Let's Talk Money

And good morning and welcome. Thank you for tuning in. You're listening to Let's Talk Money here on eight ten in one oh three one WGY. I'm Ryan Bouchet and I will be your host for the next hour or so. Glad to be here, and uh, I'm so glad all of you were tuning in are here with me on this Saturday morning. Hope everyone's weekend is

off to a great start. But let's get into it. And uh, you know, before I get into what I want to talk about today, let me share our phone line numbers so that if you have questions, if you want to talk about this week in the markets, you can get right in and fire away one eight hundred talk WGY. That's one eight hundred, eight two, five, five, nine four nine. So let's just rip the band aid off. Let's let's get into it. We'll talk about the

markets. We got three straight weeks down for you know, two of the major in disease, the S and P and the NASDAC. You know, I think probably a little bit of a theme of of what we're seeing recently is, uh, you know, the market not liking surprises. Well, we'll talk about that, uh, in today's show, we'll talk about you know, we're seeing some divergences in the market over the last week or so.

Uh, you know what's driving that? Why are we seeing that pretty pretty bad sell off yesterday and uh in tech, Uh, pretty pretty brutal all across the board there and uh, you know we well, I'll add it doesn't feel good, but we had about four hundred billion dollars of market cap lost on Friday, some of these tech companies, about two hundred billion

of that coming from Navidia alone, down about ten percent yesterday. So again just kind of seeing a little bit of a divergence here within the markets. You know, is it is it concerns over the Middle East? You know, maybe a little bit, But you know, I think, uh, it probably has more to do with strong market, strong economy, really strong growth, strong economy, stickier inflation. And we'll talk about what that means as we as we move forward heading into earning season. Yeah, I think

we've been sharing it's going to be important. I think this year more than uh, you know, the recent history or recent past. I do think earnings are going to play a huge role, even though it doesn't feel that way. Maybe over the last week or two, but definitely going to come into the forefront of conversations as we uh, you know, move forward and

get some Q one earnings coming out. Economic data, right, you know, is it is it good news bad news for the market, because you know, frankly, economic data is just continues to come in at or above expectations. Retail sales are humming, job growth is robust, few people claiming, you know, jobless claims. But this also leads to maybe a little

stickier inflation than than we'd hope and what the FED would hope. And so we'll get into an analysis there, you know, certainly changing interest rate expectations and you know, even from Powell, and we'll we'll talk about maybe where where the Fed, in j. Powell in particular, made their biggest mistake over the last four months or so, what's the going to do moving forward?

Again? Expectations have shifted dramatically. Uh, it really kind of goes back to probably a two week span in the beginning of April, and we'll talk about kind of the leading drivers of that. You know, with any volatility in the market, you got to find silver linings. And I think there's a couple of silver linings out there. We'll we'll talk about that. We we when we talk to clients, right, I mean, we're in

the world of markets investing. Uh, you know, we can put great plans in place, you know, proper asset allocation, getting you know, investments to work. But the end of the day, we do have limited control over what the market's doing on a day to day, week to week basis. But what we try to do in what we try to instill in clients is, especially from a planning perspective, let's control what we can control. And again, down markets they never feel good, but you know,

maybe there's some opportunities to control what you can control. One of those, you know, maybe Wroth conversions, and talk a little bit about why with the recent volatility, if if a wroth conversion is something you've you've been thinking about or makes sense in a planning perspective, why a down market may be a good time Along with the down market where we are seeing a rise in interest rates. Maybe not great if you're out there home shopping or taking out

large loans and debt that are tied to the interest rate market. But maybe if you're a more conservative investor or retiree or approaching retiree again, a good time to put money to work, you know, potentially both in equities but also in the fixed income market. Right, we've we've had a rise, pretty sharp rise in interest rates over the last you know, really year to date, but in particular over the last month or so, and in that may be a good time for you to, uh, you know, start

thinking about locking in those yields. We're seeing, you know, that upward trend again, the you know, the peaks and valleys, those those valleys are a little bit higher than they were last year and certainly continuing to see a little bit of an up trend here. So you know why that could be you know, even though maybe hasn't felt good year to date in some ways, but why it may be a good opportunity to get some money to

