Let's Talk Money

slate of games today. So if that's something you're interested in, maybe this is a good, uh just a good segue, good way to uh kind of ease yourself into what's to come this afternoon. So we have a lot to get into today. We'll dive into, you know, this week in the markets. We'll talk about some of the shifting you know, trends that we're seeing, uh, you know, pretty down week overall for stocks. But we'll talk about what that means, what we're seeing, what's what's driving that, and

what we can do moving forward. Talk about the economy. You have some key developments. Whether earlier in the week we had the updated manufacturing numbers, UH, to end the week, we had the latest in the August jobs report. We'll talk about that, talk about what it you know, means to you if you're if you're already retired, if you're nearing retirement, you know, how do some of these shifts affect your planning approach, How does it affect you know,

maybe your approach to your portfolio and your investments. And we'll talk about, you know, what we see on the horizon as we enter. We're nearing, believe it or not, we're nearing the fourth quarter, which is hard to believe, but it is quickly approaching now that summer is over and we're almost in mid September.

think relate to most folks out there. Maybe not everyone, but for the most part, I think all uh all ideas and issues that we can relate to, and some you know, really you know, kind of fascinating articles and studies as to you know, appropriate withdrawal rates and retirement. And I know that is a big topic conversation and

planning that we do with our clients every day. So if you're you're concerned about your portfolio after this week, or you know, wanting to make sure retirement is on track, give us a call.

out there. So again, one eight hundred talk W G Y. That's one eight hundred eight two five five nine four nine. So let's get into it. Let's talk about this week in the markets. You know, pretty for for certain of the major indices, especially you know, pretty bad week and in one of the worst weeks we've seen in two to three years in the market. You know, the SMP

was down about four point two percent this week. The Nasdaq was down even more, down over five and a half percent, down about five point six percent for the week. The Dow, you know, was stood a little bit better, down about two three quarters percent for the week.

Is it going to be short term in nature? But really, you know, some of the way I think about it, especially as you know, when we see some of these shifts.

about the markets. But you know, we we had this massive concentration in the major indices for so long over the last year twelve eighteen months, let's say, with kind of that, you know, the mag seven obviously that that was a huge theme last year and into the start of this year. We started seeing these companies grow and grow and grow help drive the market. You know, maybe there was some actually not, maybe there was some. There absolutely was, especially last year, a lot of underlying weakness

outside of those MAGS seven companies. There wasn't a ton of participation early on. Some of those smaller companies certainly lagging. But you had you had the winners, You had those top companies, the Navidias, Microsoft's, Meta, Facebook, Google, Right, you

had these companies that were driving the market. They were doing great, and because of their size, because you had five companies making up over twenty five percent of the S and P, it could hide some of the blemishes a little bit for for a long time.

of a divergence right now. And you know, it's it's almost an opposite change of what we saw for most of last year and the start of this year, where you know, maybe those Big seven companies made up for some of the blemishes underlying the market, right the major industries kept going up, kept doing well well. You're seeing the impact now when when some of those market concentrations become very high, when you start to see a little bit of weakness into those companies or a little bit

of a slowdown. And you know, with the with those major industries, whether again it's the S and P, whether it's the NASDAC, I think you're seeing a little bit you know, worsening of the indices. Then maybe what's really going on beneath the surface because we are seeing some areas of strength. It's not it's not all bad out there. You know, there's absolutely concern in terms of what we're seeing, you know, both in the economy again what what the

market has done over those last week. But you know, for the Nasdaq, I think it was the worst week in two to three years. The SMP didn't fare as poorly, but you know, the last time we had a start to the month that was as bad as these first four days were for September for the SMP was the

first four days in August. Actually, and you know, we're we're down a little bit over four percent so far in September and for the four trading days of last week, but the first four days of August, remember when we had that you know scare again between the Japanese yen carry trade. We had uh the weakness in July's job report, and we'll talk a little bit more about August report that came out on Friday, but we had that really

significant sell off. We had the vix go up two or three hundred percent in a in a day's time. We had a pretty bad sell off on the Friday when we had the July jobs report. Head into Monday and all of a sudden, we had a massive sell off. I think at one point, you know, both the SMP and Nasdaq were down over four or five percent. I think the nastac enter day that Monday was down six percent. I think it ended up recovering to only be down three or four percent when all of a sudden done.

