The Fagan Financial Report

Episode Transcript

Speaker 1 (00:00):
Good morning to welcome to the Capitol District's Money and
Investment Program. You're listening to the Fagan Financial Report on
Dennis Fagan sitting here with my son Aaron, as we
do every Sunday right here in New Airs every Sunday.

Speaker 2 (00:11):
It airs every Sunday. We'll be podcasted every Friday usually,
and right.

Speaker 1 (00:15):
Now it's eleven o'clock on Friday, as we speak to
market suffering a rough week but bouncing back a little bit.

Speaker 3 (00:20):
Today.

Speaker 1 (00:21):
We're going to talk a little bit about perhaps will
cause this pullback in the market and what it means,
and also you know how the media is treating it
a little bit about diversification, and get into the economic
data that s and P five hundred down a little
bit year to date.

Speaker 2 (00:39):
You know, yeah, as we're speaking, looks like it's it's
down point twenty percent. As we're speaking at you know,
eleven o three on Friday. Let's say, triple qs are
down year to day two point one four percent. So,
you know, I think you're seeing some pullback in large
cap stocks. I think you're seeing people look for opportunity elsewhere,

(01:01):
which I think is you know, kind of assigned since
since the COVID times really is you know, you do
have bear markets, but you almost have rolling bear markets.
You know, International is up six point nine two percent
year to date, so you know there are pockets of
the stock market in the world that are doing well.
N OBL is a S and P five hundred dividend
aristocrat and that's up three point oh seven percent year

(01:23):
to date. Even you know, the Pacers cash cap so
we own both of these, is up point eighty five
percent year to date. So you know, what I think
you're seeing a little bit is you know, a rotation
out of the things that I've worked for the past
few years into the things that you know tend to
be I guess more valued on a fundamental basis, stronger

(01:44):
balance sheets, stronger financial statements, and less in the you know,
pallenteers of the world and even large cap tech stocks.

Speaker 3 (01:52):
So what is So the big question I think is
will it continue?

Speaker 1 (01:58):
If you looked into it, I think you could see
a number of times over the past decade decade and
a half that we had this.

Speaker 3 (02:11):
Rotation out of large cap tech.

Speaker 1 (02:14):
Whether they will call it the Magnificent seven or you
expand that to you know, the salesforces and service nows
of the world just restricted to the magnificent seven. But
I think are the secular growers going to.

Speaker 3 (02:27):
Give way to.

Speaker 1 (02:30):
The the rest of the market secutor grows me and
consumer discretionary American communication services and technology. So I wrote,
you know, just kind of getting ready for the show,
and I heard somebody talking about this and it kind
of put into good kind or put into words, you know,

(02:51):
kind of how what we're thinking. And this is a
year for balance and diversification, having a little bit of care,
overchasing your conviction, meaning over being too convinced that any
one area is going to work. I think that's where
you'll make a mistake this year. If you sit back
and you say, all right, I have high conviction in AI,

(03:14):
have high conviction in semiconductors, that I'm going to overweight
that substantially. I think if you do that, I think
you're making a mistake, even if it turns out right.
And we often say just because something was profitable doesn't
mean that it was a correct thing to do. And
I think the correct thing to do this year is
to kind of maintain your balance, maintain your diversification, which

(03:36):
would include some international it includes some of the differ
than aristocrats, the NBL ETF, the COWZ ETF.

Speaker 3 (03:44):
We have DGT Global and what's that too this year?

Speaker 2 (03:49):
About it is, you know, up seven point thirty nine percent,
so you know that's doing well. We own you a
fair amount of JP Morgan active value as well. It's
an ETF JAVA that's up three percent. So yeah, I
think it's a good time, you know. And again I
think sometimes we get used to, you know, the fifteen

(04:11):
percent annual returns we've had since two thousand and nine,
but that doesn't come with some years that you see
single digit performance wherever down years, And I don't I
don't necessarily think that the market's going to be down
this year, but you know, I think you could see,
you know, some muted returns, but I think it'll be
overall good for this or bull market that we're in.

(04:33):
I think what we're seeing now is some digestion of
gains and you know, see what happens with some of
these policies Trump has put into place, and I think
I don't think there will be a lot of you know,
downside pressure, but you know, I don't I don't see
the market rocketing higher from here because it doesn't really
have a catalyst right now to do. So.

Speaker 1 (04:54):
You know, we've held that belief for quite some time,
probably five or six months, that you know, markets fairly
valued in in through these levels, and I.

Speaker 3 (05:05):
Think that it is you know, I think that.

Speaker 1 (05:10):
If if you look at you know, President Trump's policies,
I think the risk And we've also said for regular
listeners to our show that the potential range of outcomes
for the Trump administration is much broader than for the
traditional politician because a lot of the steps that he's
taken are unprecedented.

Speaker 3 (05:28):
So even if you're.

Speaker 1 (05:31):
Even if you think that the outcome is going to
work well for America, then there's still going to be
points in time when you have an unprecedented situation on
precedent policy.

Speaker 3 (05:41):
That you're going to kind of question that. And I
think that's what the markets are.

Speaker 1 (05:45):
The second thing I think is that it's well a
couple of things, you know, just not just a second thing.

Speaker 3 (05:51):
But.

Speaker 1 (05:52):
Is are the tariffs going to be something that is
President Trump is going to use throughout his administration? And
if he does, what was going to be the impact
on capital, you know, capital expenditures from companies, you know,
planning for you know, building new plants, investing in equipment
in the like. You'll see that there was a front
loading of of inventory from some of these companies, you know,

(06:15):
specifically the auto industry, where hey, let's let's get let's
get inventory.

Speaker 3 (06:21):
For material, but to build these cars before tariff's hit.