work in that part of your portfolio. And we'll talk a little bit about just the risks that we're seeing, right, you know, we're seeing a lot of good positive economic data, but what are the risks in the markets today, And we'll jump into that and just kind of talk about what we're talking about with clients, how we're we're explaining today's market environment, and you know, the good and the bad. Right. We want to we want

to deal with it all. We want everyone in the folks that we work with to be fully engaged, fully educated in how we're thinking about market. So again we'll we'll talk about all that today. If you have questions, give me a call one eight hundred talk WGY. That's one eight hundred eight two five five nine four nine. We are going to go right to the phone lines. We have Robert from Rexford, Robert good More earning. Good

morning. Ryan's Uh. You you pointed out that the markets have a lot of pros and a lot of and some cons as well going forward, uh these days. The pros being the earnings, uh. The cons being the of course the war in the least, the inflation, the uh whatever you know, political economic concerns. Uh. I wonder how important, how significant each of those pros are versus the cons? Uh? I mean, what kind of waiting would you give those pros versus those cons in this market environment?

And I know I'm not just talking about like sectors, like specific sectors like golden oil that do well in these kinds of times, but I'm talking about the market. You know, the NASDAC, the high texts. The uh, the most volatile part of the market, I guess is what I'm referring to. And how do you see these factors, both pro and con what kind of waiting would you give them? The market going forward in these days with the election, the election coming up another indicator you know, maybe

a con because it's an uncertain uncertainty. So anyway, that's enough for me. I'd like to hear your take on all these things, if you understand my point. Yeah, no, that's perfect, Thanks Robert. I appreciate the call, and it's a great segue. I'll kind of talk about just some of the market themes that we're seeing right now, and you know, it's a good I'm going to go back to a little bit we presented. We both sent out our quarterly market right up last week, but also did

our quarterly webinar. So if you go to our website www. Dot Buche dot com under our insights, if you go to the Bouchet blog, you can find both. So if you want to take a look and go through

it. But you know, in terms of pros, right, I do think a few different ways to think about this right now, is that you know, really what's driving the market down over the last three weeks or so has all been positive economic news, and you know that driver right now is really predicated on what inflation is doing and what the Fed is going to do with interest rates, and so again, higher interest rates can be a headwind to to markets, especially uh you know, to two areas of the market,

I would say, you know, technology growth companies and also you know smaller cap companies. Smaller cap companies are are being impacted more by the cost of capital h they're having They're losing a lot more on these higher interest rates, whereas you know, larger corporations, you know, they got their balance sheets in order when rates were low. They have a lot of cash on the sideline, so they're actually making money in this higher interest rate environment,

where smaller companies, you know, they don't have that luxury. They don't have as strong a balance sheets, just naturally given the size of those companies. So they're they're experiencing some headwinds. And you know, large cap growth companies experienced headwinds and high interest rate environments primarily due to the fact that discount cash flow you're trying to value a company today, that valuation comes down as interest rates go up. It's just you know, more of a calculation than

anything out. So those are some headwinds. So what we've seen in the last two weeks, two or three weeks is that this expectation of higher rates I think was a little bit of a shock to the system because we all felt that, well, I'm not gonna say we all thought because we've actually been talking about this higher rate for longer environment, we've thought that, you know, the FED really was a little chance that they were going to cut rates in the first half of this year. But you know, it is

a little bit of the headwind. But at the same time, you know, the market has continued and these companies continue to do well. This is a different environment than we've seen over the course of history with technology or growth type companies in that the fact that they actually have strong earnings. These are strong companies, good balance sheets, strong earnings. It's not similar or too

you know, the two thousand bubble, And I think that's important. The other thing, you know, that we take into account what we're saying as positive is that when you look back all time you know, investing at all time highs Now, I know we're off all time highs. We're off about five or six percent from all time highs. But investing at all time highs tends to be a positive for investors versus investing at all market conditions. And we have a chart that you can see in our presentation if you go to

it on our website. But you know, I will say it shows three months, six months, one year, two year, three year and over pretty much every you know, six months to three year environment. Investing at all time highs is going to benefit you versus not investing at all time highs. So all time high shouldn't worry us as investors. It actually shows a lot of momentum in the market. So in terms of just high level you

