Episode Transcript
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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. I'm
Dennis Fagan, sitting with my son Aaron, as we do
every Sunday right here in news Talk A ten and
one oh three one w g WYTS around nine thirty
on a Friday morning, and Aaron, couple things, Okay, One
is it feels like we had a year and a week.
Speaker 2 (00:18):
It was a year in a week.
Speaker 1 (00:20):
You know, we had movements and interest rates. We'll talk
about that in the first half hour. We had a
record setting movements in the stock market on Wednesday. We
had a retlacement on Thursday. We had the tariffs, the
imposition of tariffs being pushed back. We had reciprocal tariff
from China. We had China say hey, we're not going
(00:43):
to even increase our tariffs anymore because at this point
in time, the cost of goods in China are prohibitive
coming in from the US. We had an EU trade
official that's coming to the States today to meet with
a Trump administration officials. What is today the is ering
on Sunday? Uh, So, we've had a year in a week.
(01:04):
We've had ups and downs and ins and out and
then type of volatility we haven't seen in quite some time.
Speaker 2 (01:09):
So what do you suggest people do.
Speaker 3 (01:13):
Remain correctly allocated? Don't panic? Take a deep, take a
deep that's what you're saying. Take a deep breath, and
I think that's what you have to do, including us, Yeah,
including us. You know, if you if you're you have
to figure out what kind of allocation you want stocks
to bonds, and you know, let's say it's sixty forty
or you know, fifty to sixty in stocks and the
rest in bonds and cash. You have to decide, Okay,
(01:35):
you know, I'm gonna stay within these parameters, knowing that
you know this, this too shall pass. Uh. You know,
I know it's obviously scary with how volatile the market
has been, but you know, we talked about it a
few weeks ago. You know, if you missed the ten
best days in the market over the past twenty years,
(01:56):
you know, from twenty two to twenty twenty two, you
know your your performance would be cut in half. So
and seven of those best ten days happened during a
bear market, which we saw happen on what was it
Tuesday or Wednesday? So you know, although it's tough, I
think you have to, you know, just remain correctly allocated,
(02:16):
raise some cash if you're nervous. Don't ever go all
cash to you. Don't ever, you know, liquidate your portfolio
because that just doesn't work out over time.
Speaker 1 (02:25):
And you know, and these seems but look, this is
a period couple things. Okay, when this is a period
of survive. You survive to live to fight another day.
You know, you survive financially to live to fight another day.
So you know, you should never you should never be
on margin. But certainly at this point in time, you
survive to live another day. Emotionally, if you need to
(02:47):
make changes to your account to be able to sleep,
make them incrementally. You survive to live another day by
you know, doing some tax lust harvesting. Now, going from
funday if you have an unrealized loss, and it's very
similar to fund B and there's lots of different software
packages that you can use, and you can just google, Hey,
(03:09):
what's what's a similar fund to the Vanguard Wellington funder?
What's a similar fund to the whatever fund?
Speaker 2 (03:14):
The x y Z fund.
Speaker 1 (03:15):
You can see the correlation between the two funds, and
you can you can you can claim a tax loss
if you're in a non qualified account. Every every every
every every time is different. What's different this time? It's
different this time. Every pullback, every bear, every bear market,
every bull market has a catalyst that you can identify afterwards, Hey,
that was the catalyst. You also, every time it does
(03:38):
feel different. And yet the more things change, the more
they stay the same. It's not to say that. I
do think there's underlying issues that that do have a
longer term impact on the market, and you know, probably
not going to get into them today, just given the
fact that you know their their you know, secondary back
burner items to the issue at hand. But you know,
(04:02):
I think right now it's trying to survive this market.
I also think that we lived in such a we
live in such a politically charged environment that I think
it's sad. I think it's sad that you know, uh,
you know, and this is a silly analogy, but you know,
I've seen great, great receivers drop the ball from time
(04:22):
to time. They take the eye off the ball, the
ball goes.
Speaker 2 (04:25):
Out of bounds.
Speaker 1 (04:25):
If you're in the NBA, the Knicks kind of contributing
to their loss. The other night one of their one
of their players took took his eye off the ball
and then went out.
Speaker 2 (04:32):
This was an overtime.
Speaker 1 (04:34):
Or you see, you know, a great fielder you know,
take his his his eye off the ball or her
eye off the ball. For talking softball, you see, uh,
you know, receivers in the NFL. And you know, for us,
lots of things come back to sports, you know what
I mean. And that's just what happens, you know what
I mean. How many accidents are caused by you know,
(04:55):
you look down to check your text and and the
car that's rolling forward at the red light stops, you
bump in. Then you see that stuff all the time.
So I think it's sad that you know, we can't
we sit here and and and we did have We
do have a problem with the way that the tariffs
were applied. You know, two or three weeks ago, the
across the board nature of the mathematics of it. I
talked about it last week. You know, we got some
(05:16):
real you know, criticism for it. We've got some applaudits
for it. But what it did come down to is
both sides seem to have political overtones to their statements
rather than you know, just objective overtone. So so that's
where we sit. And I think, you know, during earlier
in the week, you know, President Trump saw interest rates
move up, and I think he felt concerned about it.
(05:37):
We'll talk a little bit about that. But what's your
takere What do you want to add to anything what
I just said or not? Do you want to just
get into the economic data.
Speaker 3 (05:43):
Let's just get into the economic data, all right? Why
don't you We saw weak economic data, uh, which could
be seen as good or bad, you know, depending on
what side you're thinking of. Producer price in next felve
point four percent during March, this after edging up a
bid point one percent during February. So over the past,
your PPIs is in two point seven cent two point
seven percent, down from three point two percent. Energy down
(06:06):
four percent last month. I think on some fears on
a slowing economy. Core PPI rows point three percent. CPI
also fell point one percent after rising point two percent
during February. CPI has fallen from a year over year
high of nine point one percent during June of twenty
twenty two. Energy prices fell two point four percent, food
(06:27):
and beverages rose a little bit shelter costs rose a
little bit, and initial tames for unemployment it was four
thousand to two hundred and twenty three thousand from two
nineteen the prior week, which was unrevised. So, you know,
you're seeing a lot of you know, I don't know
if it's apprehension in the market, but you know, yeah,
So what happens next after Friday's PPI came out? You know,
(06:47):
what does the Fed do?
Speaker 2 (06:50):
I don't think they do anything.
Speaker 3 (06:51):
I don't think they should do anything. I think there's
a lot going on right now that could have interest
rates continue to rise. Even what we saw on what
Wednesday before Trump, you know, announced that ninety day pull off.
You saw the ten year rise from like four to
four and a half percent, which is really an astronomical
rise in the ten year. You saw mortgage rates over
(07:11):
seven percent. So I think the last thing we want
to do is see you know, mortgages into the thirty
year mortgage in the seven eight percent. I don't think
anyone wants to see that. So I think you have
to kind of stay firm here for the time being.
Speaker 2 (07:24):
Like driving in fog.
Speaker 1 (07:25):
Yeah, you know, I think so many things could break
one way or the other that I think you maintain
some cash in your account, you make sure you're diversified,
make sure, as you'd mentioned at the top of the
show air, that you're within your objectives. And then let's
let's like, like you we said, take a deep breath,
let some time pass, let this play out.
Speaker 3 (07:48):
Because I think, yeah, I think this is such a
you know, I guess an experiment that Trump has committed
himself to that, you know, I think the FED needs
to have some I guess dry powder in the form
of cutting rates at their disposal, and not to cut
rates preemptively. So I think that's really the smartest thing
they could really do right now is sit hold tight
and wait for more and more economic data to come out.
(08:10):
I know Trump has been pushing Jerome Powell, you know,
to be fired, but also cut rates, and I just
don't think it's the right thing to do right now.
Speaker 2 (08:18):
I think, and I think the because.
Speaker 1 (08:22):
Most probably the vast majority of our listeners, you know,
think that, Okay, if the economy weakens, we should cut rates.
And that's true to a certain extent, but that's part
of the dual mandate of the FED is stable rates
and also stable employment. You know, stable I'm sorry GDP,
growth in state and stable uh employment. And I think
(08:44):
the thing about it is is that when you have
this type of trade quote unquote negotiations, uh, then you
have foreign entities that hold you know, a chunk of
our debt come into play and push potentially push rates up.
You know, during the course of this whole uh environment.
(09:10):
As Aaron just mentioned, we had interest rates on the
ten year move a week ago there were four oh one.
As we sit here, you know, on Thursday morning, on
nine thirty five, they're four forty. So think about it,
you know, if TARA, if if it's if it's a
one one shot deal with tariffs, interest interest costs go
up and then level off. And if tariffs are attacks
(09:31):
on America Americans, which they are, and you can argue
that they're not, but you're wrong, Uh, then you have
a slowing of economic growth. And if you have a
slong of economic growth, that should imply interest rates come down.
As Aaron mentioned earlier to mortgage rates went up. And
why did you see interest rates go up? You know,
maybe it was h And I think part of it
is before the tariffs came in. I think a lot
(09:54):
of investors mostly, you know, not retail investors and not
investors like US as managers mostly let's say, hedge funds,
bond managers at levels far above US probably expected interest
rates to come down, so they maybe they were leveraged
to that with that kind of bent that interest rates
(10:16):
will come down. And then when this happened and interest
rates started to go up, they had to cover those shorts.
Speaker 3 (10:20):
You know what I mean, what happened kind of what
happened with two thousand and eight really you know, in
terms of leverage or really with what happened with you know,
Silicon Valley Bank a couple of years ago, you know,
son come more, the more in quotations. Historically safe an
asset is the more hedge funds and the likes that
deal in those will go more on leverage because it's
(10:42):
it is a safer asset. So, you know, I think
there's a lot to take in. It's not just and
and I think that's what we've been talking about, you know,
for basically the last four months, is you know, I
think what we saw on Wednesday is one of those
ramifications of the unknown that Trump's policies are bringing. They're
bringing a lot of unknown variables in and I don't
(11:04):
think that they accounted for the fact that maybe people
won't buy as many bonds during this bond auction, and
they in the possibility of you know whatever, foreign entities,
you know, pushing the prices of our bonds up. So,
you know, I think we're continuing to work through all
these policies, and it's almost like, you know, we see
what happens with the policy, then then we see actually
(11:24):
what takes place. And I think what we saw Wednesday
was something that a lot of people didn't see happening.
And I think that really spooked the administration into, you know,
putting a pause, that ninety day pause in place.
Speaker 2 (11:37):
Right on Tuesday.
Speaker 1 (11:37):
And and and so you have you know, foreign entities
hold our bonds and notes and treasuries, and we hold
our you know, Americans hold them.
Speaker 2 (11:48):
Treasury owns a lot of them.
Speaker 3 (11:49):
They can buy some back.
Speaker 2 (11:51):
Yeah, there's certainly things that they can do.
Speaker 1 (11:55):
But the fact that interest rates were moving up when
this Usually when this stock market struggles, interest rates go
down because investors are looking for a safe haven in
times of In times of turmoil, both domestic and foreign
investors look for a safe haven flocked to the same treasury,
they flocked to safety, right, So when that didn't happen,
(12:16):
it was a yellow flag that why isn't why isn't
it happening? Yeah, you know, maybe it was just a
shot across the bow by some of the foreign entities saying, look,
you know, we've got to negotiate on even terms with
nobody having an advantage because because you know, we can
send interest rates up, which is not in anybody's interest
at this point in time. You know, maybe it was
just you know, maybe the luster coming off the dollar
(12:39):
a little bit. The dollar has sunk also since this, uh,
since this has started, which is not a good indication
because in addition to running to treasuries, you know, investors
rushed to the dollar because the dollar is a safe haven,
and that didn't happen. So on Tuesday night, even even
in President Trump said that he absorbed the bad news
about a plumbing bottom mark I saw last night, and
(12:59):
as he said, said this Wednesday, I saw last night
where people were getting a little queasy, Trump said about
the bond market. So he comes out Wednesday morning and
talks about you know, buying buying US stocks now is
being a good time. In three or four hours later,
you get the news of the postponement really of the
imposition of the tariffs for ninety days except in China.
