a nine point three four percent dividend. So
what it does is, you know, it buys underlying securities
in the NASDAK. Then it writes call options with exposure
to that benchmark, uh, to to get some income.

Speaker 1 (07:43):
You know.

Speaker 3 (07:43):
That said, the less volatile the market is, the less
the less you'll the lower.

Speaker 2 (07:50):
Dividends you have.

Speaker 3 (07:51):
But right now, at a nine percent dividend, you know,
if the market treads water, goes nowhere, and it's a
good way to participate in the market, pick up some.

Speaker 2 (08:00):
Pick up some income. Uh.

Speaker 3 (08:01):
And I think that's a that's a pretty prudent investment strategy.

Speaker 1 (08:06):
You know.

Speaker 3 (08:06):
I do believe that if you are retired, you know,
some of your money should be in things like this
because again, you know, you're not chasing returns. You're you know,
you're you're you're investing for for income and for and
for wealth preservation. So I think I think that's a
great option, uh, you know, for a market like this.
You know, also, as as we were talking about, you know.

Speaker 1 (08:28):
What are the symbols on those against J J P I,
J P Q.

Speaker 3 (08:31):
And j p Q is the NASDAC and you know
a lot of different fund companies and banks have products
similar to that. You know, there's some that you know
can write daily call options. I think that JP JETP
and jep Q are monthly call options, but.

Speaker 2 (08:46):
You know they have weekly, they have daily.

Speaker 3 (08:49):
Uh So these are all different options that you have
that you know, let's say whatever type of account that
you have, Let's say you have, you know, a non
qualified account. You know, there's ways that you can reduce
your taxes by picking you know, different funds that might
have more capital gains or you know, or more income.

Speaker 2 (09:09):
You know that said, you know, I think.

Speaker 3 (09:11):
We talked a little bit of We did talk a
little bit about you know, like something like SoundHound. And
you know how I feel right now too, is you know,
January twentieth, Trump comes into office and we don't know
what he's going to prioritize. And you know, I do
think that with a lot of unknownst in the market,
I don't know, you know, it's it's so much more
of a gamble right now investing in these companies because

(09:34):
they're so expensive and there's so many unknowns with you
know what Trump prioritizes at the beginning of next year.
So you know, it's kind of a crabshoot. And I
don't think when you know, the future I guess is
so cloudy, it's not I don't think now it's the
time to take risk.

Speaker 1 (09:50):
Right well, I think, you know, and people are sitting home,
you know, and saying, well, he's going to do great
and that. So a correction after the run up we've
had is not a comment on that. You also have,
you know, and we will talk about it later. Where
the market has done very well under both presidents Biden

(10:14):
and Trump, and you know, from sixteen to twenty under
Trump and from twenty to twenty four under Biden. And
we'll get into that a little bit later, but I
will say that it's like a So let's say you think, well,
Trump's gonna you know, he's gonna do a lot. The
Department of Government Efficiency is going to you know, save
us tons of money, or as far as government spending,

(10:36):
that government spending is now going to be going to
the private sector. The private sector is more productive, We're
gonna have a great economy, We're gonna be reshoring, the
tariffs are gonna work perfectly, and let's say that all happens.
That doesn't mean to say that won't come with pain.
You look at it like a five day cleansing. You
may feel good after the five days, but you may
feel like not so good during it, you know what
I mean?

Speaker 2 (10:55):
Right, Yeah, you're crazy.

Speaker 1 (10:56):
That's why I've never made it to those five days.

Speaker 2 (10:58):
That was really did that? Did you just make that up?

Speaker 3 (11:02):
Yeah? Yeah, yeah, So you are still you're still so
good at the analogies.

Speaker 1 (11:06):
Well it's the coffee.

Speaker 3 (11:07):
Yeah, we have dug in here now he said the
same thing, you know, Yeah, the analogy king.

Speaker 1 (11:14):
Analogy King only took him like two months to figure
that one out. So so that and that could very
well happen. Where you have before these things start to
kick in, you have, you have dislocation, you have you
have people wondering how it's gonna go. So so I
think just if you're if you're very bullish on the market,
temper your enthusiasm a little bit, take a little bit

(11:34):
of money off the table where appropriate. But I do
think that proverbial proverbial wall of where we still exist.
And we say that in our the top paragraph of
our weekly market update. It's a four or five. I
think it's three pages that goes out to our clients,
uh and those that want it. If you want to
Faganasset dot com, just email us. Someone will ship it out.

(11:58):
If you're client and you're not getting it because we
don't have your email address. If you aren't a client
and you want it, please feel free to email us.
But after a much needed breather. At this time though,
with inflation, comming, interest rates within a trading range, and
seasonal tail winds, any breather really should be a buying
opportunity we close out as we have repeatedly. As we
have stated repeatedly within the snapshat, we believe that as

(12:19):
compared to no brainer to a no brainer, this is
what we call no brainer twenty twenty twenty five will
we will prove more challenging, especially the latter part when
when President Trump's presidentlect Trump's programs really begin to take shape.
I think, so, what do you think about the University
of Michigan Consumer Sentiment.