But we had a significantly week start to August followed by you know, recovery followed by some bounce back.

going on beneath the surface as well. Again, our phone lines are open, give me a call one eight hundred talk w g Y. That's one eight hundred eight two five, five, nine four nine. And you know, as it comes with, you know some of these you know changes that we're seeing or or maybe shifts in the market, and again

whether they last or not, who knows. I think, you know, this past week, we're we're kind of getting more into that framework of and you've heard us talk about it in the past where sometimes you're in a market environment where you know, good news for the economy or good news, you know, economic news good news for the health of

the consumer can be bad for stocks. And I think we saw that last year and again maybe at the beginning phases of this year, because every thing was about interest rates, right, we were we were so locked in on what interest rates were doing. The market wanted rates to come down, figuring that higher interest rates were restrictive to the market. But we were we were anticipating, in in wanting those rates to start to come down and give a little bit of a uh, you know, breather

for for stocks. And you know, the better the economic data was, you know, everyone kind of felt that was worse for stocks because then rates would stay higher and and wouldn't have the the opportunity for rates to come down. You know, at this point, you know, we know rates are coming down. I think it's a foregone conclusion. And you know, I hope I don't in two weeks. Uh, you'll put my foot in my mouth for saying that.

But I mean it's almost a foregone conclusion that the FED is going to start cutting rates in a few weeks in September at their next meeting. I think that's coming up in about a week and a half. You know, the big question is are they going to cut twenty five basis points? Are they going to cut by fifty basis points? But your own power has almost you know,

come out and said we will be cutting rates. They're comfortable with, relatively comfortable with where inflation data is that they are seeing signs of weakness in the economy, mainly in the jobs data that was I think historically tends to be really the main driver of a lot of this economic growth or contraction when you look at it historically, and I think that was probably and has been their

main focus. And as they're starting to see a pattern and more of a trend now of slowing growth, rising unemployment rate numbers, you know, they've gotten to the point where I think they're ready to start lowering interest rates without being you know, balancing and being cautious of where inflation is because that's the last thing that want to do too, is kickstart inflation once more. But definitely we are getting to that point where we're going to see

rates start coming down. But the market knows that, right the markets always thinking I've had you know, if you're waiting to make big changes to your portfolio or certain trades based on you know, when the FED actually makes that rate cut announcement. You're waiting too long, right, Markets tend to be six twelve months ahead of the curve in terms of how they trade, what they're trading on, the information that they're trading on. Very rarely will something

like that impact that. I think you see impact on a daily basis, maybe you know, on even maybe a weekly basis in some cases, but the markets always thinking of had they are always always trading ahead, and that's so important to remember.

when it comes to overall economic data. And earlier in the week we had what they call the ISM Manufacturing Index, and that measures essentially it's a really really straightforward question, are you picking up business or are you slowing down in production? To manufacturing companies across the US. If it's over fifty, then that shows signs of growth. If it's

under fifty, shows signs of weakness. In this week, I think it was whether it was Tuesday or Wednesday, but that number came in at you know, maybe forty seven point three. I think expectations were for alaty seven point eight, again showing a little bit of an overall weakness across the country from a manufacturing standpoint. You know, it's obviously it didn't seem that day to be great for the markets.

But you know, as I was talking to a client and talking to our advisors within the firm, you know, went over the fact that, hey, you know, we've we've been in you know, outside of maybe what transpired for a few months during COVID in early twenty twenty, we've been in a relatively strong, healthy bull market since early

stages of two thousand and nine. And when you look over that timeframe, you know, especially let's say the the you know, twenty ten to twenty twenty, you know, even pre COVID, you see that for the most part, that manufacturing number in a in a healthy market and a healthy economy, sticking and saying above fifty.

to the full health of the economy. We see that fluctuate, but again it goes with other trends and trends that will talk a little bit more about, you know, as it relates to the jobs report on Friday, because we saw again a little bit of weakness there. I still think I think there's some some good news to pull out of it, and we'll talk about that. We'll touch upon, you know, some of the positives even with you know,

slightly weaker number than what was expected. But we got to look at at the positives and look at the you know, as we look ahead and we plan forward and we think about, you know, what should we be doing in our portfo how should we be thinking about the markets from here, We'll think a little bit more about what that number means in the grand scheme of things.