know, positive reasons to you know, still be invested. You know, I do think economic growth right now because we we are in the mindset that are you know, valuations, earnings need to solidify those valuations, right, valuations are a little bit high right now. That's one of the risks I would say, is high valuations. We need to see strong earnings. But a strong economy should drive higher earnings. So we think that's a good thing. Even though it's it's been a little bit of a shock to the market

over the last three weeks. In terms of some of those negatives you brought up. I mean, obviously, your geopolitical risks are out there. They're always going to be out there, and they were heightened over the last week with Iran in Israel. You know, the good news there is that even

though there's been some some bombings this week. You know, from from the folks that I follow closely who have a good pulse of what's going on there, many say that, you know, even though there's been missile launches and some bombings this week, most of it's actually been de escalatory, meaning that you know, these were more Hey, we got to we have to show our strength. We can't just sit back and do nothing. But we're really

not trying to escalate the situation. We're just trying to show that, hey, we're not gonna sit back and do nothing. So I actually think in a strange sort of way, it's actually been kind of more of a positive in the immediate term. But there's certainly those tensions in the Middle East right now, and I don't think that's going to go away. So that's definitely a risk, but that's a systemic risk that's hard to diversify away from.

Two areas that we pointed out that I do think is a little bit of a risk in the market, and I alluded to it earlier, is valuations and in valuations are high right now. They're on the you know, higher end. Our you know, historical average is about sixteen times forward earnings. We're you know, at around twenty times forward earnings. It might have come down a little bit over the last week from the recent sell off, but we're a little bit high right now. Again. The good news being though

that you know, earnings which have been trending upwards. If we can reach earnings expectations for this year, that can be a good thing for where we're at an evaluation standpoint. The other thing, and I do think we've seen this in the last week in terms of the risk of it, is that

the market's very top heavy. And again this was a theme we talked a little bit about in our presentation, and we were talking about the need for diversification right now because you know, right now, the top ten holdings in the S and P five hundred makeup you know, as of last you know, a couple of weeks ago, made up thirty two, over thirty two percent of the overall market. Of those top ten holdings, six of them are those MAGS seven companies, right. The only ones that weren't included there

were Tesla after their their recent sell off. But the market's very top heavy, and and when we look at expected earnings growth from here, those Magnificent seven companies are showing the strongest growth in the next this quarter for Q one and Q two of this year. But as the year goes on, expectations

are for the rest of the market to actually come more in line. And we have a great again going back to our website and our presentation, we have a great chart showing this and this is where I think diversification can help right now. And we've been talking about it with clients and that again,

we've we've seen this top heavy market. We've seen these these great companies drive the growth of the market over the last you know year and a half or so, you know, ever since the lows of the S and P in October of twenty twenty two, we've seen these you know, big Mag seven companies really be the drivers. I think the AI revolution has been a big part of that, but their earnings have been substantiating that growth as well.

But again, you know, sometimes those runs don't last forever. And it doesn't mean that that these stocks will continue to do well and won't continue to go up. But I do think you're seeing a little bit of a breather right now. So you know that top heaviness of the market valuations I do think are a risk. Geopolitical concerns certainly a risk. You know, can we monetize this AI revolution in the near term? Is there enough growth potential

and earnings potential there to substantiate it. I think it's going to be a major driver for the next you know, five ten years, let's say. But you know, does it substantiate the growth that we've seen recently? Hard to tell. You know, these companies are going to have to, you know, bring products and ideas to the table to help propel the market forward. And you know, where else are some of these earnings? And like I said, I do think a good thing is the strength that we're seeing

in the economy. You know, one area that I'm not as concerned about is our own election cycle. I know, a lot of headlines, you know, paint a picture that you know, it's going to cause a lot of volatility and the uncertainty of it all. But I really do think you know, historically speaking, our general elections tend to have little impact, maybe in the immediate term, maybe in a really short trading window, but overall has very little impact on the overall market. So that's one that I'm not

as concerned. I'd be more concerned about some of the geopolitical tension that we're seeing overseas, but certainly, uh, these all these all play into kind of the risks that are out there. And you know, at the end of the day, you know, we're we're off about six percent from the highs Robert, and so why it doesn't feel good? And you know, especially a day like yesterday when when the NASAQ was down close to two percent, never feels good. Feels you know, like high volatility, major sell

off. You know, the market takes breathers from time to time, and you know, this could just be a breather that we're seeing. I mean, the market does average a close to fifty percent decline year in and year out from its highs, even though you know, more times than not the market is up at the end of the year. We see these intra year draw downs, and it's not uncommon. We saw one just last October.