Speaker 3 (12:38):
You got that, you got that in front of you
that yeah, but it's a zero as sure as the
son comes up. According to the University of Michigan Consumer
Sentiment Survey, Sentiment among self identified Republicans has surged to
a level of eighty one point six percent during December
from sixty nine percent in November, and in doing so,
it's reached its highest level since November twenty twenty. Not Surprisingly,

(13:02):
sentiment among self identified Democrats plunge to seventy point nine
in December from eighty one in November. It's the lowest
level since September of twenty twenty.

Speaker 2 (13:11):
So, you know, what do I get out of this is?

Speaker 3 (13:15):
You know, these surveys are you know, I guess they're
useless unless they're self fulfilling prophecies. Almost you know now
that people, you know, Republicans are more positive about the market,
maybe they'll go out and spend.

Speaker 2 (13:31):
I don't know. I just don't take much credence.

Speaker 1 (13:35):
I know I would be interested to see, and you know,
we should, we should check this out. I've never really
looked at it. If you look at performance figures of
Democrats versus Republicans, there are Republican administrations. Are they are
they much less? You know, because Doupe do well and
we've had four or five, you know, not a lot

(13:56):
you know, calls express concern over the market more more
than four or five calls, but really those individuals that
actually wanted to take action because President Trump became in office,
and I will say conversity in twenty twenty, we had
the same thing when President Biden comes in. You know,
if our country is pretty much split fifty to fifty,
you know, left and right or Republican and Democrat, you know,

(14:17):
then then then and with the UH, I think the
the sensationalism of the media places upon that, and I
think a lot of people are prone to act. So
you know, you always get a few that that that
that make changes to their portfolio. But I was but
you know, if but by and large, I think what
we say to people, and you know, if if if

(14:40):
you're a Democrat, you know, get up, dust yourself off,
and keep investing in accordance with your long term objectives.
You know, we do have numbers. From election day twenty
sixteen through election day twenty twenty, the S and P
returned then average of twelve point zero six percent per
year under Trump, and from election day twenty twenty through
election day twenty twenty four Biden, the sp i've going

(15:01):
to return an average of fourteen point four to four
percent per year. So both not too shabby. You know,
but given that eight years, if you take those eight years,
let's say, with the average was thirteen percent a year,
a regression to the mean at some point in time,
you know, you know, returns will slow down and may
or may not be a comment on President Trump's policies.

(15:22):
You know, if it does slow down, we will see it.

Speaker 3 (15:24):
Could be in an over saluation of the market, right,
just an aggression back to the meme and that said,
you know it's you know, Republicans being so confident on
the market is or what is it? You know, consumer
sentiment among Republicans is at an all time high. I'm
just I'm just, I guess a little confused in that.

(15:46):
You know, there's no I mean, I don't think it's
really a question that Trump's policies won't be a little
bit inflationary and a little bit tough to get over
over the short term. I mean, you put tariffs on
different countries, right that. I mean, I think AutoZone, Walmart,
a few Costco, Costco all said that this will be

(16:06):
passed time to the consumers. So you know, I think
you have to get used to you know, two and
a half, three and a half four percent inflation for
the short term to I guess get over that hurdle
for Trump's policies to maybe hopefully be deflationary over the
long term.

Speaker 1 (16:24):
Yeah, well, I think too. I think if if you
look at inflation expectations, I think that's where you have
some of the you know, uh, A lot of individuals
don't realize that it's inflation expectations that drive uh, interest
rates quite quite often, especially right in the longer, intermediate

(16:45):
and long and so I think that that's something. So
President Trump's policies, let's say the the tariff is counted
by the Department of Government Efficiency. I refuse to not
I refuse. I've said it a couple of times. I
hate the word the acronym doge for that for some reason,
because the doge coin and you know, Elon Musk affiliation

(17:06):
with that or the or the tweets C put out
you know, two three four years ago. Regarding so, I
would say that if you if you if if if
the tariffs are a one time and so you'll have
a price spike, and then you'll have a leveling of that,
and then you'll have more productivity at home. And then
because you're producing things here and then and then and

(17:30):
then that one time price likeke is offset by the
ability of the Department of Government government efficiency to really
save a lot of money, then you could ultimately have
you know, lower inflation. Uh. Inflation was coming down anyways,
but you know, so so was so Yeah, you're probably
you're probably right that then and the one time bump
in inflation is probably in the cards. And then we'll

(17:51):
see that the we'll see what the Fed does with that.
We have the Fed meets on not this coming week,
they have their their last regular scheduled meeting and next
I think Tuesday and Wednesday. For this Tuesday and Wednesday,
the markets are expecting a twenty five basis point cut UH.
And then then at that point in time, with the
information that we have, they're probably going to take a