So with that, we are going to take a quick commercial break and when we come back, well we'll hit upon the jobs report before we get into the news and then you know, following that in the second half of the show, we will try to get more into some planning topics, you know, and how they relate to what we are seeing in the in the markets today, how we are approaching the volatility, what we do for clients to plan ahead and get ahead of that volatility,

and so that they can rest assured and have the confidence that you know, the market doesn't always go up and and sometimes it does go down and we need to be ready for that, and how we're thinking about and planning towards that, and how you know, the changes in what maybe you can take from a withdrawal rate has been floated out there, and so an interesting article again I teased in the opening of the show, but we'll talk about that later on in the second half

of the show. So with that, you are listening to Let's Talk Money here in eight to ten in one oh three one wgy we'll be right back and welcome back to Let's Talk Money, where we help you manage your wealth for life. I'm Ryan Bouchet and I am your host today. Thank you so much for tuning in

and being part of today's show. If you're a listener out there and you have a question, whether it's related to the markets, what we're seeing some of this recent weakness, if you have questions with regard to portfolios, your retirement plan, any financial planning topic you may have, I know there's you know, as we're seeing these shifts in the markets, you know generally questions of what's ahead and in what

we should be doing. And not only that, I mean we're seeing the shifts in the equity markets, but we know that there's gonna be big shifts and there's already been seen in the fixed income market as well. So you know, two areas of most folks portfolios that can have major impacts as to how they're invested, how they're allocated, and what it means as we move forward from here. So if you do have questions, give me a call one eight hundred talk WGY. That's one eight hundred eight

two five, five, nine four nine. So we talked about the markets, some of the obviously weakness we saw last week. Major indseaes down, uh, you know, four percent on the S and P, five and a half percent on the Nasdaq.

just kind of shifting once the markets opened up. But as the day went on, the markets tended to not like that report as much as seemed, and so we had a pretty big sell off.

slower growth, slower job creation. You know, what does that sort of mean high level in what are we seeing

when you look at the surface. I mean, I think the good takeaway, you know, maybe two key takeaways and in a theme that we had been talking about even going back to July's report, because that was what really spooked the markets a month ago, and especially because the unemployment rate came up to the four point three many people you may have heard, you know, that Sam rule that was being discussed in terms of how quickly the

unemployment rate rose over the previous twelve month average. And it's not an overly complex sort of computation there, but it just kind of shows the pace of unemployment growing in the unemployment rate, and so many people were worried. Many people were talking about that as an imminent sign of recession. And you know, I think one of the big elements of where the unemployment rate was going, and it was four point three percent. Last month, it moved back to down to four point two. Which is good

is that, you know, we're getting more participation. There's more people in the workforce, so that's kind of helping stabilize in kind of showing maybe a worse unemployment number than what's truly there because we have more participation, which is a good thing.

and we'll get into any questions you may have. Thank you for sticking with us to the news. You're listening to Let's Talk Money here on eight ten in one O three one WGY.

This this shift that I think we're undertaking kind of how to position yourself with volatility and you know, maybe you find yourself in a position and we'll talk about this is as we enter the second half of the show.

But you know, kind of this element of not so much chasing returns, but but maybe chasing returns a little bit where you know, one trade, it felt like one factor was really driving markets for the last eighteen months, and you know, you didn't want to feel like you were being left behind with everything going on, and especially large cap growth, you know, technology companies, the AI trade and seeing just that going you know, parabolic for as long as it did, and and we're starting to see

some of that change, uh, since we've entered the third quarter. You know, so for the last two months or so, maybe you have questions and how to best set up a portfolio for these changing times.

eight two five, five, nine, four nine. So I saw a I thought it was an interesting article over the weekend in Barns And if you know, we have again we have these conversations often with prospective clients, existing clients.

of our clients. And you know, even when we get weeks like last week or the week that we saw regarding that Japanese yen kind of break down from a month ago.

They must you know, clients must be so concerned, so worried, and maybe they are to a certain extent, but believe it or not, we don't get as many incoming calls when we see those those bouts of volatility as as you may think, I think from from the team that we have in place and in the advisors that we have and in the work that they do with clients, and being able to show them that, you know, not only through our planning process and really are in depth

expansive planning process that we go through and that we set up for for our clients, but showing them, you know, how we protect during times of volatility, showing them scenarios of you know, bad timing within the market and how that plays out, how that impacts, Educating clients on just an ongoing basis with how volatility is normal in the markets, how we see it, you know, quite frequently, and that

it's nothing to worry about. And you know how we especially those clients that are taking distributions because I can