You know, before October is lows markets were down almost ten percent. So even in March of last year we saw about an eight or nine percent drop in the market with the Silicon Valley bank collapse. So this volatility is not uncommon. Never feels good. But I do think given the fact that we're selling off based on strong economic news, I'd rather see, you know, for the foreseeable future, strong economic data, even if inflation is a little

stickier. Doesn't feel good inflation. But I do think a strong economy is going to drive the market forward from here versus just a drop of interest rates, because if interest rates are dropping, could mean that, you know, we're heading towards a weaker economy, and I don't know if that's good for the market's long term. So if you're still on the line, Robert,

hopefully that helps answer some of the questions you had. I think we touch upon a lot of the you know, pros and cons or the risks, and you know, positive sides of where we're at in this market cycle. But I do think in terms of what's driven this market down over the last few years. It's actually overall kind of a good thing for the market in the big picture. So hopefully that that helps answer your question. Are you still there, Ryan, I'm still here listening to every word you say.

I just want to add one more thing. Oh, certainly, and if you if you don't mind, And I wanted to mention that the geopolitical risk the you know Ukraine now, israel Is and Amas and iran Is, these are the largest unknown factors, unpredictable factors that will affect the market on a daily basis. But I have I would tend to agree that the fundamentals are

good and maybe over a little got ahead of themselves. But the I think that it's more of a technical pullbacks as opposed to a fundamental pullback at this point. And then the adagy a little political risk is what's driving it day by day. But any case, that's what I wanted to add, because I don't think it's yeah, that's it. That's what I wanted to say. No, appreciate it, Robert, Well, thank you, thank you

so much for the call. And again I would tend to agree, like I said, I mean, we saw it, uh in October last year. Right, it was the same timing where we saw conflict between Israel and Hama Hamas when they invaded Israel, and again we had to draw down in the market. It was short lived, and you know, even from those

lows back there. I mean, this is a great example in terms of talking about geopolitical risk because to your point, it's always going to be out there, and it's really hard to diversify away from it, and it's really hard to know what the impact is. I mean, you could go back probably every year for the last year, since the lows of two nine, even the last fifteen years, and how much the market's been up over that time, and I bet you could go almost every year and pick some sort

of geopolitical concern, right. I mean, Russian Ukraine's been going on for a few years now. We've had issues with North Korea. There's always been tension in the Middle East. We've had Syria, We've had you know, going back even further, you know, we had euro and Brexit and the breaking up of European countries. We've had the Greek debt crisis. Now, maybe they're not all the same sort of geopolitical issues in terms of war, but certainly. You know, big global issues and concerns that we've seen,

and like I said, you could pick that out almost every year. And you know, if you've if you've got out of the market and we're scared away from the market again, just take the conflict from last October between Hamas and Israel. If you got out of the markets, the market, the SMP was is up still up twenty percent since the lows of I guess I was six months ago October twenty three. You know, missing out on a twenty percent ride in the market can be really really impactful from a long term

perspective. You cannot miss those up markets. And we've seen a lot of strength. And that's even with like I said, the concerns in the Middle East, and I know they've been escalated in the last week or so, but I would say probably in terms of whan I said it earlier, where some of the bombings are actually a little de escalatory, as silly as that sounds, probably more of this recent selloff has been more of that breather to the markets. And you know, let's face it, the market's being up

ten percent, it was great for the first quarter. SMP was up around ten percent I think at its highs. But in terms of a sustainable trajectory for the year, I mean that would be a forty percent rise in the market if that were to continue. And you know, we know the markets don't go up in a sharp you know, in a straight linear line. There's always you know, the ups and downs. The market is a roller coaster and you know it's, uh, we're going to see these ups and

downs. And so again, I think when we when we step back and look at what's going on right now, it does certainly feels more of a short term volatility that the market on a year over year basis tends to see. It's not uncommon. Uh, it's nothing that we should be totally you know, should be concerned with it, but you know, not be afraid of of continuing to be invested in continuing and be participating in this market.