(18:13):
break and really be data dependent. We saw a couple
of things with the economy this week are when was
the payroll numbers up two hundred and twenty seven thousand.
Consensus estimate was two twenty three. The prior too months
were revised upward by an aggregate of fifty six thousand.
The rolling three months three month average and payroll gains
moved up by fifty thousand or so from one twenty

(18:34):
three to one seventy two and change, you know, And
so I don't think the labor market is really cooling
off that much. The uneploymer rate ticked up a little
bit to four point two from four point one percent.
Could be more people entering the the labor market. The
labor force participation rate down at sixty two point five percent.
It's there's certainly some slack in the labor market. Still,
average hourly earnings I think that's what you're seeing now.

(18:55):
You're seeing okay, payrolls riding rising and indicating modestly growing economy.
Average out of the earnings up a four point h
three percent in year rear, so you still have wage
growth that's there. The manufacturing week, something we watched closely,
ticked up a little bit to forty point seven hours,
and the average derate. But the average duration of unemployment

(19:15):
rose a little bit to twenty three point seven weeks,
so people who are out of work are out of
work a little longer. And that twenty three point seven
weeks is up from nineteen point nine weeks one year ago.
So you have the good payroll numbers a relatively low
unemployment rate, earnings growing, so you have a dcent economy.
Consumer sentiment, as we mentioned, according to the University of

(19:37):
Michigan that did rise overall from seventy to seventy four
from seventy one point eight, and then you had initial
claims from employment benefits bump up a little bit to
tw twenty four from two fifteen. Usually the rule of
thumb is that if benefits get above two hundred and
fifty thousand, that's kind of negative for the market initial claim.
So you have you have a dcent economy. Yeah, you know,

(19:58):
I think that's what with falling inflation. So I think
that's what President Trump's challenged with with. Moving forward, we
have three or four minutes left in the second half,
we're going to talk about, you know, how the market
did and maybe expand our look a little bit. But
this week coming up economic reports. Usually in the first
half of our show for the newer listeners, we take

(20:21):
a close look at the market. In the second half
we broaden that out. So let's close this out first
half out CPI and PPI. That's going to be something
that investors are going to watch closely. In our opinion,
I think inflation's kind of bottoming in through here two
to three tenths of a percent a month, which maybe
annualizes out in between two and three percent a year.

(20:42):
I think the Fed is going to have a difficult
time getting inflation, you know, down to where they want.
And then initial claims, like I said, ratcheted up to
two twenty four from two point fifteen. So we'll see
if that continues to go up as a sign of
a weakening labor market. Then you got Oracles earnings out there,
you got Adobe, uh, you know, sign of a both

(21:02):
we both.

Speaker 3 (21:04):
I do like both as companies. I think they're you know,
I do think that we're missing that bridge in between
now and you know, artificial intelligence being a major the
major theme. So I think, like an Adobe Oracle, I
think there's a lot of you know, companies like that
that can bridge that gap, that have been around for
a while, that have a lot of earnings, that have

(21:25):
financial stability that aren't as much of a let's say
gamble as you know, like the pure AI plays. So
I think, you know, I hope, I hope that they
have good earnings. Adobe has struggled recently ever since you know,
they were gonna buy. I forget what the name of
the company was, but they've kind of lost something like that.
I don't know if it was FAG, but I don't

(21:47):
think it was. But yeah, you know, it's interesting to see,
you know, and I'm not saying it's a sign of
a of a little it's not a bubble, but you know,
you're seeing a lot of corel between how much a
company says AI on their earnings calls and how how
stock performs over the next day or two. So it's
just going to be interesting to see, you know, what

(22:09):
Adobe says about artificial intelligence and how they're going to
adopt it.

Speaker 2 (22:13):
Oracle is kind of in the not not.

Speaker 3 (22:14):
The same boat, but you know, they have a lot
of great partnerships recently with a lot of larger companies
and they've done really well.

Speaker 2 (22:22):
So Oracle year to date is up.

Speaker 3 (22:25):
Let's see thirty five Oh no, no, it's I got
a eighty four percent. So again, you know, these companies
have gone a long way, and it's yeah, it's you know,
it's kind of evaluation question.

Speaker 1 (22:43):
Now it can't they can you know, they can't go
we meet yeahs that get twenty five thousand before it
pulls back to twenty. So I think that's what you've
got to be careful of. You've got to maintain your
asset allocation model in accord with your long term objectives,
not get foam. All right. You know that's one of
the things diverse.

Speaker 3 (22:59):
You know, we'll talk about the second half of Goldman
Sachs can't say, hey, now's the time to be diverse.