Speaker 2 (13:19):
And that's a whole other story.
Speaker 1 (13:20):
And that's really where the crux of the matter should be,
is dealing with China on trade and then all these others.
And look, I'm a trade expert, all right, so you know,
but we are experts on the market exp and buy
and large, probably more than a lot of our listeners,
experts on interest rates and this and that, and that's
why we have a management company for thirty five years.
(13:42):
But I do think there were some circumstances that were
being pushed on the President Trump and the administration and
this that said, okay, let's let's take a breath, let's
let some time pass. President Trump said, seventy some countries
had called him, and they're coming to Washington or dealing
(14:03):
with it, you know, via zoom or phone or whatever
they do, and give it some time. So I think
that's what we see now. We see the market kind
of digesting all this information. It is probably getting a
little bit fatigued, I would think at this point in time.
Speaker 2 (14:16):
And then we go from there but just moving back
just a minute.
Speaker 3 (14:18):
Too, that we're about to get into earning season two.
So you know, I don't think you know, we saw
Wells Fargo and JP Morgan came out with earnings on Friday.
Jam Morgan had good earnings. But you know, as we
were talking about before the show, they're they're putting a
little bit more away for bad debt. I think three
billion dollars this year. So I think everyone in I
think everyone in the markets are just being a little
(14:39):
bit cautious now, and I think it's a time to
be cautious as we see these things play out.
Speaker 1 (14:46):
Yeah, so yeah, JP Morgan raised their lone loss provisions
by a billion dollars or so, and that's what they
set aside for a slowing economy. So and then Jamie
Diamond said that he does expect more volatility ahead and
earning zestaments to fall as companies pull guidance.
Speaker 2 (15:04):
Yeah.
Speaker 3 (15:05):
You saw Walmart pull guidance this year this quarter. One
other company I can't think of what it was pull guidance.
So you know, I think everyone's in the same boat
a little bit. Is you know, when there's unknown variables
out there in the near future, you become a little
bit more cautious.
Speaker 1 (15:20):
Right, So the economic data, the earnings data, really isn't
meaning that much at this point. But I just want
to go back to the So the PPI fell, that
was good news. The CPI fell, that was good news
now because it's bringing year over your inflation down. Retail
inflation is measured by the CPI a two point four percent.
It's fallen from a high of nine point one percent.
(15:41):
Inflation at the wholesale level also down four tens of
a percent. If you take out energy, you know it
was it was actually up three tents of a percent.
Energy's falling a lot of energy, but I think it's
about a third of of the PPI.
Speaker 2 (15:54):
So that's why it fell.
Speaker 1 (15:56):
So so that is somewhat good news, I think on
you know, initially, why is it somewhat good news?
Speaker 2 (16:02):
Because I think there's just so.
Speaker 1 (16:03):
Much uh, it's foggy out, the water's murky, whatever analogy
that I use, the King of analogies. Initial claims run
to blowing benefits pretty good though only up Fourenty to
two twenty three. So let's see how this plays out.
You know, I'm not I think the biggest the biggest
issue for me right now, I think, you know, regarding
(16:23):
this stock market is probably is probably the bond market.
Speaker 3 (16:27):
I was gonna say, I think that's what we've been
thinking about the most this week, is you know, how
far do you go out on the bond market? Uh,
you know, do you rush to safety and like the
you know, short term money market treasures? You know, what's
a good time horizon. I think you know, what we've
kind of you know, come to the conclusion is is
you know there's more than one one right answer. We've
been buying a lot of bonds that come do in
twenty twenty seven, twenty twenty eight, as well as we
(16:49):
still have a lot of money sitting in money market
accounts and UH and the BIL which is short term
treasury is one to three months treasury. So I think
a mix of you know, short to intermedia is the
way to go right now. But I it would continue
to keep my eye on, like, you know, you know,
the five to seven to ten year treasures if that
really starts to you know, go up to the you know,
(17:10):
past five percent.
Speaker 1 (17:11):
Yeah, right now, the ten years at four forty or so,
and and I had gotten close to five maybe a
year ago or so. So I think you're ready, and
I think you're ready. We work together closely on designing,
you know, client portfolios and coming up with policy and
you know, short intermediate keeping some dry powder. From a
(17:33):
stock market perspective, but also from an interest rate interest
rate perspective, you think about it. If the tenure gets
to four fifty and inflation's three percent, you know, that
laps off. Let's say about fifteen basis points of spending
power per year, So it's take four and a half.
(17:54):
Multiply it by point three or three, and you get
up with you know, it's it's not exactly fifteen, it's
a thirteen and a half. So let's say thirteen and
a half basis points. That means you have four years
on a four percent distribution rate before you have inflation
adjusted hit to your income. You know, So that that's
that's a big plus in there. Now, if you go
(18:16):
out ten years in industrates go to six or seven,
then then you're fried, all right, So you don't want
to do that, but you know, laddering treasuries, laddering fixed income,
stay away from junk, you know, up to five or
six years, I think is the right way to go here.
Right now, we're sitting on over ten percent of the
average client portfolio in either money markets or one to
(18:38):
three month bills. The other thing too, aer you know
anything Like I sometimes I think of things to say,
things to say, but I want to make sure that
you say what you want to say. What about the rally?
What about what about the rally this past week? We
sent out a chart talk this past week. But you
know a lot of these rallies come within bear markets.
Speaker 3 (18:57):
Yeah, And I think if you remember that, you know,
as I was saying earlier, you know, you don't want
to miss those ten best days in the market. And
seven of those ten over the past twenty years happened
during a bear market. So you know, I think, I
think you want to do things, and a lot of
investing is just so behavioral and emotional that you know,
what you want to do is if you're feeling like panicked,
is you know, maybe raise a little bit of cash
(19:18):
to make yourself feel better, and as you said, you know,
fight another day. I think, because that's what you want
to get through. Sometimes with your portfolio, you just want
to get through times bear markets obviously, but you know
you don't want to make the wrong move at the
wrong time, and I think that's the hardest part about investing.
And you know, if you even look at the news,
the media cycles, especially CNBC, when the market's down, they
(19:38):
have people that are negative about the market. When the
market's up, they have people that are positive about the market. So,
you know, sometimes I think it's the best thing to
do is turn off the news and you know, revisit
your portfolio. What we're doing for people is looking at
names on our watch list that we really like, sectors
that we really like, and find buying points that we
like these things at these these equities at or mutual
(19:59):
fund of you know, equities at ets at at specific prices.
So if you know, Apple gets to this price, if
Google this gets to this price, I'm going to step
in no matter what the market environment is, because I
think that's a good value for this company. I think
that's what you have to do. You know, again in
times like this is keep your mind busy.
Speaker 2 (20:16):
On you know, keep your mind busy.
Speaker 3 (20:18):
I like your mind busy on things that will benefit
you in five years from now. Knowing that you're not
going to catch the bottom of Google or Apple or
Amazon or any stock that you want to buy, but
you have to realize that, Okay, I like it at
this price, even if it goes down another five, ten,
fifteen percent.
Speaker 1 (20:34):
Yeah, you have to be able to look past this.
If you can't look past this, you're doing so at
your own, to your own detriment. Well, it's different this time.
Every time it's different. Okay, some just feels more like
it's different this time. All right, we'll get past this.
Speaker 2 (20:51):
You know.
Speaker 1 (20:51):
Uh, maybe the maybe the economy, you know, gets itself
into a bit of a recession. Unemployment still at four
point one, four point two percent. Historically, that's not where
recessions come from. Well, well this was a shock to
the economy. Yes, it's a shock to the economy. Well,
you know, people would say, well, and this is where
(21:11):
it gets politically involved with people. Well, well, that's what
people voted for, that's what people wanted. If that's what
people voted for, and that's what people wanted, okay, which
is true, Okay, but this wasn't what they wanted. Well,
who says the market said? The market said when it
was down fifteen percent in three days, the market may
be wrong. Indeed, indeed, Okay, So and this was this
(21:33):
is a very short period of time. But that said,
all all that said, I going down this rabbit hole.
Speaker 2 (21:39):
It's just or just like meandering.
Speaker 1 (21:41):
But I guess to circle back is for all those reasons.
Now I think it's foggy. I think it's murky. You
take a step back, you watch some baseball. Enables you
to get some perspective.
Speaker 3 (21:54):
Correct allocation in your portfolio, and you move on.
Speaker 1 (21:57):
Yeah, and you move on and and and to folks
right now on all right, you know the CPI, the
PPI initial claims for unemployment benefits. The next ninety days,
I think you're gonna see news that's gonna make you,
that's gonna scare you make it and then and also
make you feel optimistic and you go from there.
Speaker 2 (22:17):
And then once we.
Speaker 1 (22:18):
Get by this, you deal with this, We deal with
the issues that you have, and then move forward. Look
if there was across the board ten percent tariffs, you know,
and I think that's what the market expected. Yeah, like
the average American who voted for Trump or didn't vote
for Trump, who said, hey, this is what he President
Trump campaigned on. I think President Trump people would say, well,
(22:38):
you know, across the board, small tariffs. You know, I
think that's what that's what the market expected, all right,
and then they didn't get that.
Speaker 2 (22:46):
So now we're dealing with that.
Speaker 1 (22:47):
I think President Trump, you know, on Tuesday evenings saw
the bond market and said, whoa, okay, this is because
the bond market's bigger than the stock market.
Speaker 2 (22:57):
Think about it.
Speaker 1 (22:58):
We have thirty seven trillion dollars in debt that's held somewhere.
Speaker 2 (23:01):
So those are some issues. Or what else you got?
Speaker 1 (23:03):
You got about a minute to go where you got
something to say and then to wrap it up or
you know, are you know if you're looking for something,
I certainly can talk.
Speaker 3 (23:09):
Yeah, I mean, you know, nothing that can only that
will only take a minute.
Speaker 1 (23:12):
Though, big rally on Wednesday, Lots of times they come
within you know, if you look at the nails that
can posit this.
Speaker 3 (23:18):
So you know what, market down four to six percent
depending on the ind of serday Thursday. So I think, yeah,
this is just the time that you don't take too
much of one day. I think we're going to continue
to see volatility. We're getting into earning season. JP Morgan
Wells Fargo kicked it off on Friday, so again, you know,
I think I'm going to be interested to see how
businesses are performing, what they're for and what they're for. Guidances,
(23:40):
if any.
Speaker 1 (23:41):
Do not take anything any any draw any conclusions from
one day movements in the market. Some big movements come
within bull markets, some come within bears. It doesn't mean anything,
so anyways, that'll just about do it. It's ten thirty
on the station you depend upon for news, weather and information,
News Talk A ten and one O three one w
g Y. Good morning, and welcome back to this and
half out of the Capital District's Money and Investment program.