Speaker 1 (06:25):
So I think if if tariff's come and go and
are ongoing part of President Trump's policy without kind of
coming to some sort of longer term reconciliation, especially with
our major training partners, I think that's going to be
somewhat of a negative for the economy. For the economy
for sure, for consumer sentiment, and also for capital expenditures expenditure.
So I think that's what the market's wrestling with right now.

(06:47):
In addition to I think in my not I think
in my opinion, but in my opinion though those returns
that we've seen over the past fifteen years, and even
with the last two administrations, the Biden then first Trump administration,
the market did twelve thirteen percent year, So I think
that's kind of what we're going through right now. And
also the second half of February, and I don't anecdotally

(07:08):
it's usually okay the market gets off to whatever start
it gets off to.

Speaker 3 (07:12):
But the second half of the February.

Speaker 1 (07:13):
It's almost like, you know, you're feeling about the winter
up here, kind of the duldrum set in. The market
pulls back, and I think, I think we're looking at
that as well.

Speaker 2 (07:21):
Yeah, yeah, you know, I have a its first trust
market minute, you know, and they wrote, which is true.
You know, the SMP has returned sixty two percent over
the past twenty five months. The largest correction in twenty
twenty three was ten percent, and the market was up
twenty six The largest correction in twenty twenty four was
eight percent and the market was of twenty twenty five percent.

(07:42):
So I think things are relatively fairly valued here, and
I think it's just a digestion of gains. You know,
earning season wasn't too strong. I think it was strong.
I think over sixty percent. You know. I think earnings
on the S and P were up sixteen percent. You're
over here, So it was strong. It's just I think
people on a wait and see mode when when there's

(08:02):
a lot of unknown variables coming into the economy, like
as you said, especially with you know, politics where they
are now, and.

Speaker 1 (08:09):
I think the retail investor will we'll touch on the
American Association of Individual Investors consumer sentiment, but the retail
investor had gotten a little too giddy.

Speaker 2 (08:20):
Yeah, calls that were office and we always say that too.
You know, the more calls we get for speculative assets,
the closer you are to the top of that speculative
of speculative assets. In general, I think no, no, no,
go on.

Speaker 1 (08:36):
But I think that also the media tends to provide
a tailwind to whatever direction the market is going.

Speaker 2 (08:43):
Yeah, and it flips on it. You know, it turn
turns on a dime so quickly too. Now, Yeah, I
think you're seeing uh, but you know, at the same
time we did print out you know, the bullish sentiment
is at nineteen point four percent. It's what is it?
It's I can't reach handwriting, but lowest percentage.

Speaker 1 (09:03):
Eighteen hundred and seventy some periods of time where the
American Association American Association of Individual Investors, they have a
weekly survey and what they found is that it's it's
only been lower. Bullish sentiment is only the lower forty
six times out.

Speaker 3 (09:20):
Of eighteen hundred and seventy. Yeah, of the times they've done.

Speaker 2 (09:23):
This since sir, which you know, is usually a bullish indicator.

Speaker 1 (09:28):
It's usually indicator, you know, And I didn't get a
chance to look into that's the that's the consensus that look,
it's usually a contrarian indicator. I will say though, that
I did look into it this morning prior to the show.
And most of those periods where it was lower were

(09:48):
clumped around nineteen eighty nine and nineteen ninety.

Speaker 3 (09:52):
When a rock invaded Kuwait.

Speaker 1 (09:55):
They were lumped around two thousand, two thousand and one,
aftern at eleven, they were kind of lumped around twenty
twenty two when the FED began to hike rates precipitously
and inflation was roaring two or three years ago. So
so you can't have an extended period where bullish sentiment

(10:16):
remains muted and the market and and and it's justified.
But absent that absent in the economy, that's that's that's
that's slow and precipitously, And certainly the Q four GDP
on revised the two point three percent. We'll get into
maybe hopefully get into economic data in a little while,

(10:39):
but absent to real drop off in the economy, then
you know, I think it probably will be a contrarian
indicator this time. We rebound star portfolios. You did all
for the past couple of weeks, so you know, all
our clients are in good shape as far as their
acid allocation MILEEL goes. But you know, I wouldn't see
I would be surprised if the market's not back. The

(11:01):
other thing I would say is I just said earlier
that you know that the Trump's policies, President Trump's UH
tariffs specifically UH you know, may provide ahead with the
capital expenditues if he uses them.

Speaker 3 (11:13):
Over and over again, over for your over for you period.

Speaker 1 (11:16):
But but I think President Trump pays close attention to
the stock market, So I wouldn't be surprised if, with
the stock market struggling here, if all of a sudden,
we get good news on tariffs. Yeah, an extension of
when they start or whatever. So I don't know how
you feel about that.

Speaker 2 (11:30):
Yeah, you know, I do think he kind of sees
it as a scoreboard. So but you did have Howard
Lutnek come out and say something this past week about
how yeah, you know, it's not it's not all about
the S and P five hundred you know, we want
more participation you know, in the over in our overall economy.
And you know, I have to agree with that really

(11:50):
because I think that you know, although you know, you
could see maybe a stagnant market for a little bit,
I do think it's important, you know, for the for
the longjevity of the stock the stock market in the
US economy to get more small, smaller cap, micro cap
mom and pop shops growing again, and and and I

(12:10):
think that that should hopefully create more jobs in America,
more middle class jobs. So you know, I do I
do think, you know, although it could be, you know,
you could see some stagnation in larger cab companies, I
do think, you know, policies that could help build up,
you know, smaller companies. Is in bringing jobs back to

(12:31):
you know, to America is key, and in building up
that middle class.

Speaker 1 (12:36):
I mean, and we say this every week, but we
manage eight hundred million dollars, we manage a hundred million dollars.