Speaker 1 (23:03):
I think that's you know, that's that's that that goes
without saying. But overall, you know, and we could we
will talk about it. After the brick Willing got about
a minute ago. You have the Dow pull them back
at the NAS deck, get all time highs US total
market in NIX at all time high, Russell two thousand
pulled back a little bit. The utility average is pulled
back a little bit. Uh maybe on earnings. I think

(23:25):
outside the NAS deck the S and P five hundred
and forty percent technology US total market probably a little
bit lower than that. But the Russell two thousand, utilities,
transports and now which don't have a lot of technology
pull back. And I think right now most investors are
looking at technology to cap off the year. They don't
want to. They don't want to begin next year with
underwaiting technology. If you're a professional investor, you want to

(23:45):
see that on your books at the end of the year.
But I do think we're due for a breather, especially
in that sector. Right now, it's ten thirty on the
station depend Upon for news, weather and information new still
K ten and one O three one W G Y,
Good morning, and welcome back to the second and have
five of the Capital District's Money and Investment program. You're
listening to the Fagan financial Report Aaron Dennis Fagan sitting

(24:06):
here today Sunday, and it's an improving day. We got
the Victorian Stroll.

Speaker 2 (24:11):
Victorian Stroll today.

Speaker 1 (24:13):
Sometimes that begin, you know, ten, Is it really that early?

Speaker 2 (24:16):
Yeah, it is.

Speaker 1 (24:17):
I'll probably go down around twelve or one and meet
some friends down there. We've been meeting friends down there
for probably the last twenty years.

Speaker 2 (24:22):
And uh, we used to meet at.

Speaker 1 (24:26):
Zy Bakers initially.

Speaker 2 (24:27):
Yeah, I love that place.

Speaker 1 (24:28):
And that a pipe burst and that they never reopened. No,
that was a good spot, good spot for dinner. There
was not a lot of spots in Troy to get
a real dinner.

Speaker 2 (24:37):
No, yeah, n uh yeah, downtown.

Speaker 1 (24:40):
Ryan's Wake we go to the l House, Caddies red front,
right front. Yeah, those are places we go. There's lots
of other places.

Speaker 3 (24:47):
Ryan's Wake has, like they really expanded their menu too.
They have some nice entrees.

Speaker 1 (24:52):
Now, yeah, Chris Ryan does a great job.

Speaker 2 (24:54):
He does.

Speaker 1 (24:55):
Would not go there on Thanksgiving Eve though, Look we
got your you. I'm obviously aged out of that one.

Speaker 2 (25:01):
I'm like happy.

Speaker 1 (25:04):
Yeah, he's a good guy. He's a good guy. Anyways.
So and you know, I was reading a couple of things,
you know, and and you know, you go and this
is you go to your doctors and and you know
you're looking for some sort of you know, key to
getting healthier and healthier, and you know, you just eat

(25:25):
right and exercise like you told me that last time.
And I think that that's that's kind of the key.
So when people listen to the show every once in
a while, I think both you and I look at
each other and roll their eyes. But you know as too, Yeah,
what can we tell people now? And and I think,
you know, and who is it, uh who writes Jason's
wage writes an article and he said he's been kind

(25:47):
of writing the same article for fifty six years, just
different things to say and then and again the first
half we went through the market. We've talked about year
end things and and iras and roths and this and that.
So we do we do touch on all the necessaries.
But when you talk about investing, you know, and I
read an article, I'm what you're comming at it? When
in fishing or investing, patients is the key and how

(26:07):
many people can just go out and fish now and
be patient and sit there and wait and not jump
spots and like jumping spots going to the new sector
if you want to equate it to investing or you know,
pulling trying a different lure or going from bay to
a lure or different lake or you know, different time
of day, and it's like, you know, it's just it's
just investing is the same way man. Boring, right, right, right.

Speaker 3 (26:29):
It's not a hate saying that. Sometimes it's you know,
people listen to you know, the radio or any type
of entertainment, uh, content for entertainment, and sometimes yeah, you
know this, this, uh this, your your portfolio should be boring.

Speaker 2 (26:42):
At times.

Speaker 3 (26:44):
You shouldn't open up your you know account and be surprised.
You know, you should kind of know where your accounts
performing just by looking at some underlying indices. But yeah,
you know, it's kind of one of those times a
year that you know, just internally we're working more on
the I guess financial planning side with you know, taxes

(27:05):
and state planning and you know, overtirement contributions and the like.
So that's that's kind of where my that that's where
my head is at right now. But also you know,
on an investment front, thinking about next year. But you know,
as we as we've been talking, you know, there's so
many variables that come into next year with economic policies

(27:25):
and in politics that you know, it's really I don't
think it's the time to make, you know, be open minded,
don't take any I don't think it's the time to
you know, be too confident in anything. And you know,
as we were saying a little bit about at the
end of the first half, is you know, stay diversified.
I think now is the time.