(24:02):
You're listening to the Fagan Financial Report. I'm Dennis Fagan,
sitting here with my son Aaron, as we do every
Sunday right here on News Talk eight ten and one
oh three to one WGY. Good article that appeared in
Barons recently. We'll talk about that the mag seven stocks
have gotten crushed by these four. Now we're going to
talk about the four and talk about the other three
that the that the article references byd the China kind
(24:30):
of competitor to Tesla at a record high. Tesla reported
three and thirty six thousand of electrical vehicles electric vehicles
delivered in the first quarters that dropped from a year ago.
You know, what does that portend for them? They're well off,
they're high low expectations. Consumers have low expectations, the lowest
since twenty and thirteen, and high expectations for inflation. Inflation's
(24:54):
expected to run higher. Talk a little bit about whether
or not that inflation is transitory. In April, you know,
generally speaking, a good month, We'll talk a little bit
about that.
Speaker 2 (25:04):
And I guess you gotta you gotta start off with.
Speaker 1 (25:08):
The tariffs, you know, President Trump, And now now it's
tariff's on Wednesday. We've seen the market, you know, move
back and forth since then. Uh, And I think that's
what we're going to continue to see. Aeron, I think
we're going to continue to see a negotiating stance from
President Trump and also the response by our trading partners,
(25:33):
be them small or big. I think some of it
has to do with the foreign responses have to do
with you know, their response, I think has to do
with what percentage of their economy is represented by trade
with the United States and how important let's say a
specific industry might be to that country.
Speaker 2 (25:55):
You know, how much they play ball with the Trump administration.
Speaker 1 (25:57):
Also, I think you'll see trading blocks form outside the
United States. You just already talk about, you know, China
and India.
Speaker 3 (26:04):
China, Japan and South Korea. You know, I think you
can also look at if you look at the s
c HF, which which is Schwab International what is it
just what's it called Shop International Equity ETF. You know
you're seeing a you know, just I know it's more
than just you know, just a pe ratio. But their
PE ratio is about sixteen fifteen point nine, you know,
(26:26):
and if you look at just you know, the S
and P five hundred, you know, their their PE ratio
is far greater at you know, a weighted P of
twenty six. Their price of sales is three, international is
one and a half. And you know, I'm not saying
that you know, this is even outside of the tariff talk.
You know, you see you could see some restructuring of
(26:47):
how you know, the largest companies in the EU, you know,
outside of emerging market. So you'll have you know, you know,
China is kind of continuing to you know, innovate, but
now you're seeing Germany, I'm loosing fiscal policy. They amended
their Constitution to exempt defense and security on fiscal spending.
You're seeing them set up a five hundred billion dollar
(27:08):
infrastructure fund for urgently needed investments in areas including transportation, energy,
and housing. So you know, you could see you know,
coupled you know, a coupling of let's say, you know,
the undervaluation and the underperformance of international over the past
two decades, you know, coupled with maybe some more innovation,
some more capitalism, them getting along better, even with you know,
(27:33):
emerging markets, to see some outperformance of the you know,
international markets. I think people are speculating a little bit.
So far, you're to date, the you know international is
up seven point three five percent as opposed to the
S and P, which is down a little bit. So
you know, I think you could see you know, some
shift away from you know, areas of uncertainty that are
(27:54):
the United States markets and more towards maybe some things
that have underperformed over the past couple of decades and
international and emerging markets.
Speaker 1 (28:05):
Yeah, you know, And I also think that if you
buy potential and sell a lack thereof you know, and look,
I think we're we're you know, if you were to
look out the next six or seven years. Barring something
totally unforeseen, I think the United the US market will
do well, you know, I think it will average, you know,
with with dividends mid sevens, mid eights and around there,
(28:31):
and a lot of that is just working off excesses
that we saw over the past decade or so, with
the market average twelve or thirteen percent. So if you
take twelve or thirteen percent over the past decade, it
stands to reason that you know, total return over this
next decade decade will be like I said, about about
eight percent. You can go back further and recognize that
the first decade of this century there stop market with nowhere.
Speaker 2 (28:54):
But I think if you just take a look at.
Speaker 1 (28:57):
Evaluations of where they are now, you know, I think
you need to create a diverse and also, you know,
how how what's going to be the driver of the
US economy going forward? I think you need to ask yourself, Okay,
well how should I position my portfolio?
Speaker 2 (29:13):
And and what you just have stated.
Speaker 1 (29:17):
Is that international UH should be a bigger, bigger and
bigger percentage of your portfolio. What I will say, though,
is that it's somewhat disconcerting that that's all I hear all,
I hear is.
Speaker 3 (29:29):
And that's what I kind of use to speculate because
you know, I think we're seeing speculation and international doing better.
And you know, international is up seven point three five percent.
Speaker 2 (29:39):
Now you're to date.
Speaker 3 (29:41):
You know, I don't I don't have any you know,
records in front of me, but I don't know if
the international has been up seven points. I want to
know that how many times in the last ten years
as international has been up seven percent, you know, throughout
the entire year.
Speaker 2 (29:56):
For the entire year, it's been up.
Speaker 1 (29:57):
But I think if you take a look at the
just the quarter, and I did read that the outperformance
of the international versus the US is for this quarter
is a is a multi year divergence between performance. Yeah,
you know, usually, uh, the international kind of works in
somewhat lot mixed up with the US as far as directionally.
(30:19):
I think you've seen that that uh, that diverged this
this past quarter.
Speaker 3 (30:24):
Yeah, and you've seen so you've seen international up five
times more than seven percent in the last ten years.
So yeah, you know, I think I think you're you're
seeing a little bit of speculation and also, uh, you know,
undervaluation of of international as well.
Speaker 1 (30:41):
You know, but so I think also you have to
be patient in there's there's Aaron and I hike a lot,
and there's an old saying that you know, if you're
if you if you're lost and off the path, the
first thing to do is, you know, stay put and
be patient. You get your bearings and be patient. I
think that's kind of where we are right now. This
is not this is the depending upon who you're listening to.
(31:03):
And and it is funny you have CNBC and you
have Fox. They both have business business news, and they
have their own editorial slant on where they think the
markets are going. And I just think now you don't
want to listen too much to the to the news. Uh,
as far as you know, for longer term investment advice,
I think what you do is you say, okay, I'm
(31:24):
going to be patient in through here. I think that
the market is not going to take off. I think
that we're going to have more and more tariff news.
Speaker 3 (31:35):
Uh.
Speaker 1 (31:36):
You know, how like we were talking about a little
bit earlier, how how other countries respond, you know, do
they you know, form their own little trading pact?
Speaker 2 (31:44):
What's we We still.
Speaker 1 (31:45):
Don't know really the ultimate goal of these tariffs are
certainly it is to you know, to return UH to
make to level the playing field, according to President Trump,
and return manufacturing to the United States, both for you know,
UH to build to continue to build the middle class,
but also for security purposes. And you know, how and
(32:06):
how far is President Trump willing to go? All those
questions remain to be answered. So when you have those
that that that that uh, that those uncertainties in the market,
I think you just say, Okay, maybe when I feel
like I missed, missed the uh miss an opportunity from
time to time, but more will come our way. I
think this is not one where the bus comes once
every three or four days. The bus is gonna come
(32:27):
once every hour or two. And yeah, if you missed
one bus, you're gonna be there to catch another. Kind
of Disney World.
Speaker 3 (32:33):
I was just gonna say, kind of like Disney Room.
It's always a bus coming, a bus coming, you know.
And I think that's kind of what we're I guess
grappling with right now. And I think we have a
lot of clients who are inner, are that in or
near retirement, and I think it's just prudent to take
a little bit of risk off the table, uh from uh,
you know, from the things that have done so well.
(32:53):
You know that said, you know, we're gonna go into
that article of how the you know, basically the MAGS
seven stocks it was in bare barons have gotten crushed
by these four now. So you know, we're continuous, continuously
wrestling with the you know, okay, we should be diversifying.
It's just a prudent thing to diversify. But then when
you actually look at these companies that have done so
(33:13):
well over the past ten, fifteen, twenty years, it's hard
to get out of them. You know if you look
at you know, in the four that these talk about
are Google, Amazon, Meta, and Nvidia. You know, those four,
you know, are obviously great companies, and it goes on
(33:34):
to talk about how you know, great the companies are,
for example, Amazon Web Services you know, everyone are just
Amazon in general, everythinks everyone just thinks of their retail
but has over one hundred billion dollars of annual revenue
and just alone AWS is you know, worth roughly one
trillion dollars. You know, Amazon's margins are expanding in North
(33:56):
in North America, you know, and they could pass one
Martin sales this year.
Speaker 2 (34:02):
I think they did last court.
Speaker 3 (34:03):
Yeah, so it has I think that you know, how
do you sell a company like that? So I think
you have to go back to Okay, what is prudent
investment management and asset allocation? And it's hey, you know,
when something becomes too big of a portion of your
portfolio where it's directing all the gains or losses, you know,
it's just a prudent thing to pair that back.
Speaker 2 (34:24):
A little bit.
Speaker 1 (34:24):
If you'l at the max seven in general, you know,
and what's for the audience perspective?
Speaker 2 (34:31):
What are they there?
Speaker 1 (34:32):
Amazon, Alphabet, Meta, Microsoft and Video? Yeah, an Apple in Tesla.
Speaker 3 (34:42):
Amazon has one hundred billion dollars in cash, fifty billion
in debt. You know, it's from a pdpe ratio. It's
cheaper than Costco and Walmart.
Speaker 2 (34:51):
I think what you got to do is be careful.
Is you have to be careful though, is to take
whatever you have in those let's say those that have
led the.
Speaker 1 (34:58):
Market, which is roughly forty percent of the S and
P five hundred, and be careful that you don't have
you'd have those you own those stocks, and then you
have like an SHB or an spy or something like
that where you're kind of now you don't have forty percent.
You look at your mutual fund holdings and make sure
that you're not duplicating coverage by having some of those
(35:19):
mag seven stocks along with you know, a large cap
index fund or something like that.
Speaker 3 (35:25):
Yeah, so let's say you have, you know, fifty percent
of your money in the SMP five hundred, and then
you own some individual stocks too, and those individual stocks
are Amazon, Apple, Google. You know, you're you're probably way
over allocated in some of those some of those holdings.
Speaker 1 (35:39):
But they talk about, you know, there's an article in
Barns a couple of weeks ago that said, what's what
mutual fund created the most wealth? That created a trillion
dollars for investors, and it was the Vanguard Total Stock
Market Index Fund. And one of the biggest takeaways the
individual says who who wrote the article, is that simpler
(36:02):
has has is. Simpler has has been better than creating
a lot of different, uh, you know, convoluting aspects to
your fund that you know you're trying to you know, take.
Speaker 2 (36:15):
A shortcut or this or that.
Speaker 1 (36:16):
And so I think as investors, you know, i'd be
more apptive in bulk to buy the Mac seven then
then sell them in bulk. At this point in time,
I mean, they're pretty rationally valued, and.
Speaker 3 (36:29):
They have a lot of cash. You know, they probably
have I don't know, I would say half a trillion
dollars in cash between all of them.
Speaker 2 (36:36):
Oh, yes, at least I'm trying.
Speaker 3 (36:39):
To be conservative. So you know, I think that and
I do think that. You know, they they say the
leaders of today aren't going to be leaders of tomorrow,
and you know, that might be true, but I think
they have to prove that they're not going to be
the leaders of tomorrow, sound that they have their their
foot in the door and every single emerging technology that
we're seeing, driverless cars, artificial intelligence, robotics, you know, they
(36:59):
do have some skin in the game, I guess in
all of those fields. So you know, as as I
was saying, you know, you see and you know, in
this article goes on to state they had the last
time they were this cheap was twenty seventeen, So you know,
I think you're seeing I don't know, I think you're
seeing a lot of confusion from investors of you know,
(37:21):
whether to hold on to these or sell them, And
I think we always tell people like you don't have
to do all or one thing or the other. You know,
you trim some things that have done so well, And
I think that that'll help you sleep at night, because
a lot of investing is behavioral and you try to
do the thing you know to get you to the
next day, next month, next year, without you know, jeopardizing
your retirement.