Speaker 3 (12:43):
We have to take stances right.

Speaker 1 (12:45):
And what I think President Trump has done, and this,
you know, was reflective. I think in in in the
in in the market that the kind of uncertainty in
the market is he really has missed the golden opportunity two. Uh,
you know, kind of get rid of waste in the government,

(13:06):
but do it, but do it in a manner that
was palatable to the American the American populace on both
sides of the political aisle.

Speaker 3 (13:13):
It's not the why, it's the how.

Speaker 2 (13:16):
Yeah, I agree, it's right now.

Speaker 3 (13:18):
I think I think.

Speaker 1 (13:19):
Most most Americans would in polls, would suggest that government
has ploaded, right, but maybe you know, a little softer.
And I liken it to you know, going to the doctor,
doctor Saint Dennis, you gotta lose twenty pounds.

Speaker 3 (13:33):
I don't go on a hunger strike. Yeah, you know,
it's like, all right, I'm gonna change my.

Speaker 1 (13:37):
Diet and change the direction that I'm going Over time,
the American economy is like like a like a you know,
a cruise ship, you know, like the Titanic. You know,
you gotta turn it slowly. You know, if you turn
it too fast, you know, then then you know, you
have issues. And I think that's some some of what's
going on right now with the market. So I'm hoping

(13:57):
that President Trump will kind of round his edges a
little bit. Although at seventy eight or seventy nine years old.
Probably difficult, but I hope he kind of takes that
into consideration. Especially see if you know, he gets continues
to get kind of pushed back from.

Speaker 2 (14:14):
And well, you know, and I think towards the end
of this year, we'll really see if this is working. Right,
So cutting all this expenses is you know, at the
end of the day, its main objective is to firm
up our balance sheet and reduce our deficit. We'll see
if if it's working, you know, you know, by the
end of the year or even you know, halfway through
the year. So you know, although you hear a lot
of you must we save this, we save this, we

(14:36):
save this, you know, until we actually see, you know,
on paper, that this is working. I think, yeah, I
think that the market could could stagnate a little bit here.

Speaker 3 (14:45):
You know.

Speaker 2 (14:45):
I also think I have something that that I saved
this week that you know, speaking upon different areas of
the market, that I that we still think could do well.
So it's a you know, it's just you know, basically
this is from public companies from scratch that are less

(15:07):
than fifty years old with a ten billion dollar plus
market cap. So it's his home Depot alone is now
worth more than all major companies founded founded in the
EU over the last fifty years combined, which is kind
of amazing if you think about it. You know, all
companies that were founded in the last fifty years with
a ten plus billion dollar market cap in the EU

(15:28):
are still smaller than just Home Depot. You know, on
one hand, you're like, man, you know, Europe, you know
you have to you know, from a from an innovation standpoint,
you have to get your things together. But at the
other point, you know, I think Europe could use this
what's going on politically as an opportunity to build up

(15:48):
their technology, start innovating, change policy to be more to
be more friendly to innovation in an entrepreneurialship. So I
think some people blur seeing this as an opportunity for
Europe as you know, the shrub financials is up seven
percent this year, to really get there, get their things

(16:08):
in order, and you know, start start innovating and you know,
be more capitalistic. Really so, and I think, you know,
from a global economic standpoint, you know, we're in good shape.
It's just we're seeing more participation other than the things
that have really led the way the past three or
four years for fifteen years.

Speaker 1 (16:28):
And I think in hindsight that that will be good
some of the like, you know, just to get into
little specific specifics on a couple of stocks.

Speaker 3 (16:37):
Here that reported in in.

Speaker 1 (16:38):
Nvidia reported earnings this week, and you couldn't have asked
for you know, much of a better earning. Had seventy
percent rise in revenue year over year earnings per share
same revenue of thirty nine point three two billion, more than.

Speaker 3 (16:55):
A billion above expectations.

Speaker 1 (16:58):
Your data set of revenue tinety three percent annuallyzed data
data set around the team about two billion dollars above expectations.

Speaker 3 (17:06):
You had you know blackwell, you know kind of whether.

Speaker 2 (17:14):
GPU chip platform, it's platform platform.

Speaker 1 (17:20):
Beginning to I guess, get to the market in early
next year, you had Genion Wang talking about demand very
very strong or CEO, and also he mentioned the amount
of computation necessary to do a reasoning the reasoning processes
one hundred times more than what we used to do.

Speaker 3 (17:39):
Wang set in an interview.

Speaker 1 (17:41):
So and yet you had Nvidia go from you know,
in the mid one thirties down to below one twenty
on that type of release.

Speaker 3 (17:52):
And I think that's what that's what you talk about.

Speaker 1 (17:55):
You talk about some of these companies being priced to
bring to perfection, and I think why you have a
little bit of a broadening out of the market is
valuations is a pure steep. Now now that's said, you know,
you know, I think I think if the market keeps

(18:16):
pulling back in the videos and amazons and apples at
the world, I think investors are going to step back in.

Speaker 2 (18:22):
Yeah, you know, I think usually when you have pullbacks
like this that are valuation pullbacks, they're buying opportunities. You know.
I think when you when you when you look at
the stock market in general and buying and selling and
trimming and things like that, I think you have to
really you have to realize that five ten percent corrections
are normal. They happen yearly, and it's it's usually a

(18:43):
buying opportunity. Yeah, once in a while something comes along that,
you know, where you see a twenty percent pullback or
thirty percent pullback, like during COVID. But I don't think
there's anything structurally wrong with the economy yet. I think
the consumer's still in good shape. And uh, you know,
with where the economy and the stock market's at now,
as long as the consumer's in good shape. I'm fairly

(19:05):
optimistic of the stock market. You know what, I think
some people might be worried about next months unemployment numbers.
Uh So, when if we start to see a lot
of these layoffs from you know, doze in the government,
how does that translate to you know, unemployment figures. But
you know, until then, you know, I think that the
econo of the stock market. You know, yeah, we might

(19:27):
see you know, five ten percent pullback, but you know,
I think that would be a buying opportunity overall. We're
kind of getting there right now.

