The Fagan Financial Report

February 23rd, 2025

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. IM
Dennis Fagan, sitting here with my son Aaron, as we
do every Sunday right here in news Talk A ten
and one oh three to one wgy. Lot going on
in the markets, lot going on in our lives. And
this past week the S and P five hundred US
total market index at one point in time both closed

(00:20):
at all time highs. The first close at an all
time high within the within the last three or four months.
So that was good news.

Speaker 2 (00:28):
And the money.

Speaker 1 (00:29):
The market continues to defy really what many would have considered.
Us included what should be, it really should be. It
is what it is, it shouldn't be.

Speaker 3 (00:39):
It is what it is.

Speaker 2 (00:40):
Choppy, a choppy market.

Speaker 1 (00:42):
So and I think it will will have an upward
bias as we have stated, but be so much choppy.

Speaker 2 (00:49):
But there's several questions that are out there for investors.

Speaker 1 (00:52):
We'll talk about that a little bit of questionnaire from
Apollo Group pro Shares twenty twenty five market Outlook.

Speaker 2 (00:59):
Why are we talking about that? Where? Because it still
brings up some interesting points.

Speaker 1 (01:02):
Stocks may have less rest than risk than you think
is a part of that conversation. Fixed income markets face challenges,
equity income presents opportunity, and bitcoin may be a diversifier
or put gold in there as well, and then get
into some more of the topical questions that are that
are confronting investors right now. But I think what I

(01:24):
would start with there is kind of what I preface
this show with, which is, uh, the market climbs a
wall of where it's an old adage and I don't know,
I don't know if the stock market and the financial
markets are just kind of like turning a deaf fear
to the to the deaii Uh information coming out of

(01:47):
the Trump administration or are are they are they assimilating?
Are they are they digesting that? And to date saying
this is good?

Speaker 2 (01:55):
Uh? Do we not know enough about it?

Speaker 4 (01:57):
Uh? You know, I think it's a nation of things.
You know, we are in earning season. I think we
saw this past earning season up up to now, earnings
are up about sixteen percent year over year for S
and P five hundred companies, So you know that's obviously
a good sign. And then you know Trump in deregulation.
I think people are thinking, Hey, you know, if if

(02:17):
we will have less regulation, that should be good for
the stock market. Uh, you know, I think that should
be the case in the short term. But as you know,
I think I've said the past few weeks, what deregulation
does is throw a lot of unknown variables into the economy,
into the stock market, and the more unknown variables that
there are, the more chance there are for something to happen.

(02:39):
You know, I don't know what that something would be,
but something I guess, some sort of black Swan events.
So you know, on one hand, you know, yeah, I
think deregulation is good for the stock market. On another
you know, I don't know what that deregulation would will bring.
You know, let's say six months a year from now.
So I think, you know, I'm cautiously optimistic stick on

(03:00):
the stock market. Uh you know, if you take you know,
politics out of it, I think you're seeing a lot
of positivity with you know, the S and P five
hundred in general. I think you're seeing a little bit
of a pullback from you know, large cap tech, but
you're seeing some other some other sectors you know, rebound
and have a good start to the year. For example,

(03:20):
find uh International is up here to date eight point
one one percent. The s m P is up north
of four percent as well. So, uh, you know, we're
we're seeing things you know, do well, which I'm which
I'm happy about, but you know, yeah, I think I'm
I think you just have to be cautious when you
have a lot of these things come out. You know,

(03:42):
you're we're throwing tariffs out there, We're you know, Trump
is just doing a lot of things that are are.

Speaker 1 (03:53):
Unusual and you're not typical, somewhat without precedent in really
modern history.

Speaker 4 (03:58):
And I think what you say a lot about the
stock market a lot is you know, the style of
Mark Twain said, what history history rhymes, It doesn't repeat.
So when you have someone like Trump come in as president,
there's not a lot of repetition that has been precedent
or you know, we don't have that repetition that we
did in the past to draw parallels on. So that's

(04:19):
kind of where we stand.

Speaker 3 (04:22):
In my opinion.

Speaker 1 (04:23):
You know, I spoke with somebody this morning about and
we are we are paid. We're an investment advisory company.
We help people with the retirement, We manage money over
eight hundred million dollars. So we are paid to take
a stance and where we think the market's going based
upon Trump's President Trump's policies, just like President Biden's policies,

(04:48):
President Trump before that, President Obama before that.

Speaker 2 (04:51):
So we have to take a stance.

Speaker 1 (04:53):
We do try to take obviously any personal political leanings
out of it and draw from the historical parallel, but
we have to make decisions right for our client's assets.
And I was saying to a client today, I'm not
worried about the economy. A lot of President Trump's economic

(05:14):
policies reducing government spending that could be a huge ultimate
tailwind for the economy. It could be a potential intermediate
term headwind for the economy, depending upon, you know, how
many government workers are let go, and then whether they
find positions in the private market or different municipality, municipal

(05:35):
government entities elsewhere, depends upon you know, challenges to the layoffs.

Speaker 2 (05:39):
So there are a lot of.

Speaker 1 (05:43):
Ebbs and flows that we could see prior to the
ultimate result of President Trump's and Elon Musk's policies regarding
the economy. But we've often said over the past five, six,
seven months, the market seems fairly valued. You know, I
would say that right now. And I'm not worried about

(06:03):
the domestic economic policies for our clients. You mentioned earlier
in that this past quarter earnings growth through about sixteen percent.
That certainly supports a market at twenty two or twenty
three times earnings at a lot of the good earnings,
you know, stronger earnings are coming from our technological leaders.

Speaker 2 (06:21):
That's good.

Speaker 1 (06:22):
We're in the first third maybe you know, fourth or
fifteen if you'd like it to a baseball game. Maybe
you know, in the beginning of the second third of
an AI revolution. That should do a lot to reduce
costs for all companies, but certainly also provide a tailwind
to the technology sector.