Speaker 1 (37:41):
But I so I would think on balance, the reason
that Amazon as pulled back is because of concern over
the consumer. This consumer discretionary in general has been weak,
so I think I think that's why it's pulled back,
So I think, and just general profit taking in that industry.
So I would think that at this point in time,
(38:02):
that would be you know, a buy now the next
one that Hani talks about it. And Amazon is one
of our largest holdings, as is Alphabet. You know, talk
about online advertising, you talk about their search engine, you.
Speaker 2 (38:15):
Talk about cloud, you talk about you.
Speaker 1 (38:17):
Know, computer software with Android, Chrome, you talk about YouTube.
Speaker 3 (38:21):
Google has can continued to get almost beaten up by
analysts in the stock market over the past year or
two when every time they have earnings they kind of
you know, I guess shut their critic critics up a
little bit because you know, they have so many different
you know, avenues of revenue. Now, as you were just
saying with you know, you know Google Cloud, YouTube, YouTube,
(38:42):
Android search and ways even Wemo.
Speaker 2 (38:45):
Yeah, you know, so drivers cars.
Speaker 3 (38:47):
You know, they say that the Waymos technology is you know,
superior to Tesla's, so you know it again, you know,
it's another one of those companies that you know, it
has such a I think over eighty something per high
eighty percent market share and search. So until we see
another company, and I know we see chat GPT, and
(39:08):
I think that's what's kind of keeping a lid on
Google a little bit, is the idea of chat GPT.
But until you know chat gpt really you start to
see some revenue from from that company, you know, it's
it's hard to believe that Google isn't going to catch
up quickly. And although chat gbt is, you know great,
it really is a glorified search engine, and Google's working
(39:30):
on the same things you've already seen Google make headway
in their AI. I don't know what it's called right now,
I can't think of it off the top of my head.
But even when you search things on Google. You do
get some sort of like chat GPT esque answer as
the top answer now without even clicking on anything. So
I think that you know, Google will you know, continue
to do well. And it is relatively cheap on you know,
just a price to earnings ratio, and I want to
(39:53):
say like twenty even maybe a little bit less.
Speaker 1 (39:56):
Less if you're about to cash even yes, you know,
so what's a trading where they say.
Speaker 3 (40:02):
And one fifty seven?
Speaker 2 (40:06):
Right? Yeah?
Speaker 1 (40:07):
So, and I think to write write alphabet off would
be a big mistake. They're not sitting still. And I
think one of the one of the hidden secrets to uh,
to Google certainly is not it's not hidden the evaluation.
Speaker 2 (40:21):
It's way mow. And it's also YouTube.
Speaker 1 (40:24):
Yeah, you know, they have six business lines with over
a billion subscribers or a billion monthly average users. So
I think you you certainly want to give them credit
for that.
Speaker 2 (40:34):
The third stock within that would be what meta?
Speaker 3 (40:37):
Is it meta? And video either or yeah?
Speaker 2 (40:40):
And you know I'm looking at right video talk about a.
Speaker 3 (40:43):
Video right now? And you know, I think in Video
is one of those companies that you know, it's in
with uh, you know, GPUs in their software. You know,
it's almost impossible to put a price target on it.
It's way outside of my comfort zone on having to value.
But I do think it's about four percent of the
S and P five hundred right now, so you should
have about four percent.
Speaker 2 (41:03):
In it market weight something like that.
Speaker 3 (41:06):
Yeah, you know, I still think when you have a
company that has what's seventy plus percent year year of
year revenue growth coming off of revenue growth of like
one hundred and fifteen percent and you know, high nineties
one hundred percent, you know, it's it's hard to really
sell something like that. You know, it had a high
about one fifty, so it's down over twenty twenty five
percent from its all time highs and it's you know,
(41:29):
it's pee ratio is near ten year low. So I
think it's you know, I think it's hard to I
guess value a lot of these companies because there's some
things that are out of their control, like you know,
government policy. But that said, you know, it's from just
a fundamental basis, and if you just looked at these
companies from like let's say you were doing let's say
(41:50):
a financial report on their fundamentals and their financial statements,
you know, they're very great companies in very good shape.
You know, you have even you know, Google's growing their
revenue at sixteen percent year over year. You know, Meta
is growing their revenue at eighteen percent year over year.
Microsoft growing their revenue at you know, fourteen percent year
(42:13):
over year. So you're seeing companies that are the largest
companies in the world continuing to have double digit growth,
which you've really never seen before in past history.
Speaker 1 (42:23):
Here's the thing about in video though, and I think
that's something that you have to keep an eye on
and something that is probably keeping the share price in
check a little.
Speaker 2 (42:32):
Bit is.
Speaker 1 (42:36):
Sometimes the bloom comes off the rose sometimes. Basically, people
if individuals are looking at in video through rose colored glasses,
sent a stock up to nearly one fifty is trading
in the low one hundreds right now.
Speaker 2 (42:50):
I think the question is, if.
Speaker 1 (42:52):
You took the mag seven you know, the Amazon, Google, Nvidia, Meta, Apple, Microsoft,
and Tesla, the two companies I believe with the least
predictable earnings would be Tesla and Nvidia.
Speaker 2 (43:04):
Do you think absolutely? So?
Speaker 3 (43:06):
That's what? Yeah, I think I think Tesla and Nvidia
have the most geopolitical risk too.
Speaker 2 (43:11):
There you go, that's a good port.
Speaker 3 (43:12):
I think that's something you always have to be worried
about as well.
Speaker 1 (43:15):
So is that gonna now Now if if investors have
just become a little more conservative and unless bullish and
want to there's seven trillion dollars in money market funds,
maybe they're not going to go back into companies that
you know, have have some some question marks as far
as there as their earnings are going forward. And you
(43:36):
mentioned the geopoliticals. I think they're huge for both for
both of those companies and also the ship cycle for
somebody my age at sixty three, my mom at sixty four,
it's been some commoditized you know, just said she's Carolyn,
just had her birthday.
Speaker 3 (43:52):
So and you know, I know most of Invidious chips
are produced by Taiwan Semi and that is in Area Zona.
But you know, I do think you'll continue and always
have that looming, you know, China, Taiwan geopolitical risk that
you know hangs over their head a little bit.
Speaker 2 (44:09):
Then you have then you have a let's we have
about four minutes to go. We have meta.
Speaker 1 (44:14):
You know, I think the article says the fewest swarts
among the max seven. I agree, I agree, you know,
I think you know, the question is their capital capital
expenditures at sixty five or seventy billion dollars. You know,
you got a company that goes on a twenty twenty
day win streak, which is nearly unheard of, and then
pulls back gives it all up. Yeah, uh and now
still trading above the flatline year to date. But if
(44:36):
you look at Facebook, if you look at the Instagram,
if you look at Reels, if you look at Threads,
even in generally.
Speaker 3 (44:42):
Very good, Yeah, I still like Meta and I think
they've done a really great job of listening to their investors.
Speaker 1 (44:51):
So we don't own enough of it. It's a top
twenty five stock, but I don't think we own enough
of that. I think UH on Pullbacks will take a
look at it.
Speaker 3 (44:58):
And I think Tessa is the last one that you know,
I probably wouldn't touch just because of the uncertainties that Loom.
Wednesday came out with reports at three hundred and thirty
six thousand vehicles were delivered in the first quarter. It
was a thirteen percent drop from.
Speaker 2 (45:12):
A year ago.
Speaker 3 (45:12):
So you know, everyone you know, Cramer's on TV calling Tesla.
You know it's a tech company, it's a tech company.
It's not a car company. But you know, I think Tesla,
I think their cars are ninety six percent of their revenue, right,
you know, I think you'll have to see those numbers
jump up a little bit until you know, I'm calling
Tesla just more than a car company.
Speaker 1 (45:31):
You know, and I'm calling it a too hard pile. Yeah, yeah,
I'm calling it something we I think about it.
Speaker 2 (45:36):
It's too hard. It's dog.
Speaker 1 (45:37):
I know, that's your uncle, Chris. We sold it. We
sold it below you know where it was trading for
most of this week. We went to robin Hood. So
we're happy with that that that trade thus far. We'll
see where it stands, you know, six or seven months
down the road. I think there's some overhead to Tesla
from from a technical basis.
Speaker 2 (45:59):
I think, you know, Ela Musk is a controversial figure.
Speaker 3 (46:04):
You know. They missed deliveries by ten percent. That's nothing
to write home about. That's that's a lot you know,
you could see, and they basically ticked off half of
their Well, you know, I would love to see the
number of people that were driving Tesla's that were you know,
I would say left wing.
Speaker 2 (46:19):
I think, well, you know, and are left of center.
Speaker 1 (46:22):
I mean, but I also think one of the biggest
things is that we've yet to really and this may
take a year, two or three as investors, we've yet
to see how this tariff things plays out. And let
me give an example how it could play out. There
are countries that didn't allow Chinese cars, you know, to
(46:43):
really be sold but by D B y D is
is boy by D actually and maybe that that number
is going to dwindle because countries aren't going to file
the US lead as closely anymore because there were not
as tight allies. Now I don't really know, I certainly
don't know that answer, but that could play out that way,
could play out that way that Elon Musk leaves the administration,
(47:05):
you know, does a Zuckerberg type of a reincarnation of himself.
Zuckerberg was a pariah two or three years ago and
now the stock got down to one hundred, and now
it's at five or six hundred. Tesla could do the
same thing where Elon mus could reinvent himself and be
back in favor with with the traditional buyer, which was,
like you said, there in his left of center. So
(47:25):
so we'll see, we'll see what goes on there. But
but I definitely put it into two hard pile for
a number of reasons, from from an earnings perspective, from
you said, the number of deliveries going down. Their cyber
truck really hasn't been that well received.
Speaker 3 (47:38):
Even Wednesday, the uh, you know, the stock in the
stock went from down seven percent to up six percent,
down seven percent on deliveries to up six percent on
the fact that he might leave, you know, this administration
helping this administration.
Speaker 1 (47:52):
We got about a minute to also get into the closing.
So what about Microsoft, That's the last one we need
to discuss.
Speaker 3 (47:57):
You know, I think Microsoft is you know, has been
basically a monopoly on outlook again, you know, it's trading
at has fourteen percent revenue year over year growth, does
have a dim end of point eighty seven percent. I
still like Microsoft here, you know, a core holing, Yeah,
they have their I guess footing the door with, They
(48:17):
have a zor, they have their cloud infrastructure. I think
a zoor is growing at twenty percent, you know, eighteen
to twenty three percent. I don't, I don't know exactly it.
You know, between advertising, personal computing as well. You know,
it's I think it's still fairly valued. It's pretty cheap
on a price to earnings ratio.
Speaker 1 (48:33):
I think go next three, four or five years. If
you buy a basket of it, Yeah, you'll be happy.
And you can do that through the ETF called MAGS. Yeah,
so try that Mags. But right now, thanks for listening.
If you want to get ahold of us two seven, nine,
ten forty four, check us out on the webit Fagan
asset dot com.