And you know, as I'll get into the second half of the show, it may be an opportunity for you in other ways, especially from a planning perspective. So again, Robert, we appreciate the call. Thank you so much for being part of the show. Today. We're gonna take a break for the news. You're listening to Let's Talk Money here on eight ten in one O three one WGY and welcome back. Thank you for listening. You're tuning into Let's Talk Money here in eight ten in one O three one WGY.

I'm Ryan Bouchet, happy to be here with all of you today and appreciate you tuning in. If you have any questions, please give me a call. One eight hundred talk WGY one eight hundred, eight two, five, five, nine, four nine. We had Robert earlier in the show. Helped get things started and good talking points because these are things that I wanted to talk about anyways, and it was a good and lead into you

know, how we're thinking about the markets right now. I mean, there's you can always have conviction in the markets, and convictions always going to help you, you know, well maybe not always help you, but could help you more times than not when trying to invest. But you know, there's there's always the uncertainty. There's always you know, different ways to view the

markets. And again, I think when we step back, I think there's still when we look at where the market is today, the type of environment does feel like a it feels more of a mid cycle bull market. Type of environment. Right, We've we've come off of some of the lows and some of the volatility, especially that we saw back in twenty twenty two, this notion of and I talked about this, and again I'll revert you to our our website, Bouche dot com. We put together our quarterly write up

as well as our Q one first quarter webinar. It's about thirty five minutes or so, so won't take you forever to tune into it, but we have a lot of good slides there. Myself and Paulo La Pietro from our office presented it. But you know, we use that as a as a

way to kind of just talk about what we're seeing in the markets. And again, when we think about this, this mid cycle bull market environment, you know, we talked a little bit about this, this recession that didn't happen last year, right, everyone, every economist, all of Wall Street, it felt like was predicting a recession for twenty twenty three, and it felt scary. It felt really scary as we were heading into that year.

But when we will look at the data, for whatever reason, we had two straight quarters of economic decline back at the start of twenty twenty two, and that coincided with the you know, bear market that we saw that I'm not sure why that wasn't considered a recession, but when you look at it and you take a step back, that was kind of recessionary. We had slowing economy, we had we had negative growth in GDP, and yeah, every other time we saw that it was considered a recession for some reason that

wasn't. And we've talked about this idea that through COVID and all the disruption, we kind of saw this rolling sort of recession. So, you know, during those two quarters in early twenty twenty two, I think that data actually sort of supports that. But outside of that, we we saw different

industries and different sectors of the market get impacted in different ways. And I do think, you know, when you think about it as maybe a rolling recession, where maybe it wasn't an immediate shock the entire country or the you know, entire economy going down all at once, but you know, hitting different times over the last two or three years, you know, I think that can put into perspective that, hey, maybe we are in more of

a growth phase right now. Maybe that recession has already happened. Maybe that recession is behind us, and we have you know a little bit more of a rosy outlook as we move forward. And like I said, with the latest economic data, I mean, and we can talk about the FED a little bit here, but you know, the worst thing I think the FED has done over the last you know, six months or so, even the last you know, year or two, is you know, almost declaring victory

I would say, in December over inflation. And in frankly, I mean, I guess the data sort of supported that at the time. If if you look at charts, you know, we saw a steady decline in you know, economic growth rates were coming down. Inflation was you know, we weren't we were seeing a disinflationary environment. Inflation was slowing. It was still high, but it was slowing, getting closer to the two percent target that the FED is so honed in on. But then all of a sudden something

changed. The last four months, we're seeing some of these numbers tick back up. We're seeing inflation get a little bit higher, and we're seeing a little bit of an upward trend there. Job growth had been slowing down, it was still you know, decent and and strong, but it was maybe a little bit below the averages that we were seeing heading into the end of twenty twenty three. Well, all of a sudden to start this year,

we're seeing robust job growth. We're seeing very low rate of jobless claims coming through on a week over week basis. That came out this past week that we saw jobless claims continuing to stay low. And so we're seeing elements of the market and the economy start to tick up, and that's going to impact

what the Fed can do. You know, the Fed the biggest we've been saying to clients, we've been saying it here in public, publicly on the radio, but the biggest risk to the Fed is moving too soon, I think in terms of their battle against inflation, and if they were to lower rates too early, too quickly and give a jumpstart to you know, more