Speaker 2 (06:37):
Continue tailwind. You know my concern. But so I if you.

Speaker 1 (06:42):
Think we could really derail the market. I don't see
something economically over the foreseeable future that's going to derail
the market unless there's something a black swan event, And
a black swan event came in the form of an
OA the housing market, and I don't see that again
this year.

Speaker 3 (07:01):
You know, But you don't. You don't see you.

Speaker 2 (07:03):
Don't see a black swan. Yeah, but but what my guess.

Speaker 1 (07:06):
My point is that what I'm trying to get to
is the the our economy is on very sound footing.
I think that the the issue that would come as
a as a as an issue a serious issue for
our markets are and I'm no expert in this, but
again I preface my whole monologue, We're gonna call it
with with that. You know, we are paid to manage money.

(07:26):
And one of my concerns really is, you know, are
kind of the transactional nature of our relationships with what
were at one point in time, you know, our strongest allies,
and and what does that mean for their decision making
in the future. And I think that's what that's what
happens sometimes is that we we make decisions. And the
President Trump's obviously the president of the United States, so he's,

(07:49):
you know, much more knowledgeable about all this information than
I am. But again, we manage money, okay, so we
have to make decisions.

Speaker 2 (07:57):
So the the the.

Speaker 1 (07:59):
Question that I have is, you know, also other countries
have decisions and a purely and in a purely transactional relationship,
those decisions may not take the United States into consideration,
perhaps as other countries may have done in the past,
and that what does that mean for us?

Speaker 2 (08:17):
For instance, if Russia does.

Speaker 1 (08:19):
Move move beyond the Ukraine, you know, what does that
mean for our relationship? What what what would we do?
What does that mean for Western Europe? And those are
some things that I think really could could rock the market. Again,
not a baseline cases fairly valued upward bias, economy does well.
But these are some things that we think about. And

(08:41):
this is not you know, this is not a negative
towards President Trump at all.

Speaker 2 (08:45):
It's just a matter of uh.

Speaker 1 (08:46):
And again, as we've said multiple multiple times on and
off the aras President Trump is not a traditional politician.
A traditional politician is moves in a much more anticipated manner.
The movements that President Trump makes is as somewhat unprecedented
at least in modern history, and has a wider range
of potential outcomes than those moves by you know, the

(09:07):
Biden administration, as ineffective as it was. So I think
that's kind of what, you know, how we're investing money today.
A little bit of a concern over that that you
know mentioned that many times that bar fight, you know,
when that first punch is thrown, we may throw the
first punch and we can control that. After that, we
can't control that. We can't control you know, what our

(09:27):
friend Canada does, what our friend the UK does. Maybe
three or four years ago, we could have controlled it
or because we're a team, we're you know, but now
that those those uh, those ties.

Speaker 2 (09:38):
Have have loosened.

Speaker 1 (09:39):
Yeah, so that you know, so that's kind of my
my and I don't know would you agree with that, like,
you know, would you want to add something to that?

Speaker 2 (09:47):
But that's kind of my concern.

Speaker 1 (09:49):
And I'm always concerned about something that's you know, that's
kind of how it goes. But you know, that's kind
of what I'm thinking about with with with investments at
this point, happy where we are confident in the economy,
been looking over our shoulder with foreign policy with Russia
and China and North Korea, in the Middle East in mind.

Speaker 4 (10:06):
Even the even you know, the European countries got together
last week to you know, just discuss their economy in general.
Uh so, yeah, I think that's you know, this is
a global economy. I think the United States is what
about a quarter of world GDP, but the eves in
the in the seventeen eighteen percent, you have China in
the in the mid teens. So you know, although we
are the largest, there's a lot of other you know

(10:28):
countries in the world that are that are you know,
big as well from an economic standpoint. So yeah, you know,
it's as we've been saying, this is it's just unprecedented,
and you know what's going on with the administration, it's
really hard to gauge what's going to happen to the
stock market when there's not a lot of you know
history that.

Speaker 3 (10:50):
To draw parallels on.

Speaker 1 (10:52):
I'm seeing about twenty five percent. So but that's that's
my mother concern. What happens to costs if let's say
and let's say EU meets it and they're like, well,
we've we've got to kind of ramp up. We know,
we can't count in the United States to have our back,
you know, and agree or disagree with it, Like I'm
not here in a position of that. But let's say
the EU says, okay, we've got to become much more

(11:13):
economically viable, defense wise, AI wise, everything wise, because of
the relationship with the United States is not what not
what it has been since the since the out since
the conclusion of World War two, it's changed its direction
most likely, so it could increase costs along the way.

Speaker 4 (11:35):
Yeah, even you know, even you know, just Trump's you know,
rhetoric with Canada. You know, I just don't I just
don't really agree with that. You know, Canada has been
our closest ally right since past one hundred years. Yeah,
and what does that mean going forward?

Speaker 1 (11:53):
You know, I mean, what does it mean if Canada
there's been overtures from.

Speaker 2 (11:56):
The EU for Canada? You know, what does that mean?

Speaker 1 (12:00):
He's got two hundred, two hundred and twenty million people,
two hundred million people. Canada's got thirty million, We've got
three thirty you know, what does that all mean?

Speaker 2 (12:08):
And I think that's.

Speaker 1 (12:09):
Kind of a you know, and it could be all positive,
you know.

Speaker 2 (12:13):
Yeah, so you just wait and see the market does climb.
A Willa Warry.

Speaker 1 (12:16):
So this Apollo put out this seven questions for investors
towards some slock and they put this out, you know,
February nineteenth, so a few days ago. Well do you
want to pick one air or what do you want
to want to just go for one or what do you? Uh?