Speaker 2 (48:49):
Take care, Take care,
Good morning, and welcome to the Capital District's Money and
Investment Program. You're listening to the Fagan Financial Report. I'm
Dennis Fagan, sitting with my son Aaron, as we do
every Sunday right here in news Talk A ten and
one oh three one w g WYTS around nine thirty
on a Friday morning, and Aaron, couple things, Okay, One
is it feels like we had a year and a week.
Speaker 2 (00:18):
It was a year in a week.
Speaker 1 (00:20):
You know, we had movements and interest rates. We'll talk
about that in the first half hour. We had a
record setting movements in the stock market on Wednesday. We
had a retlacement on Thursday. We had the tariffs, the
imposition of tariffs being pushed back. We had reciprocal tariff
from China. We had China say hey, we're not going
(00:43):
to even increase our tariffs anymore because at this point
in time, the cost of goods in China are prohibitive
coming in from the US. We had an EU trade
official that's coming to the States today to meet with
a Trump administration officials. What is today the is ering
on Sunday? Uh, So, we've had a year in a week.
(01:04):
We've had ups and downs and ins and out and
then type of volatility we haven't seen in quite some time.
Speaker 2 (01:09):
So what do you suggest people do.
Speaker 3 (01:13):
Remain correctly allocated? Don't panic? Take a deep, take a
deep that's what you're saying. Take a deep breath, and
I think that's what you have to do, including us, Yeah,
including us. You know, if you if you're you have
to figure out what kind of allocation you want stocks
to bonds, and you know, let's say it's sixty forty
or you know, fifty to sixty in stocks and the
rest in bonds and cash. You have to decide, Okay,
(01:35):
you know, I'm gonna stay within these parameters, knowing that
you know this, this too shall pass. Uh. You know,
I know it's obviously scary with how volatile the market
has been, but you know, we talked about it a
few weeks ago. You know, if you missed the ten
best days in the market over the past twenty years,
(01:56):
you know, from twenty two to twenty twenty two, you
know your your performance would be cut in half. So
and seven of those best ten days happened during a
bear market, which we saw happen on what was it
Tuesday or Wednesday? So you know, although it's tough, I
think you have to, you know, just remain correctly allocated,
(02:16):
raise some cash if you're nervous. Don't ever go all
cash to you. Don't ever, you know, liquidate your portfolio
because that just doesn't work out over time.
Speaker 1 (02:25):
And you know, and these seems but look, this is
a period couple things. Okay, when this is a period
of survive. You survive to live to fight another day.
You know, you survive financially to live to fight another day.
So you know, you should never you should never be
on margin. But certainly at this point in time, you
survive to live another day. Emotionally, if you need to
(02:47):
make changes to your account to be able to sleep,
make them incrementally. You survive to live another day by
you know, doing some tax lust harvesting. Now, going from
funday if you have an unrealized loss, and it's very
similar to fund B and there's lots of different software
packages that you can use, and you can just google, Hey,
(03:09):
what's what's a similar fund to the Vanguard Wellington funder?
What's a similar fund to the whatever fund?
Speaker 2 (03:14):
The x y Z fund.
Speaker 1 (03:15):
You can see the correlation between the two funds, and
you can you can you can claim a tax loss
if you're in a non qualified account. Every every every
every every time is different. What's different this time? It's
different this time. Every pullback, every bear, every bear market,
every bull market has a catalyst that you can identify afterwards, Hey,
that was the catalyst. You also, every time it does
(03:38):
feel different. And yet the more things change, the more
they stay the same. It's not to say that. I
do think there's underlying issues that that do have a
longer term impact on the market, and you know, probably
not going to get into them today, just given the
fact that you know their their you know, secondary back
burner items to the issue at hand. But you know,
(04:02):
I think right now it's trying to survive this market.
I also think that we lived in such a we
live in such a politically charged environment that I think
it's sad. I think it's sad that you know, uh,
you know, and this is a silly analogy, but you know,
I've seen great, great receivers drop the ball from time
(04:22):
to time. They take the eye off the ball, the
ball goes.
Speaker 2 (04:25):
Out of bounds.
Speaker 1 (04:25):
If you're in the NBA, the Knicks kind of contributing
to their loss. The other night one of their one
of their players took took his eye off the ball
and then went out.
Speaker 2 (04:32):
This was an overtime.
Speaker 1 (04:34):
Or you see, you know, a great fielder you know,
take his his his eye off the ball or her
eye off the ball. For talking softball, you see, uh,
you know, receivers in the NFL. And you know, for us,
lots of things come back to sports, you know what
I mean. And that's just what happens, you know what
I mean. How many accidents are caused by you know,
(04:55):
you look down to check your text and and the
car that's rolling forward at the red light stops, you
bump in. Then you see that stuff all the time.
So I think it's sad that you know, we can't
we sit here and and and we did have We
do have a problem with the way that the tariffs
were applied. You know, two or three weeks ago, the
across the board nature of the mathematics of it. I
talked about it last week. You know, we got some
(05:16):
real you know, criticism for it. We've got some applaudits
for it. But what it did come down to is
both sides seem to have political overtones to their statements
rather than you know, just objective overtone. So so that's
where we sit. And I think, you know, during earlier
in the week, you know, President Trump saw interest rates
move up, and I think he felt concerned about it.
(05:37):
We'll talk a little bit about that. But what's your
takere What do you want to add to anything what
I just said or not? Do you want to just
get into the economic data.
Speaker 3 (05:43):
Let's just get into the economic data, all right? Why
don't you We saw weak economic data, uh, which could
be seen as good or bad, you know, depending on
what side you're thinking of. Producer price in next felve
point four percent during March, this after edging up a
bid point one percent during February. So over the past,
your PPIs is in two point seven cent two point
seven percent, down from three point two percent. Energy down
(06:06):
four percent last month. I think on some fears on
a slowing economy. Core PPI rows point three percent. CPI
also fell point one percent after rising point two percent
during February. CPI has fallen from a year over year
high of nine point one percent during June of twenty
twenty two. Energy prices fell two point four percent, food
(06:27):
and beverages rose a little bit shelter costs rose a
little bit, and initial tames for unemployment it was four
thousand to two hundred and twenty three thousand from two
nineteen the prior week, which was unrevised. So, you know,
you're seeing a lot of you know, I don't know
if it's apprehension in the market, but you know, yeah,
So what happens next after Friday's PPI came out? You know,
(06:47):
what does the Fed do?
Speaker 2 (06:50):
I don't think they do anything.
Speaker 3 (06:51):
I don't think they should do anything. I think there's
a lot going on right now that could have interest
rates continue to rise. Even what we saw on what
Wednesday before Trump, you know, announced that ninety day pull off.
You saw the ten year rise from like four to
four and a half percent, which is really an astronomical
rise in the ten year. You saw mortgage rates over
(07:11):
seven percent. So I think the last thing we want
to do is see you know, mortgages into the thirty
year mortgage in the seven eight percent. I don't think
anyone wants to see that. So I think you have
to kind of stay firm here for the time being.
Speaker 2 (07:24):
Like driving in fog.
Speaker 1 (07:25):
Yeah, you know, I think so many things could break
one way or the other that I think you maintain
some cash in your account, you make sure you're diversified,
make sure, as you'd mentioned at the top of the
show air, that you're within your objectives. And then let's
let's like, like you we said, take a deep breath,
let some time pass, let this play out.
Speaker 3 (07:48):
Because I think, yeah, I think this is such a
you know, I guess an experiment that Trump has committed
himself to that, you know, I think the FED needs
to have some I guess dry powder in the form
of cutting rates at their disposal, and not to cut
rates preemptively. So I think that's really the smartest thing
they could really do right now is sit hold tight
and wait for more and more economic data to come out.
(08:10):
I know Trump has been pushing Jerome Powell, you know,
to be fired, but also cut rates, and I just
don't think it's the right thing to do right now.
Speaker 2 (08:18):
I think, and I think the because.
Speaker 1 (08:22):
Most probably the vast majority of our listeners, you know,
think that, Okay, if the economy weakens, we should cut rates.
And that's true to a certain extent, but that's part
of the dual mandate of the FED is stable rates
and also stable employment. You know, stable I'm sorry GDP,
growth in state and stable uh employment. And I think
(08:44):
the thing about it is is that when you have
this type of trade quote unquote negotiations, uh, then you
have foreign entities that hold you know, a chunk of
our debt come into play and push potentially push rates up.
You know, during the course of this whole uh environment.
(09:10):
As Aaron just mentioned, we had interest rates on the
ten year move a week ago there were four oh one.
As we sit here, you know, on Thursday morning, on
nine thirty five, they're four forty. So think about it,
you know, if TARA, if if it's if it's a
one one shot deal with tariffs, interest interest costs go
up and then level off. And if tariffs are attacks
(09:31):
on America Americans, which they are, and you can argue
that they're not, but you're wrong, Uh, then you have
a slowing of economic growth. And if you have a
slong of economic growth, that should imply interest rates come down.
As Aaron mentioned earlier to mortgage rates went up. And
why did you see interest rates go up? You know,
maybe it was h And I think part of it
is before the tariffs came in. I think a lot
(09:54):
of investors mostly, you know, not retail investors and not
investors like US as managers mostly let's say, hedge funds,
bond managers at levels far above US probably expected interest
rates to come down, so they maybe they were leveraged
to that with that kind of bent that interest rates
(10:16):
will come down. And then when this happened and interest
rates started to go up, they had to cover those shorts.
Speaker 3 (10:20):
You know what I mean, what happened kind of what
happened with two thousand and eight really you know, in
terms of leverage or really with what happened with you know,
Silicon Valley Bank a couple of years ago, you know,
son come more, the more in quotations. Historically safe an
asset is the more hedge funds and the likes that
deal in those will go more on leverage because it's
(10:42):
it is a safer asset. So, you know, I think
there's a lot to take in. It's not just and
and I think that's what we've been talking about, you know,
for basically the last four months, is you know, I
think what we saw on Wednesday is one of those
ramifications of the unknown that Trump's policies are bringing. They're
bringing a lot of unknown variables in and I don't
(11:04):
think that they accounted for the fact that maybe people
won't buy as many bonds during this bond auction, and
they in the possibility of you know whatever, foreign entities,
you know, pushing the prices of our bonds up. So,
you know, I think we're continuing to work through all
these policies, and it's almost like, you know, we see
what happens with the policy, then then we see actually
(11:24):
what takes place. And I think what we saw Wednesday
was something that a lot of people didn't see happening.
And I think that really spooked the administration into, you know,
putting a pause, that ninety day pause in place.
Speaker 2 (11:37):
Right on Tuesday.
Speaker 1 (11:37):
And and and so you have you know, foreign entities
hold our bonds and notes and treasuries, and we hold
our you know, Americans hold them.
Speaker 2 (11:48):
Treasury owns a lot of them.
Speaker 3 (11:49):
They can buy some back.
Speaker 2 (11:51):
Yeah, there's certainly things that they can do.
Speaker 1 (11:55):
But the fact that interest rates were moving up when
this Usually when this stock market struggles, interest rates go
down because investors are looking for a safe haven in
times of In times of turmoil, both domestic and foreign
investors look for a safe haven flocked to the same treasury,
they flocked to safety, right, So when that didn't happen,
(12:16):
it was a yellow flag that why isn't why isn't
it happening? Yeah, you know, maybe it was just a
shot across the bow by some of the foreign entities saying, look,
you know, we've got to negotiate on even terms with
nobody having an advantage because because you know, we can
send interest rates up, which is not in anybody's interest
at this point in time. You know, maybe it was
just you know, maybe the luster coming off the dollar
(12:39):
a little bit. The dollar has sunk also since this, uh,
since this has started, which is not a good indication
because in addition to running to treasuries, you know, investors
rushed to the dollar because the dollar is a safe haven,
and that didn't happen. So on Tuesday night, even even
in President Trump said that he absorbed the bad news
about a plumbing bottom mark I saw last night, and
(12:59):
as he said, said this Wednesday, I saw last night
where people were getting a little queasy, Trump said about
the bond market. So he comes out Wednesday morning and
talks about you know, buying buying US stocks now is
being a good time. In three or four hours later,
you get the news of the postponement really of the
imposition of the tariffs for ninety days except in China.