Speaker 1 (27:44):
To be diversified well, and I think don't don't be
don't be too confident that President Trump's policies are going
to immediately be reflected in the stock market, even if
they're successful. All right, I think, you know, that you know,
and and and I know President Trump likes to use
the performance of the stock market is kind of like

(28:06):
a benchmark for his performance. And yet it may may
not be the case his time. If he really wants
to get things done in Washington, however successful that he
might be because a lot of good news has already
been reflected. And as we mentioned in the first half hour,
you know, you know, some taking taking the medicine, if
it truly is medicine, it's going to help the help

(28:28):
the US over the longer haul, you know, can taste
kind of crappy for a while. So I think you've
got to be careful that you don't equate to too
and don't say, oh, President Trump is the president and
everything's gonna be wonderful, and I got to get into
the stock market. No, that's not how it works. And
I know you talked a little bit about it earlier
this year, earlier, I don't know it was this week
or last week, the week's flight, or maybe in the office.

(28:50):
But you know, the performance of the market is not
always reflective of the president, you know, And a lot
of times I think it's I think it is going
to be different this time at a certain extent, I
think the performance of the market is going to be
somewhat reflective of how how the tariffs and the Department
of Government Efficiency performs works out for.

Speaker 3 (29:08):
The for the for the market, but in tariffs, like
you know, I'm really curious to see, you know, if
this tear this tariff talk is just rhetoric to get
other things achieved, or yeah, we're going to implement you know,
major tariffs on some of our.

Speaker 2 (29:22):
Biggest trade partners.

Speaker 1 (29:23):
So well, the other thing, you know, right and often
you know, you you liken that stuff. And I've never
been in one, but to a bar fight. After the
first punch is thrown, all hell breaks out, and who
knows where it ends up? You know, could end up
in the back room, could end up in the street,
could end up in the back of the paddywagon. Who
really knows, you know. So I think this is the
same way you know, countries that our allies start protecting themselves.

(29:45):
We got to be careful that we we know where
this ends up, you.

Speaker 3 (29:50):
Know, I do think, you know, the only like you know,
thinking about positives with our relationships with other countries is
you know, Canada is in trouble Canada's Canada is not
happy with their politicians. So you know, we I think
we have the upper hand and the leverage and negotiations
right now. And you know, look at Europe. You know,
I forget who said it, but you know you were

(30:12):
talking about how Europe is going to be museums and
great food and you know, history, but not the place
to go to invest. But you know, I saw someone
say on on Twitter that is disrespectful to museums, you know,
because museums still have the you know, the money coming

(30:32):
in and everything like that. So a lot of these
countries are in a little bit more tougher shape than
we are. That I think we do have the you know,
bargaining power hopefully to you know, get some things achieved
that you know, President President elect Trump ran.

Speaker 1 (30:46):
On, well, and we're are. The US economy is in
good shape, you know. I know you talked a little
bit about or brought at the Apollo with the tors
and slock euro of your inflation is close to two percent,
but the price level to is twenty two percent higher
than in January twenty twenty. I think part of the
reason that immigration and also inflation is why President Trump

(31:07):
beat Vice President Kamala Harris. But uh, you know, and
inflation is coming down, so you know, but in our
economy is doing pretty well, but we're still feeling the
impact of inflation. So so so I don't know, but
we'll see how things play out. And and well they also,
I mean, how how how how much are US senators

(31:32):
and congress people going to go along with President Trump
when all those job cuts hit their districts? You know?
Can they really are states and districts? Can they really
play the long game there? I mean, what happens in
the midterms, you know, and and do the do does
the House incentive push back on President Trump? Or are

(31:54):
they going to be all in? Are the Republicans going
to be all in with this slim majority and they
lose two or three votes and it's not going to
get done? Or or are those cuts in the bureaucratic
machine going to have to be watered down a little
bit in order to get things done. So that remains
to be seen. I you know, I sit here, you know, optimistic,
you know, I sit here regardedly optimistic. And we'll see

(32:20):
what transpires from there. You know.

Speaker 3 (32:22):
I saw something It was by toursts and slocks. So
I'm kind of just throwing this out at you right
now because it came out at six point fifty eight
this morning.

Speaker 2 (32:31):
But get this, annuity sales.

Speaker 3 (32:32):
Are almost double their pre pandemic levels because of the
higher interest rate and strong annuity sales create strong demand.
So you know, basically a record high annuity sales. What
do you contribute that to?

Speaker 1 (32:44):
Attribute?

Speaker 3 (32:45):
Attribute? Do you attribute that to just ten thousand people
turn sixty five every day? No?

Speaker 1 (32:52):
Attribute to higher interest rates? You know, if you if
you figure your monthly income is going to be a
function of your age, you know, your beneficiary, and the
interest rate environment, Well that one the one one of
those criteria variables. Interest rate environment is up with four
percent versus one person.