inflation, that would be a bad thing. They cannot risk that. And now that we're seeing inflation still, you know, hovering just over three percent, you know, core CPI and the CPI readings going back to April eleventh coming in at like three point four three point five percent. Again, that's a little bit higher than what they were expecting, and so we're not seeing that trend back to two percent. So I think we're in this higher for

longer environment. And you know, frankly, the markets did not view that too kindly over the last three weeks. As I said, you know, we've had three straight weeks down in the market for the S and P and the NAT. That last week the SMP was down three percent, still up about four percent year to date, We're off, you know, right around six percent from the highs and then AASAC was down five and a half percent last week, and like I said, huge catalyst for that was on Friday,

major selloffs in some of those big winners this year. Navidia dropping ten percent was pretty alarming to see. That's a pretty big shock to the system. And so you know, you saw some specially weakness in those growth companies.

But you know, you look at the Dow and you know, maybe it's not so much a proxy for the overall market, but it is it does bring into I think the forefront of our minds that notion of diversification, because frankly, over the last year, in a quarter, you know, let's say twenty twenty three, in the first quarter of this year, diversification hasn't really helped. Right outside of those large cap growth companies, we haven't seen a real ranked in many other places of the market. But you know,

for last week, the Dow was actually slightly up. You know, it's still lagging the overall market year to date, but you saw different elements of the market do well. And I thought that was really interesting, even

a day like yesterday. You know, one of our core positions, you know, we we've been talking about quality companies, and we've been talking about it in the sense that, hey, if we get a little bit of a you know, slowing economy, not not necessarily a recession, but just a slowing economy from the strength that we saw over the last couple of years, if we saw that and you know, we saw persistently high interest rates, you know, there could be some of these quality companies and that could

come in different flavors, right, strong cash flow, strong balance sheets, good earnings. We like companies that not only have a growth sort of factor to it, but a growth factor that has some strong under earnings as well. I think we're all searching for that. But those types of you know,

companies in the ETFs that we held actually did really well. And like I said, one of our core holdings is a dividend growing ETF so companies that over a you know, ten to fifteen year period have consistently grown their dividends. Again, that just shows strength and their balance sheets and their cash flow. You know, with with the S and P down almost one percent, with the NASSECT down two percent, that holding yesterday was up over one

percent. And you know, it doesn't mean it's it's going to be you know, necessarily the longest term winner, but it does give you the sense of how diversification can help in these types of markets. And it almost felt like over the last year plus timeframe that you know, many people wanted to give up on diversification. You know a lot of people are just saying, like, I should just hold these MAGS seven companies. I mean, they're

the ones that are going up. Why don't I just hold those? Well, you look like a day like yesterday, right, one of those MAGS seven companies down ten percent. If you looked over during twenty twenty two when we had that our last bear market, when the SMP was down twenty five percent at its lowest point of the year, I think it bottomed out in

October of twenty twenty two. But you look at that timeframe in those MAGS seven companies, most were down over fifty percent, you know, some were down seventy percent plus, you know, And that's that's the risk you have when when you know the markets get top heavy or you give up undiversification. I think you have to have it in the right instances. You have to know how it can help. In a week like last week just shows how, you know, we can see some of these rotations within the market.

And like I said, going back to our presentation we gave last week, one of the best charts that we saw from it is kind of the evening of the playing field from a Ford earnings perspective of these MAG seven companies, which again earnings have been great. They've been a huge driver of the market. Quarter one earnings expected to be high, expected to be great drivers for the market. But you're seeing catch up from other areas of the market.

And that's where again this strong economy, strong consumer, the consumer makes up over two thirds of our overall economy. These things are in place, and these things can continue. That should be a driver for the markets moving forward and maybe less reliant on some of those big names that again have been great and you know, frankly, in bull markets, some of the growth tends to be top heavy. I mean that's you know, some of these great

companies, some of these great growth stories are what drive markets forward. But it's good when we see further participation. And so as bad of a day as yesterday was from the big winners, over the last year year and a half, we saw some strength in other areas of the market, which is you know, to me, it's actually probably a good sign and it's probably a good thing. So you know, that's where we we have that you

know, silver lining and everything that's been going on. And even though we've had a bad stretch of the last three weeks, uh, you know, there's still some positives to take away from it. Again, our phone lines are open, give me a call one eight hundred talk WGY. That's one