Speaker 2 (13:19):
And that's a whole other story.
Speaker 1 (13:20):
And that's really where the crux of the matter should be,
is dealing with China on trade and then all these others.
And look, I'm a trade expert, all right, so you know,
but we are experts on the market exp and buy
and large, probably more than a lot of our listeners,
experts on interest rates and this and that, and that's
why we have a management company for thirty five years.
(13:42):
But I do think there were some circumstances that were
being pushed on the President Trump and the administration and
this that said, okay, let's let's take a breath, let's
let some time pass. President Trump said, seventy some countries
had called him, and they're coming to Washington or dealing
(14:03):
with it, you know, via zoom or phone or whatever
they do, and give it some time. So I think
that's what we see now. We see the market kind
of digesting all this information. It is probably getting a
little bit fatigued, I would think at this point in time.
Speaker 2 (14:16):
And then we go from there but just moving back
just a minute.
Speaker 3 (14:18):
Too, that we're about to get into earning season two.
So you know, I don't think you know, we saw
Wells Fargo and JP Morgan came out with earnings on Friday.
Jam Morgan had good earnings. But you know, as we
were talking about before the show, they're they're putting a
little bit more away for bad debt. I think three
billion dollars this year. So I think everyone in I
think everyone in the markets are just being a little
(14:39):
bit cautious now, and I think it's a time to
be cautious as we see these things play out.
Speaker 1 (14:46):
Yeah, so yeah, JP Morgan raised their lone loss provisions
by a billion dollars or so, and that's what they
set aside for a slowing economy. So and then Jamie
Diamond said that he does expect more volatility ahead and
earning zestaments to fall as companies pull guidance.
Speaker 2 (15:04):
Yeah.
Speaker 3 (15:05):
You saw Walmart pull guidance this year this quarter. One
other company I can't think of what it was pull guidance.
So you know, I think everyone's in the same boat
a little bit. Is you know, when there's unknown variables
out there in the near future, you become a little
bit more cautious.
Speaker 1 (15:20):
Right, So the economic data, the earnings data, really isn't
meaning that much at this point. But I just want
to go back to the So the PPI fell, that
was good news. The CPI fell, that was good news
now because it's bringing year over your inflation down. Retail
inflation is measured by the CPI a two point four percent.
It's fallen from a high of nine point one percent.
(15:41):
Inflation at the wholesale level also down four tens of
a percent. If you take out energy, you know it
was it was actually up three tents of a percent.
Energy's falling a lot of energy, but I think it's
about a third of of the PPI.
Speaker 2 (15:54):
So that's why it fell.
Speaker 1 (15:56):
So so that is somewhat good news, I think on
you know, initially, why is it somewhat good news?
Speaker 2 (16:02):
Because I think there's just so.
Speaker 1 (16:03):
Much uh, it's foggy out, the water's murky, whatever analogy
that I use, the King of analogies. Initial claims run
to blowing benefits pretty good though only up Fourenty to
two twenty three. So let's see how this plays out.
You know, I'm not I think the biggest the biggest
issue for me right now, I think, you know, regarding
(16:23):
this stock market is probably is probably the bond market.
Speaker 3 (16:27):
I was gonna say, I think that's what we've been
thinking about the most this week, is you know, how
far do you go out on the bond market? Uh,
you know, do you rush to safety and like the
you know, short term money market treasures? You know, what's
a good time horizon. I think you know, what we've
kind of you know, come to the conclusion is is
you know there's more than one one right answer. We've
been buying a lot of bonds that come do in
twenty twenty seven, twenty twenty eight, as well as we
(16:49):
still have a lot of money sitting in money market
accounts and UH and the BIL which is short term
treasury is one to three months treasury. So I think
a mix of you know, short to intermedia is the
way to go right now. But I it would continue
to keep my eye on, like, you know, you know,
the five to seven to ten year treasures if that
really starts to you know, go up to the you know,
(17:10):
past five percent.
Speaker 1 (17:11):
Yeah, right now, the ten years at four forty or so,
and and I had gotten close to five maybe a
year ago or so. So I think you're ready, and
I think you're ready. We work together closely on designing,
you know, client portfolios and coming up with policy and
you know, short intermediate keeping some dry powder. From a
(17:33):
stock market perspective, but also from an interest rate interest
rate perspective, you think about it. If the tenure gets
to four fifty and inflation's three percent, you know, that
laps off. Let's say about fifteen basis points of spending
power per year, So it's take four and a half.
(17:54):
Multiply it by point three or three, and you get
up with you know, it's it's not exactly fifteen, it's
a thirteen and a half. So let's say thirteen and
a half basis points. That means you have four years
on a four percent distribution rate before you have inflation
adjusted hit to your income. You know, So that that's
that's a big plus in there. Now, if you go
(18:16):
out ten years in industrates go to six or seven,
then then you're fried, all right, So you don't want
to do that, but you know, laddering treasuries, laddering fixed income,
stay away from junk, you know, up to five or
six years, I think is the right way to go here.
Right now, we're sitting on over ten percent of the
average client portfolio in either money markets or one to
(18:38):
three month bills. The other thing too, aer you know
anything Like I sometimes I think of things to say,
things to say, but I want to make sure that
you say what you want to say. What about the rally?
What about what about the rally this past week? We
sent out a chart talk this past week. But you
know a lot of these rallies come within bear markets.
Speaker 3 (18:57):
Yeah, And I think if you remember that, you know,
as I was saying earlier, you know, you don't want
to miss those ten best days in the market. And
seven of those ten over the past twenty years happened
during a bear market. So you know, I think, I
think you want to do things, and a lot of
investing is just so behavioral and emotional that you know,
what you want to do is if you're feeling like panicked,
is you know, maybe raise a little bit of cash
(19:18):
to make yourself feel better, and as you said, you know,
fight another day. I think, because that's what you want
to get through. Sometimes with your portfolio, you just want
to get through times bear markets obviously, but you know
you don't want to make the wrong move at the
wrong time, and I think that's the hardest part about investing.
And you know, if you even look at the news,
the media cycles, especially CNBC, when the market's down, they
(19:38):
have people that are negative about the market. When the
market's up, they have people that are positive about the market. So,
you know, sometimes I think it's the best thing to
do is turn off the news and you know, revisit
your portfolio. What we're doing for people is looking at
names on our watch list that we really like, sectors
that we really like, and find buying points that we
like these things at these these equities at or mutual
(19:59):
fund of you know, equities at ets at at specific prices.
So if you know, Apple gets to this price, if
Google this gets to this price, I'm going to step
in no matter what the market environment is, because I
think that's a good value for this company. I think
that's what you have to do. You know, again in
times like this is keep your mind busy.
Speaker 2 (20:16):
On you know, keep your mind busy.
Speaker 3 (20:18):
I like your mind busy on things that will benefit
you in five years from now. Knowing that you're not
going to catch the bottom of Google or Apple or
Amazon or any stock that you want to buy, but
you have to realize that, Okay, I like it at
this price, even if it goes down another five, ten,
fifteen percent.
Speaker 1 (20:34):
Yeah, you have to be able to look past this.
If you can't look past this, you're doing so at
your own, to your own detriment. Well, it's different this time.
Every time it's different. Okay, some just feels more like
it's different this time. All right, we'll get past this.
Speaker 2 (20:51):
You know.
Speaker 1 (20:51):
Uh, maybe the maybe the economy, you know, gets itself
into a bit of a recession. Unemployment still at four
point one, four point two percent. Historically, that's not where
recessions come from. Well, well this was a shock to
the economy. Yes, it's a shock to the economy. Well,
you know, people would say, well, and this is where
(21:11):
it gets politically involved with people. Well, well, that's what
people voted for, that's what people wanted. If that's what
people voted for, and that's what people wanted, okay, which
is true, Okay, but this wasn't what they wanted. Well,
who says the market said? The market said when it
was down fifteen percent in three days, the market may
be wrong. Indeed, indeed, Okay, So and this was this
(21:33):
is a very short period of time. But that said,
all all that said, I going down this rabbit hole.
Speaker 2 (21:39):
It's just or just like meandering.
Speaker 1 (21:41):
But I guess to circle back is for all those reasons.
Now I think it's foggy. I think it's murky. You
take a step back, you watch some baseball. Enables you
to get some perspective.
Speaker 3 (21:54):
Correct allocation in your portfolio, and you move on.
Speaker 1 (21:57):
Yeah, and you move on and and and to folks
right now on all right, you know the CPI, the
PPI initial claims for unemployment benefits. The next ninety days,
I think you're gonna see news that's gonna make you,
that's gonna scare you make it and then and also
make you feel optimistic and you go from there.
Speaker 2 (22:17):
And then once we.
Speaker 1 (22:18):
Get by this, you deal with this, We deal with
the issues that you have, and then move forward. Look
if there was across the board ten percent tariffs, you know,
and I think that's what the market expected. Yeah, like
the average American who voted for Trump or didn't vote
for Trump, who said, hey, this is what he President
Trump campaigned on. I think President Trump people would say, well,
(22:38):
you know, across the board, small tariffs. You know, I
think that's what that's what the market expected, all right,
and then they didn't get that.
Speaker 2 (22:46):
So now we're dealing with that.
Speaker 1 (22:47):
I think President Trump, you know, on Tuesday evenings saw
the bond market and said, whoa, okay, this is because
the bond market's bigger than the stock market.
Speaker 2 (22:57):
Think about it.
Speaker 1 (22:58):
We have thirty seven trillion dollars in debt that's held somewhere.
Speaker 2 (23:01):
So those are some issues. Or what else you got?
Speaker 1 (23:03):
You got about a minute to go where you got
something to say and then to wrap it up or
you know, are you know if you're looking for something,
I certainly can talk.
Speaker 3 (23:09):
Yeah, I mean, you know, nothing that can only that
will only take a minute.
Speaker 1 (23:12):
Though, big rally on Wednesday, Lots of times they come
within you know, if you look at the nails that
can posit this.
Speaker 3 (23:18):
So you know what, market down four to six percent
depending on the ind of serday Thursday. So I think, yeah,
this is just the time that you don't take too
much of one day. I think we're going to continue
to see volatility. We're getting into earning season. JP Morgan
Wells Fargo kicked it off on Friday, so again, you know,
I think I'm going to be interested to see how
businesses are performing, what they're for and what they're for. Guidances,
(23:40):
if any.
Speaker 1 (23:41):
Do not take anything any any draw any conclusions from
one day movements in the market. Some big movements come
within bull markets, some come within bears. It doesn't mean anything,
so anyways, that'll just about do it. It's ten thirty
on the station you depend upon for news, weather and information,
News Talk A ten and one O three one w
g Y. Good morning, and welcome back to this and
half out of the Capital District's Money and Investment program.