Speaker 1 (19:35):
Yes, nasdeck's down about five or six percent from its
high s, and p down three percent or so. So
if you were to double that, Russell two thousand, which
is the second third thousand largest American stocks, you know,
down about thirteen or fourteen percent.

Speaker 3 (19:51):
From their recent high.

Speaker 2 (19:52):
Yes, even the Triple ques are down, you know, almost
eight percent from from its high. So you know you're
seeing a pullback. But yeah, that's kind of how I
feel like, I like, I like we have a we
have a very diversified portfolio. Yeah, yeah, we we rebalance
everyone's an allocation. Uh So, you know, I'm not I'm

(20:13):
not worried about the overall market right now, and I
think some you know, stagnation in the market would be
you know, a good thing overall for it.

Speaker 1 (20:23):
Oh, you talked about you know, we talked about on
a regular basis that if you think about the way
the market can correct. Let's say the market is fully valued,
it can correct by going down in value. It can
correct by the passage of time, where corporations continue to
grow their earnings a bit. Time passes, so those valuations

(20:43):
come down.

Speaker 3 (20:43):
Where you can have a.

Speaker 1 (20:44):
Combination of the boat of the two, where you have
where you have earnings, where you have earnings grow faster
than your stock prices, or you have earnings or the
stock prices decline a little bit.

Speaker 3 (20:55):
And I think that's kind of what we're gonna see.

Speaker 1 (20:57):
We're gonna see that mid If you look at it
like a V, you're going to see a narrow V
where my maybe the next five or six months, the
market you know, goes sideways to do a little bit,
or sideways to.

Speaker 3 (21:07):
Up a little bit.

Speaker 2 (21:08):
And I think, you know, if you're in like the
accumulation phase of your life, you know, I think it's
a good thing because you continue to dollar cost average
into the market weekly, bi weekly or monthly. So you know,
if you see a time correction, you know it should
be good for you know, you know, the accumulation investor
like me. But even if you're in retirement, you should
have a portfolio. If we do stagnate for a while,

(21:30):
that's bringing you in income, in in gains in other ways.
You have dividend paying stocks, you have equity income funds,
you have bonds in your portfolio. So you know, I
think if if the market does go sideways and you're
in retirement, you have to have a portfolio that's still
helping you bide your time by seeing you know, interest
come in, dividends come in, you know, diversified portfolio where

(21:51):
you could see some you know, capital gains from from
from different areas of the market, not just you know
the S and P five hundred, that's forty percent tac.

Speaker 1 (22:00):
It's much easier now than it was four years ago
when interest rates were zero percent. Yeah, now ye had
a ten years sitting at four thirty or so for
twenty five you know, the.

Speaker 3 (22:09):
Two years sitting at four percent.

Speaker 1 (22:10):
So you actually can fill a portfolio or the income
side of your portfolio let's say you have a sixty
forty a sid allocation model. You know, twenty percent might
go into treasuries, twenty percent might go into other sources
of fixed income even for its stocks, and the other
sixty percent go into a combination of DYTAM dividend payers.

Speaker 3 (22:28):
And secular growers.

Speaker 1 (22:30):
Yeah, that's kind of or the jet Be's and the JEPI,
JP Morgan PREMIMAC with the income fund something like that,
where uses options to generate income.

Speaker 3 (22:42):
You know.

Speaker 1 (22:42):
So, I think that's what we've got going on right
now with the stock market. I think we've got the
the market is just biding its time getting to feel
for President Trump's policies, getting it feel for you know
how how I guess strict he's going to be with
the these policies, what type of flexibility has, type of

(23:02):
relationships we're going to build with our allies. I think
there's some there's some huge My opinion foreign policy news
that came out over the past couple of weeks is
that's just going to be a transactional thing where you know,
he's going to kind of walk that back and kind
of warm up again to our allies a little bit.
I think that that's kind of what the market's thinking
about right now, is you know, Okay, let's let's watch.

(23:26):
Let's see if President Trump can reveal more of himself
and his administration over the next few months.

Speaker 3 (23:33):
Yeah, okay.

Speaker 1 (23:35):
So well, so when we come back, kind of touch
a little bit about on the economic data that came out,
talk a little about Warren Buffett's letters to his shareholders.
Berkshire Hathway, you have a nice letter which just look
at it yourself.

Speaker 3 (23:49):
He has some good wisdom. He's almost one hundred years old.
We'll talk a little bit about that.

Speaker 1 (23:54):
But right now, it's ten thirty on the station she
depend upon for news, weather, information, News to ten and
one to three one WGY. Good morning, and welcome back
to the second half hour of the Capitol District's Money
and Investment Program. You were listening to the Fagans Financial Report.
Aaron Fagan and Dennis Fagan sitting here. It's a Friday,

(24:14):
about noon time, recording this show for the weekend.

Speaker 3 (24:17):
I hope you're enjoying it. I hope it's seventy degrees
out I know this weekend.

Speaker 2 (24:24):
Yeah, then it's supposed to be warm out fifty five
on the radar next Wednesday. Yeah, I know. You guilt
tripped me and the running outside on like Tuesday this week,
you know, because it was nice and I go outside
and I'm like running through puddles. There's still snow out there.

Speaker 1 (24:39):
Well that is true, there's snow still generates cold.