Speaker 3 (33:08):
So even yeah, you got fit, you know, because you
see some people coming in here who have a fixed
annuity from you know, ten fifteen years ago, and you know,
people were people were happy to have you know, guaranteed
three percent, right, so now you're probably seeing what a
guaranteed you know, fixed fixed annuity at five five percent?
You know, so yeah, that's probably that that's probably.

Speaker 1 (33:28):
Yeah, well so you do that the underlying the underlying
I will say though, though if you look at the
guaranteed rate after the guaranteed rate, the contractual guaranteed rate.
These annuity companies have learned their lesson, meaning that let's
say they're going to offer you five percent for the
next three years in annuity company that could renew at

(33:49):
down to one. You know, fifteen or twenty years ago,
nudy contracts had a guaranteed rate of three, so they
had like a today's rate, you know what I mean,
Like like they say, okay, for next three years, you're
gonna get five percent, but the lowest that will ever
go is three. Now because where interest rates were from
OA to twenty, that that has that that guaranteed rate

(34:10):
after your maturity for a lot of annuity contracts is low.
It's like one percent because they don't want to get
stuck having to pay out three if interest rates go
back down in rain environment's one you know, So I
think that but I think that that's where annuities, you know,
play an important role for clients. And we don't do
a lot of work with annuities. You know, would rather

(34:32):
buy a treasury and maintain right to principle rather than
an immediate annuity. But that's why I think you know
that they've picked up in the other. Other thing I
don't like about a non qualified annuity if you look
at just taking money from the bank that's not in
an IRA or four own K and put it into
an annuity, is that you don't get a step up
in basis upon your death. So if you put in
twenty thousand dollars and you die with fifty thousand dollars,

(34:55):
your beneficiarys are going to have to pay tax on that.
Whereas whereas with the stock market, you get a step
up in basis so you can take a higher paying dividend.
You could take a national grip of pages dividend of
five or six percent or a jetpie you know, in that.

Speaker 2 (35:09):
You're going to get an income. You don't have the volatility.

Speaker 3 (35:12):
I guess even bufferdtfs exists now rather that have some
downside protection if you're you know a little bit weary
about jumping into the stock market. We don't own any
bufferdtfs with just the with the ability to customize portfolios.
We use cash and bonds to reduce portfolio risk. But
you know, let's say, you know, I think buffer dtfs
are you know, a pretty good strategy, Uh, you know,

(35:32):
I know a lot of people use them for I
guess long term savings. You know, you don't want, like
let's say a brokerage account to be as volatile as
the market. So you just you know, throw X amount
of dollars per month, you dollar cross the avenue to
a BUFFERDTF if you need to get at the money,
you know you still can and it doesn't have you know, yeah,
let's say the risk associated with you know, S and P.
That's like thirty five forty percent tech and communication services.

(35:56):
But I think, you know, I guess another show we
can go into bufferdtfs a little bit more, right.

Speaker 1 (36:04):
You got if you look at some other things really
going on. I know you talked a little bit about
we talked a little bit about the economy. We talked
about uh, you talked a little bit about fishing US
as we close out the year.

Speaker 2 (36:19):
I think that do you have something?

Speaker 1 (36:22):
Yeah? There there was, there was There was an article
in Barons this week talked about you know, not wanting
interest rates to go back to where they were and
and and I think I would agree with that. What
are we looking at now, Aaron? As far as alternatives
to this? The equity markets and there's some that believe

(36:42):
there there is no alternative. But you know we've kind
of staggered some treasuries and done some preferred stock.

Speaker 3 (36:48):
Or yeah, you know we have some preferred stock. I
know Bank of America has a good, a great preferred stock.
P f F is a preferred stock index et I'm
gonna pop it up right now, but you know it
has a five point five six percent yield points four
to six percent expense ratio. So you know it's in
north of five percent yield, which you know I would

(37:10):
be happy with. A year to date it's up looks
like ten percent. Uh, So you know, I think that
that's a good option. You know, I also think, you know,
the best option if you're in the equity, if you're
just talking equity markets, is diversification. You know, we do
have a lot of large cap tech. We have paired
some back recently. But I think you know what we

(37:31):
do here is we try to pair back. We try
to pair a lot of our ETF holdings are you know,
I would say we're more growth investors on the stock side,
individual security side. So what we try to do is
pair our individual securities with ETFs that aren't as correlated
you know, to those securities. So you know, uh, cow

(37:52):
Z is a cash cow ETF Pacers. I think it's Pacers.
I'm not sure. I don't want to not give credit to.

Speaker 2 (37:59):
Yeah, hacer us cash cow ETF so.

Speaker 3 (38:04):
Companies with really really uh you know, great financials as
well as you know, yeah, a lot of free cash
flow on hand. It's only up seventeen point nine percent
year to date, so it is, uh, it is lagging
the market a little bit, but again, you know, it's
a it's one of those companies that could do you
know a little bit well if there's a shift. N

(38:25):
OBL is a divin end aristocrat ETFs companies that raise
their dividends. It's heavily allocated towards towards mid cap n OBL.
I just want to get the exact exact figure, but
you know it's fifty two percent MidCap, three percent small caps.