Speaker 4 (12:30):
You know, I think I think the one everyone has
been thinking is if inflation remains sticky and the FED
doesn't hike, what will happen to long eight, to the
long to long rates and break evens? You know, I think,
I think everyone I think that That's the biggest question
in my head really right now is if the FED
remains sticky, what does and what if inflation remains sticky,

(12:52):
what does what does the FED do? And what does
Trump do in retaliation to the Fed? I know he's
been calling for us to cut rates while inflation has
been high, which you know would be inflationary. So, you know,
I don't want to see that to come to a
to a head between you know, Jerome Powell and President Trump.
So I think that's the that's the that's the biggest

(13:16):
worry in a lot of Trump's uh rhetoric has been inflationary, right,
Tariffs are inflationary, you know. So I think that's kind
of the biggest question that that I see.

Speaker 1 (13:27):
All Right, I would say that from my perspective, uh,
if inflation remains sticky, so do interest rates around here?
I think from the FEDS perspective, they remain here.

Speaker 4 (13:40):
You said, I think we saw we can flourish as
an economy with interest rates around here though, you know.

Speaker 1 (13:46):
Definitely, I don't think that's an issue at all. I think,
you know, I think, you know, we got some pretty
sour data on in the housing market this this past week.

Speaker 2 (13:56):
But in general, I think.

Speaker 1 (13:57):
If inflation stays in around two and a half percent,
I just and I think we've bend that night. I
think we've been that way for the last couple of
years in that inflation is going to remain stickier for
longer because of wages, because of onshoing near shoring. And
I think that's even more likely now with a change
with tariffs and a change in foreign policy, all potentially

(14:21):
offset by the Department of Government efficiency. But I think
that's a little bit of a stretch and a wish.
All could be offset if the economy really slows down
because of uncertainty or because of layoffs in government employment.

Speaker 2 (14:34):
So I think we sit here and thinking, okay, we're
okay in around here.

Speaker 1 (14:39):
I wouldn't work look for the market to take off,
and I wo wouldn't look.

Speaker 2 (14:43):
For the market to pledgure.

Speaker 1 (14:44):
But the answer is directly, if inflation remains sticky and
the FED doesn't hike, what will happen to long rates?
I think they kind of staying around here four and
a half five percent. I think the real issue for
the market would be if the tenure got to five percent.
I think that's a head wind for for the stock.
Ten you're sitting around four fifty. Stock market can digest it.

Speaker 3 (15:06):
I agree.

Speaker 4 (15:07):
You know, we're seeing the you know Shiller pe ratio
cape ratio, price to earn it Shiller's uh, you know,
the Shiller pe ratio. Essentially it's you know, price to
earnings over growth. You know, at thirty eight. It's only
been thirty eight I think at twenty twenty two when
the market was you know, pulled back and then maybe
maybe during the dot com bubbles. So yeah, prices are elevated.

(15:30):
But at the same time, you're seeing revenue growth which
is higher than it's never been before either. So you know,
I think I think, yeah, I'm I'm optimistic on the
market because we just saw a great earning season. Companies
seem to have pretty strong forward guidance. But you know,

(15:51):
I'm cautious in that. You know, the market is pretty
fairly valued here, right, and.

Speaker 2 (15:58):
We've been saying that.

Speaker 1 (15:59):
So another question for investors from Apollo total federal employment,
including contractors is around ten million. Can the Department of
Government efficiency dose related firings and cuts create a recession?
How will markets respond if job as claims start moving higher.
I think it's it's the magnitude to which they move

(16:21):
higher and the pace at which they move higher which
would impact the markets. If they move I guess slowly higher.
I think the market digests that, okay, because I think
the ultimate impact would be restructuring of the economy, more

(16:41):
emphasis on the private sector. However, if that if these
federal employees are not able to find a job elsewhere,
or if they're their dismissal is.

Speaker 2 (16:55):
Rapid, and perhaps.

Speaker 1 (16:59):
Contention via visa v lawsuits and court court uh you know,
court dates and the like. You know, I think the market,
you know, kind of wrestles with it. I think that's
you know, it's a push pull of the market. Really
right about now, so total federal employments employment at ten million,

(17:21):
I think the market can digest a slow moving kind
of I think that, you know, just to say, you know,
I think everyone, I think everyone would suggest that, you know,
the government is bloated and it's a matter of cutting back.
But it's kind of like saying that your doctor saying, hey,
you need to lose twenty pounds. You don't starve yourself
for the next two.

Speaker 3 (17:42):
Weeks, you know, and give yourself a tape.

Speaker 1 (17:45):
Right, get yourself on a regimen toeh to basically cut
those types of jobs.

Speaker 2 (17:49):
And then so that's the thing.

Speaker 1 (17:51):
Do we take the hatchet with this with these ten
million jobs or do we kind of use a combination
of attrition and the like and the other thing too,
where As I would say, is that just talking about
the market, there's you know, if you look at a
correction in the market, there's kind of three ways the
market can correct. It could there's a there's a percentage correction,

(18:13):
there's a time correction, and there's a combination of the two.
The market could kind of kind of slog around for
a year or two or whatever, and then you have
a time correction where earnings catch up. The market could
go down twelve percent, creating opportunity over the next two months,
and there's a corrective opportunity, you know, or you have
you have a combination of the two. The market goes
down a little bit and time passes, or the market

(18:36):
goes up at a pace that's not indicative of great earnings,
So earnings earnings grow faster than than the market rises,
and you have a contraction in the in the fundamental
ratios of the market. So there's a lot of things
that could happen here. I don't want to sound too negative.

Speaker 2 (18:51):
I want to sound I want to sound Hey, we
like where we are. I mean, let me let me
ask you.