Speaker 2 (24:43):
Yeah, and it was rainy, right, it wasn't rainy, you
know when you started it was and it wasn't. Yeah,
I know, then it started ring. Go down Husick Street,
you know, I'm probably you know, yeah, right, I hate
I hate running on Who's Ex Street? You know, if
you're familiar with the area, it's just yeah, I know,
it's just it's just so not peaceful. You know. You

(25:05):
kind of go for a run to like clear your mind.
It's hard to clear your mind when you have you know,
cars going by you at forty five fifty miles an hour, smog. Yeah,
you're crows. Yeah, you're always business driveways, so you're always
kind of on alert. We go down to the Oakwood Cemetery.
A lot not of good birds down there.

Speaker 3 (25:24):
Definitely down there Wednesday.

Speaker 2 (25:28):
Yeah, hidden gem, a hidden.

Speaker 3 (25:31):
Gem birthplace, old uncle Sam.

Speaker 2 (25:35):
Yeah, a couple other people.

Speaker 3 (25:37):
George Thomas, George.

Speaker 1 (25:39):
From the Civil War, a few other Civil War people.
Russell Sage is buried down there, Willard is buried down there.
You know, famous names from Troy. In fact, if you
look at a lot of the streets in Troy, yeah,
not like first streets not buried down there, but I'm talking.

Speaker 2 (25:57):
About some of the name streets, you know, right like.

Speaker 3 (26:03):
It was.

Speaker 2 (26:08):
I was, I wasn't listening to you. I was looking
up Russell Sage wasn't a great man, I don't think,
wasn't his wife.

Speaker 3 (26:17):
I think I think he left. I think the White.

Speaker 2 (26:23):
As like a like a.

Speaker 3 (26:24):
Right to kind of like give it to him, because
I don't.

Speaker 2 (26:26):
Because he wasn't that great for you anyways.

Speaker 1 (26:31):
Uh, economics, So here we have a market time turning around,
worried about, worried about, Yeah, worried about.

Speaker 2 (26:41):
You were saying that right before the break. You know,
I think I think we're at an intersection of new
policy change. And you know, they just look at some
stocks have gone have gone parabolic, you know. So you
you saw a lot of these AI stocks and the
hope of you know, this next day I revolution, you know,
up financially, you know, pallunteers up two hundred and forty

(27:02):
five percent in a year, you know. You know, Reddit
is up, you know, two hundred and sixteen percent a
year over years, So you know, you're seeing a lot
of like you know, the momentum stocks have done so well. Yeah,
me too, you know, and I think some of them
will be buying opportunities again. It's just they yeah, yeah,
they went parabolic. Things can't go up forever with without

(27:25):
some sort of.

Speaker 1 (27:25):
Correction where appropriate, we trimmer much higher levels.

Speaker 3 (27:32):
Right now, it's sitting at eighty two.

Speaker 1 (27:35):
So let's get into the economic information before we move
over to Warren Buffett. I think you'll find Warren Buffett's
what he has to say of great interest, given his
acumen really with the market. And I think the market's
reflecting what Aaron and the economic information is reflecting what

(27:55):
Aaron and I have been talking about. Conference Sports Consumer
Confidence next slipped to ninety eight point three during February
from one oh five point three, so down seven points
almost seven percent over that past month. Consumer Conference is
down six point two percent year over year. Those that
think the presidents how is the president situation doing? Fell
from one to one thirty six point five to February

(28:17):
from one thirty nine point nine. Then the question was asked, well,
what do you think about the future of the economy.
That fell to seventy two point nine during the February
from eighty two point three, So that was down quite
a bit, down almost ten points nine and a half
points on a basis of eighty two.

Speaker 3 (28:33):
So you're talking.

Speaker 1 (28:34):
About, you know, down you know, eleven twelve percent month
over month. Those surveys saying that jobs are hard to
get up to sixteen point three percent of respondence from
fourteen point five so and those that say their jobs
are plentiful dipped fractionally as well. So as far as
the consumer, it's often said, don't tell me what the
consumer says, tell me what they're doing. I think that's

(28:56):
reflected a little bit. And I'll bounced to Friday and
then you know, bounced to over to Friday and then
pull back.

Speaker 3 (29:04):
Personal spending personal las PCE down.

Speaker 1 (29:10):
Zero point two percent during the month of January or February,
and personal income up zero point nine percent, so personal
incomes still solid. Americans did increase their savings rate to
about four and a half percent from three point eight percent,
perhaps addressing some concerns they have about the economy. The

(29:33):
inflation rate came right in line year over your inflation
we said about two point six percent, So we're seeing
again a modestly growing economy. Earlier in the week, we
had data from home sales, sales of new homes, that's
the housing market that's really struggling. Their sales of new
homes were down seventy seven thousand to six hundred and

(29:56):
fifty seven thousand from seven hundred thirty four thousand. Sales
of new homes are down thirty six percent from the
recent peak in October of twenty twenty. The all time
peak was twenty years ago or so. It's amazing seven.
So here we have twenty or thirty more million people
in America and new home sales down forty eight percent.

Speaker 2 (30:16):
Going to be a nation of renters.

Speaker 1 (30:18):
Never ceases to amaze me as they drive through cities
and even drive through the city of Troy.

Speaker 2 (30:24):
What you see down there with the building, with the building, yeah,
and renting.

Speaker 1 (30:28):
It's astounding, really in my opinion, the amount of renters
you have versus those that want to buy a home.

Speaker 3 (30:35):
But when you look at the cost of a.

Speaker 2 (30:36):
Home, I think people want to buy a home. It's
just you know, you're seeing forty percent of people in
America don't have mortgages. You know, they have very little
incentive to go anywhere.