(24:02):
You're listening to the Fagan Financial Report. I'm Dennis Fagan,
sitting here with my son Aaron, as we do every
Sunday right here on News Talk eight ten and one
oh three to one WGY. Good article that appeared in
Barons recently. We'll talk about that the mag seven stocks
have gotten crushed by these four. Now we're going to
talk about the four and talk about the other three
that the that the article references byd the China kind
(24:30):
of competitor to Tesla at a record high. Tesla reported
three and thirty six thousand of electrical vehicles electric vehicles
delivered in the first quarters that dropped from a year ago.
You know, what does that portend for them? They're well off,
they're high low expectations. Consumers have low expectations, the lowest
since twenty and thirteen, and high expectations for inflation. Inflation's
(24:54):
expected to run higher. Talk a little bit about whether
or not that inflation is transitory. In April, you know,
generally speaking, a good month, We'll talk a little bit
about that.
Speaker 2 (25:04):
And I guess you gotta you gotta start off with.
Speaker 1 (25:08):
The tariffs, you know, President Trump, And now now it's
tariff's on Wednesday. We've seen the market, you know, move
back and forth since then. Uh, And I think that's
what we're going to continue to see. Aeron, I think
we're going to continue to see a negotiating stance from
President Trump and also the response by our trading partners,
(25:33):
be them small or big. I think some of it
has to do with the foreign responses have to do
with you know, their response, I think has to do
with what percentage of their economy is represented by trade
with the United States and how important let's say a
specific industry might be to that country.
Speaker 2 (25:55):
You know, how much they play ball with the Trump administration.
Speaker 1 (25:57):
Also, I think you'll see trading blocks form outside the
United States. You just already talk about, you know, China
and India.
Speaker 3 (26:04):
China, Japan and South Korea. You know, I think you
can also look at if you look at the s
c HF, which which is Schwab International what is it
just what's it called Shop International Equity ETF. You know
you're seeing a you know, just I know it's more
than just you know, just a pe ratio. But their
PE ratio is about sixteen fifteen point nine, you know,
(26:26):
and if you look at just you know, the S
and P five hundred, you know, their their PE ratio
is far greater at you know, a weighted P of
twenty six. Their price of sales is three, international is
one and a half. And you know, I'm not saying
that you know, this is even outside of the tariff talk.
You know, you see you could see some restructuring of
(26:47):
how you know, the largest companies in the EU, you know,
outside of emerging market. So you'll have you know, you know,
China is kind of continuing to you know, innovate, but
now you're seeing Germany, I'm loosing fiscal policy. They amended
their Constitution to exempt defense and security on fiscal spending.
You're seeing them set up a five hundred billion dollar
(27:08):
infrastructure fund for urgently needed investments in areas including transportation, energy,
and housing. So you know, you could see you know,
coupled you know, a coupling of let's say, you know,
the undervaluation and the underperformance of international over the past
two decades, you know, coupled with maybe some more innovation,
some more capitalism, them getting along better, even with you know,
(27:33):
emerging markets, to see some outperformance of the you know,
international markets. I think people are speculating a little bit.
So far, you're to date, the you know international is
up seven point three five percent as opposed to the
S and P, which is down a little bit. So
you know, I think you could see you know, some
shift away from you know, areas of uncertainty that are
(27:54):
the United States markets and more towards maybe some things
that have underperformed over the past couple of decades and
international and emerging markets.
Speaker 1 (28:05):
Yeah, you know, And I also think that if you
buy potential and sell a lack thereof you know, and look,
I think we're we're you know, if you were to
look out the next six or seven years. Barring something
totally unforeseen, I think the United the US market will
do well, you know, I think it will average, you know,
with with dividends mid sevens, mid eights and around there,
(28:31):
and a lot of that is just working off excesses
that we saw over the past decade or so, with
the market average twelve or thirteen percent. So if you
take twelve or thirteen percent over the past decade, it
stands to reason that you know, total return over this
next decade decade will be like I said, about about
eight percent. You can go back further and recognize that
the first decade of this century there stop market with nowhere.
Speaker 2 (28:54):
But I think if you just take a look at.
Speaker 1 (28:57):
Evaluations of where they are now, you know, I think
you need to create a diverse and also, you know,
how how what's going to be the driver of the
US economy going forward? I think you need to ask yourself, Okay,
well how should I position my portfolio?
Speaker 2 (29:13):
And and what you just have stated.
Speaker 1 (29:17):
Is that international UH should be a bigger, bigger and
bigger percentage of your portfolio. What I will say, though,
is that it's somewhat disconcerting that that's all I hear all,
I hear is.
Speaker 3 (29:29):
And that's what I kind of use to speculate because
you know, I think we're seeing speculation and international doing better.
And you know, international is up seven point three five percent.
Speaker 2 (29:39):
Now you're to date.
Speaker 3 (29:41):
You know, I don't I don't have any you know,
records in front of me, but I don't know if
the international has been up seven points. I want to
know that how many times in the last ten years
as international has been up seven percent, you know, throughout
the entire year.
Speaker 2 (29:56):
For the entire year, it's been up.
Speaker 1 (29:57):
But I think if you take a look at the
just the quarter, and I did read that the outperformance
of the international versus the US is for this quarter
is a is a multi year divergence between performance. Yeah,
you know, usually, uh, the international kind of works in
somewhat lot mixed up with the US as far as directionally.
(30:19):
I think you've seen that that uh, that diverged this
this past quarter.
Speaker 3 (30:24):
Yeah, and you've seen so you've seen international up five
times more than seven percent in the last ten years.
So yeah, you know, I think I think you're you're
seeing a little bit of speculation and also, uh, you know,
undervaluation of of international as well.
Speaker 1 (30:41):
You know, but so I think also you have to
be patient in there's there's Aaron and I hike a lot,
and there's an old saying that you know, if you're
if you if you're lost and off the path, the
first thing to do is, you know, stay put and
be patient. You get your bearings and be patient. I
think that's kind of where we are right now. This
is not this is the depending upon who you're listening to.
(31:03):
And and it is funny you have CNBC and you
have Fox. They both have business business news, and they
have their own editorial slant on where they think the
markets are going. And I just think now you don't
want to listen too much to the to the news. Uh,
as far as you know, for longer term investment advice,
I think what you do is you say, okay, I'm
(31:24):
going to be patient in through here. I think that
the market is not going to take off. I think
that we're going to have more and more tariff news.
Speaker 3 (31:35):
Uh.
Speaker 1 (31:36):
You know, how like we were talking about a little
bit earlier, how how other countries respond, you know, do
they you know, form their own little trading pact?
Speaker 2 (31:44):
What's we We still.
Speaker 1 (31:45):
Don't know really the ultimate goal of these tariffs are
certainly it is to you know, to return UH to
make to level the playing field, according to President Trump,
and return manufacturing to the United States, both for you know,
UH to build to continue to build the middle class,
but also for security purposes. And you know, how and
(32:06):
how far is President Trump willing to go? All those
questions remain to be answered. So when you have those
that that that that uh, that those uncertainties in the market,
I think you just say, Okay, maybe when I feel
like I missed, missed the uh miss an opportunity from
time to time, but more will come our way. I
think this is not one where the bus comes once
every three or four days. The bus is gonna come
(32:27):
once every hour or two. And yeah, if you missed
one bus, you're gonna be there to catch another. Kind
of Disney World.
Speaker 3 (32:33):
I was just gonna say, kind of like Disney Room.
It's always a bus coming, a bus coming, you know.
And I think that's kind of what we're I guess
grappling with right now. And I think we have a
lot of clients who are inner, are that in or
near retirement, and I think it's just prudent to take
a little bit of risk off the table, uh from uh,
you know, from the things that have done so well.
(32:53):
You know that said, you know, we're gonna go into
that article of how the you know, basically the MAGS
seven stocks it was in bare barons have gotten crushed
by these four now. So you know, we're continuous, continuously
wrestling with the you know, okay, we should be diversifying.
It's just a prudent thing to diversify. But then when
you actually look at these companies that have done so
(33:13):
well over the past ten, fifteen, twenty years, it's hard
to get out of them. You know if you look
at you know, in the four that these talk about
are Google, Amazon, Meta, and Nvidia. You know, those four,
you know, are obviously great companies, and it goes on
(33:34):
to talk about how you know, great the companies are,
for example, Amazon Web Services you know, everyone are just
Amazon in general, everythinks everyone just thinks of their retail
but has over one hundred billion dollars of annual revenue
and just alone AWS is you know, worth roughly one
trillion dollars. You know, Amazon's margins are expanding in North
(33:56):
in North America, you know, and they could pass one
Martin sales this year.
Speaker 2 (34:02):
I think they did last court.
Speaker 3 (34:03):
Yeah, so it has I think that you know, how
do you sell a company like that? So I think
you have to go back to Okay, what is prudent
investment management and asset allocation? And it's hey, you know,
when something becomes too big of a portion of your
portfolio where it's directing all the gains or losses, you know,
it's just a prudent thing to pair that back.
Speaker 2 (34:24):
A little bit.
Speaker 1 (34:24):
If you'l at the max seven in general, you know,
and what's for the audience perspective?
Speaker 2 (34:31):
What are they there?
Speaker 1 (34:32):
Amazon, Alphabet, Meta, Microsoft and Video? Yeah, an Apple in Tesla.
Speaker 3 (34:42):
Amazon has one hundred billion dollars in cash, fifty billion
in debt. You know, it's from a pdpe ratio. It's
cheaper than Costco and Walmart.
Speaker 2 (34:51):
I think what you got to do is be careful.
Is you have to be careful though, is to take
whatever you have in those let's say those that have
led the.
Speaker 1 (34:58):
Market, which is roughly forty percent of the S and
P five hundred, and be careful that you don't have
you'd have those you own those stocks, and then you
have like an SHB or an spy or something like
that where you're kind of now you don't have forty percent.
You look at your mutual fund holdings and make sure
that you're not duplicating coverage by having some of those
(35:19):
mag seven stocks along with you know, a large cap
index fund or something like that.
Speaker 3 (35:25):
Yeah, so let's say you have, you know, fifty percent
of your money in the SMP five hundred, and then
you own some individual stocks too, and those individual stocks
are Amazon, Apple, Google. You know, you're you're probably way
over allocated in some of those some of those holdings.
Speaker 1 (35:39):
But they talk about, you know, there's an article in
Barns a couple of weeks ago that said, what's what
mutual fund created the most wealth? That created a trillion
dollars for investors, and it was the Vanguard Total Stock
Market Index Fund. And one of the biggest takeaways the
individual says who who wrote the article, is that simpler
(36:02):
has has is. Simpler has has been better than creating
a lot of different, uh, you know, convoluting aspects to
your fund that you know you're trying to you know, take.
Speaker 2 (36:15):
A shortcut or this or that.
Speaker 1 (36:16):
And so I think as investors, you know, i'd be
more apptive in bulk to buy the Mac seven then
then sell them in bulk. At this point in time,
I mean, they're pretty rationally valued, and.
Speaker 3 (36:29):
They have a lot of cash. You know, they probably
have I don't know, I would say half a trillion
dollars in cash between all of them.
Speaker 2 (36:36):
Oh, yes, at least I'm trying.
Speaker 3 (36:39):
To be conservative. So you know, I think that and
I do think that. You know, they they say the
leaders of today aren't going to be leaders of tomorrow,
and you know, that might be true, but I think
they have to prove that they're not going to be
the leaders of tomorrow, sound that they have their their
foot in the door and every single emerging technology that
we're seeing, driverless cars, artificial intelligence, robotics, you know, they
(36:59):
do have some skin in the game, I guess in
all of those fields. So you know, as as I
was saying, you know, you see and you know, in
this article goes on to state they had the last
time they were this cheap was twenty seventeen, So you know,
I think you're seeing I don't know, I think you're
seeing a lot of confusion from investors of you know,
(37:21):
whether to hold on to these or sell them, And
I think we always tell people like you don't have
to do all or one thing or the other. You know,
you trim some things that have done so well, And
I think that that'll help you sleep at night, because
a lot of investing is behavioral and you try to
do the thing you know to get you to the
next day, next month, next year, without you know, jeopardizing
your retirement.