Speaker 1 (18:56):
We'd like where we are, We'd like what we hold
we are little question just given the foreign policy concerns
that I expressed earlier, this is out of the norm. Yeah,
the market's going to accept President Trump for a while
until until it doesn't.

Speaker 4 (19:13):
Yeah, And you know, I think I think, which I'm
a little bit bit nervous too, is you know our
business is in a wait and see mode? Right are
we gonna wait and see how these policies play out?
And being in a wait and see mode? Does that
slow down the economy right there?

Speaker 3 (19:28):
You know what I mean?

Speaker 4 (19:29):
So even just from a you know, business owner standpoint,
you know, I think, you know, just talking to other
business owners, Yeah, I think a lot of people are like,
all right, let's see how this plays out. But does
let's see how this plays out create some inactivity which
slows down GDP right there. So you know, these are
just kind of some things that are going through our head.
And uh as as you know, investment advisors really right and.

Speaker 1 (19:52):
Should be going through should be going through everybody's head,
you know, whether you whether you invest money professionally like
Aaron and I do, or you invest your your own money.
These are questions that should should be going through your head.
And and and I really it saddens me to think
that these questions but you see it with consumer sentiment.
It saddens me that these questions are are I guess

(20:15):
it's impossible not to, but are but are colored by
your political persuasion. Yeah, you know, we try to be
very objective. I don't think anyone would know what political
party we lean to. I would hope not, you know
what I mean. And we go from there.

Speaker 2 (20:32):
Well one of them.

Speaker 1 (20:33):
There's a couple of questions that really aren't particular to
this show. We answered the number seven. What type of
sudden events can happen as a result of more and
more segmentation in global trade? Tech and security? Uh, certainly,
you know prices could go up. Security, it would be
a big issue. Uh. Technology, you could have tariffs, you

(20:55):
could have, you know, restrictions on different technology around the world,
the bifurcation between the East and the West, the bifurcation
between the EU and the US. You can have a
closer alignment with really Russia and China. All these things
are just part and parcel with Yeah, with a global economy.
But the globalization is.

Speaker 3 (21:15):
Dead, yeah, especially for the time being.

Speaker 1 (21:18):
Right, Yeah, And then I guess probably the final when
the stock of the amount of treasury builds out standing,
is that a record high as a share of total
government debt will quarterly refunding announcement later this year, increase
issuance of coupons. And if yes, what does that mean
for longer? It's I assume it will you know, we
need to fund this debt. We need to issue more debt.

(21:41):
Assuming a stable demand or consistent demand and an increase
in supply, prices go down and rates probably you know,
go up a little bit or staying here. I think
the combination of the issuance of debt and our you know,
inflation sticking sticky inflation keeps rates here for a while.

Speaker 4 (22:05):
And then you know, I don't know if you said,
but then Powell's term ends in May of twenty twenty six.
So what happens when you know, a Trump appointed I
don't know, do we know yet?

Speaker 2 (22:18):
No?

Speaker 4 (22:19):
Yeah, so who is that? And you know, how how
how independent will he actually be?

Speaker 2 (22:23):
Right? What happens to the independence? Yeah? And also you
have reissuance.

Speaker 1 (22:27):
You have foreign countries on around more than twenty percent
of our US debt, So what happens there?

Speaker 4 (22:33):
You know, you see in Japan, you know, we didn't
talk about it yet, but you know Japan has raised
rates twice. You're seeing you know, inflation climbs to a
two year higher four percent in January, supporting rate hikes,
calls for Bank of Japan members. So yeah, you could
see one of the larger economies in the world continue
to raise rates. So you know, is there going to
be an alternative to the to the US Treasury? No,

(22:55):
I don't think you know right now. No, but you
know what happens in a few years and you.

Speaker 2 (23:00):
Know, so the other the other thing is I forgot
I was going to say, I lost my train of thought,
got a minute left, got a minute left to get
it back. Yes, that's not gonna happen anyway. So I
think things things.

Speaker 1 (23:14):
Are going up pretty well, uh, you know, if check
out our website at fagan Asset dot com, you'll see
all of our largest holdings as of the end of January.
We like I said, we like what we own. We
feel good about it. We got about nine or ten
percent cash. A lot of that cash is sitting at
four or five percent four percent. Some of it's you know,
we're transitioning from a sweep account back into the market

(23:36):
in some order. So yeah, I think things are pretty
good at this point. I do think we live in
uncertain times.

Speaker 2 (23:42):
Uh. After the break a little outlook from pro Shares
for this year.

Speaker 1 (23:47):
Some of the topics we talked about stocks may have
less risk than you think.

Speaker 2 (23:51):
We counter that argument.

Speaker 1 (23:53):
Right now, it's ten thirty on the station depend upon
for news, weather and information news talk A ten and
one O three one w G.

Speaker 2 (23:58):
Y put my headphones back on and get ready.

Speaker 3 (24:03):
Yeah, what's going on?

Speaker 4 (24:04):
You know sometimes you just get right into it as
opposed to you know, talking about life.

Speaker 3 (24:11):
Yeah, people like to hear from you as.

Speaker 2 (24:13):
Like heys as a sixty three year.

Speaker 3 (24:16):
Old guy radio personality.

Speaker 2 (24:18):
Nobody likes to hear from me. I don't have anything
going on.

Speaker 1 (24:21):
You have, you have your family, like your growing family, Jude, Yeah,
as me.

Speaker 2 (24:27):
How old is she now? Seven months?

Speaker 3 (24:28):
Yeah, seven and a half, seven months.

Speaker 2 (24:31):
She's adorable, thank you, she.

Speaker 3 (24:34):
Is adorable, Jude.

Speaker 4 (24:35):
Right now we're filming this Friday, or recording this Friday.
Jude's at the Lansingburg Jude and esme too, or at
the Lansingburg Kids story time.

Speaker 3 (24:44):
Mom puts it on. It's a hit. Kids love it.
They do an activity and there's like a theme.