eight hundred eight two five, five, nine four nine. Before we uh head to the final stretch of this morning show, probably take one more quick commercial break and when we come back, we'll talk a little bit about you know, I can I can continue to talk about the markets, but why don't we talk about some planning opportunities. Let's again go back to that silver

lining, you know, glass half full. Even though we're seeing some volatility today, how can we use this volatility and maybe take advantage of it in this type of market environment. So with that, we're gonna go to a quick commerce shall break and when we come back, we will dive into some of those topics. So stay with us. You're listening to Let's Talk Money here on eight ten in one O three one WGY And welcome back to Let's Talk Money here on eight ten and one O three one WGY. We're in

the home stretch. We only got about ten minutes left with you. I'm Ryan Bouchet. Appreciate all the listeners out there that are tuning in, and if you have any questions as we look to wrap up today's show, we still have time, give me a call. One eight hundred talk WGY one eight hundred, eight two, five, five, nine four nine. So talked a lot about the markets, talked about some of the pros there,

some of the cons some of the risks that we're seeing. Uh, you know, I do think as we come off of this you know, really bad week in the market, SMP being down three percent, NASSEC being down five and a half percent. Some things to just keep in mind before we talk about ways to take advantage of this volatility. One, you know, I think perspective is key. It's always critical to have the right perspective whenever we see market volatility. A couple of things I'll point out. So I

saw this stat this morning. We've had twenty eight since two thousand and nine, so so the lows of two thousand and nine, right going back to March of two thousand and nine, that was the low from the global financial crisis. So you know, let's say over the last fifteen years, we've had twenty eight five percent pullbacks or or more over that time. So you know, what's that about two a year? Yeah, it's been fifteen years, twenty eight I've had about two a year. So this is not uncommon,

right, this is this is standard. We see this about every six months. Last time it happened was about six months ago, so this, you know, so far, this seems to be some pretty normal volatility. The other, you know, keeping things in perspective, I saw which is a great chart. I don't have it on our site, but I'll talk

to you about it. But you know, what are the percentages, what's the probability of a negative return in the market, And it goes from one day to ten year, and on a day to day basis, believe it

or not, having an update in the market's almost a coin flip. You have a forty six percent chance that the market's going to be down on any given day, which is pretty staggering seeing that the markets, you know, tend to be up over time, and we've been in you know, you look back on a chart over the last hundred plus years and you see just how much the market has grown, But on a day to day basis,

it's almost a coin flip. Uh. Even over a one month period, the market's down about forty percent of the time on a one month basis, so only sixty percent of the time for a one month is the market up. So you having time periods like that is like, this is not uncommon. This happens, you know as investors. This is I've talked, I've written about in the past, But this is the price we pay as investors, right for those long term substantial returns we have to go, We have

to live through some of the short term volatility. So this is the price we all pay. You know, something else talked about earlier, just diversification. I think diversification has shown just how positive it can be, even though it feels like it's probably been hurting us over the last year plus timeframe. But you know, a week like last week, diversification certainly is help.

And you know, just talking about the overall economy and what's really driving to sell off, I do think it more than anything has to do with market not liking surprises and you know, stronger than expected economic data and higher than

anticipated inflationary data really sort of driving what we're seeing today. So again, I think the biggest the best word I can use, and I've already said it, but just keeping things in perspective, and that's our job in terms of communicating to clients, you know, pointing out what we're seeing in the

markets. It's all about having the right perspective. And if you do, you know, the volatility like we've seen over the last week or three weeks, we can live with it, we can get through it, but we have to have the right perspective, in the right mindset and know that again there's a cost, there's a price we pay to be successful long term investors. And if we want that long term success, uh, you know, we have to live through some of these ups and downs that we see and

that we all experience. So again with that, we're we're we've got about you know, seven or eight minutes of the show if you want to give me a call one eight hundred talk WGY one eight hundred and eight, two, five, five, nine, four nine. So how can we take

advantage of this volatility? And you know, I think there's there's a few different ways to look at it. One of the big planning opportunities and something we work with clients on often is you know, in in clients, you know, they're they're always looking for guidance when it comes to planning, and you know, how can we put a plan in place, stick to the plan knowing that there's going to be variables, knowing that there's going to be