(38:46):
Over half of it is small and mid caps. So
you know, in a in a in an interest rate
environment where we maybe uh you know, our cutting rates,
you know, these small madcap companies could do better.

Speaker 2 (38:56):
We just bought ai r R.

Speaker 3 (38:57):
So it's first renaissance American industrial and asance ETF. You know,
that's a you know, it's a forty six percent year
to date. And that's even more so, that's a sixty
seven percent, sixty eight percent small cap, fifteen percent microcap,
in sixteen percent mid cap. So there's no large cap
or or you know, giant cap. It's it's called you know,

(39:20):
those trillion plus dollar companies. So again, you know, it's
another sector that is you know, could do well if
we're bringing jobs back home, and it's it's almost ninety
percent industrials. So you know, that's kind of what we're
looking at right now, is you know, you pair the
winners of today with maybe the winners of the next
you know, five years, and you know that could benefit

(39:42):
from this interest rate cutting environment because you know, if
you see the economy as doing well, you don't see
the stock market as very overvalued. But you know, you
see the you know, triple cues and the like that
have done so well over the past ten or fifteen years.
So you know, if you're in a if we're in an
environment where hey, you know, economic economy is doing pretty well,
but these companies might be a little bit overvalued, I

(40:04):
think now is the time to diversify really, and that's
kind of what we're doing.

Speaker 1 (40:08):
And that's the theme of the show. Really. I think
if you were to if someone were to listen to this,
I think they're getting that theme that time to diversify
and time to spread out a little bit. And I think,
you know, and by and large we have done that.
We have done that over the past probably six months,
because we've probably have been saying it for the past
six months. Yeah, you know. Another area that I think
is is well worth looking into. It is not international

(40:33):
but global. And what's the difference between international and global
as as some would say it's just semantics, but it's
not if international investment if you look at international ETF
for fun, excludes the United States and global includes the
United States. So one of the funds that we've been
dealing with on an ETF basis is the Spider Global
Dow ETF Simple DGT. It's up about eighteen percent year

(40:56):
to day. It's largest holdings are Tesla, Carnival, Wells, Fargo
Booking Holdings, which is the old Priceline, Salesforce, Missuzo, Mizuho Financial, Netflix, Disney,
and Goldman Sachs. So it's well diversified there and also
on a UH and the I Shares Global one hundred ETF,
which is the largest one hundred stocks in the world.

(41:17):
It's of twenty eight point twenty eight percent, so it's
it's it's again doing pretty well. It's largest holdings or
as you would expect UH in the tech sector because
those are the largest stocks, the apples and videos Microsofts
of the world. So those are there are a couple
areas there. Aaron mentioned in the first half hour the
j EPI, which is the JP Morgan Equity Premium Income Fund,
and the JPQ which is JP Morgan US Tech Leaders Fund.

(41:41):
Right now, JP Morgan, the NASDAC got what is it?
What is the official name of that or JBPQ, It's
JP Morgan, It's a j NASDEK Equity Premium ETF. So
those are some things that you're you're going to want
to look at as you close out the year. I
did maybe not getting into the fixed income as UH
as we we would have liked. Our largest holdings in

(42:02):
that sector de vand GUARD Intermediate Term Corporate Bond ETF,
I shares, Core US Aggregate bond, the symbols agg you know,
and I think as interest rates are, and these are
some alternatives to uh to perhaps annuities and the like.
You're to date that you know, the funds up three
point five one percent to dive it in yields three
point three three percent, it's a bond in next fund.

Speaker 3 (42:24):
It's you know, it's it's forty two percent long term,
fifty five percent intermediate term. So you know, it is
kind of diverse. So you know, you pair that with
some very short term ETFs are or or mutual funds
mutual funds, and now, you know, I think that that's
a good pairing. You know, forty two percent long term,

(42:45):
I'm not saying that's a little concerning, but uh, you know,
thirty one percent is the twenty to thirty year bond.

Speaker 2 (42:52):
So that's a little bit more than.

Speaker 3 (42:56):
I guess I think that duration is a little bit
uh longer than you know, we're putting a lot of
money towards. I think we're more in the uh, you know,
five three to five year range and short term I mean, uh,
and there's a lot of uncertainty out there, I still
think with inflation. So I think that you know, the
five ten year what we're main around these areas for

(43:18):
the time being.

Speaker 1 (43:19):
You need some duration because you don't want to get caught,
you know with interest rates back at one or two
percent for whatever reason that is unforeseen. And have U
and have a lot of money there Vanguard, Core Plus, Bond,
ETF Simple, VPS and pau L's and Larry SS and
Sam the good area. So that's what we're that's what
we're kind of doing now to uh get through.

Speaker 3 (43:41):
Uh.