Speaker 4 (24:50):
Jude loves it. He sits right in the front row.
It's hard for him to like share his grand his
grandmother though.

Speaker 2 (24:57):
You know, I feel the same way about her. Yeah,
you know what I mean. So yeah, he does like that.

Speaker 3 (25:03):
He does. He lets it down.

Speaker 1 (25:05):
But you know, we've had a string of kind of
difficult weather. We are getting into March. Got baseball spring
training has started. Yeah, right, so that's exciting. We've got
the Mets. Mets should be decent again this year. You know,
you always got to wonder with the Mets though, because
when they're supposed to be decent, you know, things hit
the fan and there, you.

Speaker 2 (25:24):
Know, Sodo gets hurt, this and that.

Speaker 1 (25:25):
Happens in we're winners now, though, we are we're winners,
Dan Cone, We're winners.

Speaker 4 (25:31):
You're gonna get down to Uh, you're gonna get down
to any games. I know you're a big spring training guy.
You know, I know you like games, but you're a
big spring training fan.

Speaker 1 (25:40):
Well, usual up in Florida for a week, Like I
don't winter a time you go down for a week, Carolin.
I but we were there there already and we did not.
She does have tickets for a couple of games in
a couple of weeks. So I don't know it, believe
it or not, it's okay to go on vacation. I
know you don't think it is okay to go on vacation,
but it's okay. You know, you know that that's not funny,

(26:08):
you know, I don't know.

Speaker 3 (26:10):
We used to go to the Orioles. Orioles have a
nice facility.

Speaker 4 (26:12):
Where is the Orioles one in Sarasota and Sarah So
and then when I was growing up, uh, you know,
in college I went to Tampa, so there was right
near Lakeland. Lakeland, the Tigers have a nice facility. It
was cool because you know, you could bring a cooler
and sit in the outfield on like a hill. You know,
so it was just kind of relaxing.

Speaker 1 (26:32):
Yeah, got pictures of Francisco Lindor, like, you know, like
the Mets Stadium in Port Saint Lucy's seats like five
thousand people.

Speaker 2 (26:39):
So you're right there.

Speaker 4 (26:39):
Yeah, and you know, aren't the in the Yankees are
right in Tampa? But also the Yankees are I think
the Yankees are, aren't they? Isn't Tampa? Are the the
is in Tampa playing at the Yankees facility, the Yankee
spring training That would be a cool game to go to.

Speaker 2 (27:01):
Because of the hurricane. Yeah, you know down there.

Speaker 1 (27:04):
Let's get into it a little bit though. And I
just gotta start off with something that I just punched
up on my computer, which is pollunteer CEO Alex Carps
new plan to sell one point two billion dollars in
stock Stott. The stock has risen almost sixfold, Yeah, about
a year ago.

Speaker 2 (27:19):
Uh.

Speaker 1 (27:19):
He has a ongoing plan of sales in at an
existing trading plan that he adopted in a year or
so ago in twenty twenty three, and now he has
another one that he adopted recently December eleventh, and it
goes through the September twelfth of twenty twenty five to

(27:43):
sell to ten million shares, So ten million stocks trading
at about you know, one hundred so that's a billion dollars.

Speaker 2 (27:52):
You know, I don't see, you know, the stocks sold
off on it. We we did sell.

Speaker 1 (27:55):
We have two fIF We had two hundred fifty thousand
shares of Pollunteer or so for a client, I think
our average cost is under under thirty. We did sell
one fifth of that. We were cognizant of the tax
ramifications for those who.

Speaker 2 (28:09):
Had it in iras as well as as a right.

Speaker 1 (28:12):
Yeah, and I don't make too much of the carp
sal stocks sold off a little bit on the on
the idea or the the potential that President Trump and
Ela Musk floated about cutting defense spending defence, what do

(28:33):
you I got? I think I have my own opinion,
not on Palenteer, but on stocks in general that moved
from like that have a twenty twenty five percent correction
over a short period of time. I think it let
them settle down a little bit before diving back in,
so to speak. And I'm talking about clients.

Speaker 2 (28:50):
What do you think? What do you think about Palenteer
at this level?

Speaker 1 (28:53):
Would would it? Would you nibble at it? Would you
or just in general when stocks have I.

Speaker 4 (28:57):
Think it's hard not to get green. But sometimes you
have to have disciplines to be a successful investor. And
I think selling a portion of something that's up what
hundreds of percent in one year is the way to go.

(29:19):
You know, year to date, Palenteers up forty percent. It's
February twenty first, as we're speaking. One year, it's up
three hundred and fifty four percent. Three years it's up
eight hundred and sixty four percent. So I think that
you have to have disciplines in investing, and you know,
selling things when when I believe that they have gone

(29:40):
a bit parabolic is a good discipline, even if we're wrong.

Speaker 1 (29:43):
I'm talking about after that though, after that, after that
we made that decision. Two things, okay, One is for
the people that have it, what do you do for
the for those listeners out there? And just on a
broad investing type of a question, people have been waiting
and waiting to get into a Palenteer. They've been waiting
and waiting, like when Apple pulled back from two sixty
to two to ten or so recently. I mean, you know,

(30:07):
there's an Apple pulled back and like like, I know
I'm being kind of vague with this question, but given
the volatility of the movement and pallanteers certainly unlike an apple,
as far as it's it's it's volatility, inherent volatility as
a company just because of its its valuations and its

(30:28):
age and it's and its business.

Speaker 2 (30:31):
You know, what do you do if you own it
at this point? Yeah? And what do you do if
you don't own it at this point? Personally? I think
you take a wait and see attitude on both sides.