Speaker 3 (30:46):
And those that do have mortgages, the average mortgages about
four percent.

Speaker 2 (30:50):
Yeah, so are you talking to somebody earlier?

Speaker 3 (30:53):
Your mortgage is.

Speaker 2 (30:53):
About three right, two point three. So I told someone
that the other day. It's like even you know, it's
going to be almost impossible for us to move really
for me mentally, like you know, we don't we have
a we have an old farmhouse, you know, or we
have you know, two kids, and we have three bedrooms,
so you know, we don't we don't have a we

(31:15):
don't have another bedroom. But I'd be much more inclined
to find one, you know, in my home than than
move right now. Uh exactly. So yeah, you know, it's
it's hard to it's hard to see anyone do that.
And you know, even the people that do have homes,
let's say if forty percent of people don't have mortgages,
you know, now you're seeing you know, it's it's amazing.

(31:35):
I saw you're seeing town homes for five hundred and
fifty thousand dollars. So you know, it's hard for people
to sell their home and move and buy a even
a home all in cash for a town home for
you know, five six hundred thousand dollars. So yeah, you
know it's it's gonna you know, housing isn't just yeah,
supply and demand. It's where people want to live too.

(31:58):
You know, you're running out of real estate for people
near to where they want to live, let's say, within
ten fifteen miles of a city. So I think it's
just the culmination of things hard, you know, strict zoning laws,
inconsistent zoning laws across towns, across cities. So I think
it's it's a mess kind of And it's hard to

(32:18):
think that that will be fixed anytime soon.

Speaker 1 (32:20):
I think, and I know we've said this, and the
fixing the housing market will be measured in and I
don't want to give ourselves too much credit, but in
quarters and years, not days and months.

Speaker 2 (32:34):
No. I thought you were going to say, like decades.

Speaker 3 (32:36):
No, I think it's going to be quarters in years.
Well years, because.

Speaker 1 (32:42):
Just because of the enjoying Now there could be a
fiscal policy that changes all that, or tax policy that
changes all that.

Speaker 2 (32:48):
Well, there'll have to be a federal policy that changes
all of that. I think, Uh, there's been a lot
of experimentation in and you know, even if you think,
like in Minneapolis, let's say, like they've said the Twin
Cities that you can build you know, apartment complexes in
neighborhoods now. And the issue with this is the people

(33:08):
that show up at zoning board committees are the ones
that don't want it. No one's showing up for things
that they want that they don't have yet. You know,
no one's showing up from a different town at a
to a hypothetical place that they want to live. So
you know, the the further you go out from the cities,
the less people really want change, uh. And I think
that's going to continue to have issues with the housing

(33:30):
market is you know, the segmentation of zoning laws, you know,
combined with the power of the people that already lived there.
You know. So yeah, Airbnb.

Speaker 1 (33:42):
Verbal things like that. And I Mom and I were
down in Florida about three months ago. See, I was
seeing clients and right right after the hurricane and we
we Mom got a house we want to stand for
a couple of days. It was literally in a namehood
that she didn't. Yeah, and it was I think it

(34:03):
was a Marriott. Marriott has their own airbnbs ish type
adventure that they're going on, and I think, h so,
you're so that also skews those that are owning homes.
Maybe they're wealthier than those that don't own homes, and I'm.

Speaker 3 (34:24):
Truly surmising them.

Speaker 1 (34:25):
And then those that can own a second home or
like a VRBO home are either you know, just kind
of take up that excess.

Speaker 3 (34:33):
Supply out there. That's kind of what you're faced with
right now to a certain extent.

Speaker 2 (34:38):
Yeah, owning a second home is a business. Now, it's
not a luxury. You know, we're twenty years ago.

Speaker 1 (34:44):
Americans own a second home, be it for business or
for pleasure, Yeah, don't think about that. So that's something
that's going and I think that's got to get fixed
for the market to really hit on, for the not
the market, for the economy to kind of get moving again.
Medium sales of a new home up seven point five
percent to four hundred and forty six thousand dollars. I'd

(35:05):
say it's a rising four point seven percent in January series.
So four hundred and sixty thousand dollars is a record high.
The average sales price of a new home is five
hundred and ten thousand dollars, just below it's all time
high of five forty one two.

Speaker 3 (35:23):
Let me see what else can I clean from that?

Speaker 1 (35:28):
Months supply of new homes for sale nine months, so
houses are sitting on the market. The seasonally adjusted months
supply of new homes for sale rose to nine months
in Jayar's a point to eight months in December, the
lowest six point nine months in.

Speaker 3 (35:41):
May of twenty and twenty three.

Speaker 1 (35:44):
The meeting in the median number of months in new
home state and the market increased at three point zero
months in January, the higher since April of twenty two,
which was when the FED started raisings.

Speaker 3 (35:53):
I think the FED started.

Speaker 1 (35:54):
In March of twenty two or so.

Speaker 3 (35:58):
So there you have it.

Speaker 1 (35:59):
Initial claims running plump benefits bounced. Hire of twenty two
thousand and two. Two hundred and fifty thousand is kind
of the number that you look at is as hey, hey,
the economy is slowing down, so it was quite a jump.
The four week average will still sits at two twenty
four and then continuing claims fell fivey to one point
eight sixty two million. So those are some numbers that

(36:21):
I think you're gonna want to have so confidence. You know,
what's the consumer thinking. We saw that in the conference board.
You also see it in the University of Michigan consumer sentiment.
What's what's the labor market like? We see it every
week in initial claims from employment benefits. You'll see it
next week in non farm payrolls for the month of
FED where that will come out next Friday. And then
fourth quarter domestic product that's kind of a lagging indicator

(36:44):
of two point three percent in the fourth quarter, down
from three point one in the third quarter. This was
the second revision. This is the second third estimate, the
second revision.