changes. But what can we do to take advantage of situations? How can we can you know I said it earlier, how can we control what we can control? And one of those is is you know, potentially you know, wrath conversions. If that's something you've been thinking about or considering, you know the best time to do a wrath conversion is really in down markets, right, you have the opportunity to make that change whatever the you know,

the number is for you. We see this mostly, you know, we do so much tax planning around our financial planning process, and we have such great tools, We have such great colleagues and advisors that can walk through these

these tax planning analysis for clients. But tax planning is such a big role in the work we do with clients, and you know, I think about especially for conversions, right, it's it's come to the forefront a lot more with changes in estate in how you know, I guess some estate planning ways, but how I rays are inherited and how beneficiaries have to distribute them.

So wroth conversions have probably come more to the forefront over the last few years for folks who you know, may even be retired where it really wasn't as great of a planning opportunity before, but in the right situation it can be. And I always think about these gap years, right, maybe from if you're retiring in your early to mid sixties, and that's generally what we see for a lot of our clients are retiring around that time. You know,

uh, Medicare kicks in. Maybe so security is kicking in. But I look at these, you know what I would call maybe those gap years between retirement and when rm ds are starting, you know, around seventy three, and those maybe you know, your best years if you are considering a Wroth conversion to do so, because you may be recently retired, income levels are

lower. You know, how can we look at your full picture, your full income and tax picture to maybe make some Wroth conversions that best benefit you and maybe best benefit your beneficiaries or your heirrors for down the road in terms of the benefit they get. And those tend to be you know, the best opportunities to do it, you know, after retirement, but before rm

ds kicking and finding again what that right level is. But in a down market like we're seeing right now, and if you know, if we continue to have more volatility next week or the week after again, that may be, hey, a good trigger point to say, hey, you know, I've been thinking about the Roth conversion. We've been we've been talking about it, we've been discussing it. You know, this may be a good time

again. That's just a planning opportunity when markets are down. It's a good time to make a change like that, if it's something you've been considering. Yep, getting money to work, I know, you know, five percent, six percent. Again, I talked about how common those pullbacks are, so maybe it's not a huge pullback. But if if you've been sitting on cash waiting for you know, a time to put something to work, you know, now's the time to start, you know, thinking about that,

start considering. Hey, you know, I've been looking for an entry point. I've kind of been scared off of markets being at all time highs, even though we've talked about it that you know, that really shouldn't be a concern of yours. But if it is, and you've been, you've been, you know, a little hesitant to put money to work. Hey, you get a little bit of a pullback, Hey, let's let's put to work. Let's take advantage of it, not only in the equity space,

but even fixed income. And we've had clients where where we're taking advantage of

that. Not only you know that may have been sitting in cash, but even from a tactical perspective, we've been you know, we've been a little bit more patient in the fixed incomes out of our portfolio holding short term fixed income, you know, not being exposed to the you know, interest rates going up, keeping low duration, so that in keeping a higher yield because we're in an inverted yield curve environment, so we're getting higher yield, less

impact by duration. But as we're seeing rates get high, you know, we we had the ten year hit four seven this week. It's out about four six two right now, but you know we've seen over the course of the last couple of weeks we're seeing a pretty sharp rise and interest rates. You know, take advantage of those rates, right you know, we know, you know, the Feds being more patient, they're not cutting right away, but we know the short end of the curve isn't going to be higher

forever. So what are those entry points? And again, as we see rates tick up again, if you're sitting in cash or cash alternatives, and maybe it's time to start considering you know, those intermediate term bonds, you know that five to seven year time horizon where you know, maybe that's that's the best area of the yield curve for you to be locking in those rates. So whether it's equities, fixed income, again, maybe a good time

to get that money to work for you. So again, always trying to find the silver linings, trying to have a glass half full approach when we see volatility, but we take a step back, we have the proper perspective, you do the appropriate planning, and I can assure you when we when we see times like like we're seeing today, they become a lot easier to deal with and you can find that you know the right peace of mind in the up ups or downs in the market. So we're near in the end

of today's show. Don't forget. We'll be live tomorrow at eight am. So Sunday at eight am you can catch us. Uh appreciate all the listeners that tuned in today. Thank you for being with us. You are listening to Let's Talk Money here on eight ten, one oh three one w G Y. Have a great rest of your weekend.