Speaker 1 (30:41):
I think it's for people who own it, I would say,
I think it's probably gonna work its way higher. For
people don't own it, I think that it comes with
maybe right now, maybe you begin to nibble at it
a little bit. Maybe let Personally, I would probably let
the dust settle, and if you miss a move back up,
you miss it.

Speaker 2 (30:58):
Given given where we.

Speaker 1 (30:59):
Are with the stock market in the evaluations, what do
you think about Palenteer at this point in time if
you don't own it, or if you own eighty percent
of what you used to own because we because we trimmed.

Speaker 4 (31:09):
I think I think if you if you want on
two percent, you buy one percent now, so.

Speaker 2 (31:14):
You begin to build a position. Yeah, all right.

Speaker 4 (31:16):
I think what's tough about the stock market too sometimes
is I think a lot of people have things like
on their radar, like we have a watch list that
you know, we have companies we own, then we have
companies that we're watching, so it's a watch list. And
I think sometimes the hardest part about that is, uh,
sometimes you have to face the fact that you missed
the boat on something. And I'm not saying Palenteer is,

(31:39):
you know, I'm not saying I don't. I still think
Palenteer has a room to run, and I think, you know,
five ten years from now, Palenteer could possibly be one
of the larger companies in the world. But I think
for the time being, it's it's it's going a bit
pair about Botic, And I think sometimes you have to
move on from from companies that you missed the boat
on Labs just one of them, Like I don't know

(32:01):
if we'd ever buy that for clients, but I didn't
own it, you know, and I'm thinking, oh, man, I
washown Rocket Labs. But I'm not going to jump in
just because it's down five or ten percent. I think
you have to, you know, move on sometimes.

Speaker 2 (32:12):
Oh yeah, And I think you know that makes it
you make a good point.

Speaker 1 (32:15):
But I think you would agree, and I think you're
kind of saying this this this as well, is you
missed the boat like that that that rising tide that
brought the Pounteer boat also brought up the Rocket Lab boat,
also brought up the Robin Hood boat. Yeah, also brought
up a lot of boats that then the.

Speaker 2 (32:34):
Tide went out and those things go down quickly.

Speaker 3 (32:37):
If you look at rocket Labs up four hundred percent
year over a.

Speaker 2 (32:39):
Year, is it down from its high from a high?

Speaker 3 (32:44):
It's not?

Speaker 4 (32:46):
Oh yeah, yeah, oh from its tie right now? Yeah,
it's probably down you know, yes.

Speaker 1 (32:52):
Thirty three, it's twenty five. So basically it's down twenty
five percent from its high. So my point is, is
this a pullback where you say, geez, I can get
back on the boat or I think in my opinion,
at least for the time being, I mean.

Speaker 4 (33:04):
It's hard set yes or not, Like I mean, I
don't know, I don't know, you know. So, so I
think if if you want to get into it, you
buy half of the position that you want.

Speaker 1 (33:15):
I'm talking about aggressive companies, like half the position that
you want like am I I'm just thinking about has
has the tenor of the market changed?

Speaker 2 (33:25):
Yeah, the world?

Speaker 4 (33:27):
I think yeah, I think so. I think there are yeah,
and I think there's some companies that can buck that trend.
But I think yeah, I think uh. I think for
those you know, hyper volatile stocks, I think that it's
not just everyone's going to win going forward.

Speaker 1 (33:45):
Right, the the tenor of the market has changed to
the extent that has raised a level of risk relative
to the potential return for some of these stocks, at
least for the time being.

Speaker 3 (33:58):
And I think that that.

Speaker 4 (34:00):
I think that euphoria based on deregulation has kind of
dissipated a little bit as well. You know, I think
the market will be in a little bit of a
consolidation period until we as a country and economy know
what's next.

Speaker 2 (34:16):
So something just right.

Speaker 1 (34:17):
So that's kind of my point is something can pull
back a little bit, and if it pulls back in
a normal environment, okay, but if it pulls back as
the whole tenor of what and also.

Speaker 3 (34:29):
This, you know, in this you'd be careful.

Speaker 4 (34:32):
And I also think that, you know, if you look
at just Rocket Labs in general, it did participate in
early in late two thousand and one, early two thousand
and two where it got up to fifteen. So then
it got to fifteen, then it got down to you know, three,
and then you know, for it to hit fifteen again,

(34:53):
you know, which was in I don't know, you know,
late twenty twenty four. So basically, you know, if you think,
if you think a company is going to be you know,
a winter long term five ten years, you actually have
to live by that a little bit, you know. So

(35:14):
if you if you if you buy, you know, a
company that has gone a little bit parabolic, and even
if it even if five ten years from that it's
higher than that, can you live if you manage your
own portfolio of three years of going nowhere?

Speaker 3 (35:30):
Will you actually hold on to it?

Speaker 2 (35:32):
Right?

Speaker 4 (35:32):
And you know, I think you can say yes now.
But as something goes nowhere, it gets harder and harder
to hold on to that, you know. So I think
that's a little bit of what I think too.

Speaker 1 (35:43):
And those aren't a whole other level of risk as
opposed to like a Microsoft and Amazon and those. This
is a whole that speculati Those are speculative companies. Yeah,
And when you have movements like that twenty five percent movements,
Like with the Palants here, I think Palentier is still
pretty speculative company.

Speaker 2 (35:58):
Yeah, you know, so you just got to be careful.

Speaker 1 (35:59):
So so just be careful of the really go go
stocks out there or go go funds out there that
you might have rocketed pardon the pun in twenty twenty four,
challenging environment for them in two and twenty five, And
I think that's kind of what you're looking at now.

(36:22):
Simeon Hyman CFA Global Investment Strategists for pro Shares put
out some case for optimism in the year ahead, and
this is probably a couple months old, but you know,
certainly we still have a little over ten months to
go for the rest of the year. And he says
stocks may have less risk than you think.

Speaker 2 (36:41):
And he says, hey.