Speaker 3 (36:58):
For for Q four GDP.

Speaker 1 (37:02):
And then finally, as I mentioned, personal income and spending
uh A, personal income up, spending down.

Speaker 3 (37:09):
A little bit during the month of January.

Speaker 1 (37:13):
So that there you have the economic data that's coming
across our table.

Speaker 3 (37:17):
Anything on a broider basis there that you want to
you want.

Speaker 1 (37:20):
To touch on before we get into this this this
warm buffet. GM raises the quarterly dividend, initiated a six
billion dollars stock buyback. It's gonna be hard to see
autos getting out of getting out of their own way
with the tariffs still potentially on the table. I worked
Bank of America Global one manager survey showed the lowest

(37:40):
levels of cash since twenty ten less than six percent
a manager expecting a hard lending the global economy of
next twelve.

Speaker 2 (37:47):
Months less than six percent. Okay, we're at we.

Speaker 1 (37:54):
After rebalancing, we have about tenor of ten or eleven
percent cash and uh, thank yeah, we'll just bring things
back back into alignment.

Speaker 3 (38:09):
We got here. Yeah.

Speaker 2 (38:10):
You know, Warren Buffett's letter came out this year, and
I think I'm just looking for it right now. I
think everyone, Uh yeah, me too. I think it's I
think a lot of things transcend finance. You know, it
talks about business, and I think even if it's talking
about business, what it talks a lot about life. And

(38:31):
I think a lot of a lot of times. You know,
we've been talking about Warren Buffet's cash pile continuing to
increase throughout the past let's say, eight or so months,
and I think we have to remember that this is
a ninety four year old man who's basically the face
of an asset management company. You know, maybe they're just
building cash because it's a ninety four year old man

(38:53):
combined with he's a value investors, which hasn't really you know,
I guess there's not as much opportunity as as he's
saying out there as there once was.

Speaker 1 (39:05):
One of the famous quotes that we live by is
there's no balls and strikes. Yeah, let's say someone's throwing
you a baseball and there's no strikes, you know, no balls,
You're just gonna wait for a fat pitch. And I
think I think kind of that's what he's doing right now.
We don't have that luxury. Our clients don't have that
luxury because he can sit in cash, sitting cash and

(39:26):
sit in cash, because he's got three hundred much does.

Speaker 3 (39:29):
He have in cash out of you know.

Speaker 2 (39:32):
Billion?

Speaker 1 (39:32):
Yeah, yeah, So see he can sit in cash and
sit in cash, and you know, we have to deploy
cash for about ten percent now and they get and.

Speaker 2 (39:42):
We own Berkshire. We own a good amount of Berkshire. Actually,
let's go on.

Speaker 1 (39:46):
Leture read some things that you think would be of
interest to our our listeners.

Speaker 3 (39:50):
Anything of Nope, you know, he did think he's thank you,
Uncle Sam.

Speaker 1 (39:57):
Someday your niece's nephew that Berkshire hope to sit even
larger payments than we did in twenty twenty four. Spend
it wisely, take care of the many who, for no
fault of their own, get the short straws in life.
They deserve better, and never forget that we need you
to maintain a stable currency and that result requires both
wisdom and vigilance time your party.

Speaker 2 (40:17):
And I think he kind of you know, what I
think he means out of that is a little bit.
You know, we although you know, America is in good shape.
You know, we're kind of going through this experiment with
Donald Trump and Doze and everything like that. I think,
you know, we can't forget that. You know, we are
the most innovative, capitalistic country in the world, and you know,

(40:37):
other countries rely on us to you know, to have
a stable currency, be leaders. And yeah, this is a
global economy. You know, sixty percent of our companies get
money earn their revenue from abroad. So although you know,
we may have been taking advantage of other countries and

(40:57):
quotations in over the past ten to twenty the years,
we also have reaped a lot of benefits from spending
and and and lifting up other nations because a lot
of uh, you know, these companies that we invest in
domestically are getting revenue abroad. So you know, I think
we need to, you know, kind of remember that, you know,

(41:20):
although it's you know, we want to bring jobs back
to America. A lot of the people that work for
these large companies have their jobs because of you know, revenue.
We we we we have we have gotten overseas.

Speaker 3 (41:35):
Sure just looking for something new.

Speaker 1 (41:37):
I think they paid more in taxes than they than
they they ever have. And the company that pays the
most in taxes to the federal companies, we're not seeing
somebody these ship center in taxes.

Speaker 3 (41:52):
This was interesting. I thought, mistakes, yes, we make them
at Brookshire.

Speaker 1 (41:59):
During twenty nineteen to twenty three period, I've used the
words mistake or era sixteen times in my letters to you,
and again he's got a fifteen page letter that he
sends out to shareholders. The shareholders you can pick up
right online. Many other huge companies have never used either
word over that span. Amazon, I should acknowledge, made some
brutally candid observations in its twenty twenty one letter Elsewhere

(42:22):
has generally been happy talk and pictures. I've also been
a director of large public companies at which mistake are
wrong were forbidden at board meetings or analyst calls that
taboo implying managerial perfection. I think we see that on
on like some of the financial stations. Now, I think
that's I think that's also I guess what I would

(42:45):
consider a fault of many Americans is not to be
self reflective and not admit that that the humans often say,
you know, someone with ten errors basically wins the gold
glove in the major leagues. You know that those as
but but you know, this.

Speaker 3 (43:01):
Is a business of errors.

Speaker 1 (43:02):
He says he's been a director of companies that which
mistake the name of words mistake or wrong were forbidden
words that that bloom playing manager manage your perfection always
may be nervous, though at times there could be legal
issues that limited discussion advis will you live in a
very litigious, litigious society.