Speaker 1 (43:42):
You know, you know a stock market that's done great
and you know, you know now moving forward, and you
see it with projections from Vanguard and Goldman Sachson, like,
you know, projecting the market that maybe four or five
percent a year, maybe six percent a year total return
including dividends. So you're gonna have to add something else
in there.

Speaker 3 (43:59):
Uh.

Speaker 1 (44:00):
You mentioned PFF as a preferred stock paying five point
five six percent, jet By and jep Q, so you
had some optionality into that, and you also had some
fixed income. And I think you're pretty good shape because
let's say that does happen and now you're getting four
or five on fixed income, maybe you're getting six on
in the stock mark. That's still covering your your needs
for growth and the long term. I think what it's
gonna happen, though, is I think investors are going to

(44:22):
be disappointed with that and maybe impatient with that. And
I think you've got to fight that again using that
fission analogy that we started off with, I think you've
just got to be careful that you don't really keep
changing your location or your bait a lot to kind
of look for that, you know, look for that hot spot,
because I think that you know, at some point in time,
I think that's and it always happens, it's going to

(44:44):
wear your portfolio down. You're going to get into something
that was once hot and let's say it's cooled off
a little bit and you thinking, oh my gosh, I
can buy app lovin, you know, twenty percent below where
it was, and all of a sudden it's stagnateure goes
down again. Because when the bloom comes off those roses,
it really comes off quickly. I'd be remiss if I
didn't say, really, if we didn't kind of bring up

(45:06):
some things that you should be looking at your portfolio
with right now. If you're managing it your own. This
is what we're doing. If you are required to take
a minimum distribution from your IRA, you got to get
it done. We're finalizing those now. We probably got a two,
three or four dozen left to do, whether it's an
inherited IRA or your own IRA. If you're seventy three,

(45:27):
you have to begin to take money out and also
realize capital gains and losses. You know, take a look
at your portfolio. Maybe want to pair up some of
the gains this year by if you have a couple losses,
offset that. You want to do that. Charitable contributions of
appreciated stock. You can do that where you have a stock.
Let's say you bought Nvidia ten and now it's one

(45:49):
forty or so. You want to gift shares to your
favorite charity. You want to get that done because that
does take some time. You'll get a tax deduction on
the full market of the stock. You can certainly you
can gift cash. You can also use qualified charitable distributions
from your required minimum distribution. If you're required to take
one out from your IRA, you can you can offset

(46:12):
that income by by gifting those to a charity. If
you're seventy or over, even if you don't have to
take a minimum distribution, you can gift that some of
your IRA to charity and not really and not pay
tax on that. So those are something that you can
do right now as we close out the year. It's
kind of late for bumping up your four oh one
k as you prepare for next year, bumping up your

(46:36):
four one k now, or taking any pay increase that
you might have expecting that you're expecting, or or just
to you know, if you inflations three or four percent
and you haven't increased your four O one K for
a while and you're not at the maximum, now you
want to you want to take a look at maybe
ratcheting that up a bit if you're if you're if
you're not investing at all in your four O one k,

(46:58):
you know you're probably foregoing your co But he match
lots of times companies match the first three percent either
dollar for dollar fifty percent. So either you know, three
whatever whatever max is out that match, you want to
take a look at that as well. So those are
some things we're doing now, you know, rebalancing your portfolio
as you close out the year. So you hit the
ground running in U in twenty twenty five. A lot

(47:19):
of investors, uh, you know, take the month off, but
but you know, you could do some housekeeping with some
of these. So as we go into next week, in
the week after, Uh, we're going to concentrate on required
minimum distributions, uh, charitible givings, charitable giving, and also balancing
out tax loss harvesting as we go as we go
into next year. So so that's about what's what's on

(47:42):
our plate. Let me see what else we got here.
That's about it for today. I'm mean I covered all
the all the bases for for today.

Speaker 3 (47:51):
Know they say we're supposed to know today or tomorrow.
We're want Soto signs.

Speaker 1 (47:56):
Let's go Mets.

Speaker 2 (47:57):
Yeah hopefully.

Speaker 1 (47:58):
You know I'd be I'd be sad if he lost
the Linzo Yeah, you know you know so yeah, me too.
But what are you gonna do now? You know you
want someone whos gonna stay there? They're talking about McNeil
to the Yankees. I saw that online. You know a
little bit for pitching, you know, so so we'll see there. Yeah,
we can pick up a pitcher they need, they need
a multi you know, multi position in fielder. Yeah. So

(48:21):
what it is. If you have any questions during the week,
give us a call five one eight, Uh, you can
check us out in the web. But faganasset dot com
like us on Facebook. As I mentioned earlier, our snap
snapshot goes out at about eight o'clock every Sunday morning,
so check that out. Other than that, go down to
the Victorian Stroll. If I see it, will say hello,

(48:42):
have a great day, take care.