Speaker 1 (36:42):
Stocks are expensive ten years, yielding around four and a half.
Based upon that, the stocks trailing price to earning, his
ratio should be around eighteen to twenty. It stands roughly
at twenty five. We've got to be a little you know,
that would kind of suggest a little more careful type
of a posture. However, he says that you know, excluding

(37:03):
the uh, the mag seven, they're cheaper, and they have
a lot less leverage in the past. You have return
on assets a lot higher now than they were in
the past.

Speaker 2 (37:17):
And I think if you so, if you look at these.

Speaker 1 (37:20):
Comparisons between now in the past, you know stocks still
have the potential to return double digits.

Speaker 2 (37:27):
We talked last week or the week before about you know.

Speaker 1 (37:32):
That from if the stock market is up more than
three percent by Valentine's Day, for on a year to
day basis than ninety three percent of the time since
nineteen fifty it has done at least thirteen percent, that's
pretty good.

Speaker 2 (37:48):
Type of potential.

Speaker 1 (37:50):
So you know he's saying, look, with this in mind,
you know, stock's offer some opportunity. I would agree, would you, Yeah,
stocks off for opportunity in here.

Speaker 2 (37:59):
Yeah.

Speaker 1 (37:59):
I mean, well, we've addressed the challenges in the first
half that we think stocks face more on a political basis,
foreign policy, political basis that we do with domestic and
I guess the other thing fixed fixed income markets face challenges.
I don't want to get into that. Equity income presents opportunity.
The dividend component of someone's portfolio. What we own, Jeffy,
we owned jep Q, n O.

Speaker 4 (38:21):
B L is a dividend aristocrat fund. W that's not
a dividend fund, that's just a cash cow fund. But
it does have a one point seven to seven percent dividend.
You know, n O b L is you know the
dividend aristocrat fund that is a two percent dividend, so
you know, not specifically.

Speaker 3 (38:45):
Yeah, and jet Q you know you do.

Speaker 4 (38:47):
You know it is buffered against you know, you won't
participate as much when the market goes up, but for
a lot of people, they don't need that participation if
you're in retirement.

Speaker 3 (38:55):
So yeah, I think they're I think they're great funds.

Speaker 2 (38:58):
Yeah, and I think think I guess like the thing too.

Speaker 1 (39:01):
I'm a I'm a believer in the dividend component now
more so now after the market's run up sixty percent.
If you need a dividend component to your portfolio, dividends
or interest and uh, looking through our holdings and working
with you in our holdings, you know, I'm seeing those
become a bigger and bigger component to the accounts.

Speaker 2 (39:24):
Again. J E p Q, j E P I n OBL.

Speaker 1 (39:30):
Are you know larger and larger percentages cowz you're more
of a cash flow.

Speaker 4 (39:35):
Type Schwab dividend s CHD has a three point five
two percent dividend. International SCHF has a three percent dividend.
So there's where there's other places to find some yield
outside of you know, large cap companies in the United States.

Speaker 1 (39:49):
Again, thinking about a time correction for the market. Yeah,
you know, even if the market just bides its time
for a while, picking up two or three percent on
your portfolio, as as the market by the time. The
other thing too, Bitcoin may be a diversifier. Let me
stretch that out a little bit. That point, bitcoin, gold, commodities,

(40:11):
and they've all done very well. We probably have one
percent of our assets or so, maybe a little bit
less than that in bitcoin.

Speaker 4 (40:18):
Not much golder than if clients suggested it. Obviously wish
we had more. It's almost forty five percent year over year,
up twelve percent year to date. So I think people
are flocking to safer assets with unknown variables being out there,
and gold it is one of them. I think silver's
up even more than gold is this year substantial a

(40:40):
thirteen point seventy five percent, so it's outperforming gold. So yeah,
I think you're seeing a flight to safety with a
lot of unknown variables lurking in the global economy right now.

Speaker 1 (40:50):
On the commodity side, we've kind of opted for energy
as opposed to as opposed to a commodity like gold.
Energy's done well this year, kind of lack last year
of the XLA, which is the Energy Select Spector Sector
Spider Fund of eight point four to one percent this
year a year to date so has a dividend of
three percent, but again it's slagged through the course of

(41:11):
the year. What else we got in here that we
can touch on, you know, the median age of home buyers.

Speaker 4 (41:18):
Yeah, you know, I sent this to my friends this week.
That is, you know, the reason it's disappointing. You know,
I sent to you know, I have a group chat
of five friends, six of them, two of them don't
own homes. You know, it's it's when you're going up,
when you're you know, if the record high is sixty
fifty six years old in twenty twenty four, is the

(41:38):
medium age of home buyers up from forty five and
twenty twenty one, and in nineteen eighty one it was
thirty one. So the supply is way down on homes,
so people with money are buying homes, which you know,
it has increased, you know, obviously the price of homes
and pricing out. You know, the first time home buyer.
Less than one percent of homes or about one percent
of homes are about are so that are sold are

(42:00):
less than two hundred grand. So the housing market's kind
of in shambles a little bit right now, wouldn't you say?

Speaker 1 (42:07):
And I would indeed, And I think that median age
is somewhat scary given the fact that.

Speaker 2 (42:15):
You know, you you look at well.

Speaker 1 (42:17):
The number of homes being sold is down, way down
forty percent from this peak. And then you look at
the median age and you look at you know, families,
you know, households being built. These are not households being built,
you know, or formed like you would have with someone
thirty thirty two. This is a different type of a buyer.

(42:38):
And I think that President Trump has to get something
going with the housing market. President Biden didn't or failed
to do it. So President Trump needs to get the
housing market off of its back and moving forward.

Speaker 2 (42:50):
Yeah, However, sentiment is down on home on home BLAIRSDA.
They are worried about tariff's.