Speaker 3 (43:19):
I think I think that I picked up on that
from that letter.

Speaker 2 (43:23):
Yeah, you know, mistakes fade away, winners can forever blossom,
you know. He goes on to say, and you know,
I think that that it's true, right and right, you
got Yeah, you gotta swing the bat. You know. You
have to. You have to time, you have to you
have to try. You have to, uh, you know, admit
when you're wrong and move on, you know the You know,

(43:46):
I do agree with this, but you know, in investing,
I think the key to being successful is, you know,
small mistakes are fine. You don't make the big mistake.
You know, you over all gating to one stock, trading options,
not having a strategy. Yeah, I mean retail investors, not

(44:07):
trading options, you know, like they're talking about the zero
day options. So you know, I think sticking to a
game plan and not over allocating to one sector or
one individual stock is is uh, you know, paramount and
not making that big mistake.

Speaker 1 (44:24):
You know, I think some of the mistakes we made
over the over the years, I think hanging.

Speaker 3 (44:30):
On to something too long.

Speaker 2 (44:32):
Yeah, on both sides.

Speaker 1 (44:34):
You know, Warren Buffett, I think it's warm Buffet. Maybe
it's Peter Lynch says, you know, just capture the.

Speaker 3 (44:38):
Middle eighty the movie.

Speaker 1 (44:39):
Yeah, the bottom if you're looking at catching a full
and nightly, the bottom ten percent to somebody else.

Speaker 3 (44:44):
In the top ten percent to somebody else.

Speaker 1 (44:46):
And I'm happy that we sold twenty here regardless of
where went after that.

Speaker 2 (44:51):
You know, that was three weeks ago, two or three
weeks ago, so two weeks ago. And also you have
to have disciplines, you know, so you know, as even
if even if it's not the right move over time
it was, it is still the right move. You know,
if you buy two percent of something and it turns

(45:12):
into six or eight percent of someone's portfolio because the
capital gains, it's the proven thing to do is to
sell it, you know, Paaraback.

Speaker 1 (45:18):
You know, yeah, it also got to take taxes in
the consideration and that type of thing. But there's discipline,
Trump's motivation because different discipline also Trump's emotions.

Speaker 3 (45:30):
Like you just think of yourselves exercising.

Speaker 1 (45:32):
You know, if you're not motivated exercising, you have discipline,
you're still gonna do it. If you don't, you're not
gonna do it. I think that's what we see in
the stockmorga quite often where you have greed and fear
set in. So if you don't have enough discipline and
a plan to curb that greed fear and you succumb

(45:55):
to that, you're gonna end up being on the wrong
side of the as far as investment performance most times.

Speaker 2 (46:03):
Yeah, and you know, I think you know, I just
had a conversation with a with a client over the phone,
you know, who's really pessimistic, and he's like, you know,
why don't you go to all cash? Uh? And then
when things get rosier, essentially, you know, get back into
the market. And you know, let's say, even if you
are negative in your right you know, what we have
is you know, thirty years of experience, and that's something

(46:25):
that this works. Jumping in and out of cash never works.
You know, if you're a growth and income investor where
you're usually seventy five twenty five, seventy fifty to seventy
five percent in the market and you're super pessimistic, go
down to fifty percent in the market. You know, always
work within peripheries, and because that's what works over time.

Speaker 3 (46:44):
Yeah, yeah, yeah, I agree, you know.

Speaker 1 (46:46):
And also I think it's arrogant to suggest that you
know what's going to happen in the future. We often
say that you can't quantify human behavior. You know, the
market bottom at the height of the pandemic back in
March twenty twenty and then bolted higher from that point
on after a thirty some percent correction over the prior month.

Speaker 3 (47:06):
So I think you know that. I think those are
some lessons that you.

Speaker 1 (47:09):
Have to to learn from and not let those lessons go,
not get caught up in the moment.

Speaker 3 (47:18):
Be it.

Speaker 1 (47:19):
You know, positive movements in the market, and like I said,
and right now, it's just abiding your time finally from
buffing out of America's prosperity, which I thought was interesting.
Our country's progress over itspere two and thirty five years
of resistance would not have been imagined by even the
most optimistic colonists. In seventeen eighty nine, when the Constitution
was adopted, that country's energies were unleashed. The American process

(47:43):
has not always been pretty. Our country has forever had
many scoundrels and promoters who seek to take advantage of
those who mistakenly trust them with their savings.

Speaker 3 (47:51):
But even with such malfeasans.

Speaker 1 (47:52):
Which remains in full force today, and also much deployment
of capital that eventually flounder because of brutal competition or
disruptive innovation, savings of Americans have delivered a quantity and
quality of output beyond the dreams of any colonists, and
he he finally closes out with that from from a
base of only four million people, despite a brutal internal

(48:12):
war early on, hitting one American against another, America changed
the world in the blink of a celestially.

Speaker 3 (48:20):
I think that's a good way.

Speaker 2 (48:20):
Yeah.

Speaker 1 (48:21):
Anyways, what do you got anything else? You've got about
another fifteen twenties?

Speaker 2 (48:25):
Not really?

Speaker 3 (48:25):
You good job.

Speaker 2 (48:28):
Yeah. You know, I think we're you know, the market
will still kind of be range bound, data dependent. You know,
we'll see unemployment numbers, inflation numbers. So I think we're
just uh, you know, not biting our time, but remaining
cautiously optimistic. Yeah.

Speaker 3 (48:45):
It was called during the week five.

Speaker 1 (48:48):
Check us out out on the web daganaset dot com
or like SAI on Facebook.

Speaker 2 (48:51):
Have a great day, Take care