I can't stress this enough. And you know, it's it's fun it's not funny, but it's you know, it's always great conversation when we have with clients as they're you know, sharing as they're entering or making that decision to retire, all that goes into that decision and all you know, kind of the uncertainty and in the nervousness, and you know, they don't they think maybe they're sort of unique in

those feelings. And it is such a big decision, and it is such an impactful and such an emotional one when you're going from this this accumulation, right, maybe for the last forty plus years, you've been accumulating a portfolio, you've been saving towards retirement. Now all of a sudden you're going through the motions of, well, now it's time to start preserving capital and maybe even you know, withdrawing and in having it to accumulate over the next you know,

however many years. And that's that's a huge, huge shift emotionally and mentally, and it's one we don't take lightly, but you know, one that is not unique to folks who are retiring. It is a it's such a big decision, you know, again, financially, emotionally, there's so much that goes into it, and so planning out what's ahead and planning out you know, how we can safely withdraw, how we

can properly set up the portfolios. Two help, you know, give you that confidence of of you know, your new paycheck, you know what you're getting distributed from the portfolios and from your investments through you know, the remainder of your life. And for many folks again that we're working with, we're planning for thirty plus years oftentimes, and when we do that, you know, we want to be really confident and secure that we have a plan in place that works, that fits the client's need and helps.

timeframe with having fifty percent stocks fifty percent bonds? What could you what could you get through your twenty five thirty years of retirement to safely withdraw? And the number that he came up with with four percent. And it's funny because I've seen articles even over the last couple of years where folks have said, well, that four percent is really only you know, three point eight percent, or that four percent is only three point six Most have

come down on that number. But I saw today that you know, in the creator of that four percent rule was part of the article as I think he's either writing a new book or updating it from what he had previous put out. But the new rule looks like it may be closer to five percent. And you know, I thought that was just interesting from you know, how the shifts are happening, how the dynamics are taking place.

You know, I don't it shouldn't be too much from this increase in in fixed income and in yields that we're seeing in the markets, although maybe it has some sort of impact that that you know now that you can get a little bit more for your money and safer investments. But I did think it was an interesting

changing dynamic. And you know, I will say from from our perspective and as a firm, you know, we try not to have any hard and fast role, right because we know, you know, planning for retirement is dynamic, right, It's not this uh, straight line plan and hard and

fast rules. You need to have guard rails I always say, I think that's probably the best way to put it is, you know, having the appropriate guard rails in place to understand, you know, having some flexibility, right, And I think everyone's life needs flexibility because again, life changes, things happen. You know, you can plan as much as you want, but there's got to be room for flexibility within that plan you

need to have. You know, some of those variables are not going to be exactly what you what you thought. And so you know, when we work with clients, especially early on in retirement, you know, this is when if you're in your sixties, again, we're still planning for for thirty plus years for anyone we work with. But when you're in your sixties and you're newly retired, you know, this is when you want to take advantage of what

you've saved for. This is when you want to take advantage and do those things maybe you've been putting off, whether it's travel, time with friends, times with family, you know, whatever it may be. You don't want to push it off and push it off, push it off until you can't do it anymore.

And I thought it was interesting in this article because this is something we've been doing, you know, for as long as I've been with the firm, which is over you know, twelve thirteen years. But you know, talking about hey, setting aside those short term spending needs. Listen, we're gonna put something for your next eighteen to twenty four months,

super conservative. And now you know we can we can invest in conservative areas of the market while also getting a lot more pack on our money in the four to five percent range. But we're gonna put that in conservative holdings. This is gonna help where you're not worrying about volatility. If you've ever heard of the term sequence of return risk, we're removing that right because that's all

about pulling money out when the markets are down. So if we can protect your short term spending needs while continuing to grow your money in up markets withstanding any volatility that we're seeing, again, that gives just great confidence to folks who are spending in retirement, who are needing that money in retirement and setting them up for success

in retirement. And this article goes on it talks about you know, and this is where I actually have a little bit of a disagreement, not disagreement, but just maybe a differing philosophy. And again, if you find yourself in this position, or you know you're struggling with how to withdraw money in retirement, give me a call one eight hundred talk WGY. That's one eight hundred eight two five, five nine four nine. But they talk about a three

bucket strategy, right, one being those short term needs. And they actually said two years worth of of income or cash flow needs, like I said, which is something we've been doing for decades for our clients then having an intermediate bucket, right, maybe something more intermediate bonds, you know, higher dividend paying stocks that can get you through you know, a five to seven year period, and then sending the rest of the portfolio up for growth, your growth bucket

for you know, continued growth seven, ten years and beyond. And I actually, you know, I think when you set back and you look at how the portfolios are structured, I would say our portfolios are probably structured very similarly. But I think we think about it less about the three bucket approach versus more of the you know that one, the cashlow need bucket, right, is definitely a bucket we set aside. We call it our cash management just cash

cash distribution management strategy. For those clients that are taking distributions, whether it's r M D S or just UH living expenses and cash loow needs from their portfolios, setting that aside very clearly within our our automated trading system, and you know, removes any of the concern when we see a week like last week when the markets are down

four or five percent. But setting that up, setting that aside, and then managing the rest of the portfolio in a way that does you know is set up for growth and it does have diversification, right, we do have.