Speaker 1 (42:55):
A lot of our lumber comes from Canada, and I think,
you know, if you look at sentiment, I think think
that's the other thing we were talking a little bit
about earlier in the first half, that you.

Speaker 2 (43:05):
Know, you've got to be careful about sentiment dropping.

Speaker 1 (43:08):
And you were saying, you know, I think we were
talking about this that that if it's kind of sentiment
stays or people's expectations are people are uncertain, they might
slow down the economy. Yeah, and I think it might
see uncertainty in the housing market tend to be a
drag on the economy while we work out these tariff
issues with with with Canada as well as as as

(43:32):
other of.

Speaker 4 (43:32):
Our Yeah, we had a lot of lumber from Canada.
US homebuilders raise alarm over terraces, A sentiment falls to
five months low, so you know, I think, yeah, home
builders are starting to, you know, voice their concern over
tariffs and what that will happen to the price of
single family homes.

Speaker 2 (43:48):
So just something to keep on your radar.

Speaker 1 (43:50):
And home building is a important to the economy.

Speaker 2 (43:56):
If you look at.

Speaker 1 (43:57):
The select sector home builder spider, the symbols XHB, I
think it's got to be down on date. XHB is
down on a year to day basis, not even market's
up about four percent. On a one year basis, it's
up six percent. The market's up around you know, more

(44:18):
than two or three times that, so it has lagged
quite a bit. That would be something though, you want
to keep on your radar because I do think that
at some point in time those we don't own any
home builders. The way we've been playing it on a
year to day basis is, Lows Lows is unchanged. On
a year to day basis. On a one year trail,

(44:39):
lowses up about eleven percent. Three years it's up around
seventeen percent. So Lows has lagged a little bit as well.

Speaker 4 (44:48):
It's had a rough month, you know, since we started
talking tariffs, down five percent. Last month, had a rough
week two down two percent. So not that rough, but
a little rough.

Speaker 1 (44:58):
Home depots in a similar boat, yeah with that, so
just be careful of that. But I think you look
for opportunities in some of these beaten down sectors because
they represent decent valuation. Yeah, but keep some powder dry.
I think that's pretty at this point. Given the run

(45:19):
up in the market.

Speaker 4 (45:21):
You know, a lot of people to do investments or
advisors allow like a drift model. So if you're you know,
an income investor, let's say a fifty to fifty portfolio,
and the stocks you know are sixty percent now because
they've drifted up through through performance. I think now is
a decent time to get back into allocation and where
we working at that with our clients, some of the.

Speaker 2 (45:43):
More conservative ones.

Speaker 1 (45:44):
Yeah, I guess Probably the last thing I wanted to
talk about is just a post from Ben Carlson some
things I'm thinking about and not necessarily has about seven
or eight things, and some are the pertinent in the marketing,
some are, but says cash is a terrible long term
and but he closes out that. He gives some statistics
and granted it's a long term investment, but he closes

(46:06):
that a part of the post with Regardless of all that,
cash is an insanely helpful asset in the financial planning process.
It's a wonderful hedge against life getting in the way
of your plan.

Speaker 4 (46:17):
Yep, yeah, yeah, I think it's always prudent to have cash,
you know, for you know, emergencies, but also cash allows
having a portion of cash in your portfolio if you're retired,
in my opinion, helps let's say I have a year
or two of distributions for cash helps weather the rough

(46:37):
times in the market.

Speaker 2 (46:38):
The emotional rough Yeah, you know what I'm saying.

Speaker 1 (46:40):
Yeah, it gives you peace of mind to be able
to sleep at night, to know you have two, three, four,
or five years of cash.

Speaker 2 (46:47):
Think about your portfolio.

Speaker 1 (46:49):
If you have cash and bonds totaling twenty five percent
of your portfolio with a four percent interest rate on
those cash and bonds, Yeah, and if you needed four
percent out of your account every year, you have eight
years of distributions from your portfolio before you would get
into the stock side of your portfolio.

Speaker 2 (47:07):
So just keep that in mind that you know and
cash allows you to sleep at night.

Speaker 1 (47:12):
And the other thing too, is like I think what
happens when you have some cash is that you don't
you just don't feel as pressed when the market goes
down because you know you have this cash on the sidelines.
There's not that there's not that kind of siren's call
two to make a change in your portfolio. If you
are going to make a change with your portfolio. We

(47:33):
speak to clients quite often about this and and and
those that we don't speak with where they're communicating with
them in our snapshot and if you want to get that,
it comes out every Sunday morning, uh, every every week
at a three or four pat synopsis of the market.

Speaker 2 (47:47):
We also have a website, Faganasset dot com. But what
we are, what we would.

Speaker 1 (47:52):
Do, is just work incrementally with your portfolio. You know,
if you if you love the market at this point,
don't go all in. If you hate the market at
this point, don't go all out. So if you're sixty
forty in the market and you see President Trump is
doing a lot of good things, and you're bullish and
you're investing on your own, you'll bring that up to
sixty five or seventy percent, and again.

Speaker 2 (48:12):
At at at what you would consider prudent time. If
you're concerned about the future, then you bring that down
a little bit. Yeah, and then then that'll work well
for you over time.

Speaker 4 (48:22):
What else you got there, anything that you want to discuss, No,
that's it really for right now. We got about twenty
seconds left.

Speaker 2 (48:27):
And that'll just about do it.

Speaker 1 (48:29):
Feel free to give us a call local number five
one eight two seven nine forty four.

Speaker 2 (48:34):
You can check us out on the web at Faganasset
dot com.

Speaker 1 (48:37):
Email us on Facebook, email us at the Faganasset dot com.
We want to get together. We do a free initial consultation.
We're a little backed up because of taxes, but that's
about it.

Speaker 3 (48:47):
Have a great day, take care,