Speaker 1 (37:41):
But I so I would think on balance, the reason
that Amazon as pulled back is because of concern over
the consumer. This consumer discretionary in general has been weak,
so I think I think that's why it's pulled back,
So I think, and just general profit taking in that industry.
So I would think that at this point in time,
(38:02):
that would be you know, a buy now the next
one that Hani talks about it. And Amazon is one
of our largest holdings, as is Alphabet. You know, talk
about online advertising, you talk about their search engine, you.
Speaker 2 (38:15):
Talk about cloud, you talk about you.
Speaker 1 (38:17):
Know, computer software with Android, Chrome, you talk about YouTube.
Speaker 3 (38:21):
Google has can continued to get almost beaten up by
analysts in the stock market over the past year or
two when every time they have earnings they kind of
you know, I guess shut their critic critics up a
little bit because you know, they have so many different
you know, avenues of revenue. Now, as you were just
saying with you know, you know Google Cloud, YouTube, YouTube,
(38:42):
Android search and ways even Wemo.
Speaker 2 (38:45):
Yeah, you know, so drivers cars.
Speaker 3 (38:47):
You know, they say that the Waymos technology is you know,
superior to Tesla's, so you know it again, you know,
it's another one of those companies that you know, it
has such a I think over eighty something per high
eighty percent market share and search. So until we see
another company, and I know we see chat GPT, and
(39:08):
I think that's what's kind of keeping a lid on
Google a little bit, is the idea of chat GPT.
But until you know chat gpt really you start to
see some revenue from from that company, you know, it's
it's hard to believe that Google isn't going to catch
up quickly. And although chat gbt is, you know great,
it really is a glorified search engine, and Google's working
(39:30):
on the same things you've already seen Google make headway
in their AI. I don't know what it's called right now,
I can't think of it off the top of my head.
But even when you search things on Google. You do
get some sort of like chat GPT esque answer as
the top answer now without even clicking on anything. So
I think that you know, Google will you know, continue
to do well. And it is relatively cheap on you know,
just a price to earnings ratio, and I want to
(39:53):
say like twenty even maybe a little bit less.
Speaker 1 (39:56):
Less if you're about to cash even yes, you know,
so what's a trading where they say.
Speaker 3 (40:02):
And one fifty seven?
Speaker 2 (40:06):
Right? Yeah?
Speaker 1 (40:07):
So, and I think to write write alphabet off would
be a big mistake. They're not sitting still. And I
think one of the one of the hidden secrets to uh,
to Google certainly is not it's not hidden the evaluation.
Speaker 2 (40:21):
It's way mow. And it's also YouTube.
Speaker 1 (40:24):
Yeah, you know, they have six business lines with over
a billion subscribers or a billion monthly average users. So
I think you you certainly want to give them credit
for that.
Speaker 2 (40:34):
The third stock within that would be what meta?
Speaker 3 (40:37):
Is it meta? And video either or yeah?
Speaker 2 (40:40):
And you know I'm looking at right video talk about a.
Speaker 3 (40:43):
Video right now? And you know, I think in Video
is one of those companies that you know, it's in
with uh, you know, GPUs in their software. You know,
it's almost impossible to put a price target on it.
It's way outside of my comfort zone on having to value.
But I do think it's about four percent of the
S and P five hundred right now, so you should
have about four percent.
Speaker 2 (41:03):
In it market weight something like that.
Speaker 3 (41:06):
Yeah, you know, I still think when you have a
company that has what's seventy plus percent year year of
year revenue growth coming off of revenue growth of like
one hundred and fifteen percent and you know, high nineties
one hundred percent, you know, it's it's hard to really
sell something like that. You know, it had a high
about one fifty, so it's down over twenty twenty five
percent from its all time highs and it's you know,
(41:29):
it's pee ratio is near ten year low. So I
think it's you know, I think it's hard to I
guess value a lot of these companies because there's some
things that are out of their control, like you know,
government policy. But that said, you know, it's from just
a fundamental basis, and if you just looked at these
companies from like let's say you were doing let's say
(41:50):
a financial report on their fundamentals and their financial statements,
you know, they're very great companies in very good shape.
You know, you have even you know, Google's growing their
revenue at sixteen percent year over year. You know, Meta
is growing their revenue at eighteen percent year over year.
Microsoft growing their revenue at you know, fourteen percent year
(42:13):
over year. So you're seeing companies that are the largest
companies in the world continuing to have double digit growth,
which you've really never seen before in past history.
Speaker 1 (42:23):
Here's the thing about in video though, and I think
that's something that you have to keep an eye on
and something that is probably keeping the share price in
check a little.
Speaker 2 (42:32):
Bit is.
Speaker 1 (42:36):
Sometimes the bloom comes off the rose sometimes. Basically, people
if individuals are looking at in video through rose colored glasses,
sent a stock up to nearly one fifty is trading
in the low one hundreds right now.
Speaker 2 (42:50):
I think the question is, if.
Speaker 1 (42:52):
You took the mag seven you know, the Amazon, Google, Nvidia, Meta, Apple, Microsoft,
and Tesla, the two companies I believe with the least
predictable earnings would be Tesla and Nvidia.
Speaker 2 (43:04):
Do you think absolutely? So?
Speaker 3 (43:06):
That's what? Yeah, I think I think Tesla and Nvidia
have the most geopolitical risk too.
Speaker 2 (43:11):
There you go, that's a good port.
Speaker 3 (43:12):
I think that's something you always have to be worried
about as well.
Speaker 1 (43:15):
So is that gonna now Now if if investors have
just become a little more conservative and unless bullish and
want to there's seven trillion dollars in money market funds,
maybe they're not going to go back into companies that
you know, have have some some question marks as far
as there as their earnings are going forward. And you
(43:36):
mentioned the geopoliticals. I think they're huge for both for
both of those companies and also the ship cycle for
somebody my age at sixty three, my mom at sixty four,
it's been some commoditized you know, just said she's Carolyn,
just had her birthday.
Speaker 3 (43:52):
So and you know, I know most of Invidious chips
are produced by Taiwan Semi and that is in Area Zona.
But you know, I do think you'll continue and always
have that looming, you know, China, Taiwan geopolitical risk that
you know hangs over their head a little bit.
Speaker 2 (44:09):
Then you have then you have a let's we have
about four minutes to go. We have meta.
Speaker 1 (44:14):
You know, I think the article says the fewest swarts
among the max seven. I agree, I agree, you know,
I think you know, the question is their capital capital
expenditures at sixty five or seventy billion dollars. You know,
you got a company that goes on a twenty twenty
day win streak, which is nearly unheard of, and then
pulls back gives it all up. Yeah, uh and now
still trading above the flatline year to date. But if
(44:36):
you look at Facebook, if you look at the Instagram,
if you look at Reels, if you look at Threads,
even in generally.
Speaker 3 (44:42):
Very good, Yeah, I still like Meta and I think
they've done a really great job of listening to their investors.
Speaker 1 (44:51):
So we don't own enough of it. It's a top
twenty five stock, but I don't think we own enough
of that. I think UH on Pullbacks will take a
look at it.
Speaker 3 (44:58):
And I think Tessa is the last one that you know,
I probably wouldn't touch just because of the uncertainties that Loom.
Wednesday came out with reports at three hundred and thirty
six thousand vehicles were delivered in the first quarter. It
was a thirteen percent drop from.
Speaker 2 (45:12):
A year ago.
Speaker 3 (45:12):
So you know, everyone you know, Cramer's on TV calling Tesla.
You know it's a tech company, it's a tech company.
It's not a car company. But you know, I think Tesla,
I think their cars are ninety six percent of their revenue, right,
you know, I think you'll have to see those numbers
jump up a little bit until you know, I'm calling
Tesla just more than a car company.
Speaker 1 (45:31):
You know, and I'm calling it a too hard pile. Yeah, yeah,
I'm calling it something we I think about it.
Speaker 2 (45:36):
It's too hard. It's dog.
Speaker 1 (45:37):
I know, that's your uncle, Chris. We sold it. We
sold it below you know where it was trading for
most of this week. We went to robin Hood. So
we're happy with that that that trade thus far. We'll
see where it stands, you know, six or seven months
down the road. I think there's some overhead to Tesla
from from a technical basis.
Speaker 2 (45:59):
I think, you know, Ela Musk is a controversial figure.
Speaker 3 (46:04):
You know. They missed deliveries by ten percent. That's nothing
to write home about. That's that's a lot you know,
you could see, and they basically ticked off half of
their Well, you know, I would love to see the
number of people that were driving Tesla's that were you know,
I would say left wing.
Speaker 2 (46:19):
I think, well, you know, and are left of center.
Speaker 1 (46:22):
I mean, but I also think one of the biggest
things is that we've yet to really and this may
take a year, two or three as investors, we've yet
to see how this tariff things plays out. And let
me give an example how it could play out. There
are countries that didn't allow Chinese cars, you know, to
(46:43):
really be sold but by D B y D is
is boy by D actually and maybe that that number
is going to dwindle because countries aren't going to file
the US lead as closely anymore because there were not
as tight allies. Now I don't really know, I certainly
don't know that answer, but that could play out that way,
could play out that way that Elon Musk leaves the administration,
(47:05):
you know, does a Zuckerberg type of a reincarnation of himself.
Zuckerberg was a pariah two or three years ago and
now the stock got down to one hundred, and now
it's at five or six hundred. Tesla could do the
same thing where Elon mus could reinvent himself and be
back in favor with with the traditional buyer, which was,
like you said, there in his left of center. So
(47:25):
so we'll see, we'll see what goes on there. But
but I definitely put it into two hard pile for
a number of reasons, from from an earnings perspective, from
you said, the number of deliveries going down. Their cyber
truck really hasn't been that well received.
Speaker 3 (47:38):
Even Wednesday, the uh, you know, the stock in the
stock went from down seven percent to up six percent,
down seven percent on deliveries to up six percent on
the fact that he might leave, you know, this administration
helping this administration.
Speaker 1 (47:52):
We got about a minute to also get into the closing.
So what about Microsoft, That's the last one we need
to discuss.
Speaker 3 (47:57):
You know, I think Microsoft is you know, has been
basically a monopoly on outlook again, you know, it's trading
at has fourteen percent revenue year over year growth, does
have a dim end of point eighty seven percent. I
still like Microsoft here, you know, a core holing, Yeah,
they have their I guess footing the door with, They
(48:17):
have a zor, they have their cloud infrastructure. I think
a zoor is growing at twenty percent, you know, eighteen
to twenty three percent. I don't, I don't know exactly it.
You know, between advertising, personal computing as well. You know,
it's I think it's still fairly valued. It's pretty cheap
on a price to earnings ratio.
Speaker 1 (48:33):
I think go next three, four or five years. If
you buy a basket of it, Yeah, you'll be happy.
And you can do that through the ETF called MAGS. Yeah,
so try that Mags. But right now, thanks for listening.
If you want to get ahold of us two seven, nine,
ten forty four, check us out on the webit Fagan
asset dot com.
Speaker 2 (48:49):
Take care, Take care,
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