finding the right portfolio allocation that makes sense. For Again, they're not only their spending needs, but also what their comfort level is right and can they appropriately and safely get through retirement with a given strategy, Because you know, go back three or four or five years, if you had a retired couple that were ultra conservative, super nervous about the markets, it may be hard to you know, go with two conservative of a portfolio and get through

a twenty five thirty year time horizon when you know interest rates were you know, I think the ten year you know, maybe getting one percent on a ten year treasury. I mean, that's not going to get you very far

if you're a conservative investor. But you know, balancing what they can live through, what they can you know, sleep at night with their exposure to the markets, with also you know, setting up the most appropriate strategy and into us and to me and I think to the team that we have in place, you know, what's what's even more important than maybe having three buckets is you know, on top of that short term cash need that we set aside for clients, but having the just the appropriate.

clients plan for that. I remember one of our new clients set it best. You know, they recently retired, they had gotten to the point where they saved a lot of money, did really well. He said, you know, I was able to get me and my family to this point. What I really need you in your team to help us with is getting the money out. Not so much putting the money in and growing it, but how do

we get it out? How do we get it out in the most tax efficient manner that works for us now and into the future and maybe for your beneficiaries as well. So we're gonna go to the phone lines. Our phone lines are open one eight hundred talk WGY. That's one eight hundred, eight two five, five, nine, four nine. We have Robert and Rexford.

it was large cap technology companies. You saw it in the SMP sectors in what was doing the best for you know, even when we look at it at the end of June, so through the first two quarters of the year, the only two areas that we're outperforming the S and P from a sector perspective was technology and you had communications services and the reason why that was doing so well was their biggest holding is Meta Facebook, and so Facebook was having a great year in the markets.

Those are the only two areas, and I don't have the full data in front of me, but you know, the market was up approximately fifteen percent. Those two sectors were up maybe sixteen or seventeen. It wasn't like they were outperforming by a huge amount. And then you had the rest of the sectors, the other nine sectors within

the market were up on average maybe five percent. You saw, you know, a ton of weakness in real estate, you saw a ton of weakness in you know, some other areas of the market, and you know, between all of the other ones, they were not holding up their end of the bargain within the markets. And now, you know, the last two months, you have seen a pretty dramatic shift. And I think I think it's two or three ways

to be thinking about this. One is part of the shift is with rates expecting to come down and maybe pretty significantly. Now as we're seeing a little bit weakness in the markets, you're seeing some higher yielding areas in the market, So maybe real estate utilities, those types of sectors sometimes energy to a certain extent, but energy is

you know, highly driven by the price of oil. But those sectors are starting to do a little bit better now because if rates come down and someone's looking for income, you know, those areas in the market have higher dividend yields, so they become a little bit more attractive. What you're seeing is that we had this huge growth story for so long, and you know, we had a decent second quarter earnings reports from some of those but you're you know, we don't have any news right now to kind of

show us, hey, like, what's what's out there? What's do we have any.

that we did. We actually showed sort of what we were seeing from a future expected earnings growth in the mag seven for you know, the end of twenty twenty three, in the beginning of twenty twenty four had huge earning growth potential, but you started to see that slow down as a year went on, and you started to see other areas of the market looking stronger and stronger.

it here. The quality factor. You know, in a slowing economy, and maybe not a recessionary economy, but in a slowing economy, we want companies that again continue to show strength and cash flow, strength and profitability, strong balance sheets. And I think that's an area in this day and age where we are getting this slowing economy I think can do well.

It doesn't mean that we're not gonna, you know, continue to see strength in those larger cap companies, but I do think you're gonna see volatility in any extended bull market. Most of the market is concentrated in terms of winners and losers. But I think you know, in this environment, I do think you know that quality factor is going to be really important. So I'm gonna end there, Robert, we only have about forty seconds after the show, but it was a great question and we appreciate the call.

I think it was a great talking point to end today on and able to kind of.