Let's Talk Money

games this weekend. I know Clemson is playing Georgia. Or if you're a bigger NFL fan, which I certainly am a very big NFL fan, anybody that personally knows me knows that I'm a very, very very big Las Vegas Raiders fan and optimistic about this season. We'll see what Gardner Minshaw can do. But looking forward to the games. But I just feel like, most likely you didn't join this morning show to hear me talk about the Raiders,

and I don't blame you for that. I could probably put you asleep on how much I would talk about it. So why don't we get into markets? What to give you a market recap for the week. We'll talk about some economic data that we saw, some economic data that's coming up, some portfolio positioning. I know Vinny wants to share some good information on, you know, what to do with your money, looking at potentially refinancing with mortgages with

the backdrop of interest rates coming down. I know Vinnie's got some good information on equity compensation, specifically with stock options. Very interesting stuff. Not a lot of people have the expertise that Vinnie has, so certainly gonna want to tap into Vinnie on that. But as always, folks would love to hear from you. The phone lines are going to be opened all throughout today's show, and again that number

is going to be one eight hundred talk WGY. That's one eight hundred eight two five five nine four nine. Again one eight hundred eight two five five nine four nine. So to a recap of the market performance this week, we had the Dow Jones Industrial Average up zero point nine four percent. It was actually the leading indicy for for equities because then we had the S and P five hundred only up point twenty four percent, and then the tech heavy Nasdaq actually down zero point nine two percent.

You know, I've been on the show a couple times in the last say, you know, a month, month and a half, and you know, it seems like there's been some of that reoccurring theme that I've been talking about, some shifts in the market that are showing more market breadth, which is a positive. You know, we've been so used to through twenty twenty three and even you know, the first half of twenty twenty four that technology was really the market leader and providing all the performance in the

equity markets. But now with the prospect of the right, you know, the FED cutting rates, and you know, certainly we're going to get into that exactly how much they're cutting and what the market expects. But now that they're showing some easement as far as interest rates, You're starting to see other sectors in areas of the economy do well. You're starting to see small caps and mid caps rebound.

You're starting to see more of the value on the cyclicals and the dividend player payers, you know, rebound quite nicely. And again that'sive this week when we saw the dal Jones and dush are average being the leading into see up point ninety four percent. So why don't we just quickly also talk about some data we got. It was a light data week, not a ton of information that came out, But of course we want to highlight Wednesday. Why was Wednesday important? Aside firm that being humped ay,

it was also when the video posted earnings. I mean, the video has been everybody's darling. I don't think I've been in an investment conversation yet in the last twelve months where a client or prospect, or a friend or family member says, hey, what's Navidia doing. How's the video going to do? So all eyes were on the video's earnings that we got on Wednesday, and for the most part,

earnings looked great. They be on all expectations. They posted thirty billion dollars in sales for the second quarter, which was actually up one hundred and twenty two percent from the same quarter last year, so double profits from last quarter, up to sixteen point six billion dollars. So again, fundamentally, this company is making cash handover fist. And what is also important is they you know, they posted some strong forward guidance, which is important, meaning that the company is

showing that they're continuing to head in a positive direction. Now, the one thing that the video has against itself is over the last three years, the video is up almost four hundred and fifty percent. I actually think it's up over four hundred and fifty percent. So when you get to these high levels, you really need to have extremely

strong earnings to support the price of your stock. And so while the earnings look solid, you know, the market said, hey, it wasn't as good as we wanted, right, and we saw some volatility from Navidia, and we saw a nice rebound on Friday, you know, even out but nonetheless there was some shake up in the middle of the league with the video, and then on Friday we got some

inflation numbers. We got PCE that came in. We all know that the Fed loves looking at pce it's their favorite indicator for inflation, and good news on that front. You know, headline PCEE came in at two point five percent year over year, which was in line with expectations. And core PCEE, which excludes the you know, the volatile food and energy prices, that came in at two point six percent, which was actually softer than the market expectation

at two point seven percent. So that was good. That was good inflation data that we received.

I feel like I talk about it every show, every quarterly presentation, every you know, economic update, Me, you, your sister, your mother, your brother. We all make up seventy percent of the US economy. Seventy percent of the US GDP is made up by consumer spending. So in order to continue to perpetuate this market forward, continue to remain on

healthy levels, the consumer needs to remain healthy. So seeing that consumer spending element of the PCE growing out, you know about a half a percent, that was a healthy sign. So when we talk about inflation numbers, then you naturally want to start push towards Okay, what's the Fed going to do with interest rates? And that's certainly been a hot topic. You know, just next month, September seventeenth and eighteenth, the Fed will be mating a meeting and deciding where

they're taking the federal funds rate. And you know, we've had a good amount of data over the last three four months that have been showing softening inflation getting right in line with the expectations or where the Fed wants it, and some softening in labor. Right. So, as a reminder, last month, so we got you know, the job's number and jobs numbers came in pretty soft compared to compared to expectations. So this has been all signals go for

the FED to start cutting rates. And before I get into you know exactly where the Fed's taking rates, why don't we take a question from a caller. We have Eddie from Mechanicville. Eddie, how we doing this morning?

That numbers one eight hundred talk WGI WGY. That's one one hundred eight two five five. So we're talking about some softening and economic data that is giving the FED enough confidence to start eventually cutting rates, and that is going to most likely start in September. They're meeting September seventeenth and eighteenth, and right now the market is expecting, almost with one hundred percent certainty, that they're going to

at least cut by twenty five basis points. Now, you go out and you look at the Fed funds futures market, which predicts, you know, not only what cuts can happen in September, but also what can happen in November and December. There is some growing sediment in that market that thinks that the FED could cut up to one hundred basis points, so a full one percent by the end of this year. Now,

I personally think that that's a little too optimistic. I'm in the camp that probably twenty five to fifty basis points is where I see, you know, the federal funds right by the end of this year coming down. But nonetheless, that shows that the market thinks that there's more flexibility on how far the FED could bring down interest rates. And this is what I was talking to Vinnie about before the show, and we're thinking about what great data and what great topics do we want to bring to

you folks. One of the you know, backdrops of the FED bringing down the federal funds rates is going to be refinancing opportunities, and it's specifically refinancing on home value. So Vinnie, I want to pull you in here and want to get your opinions. You know again, you know, with the FED most likely cutting rates in September and maybe again additional cuts before your end, what are you seeing out there for refinancing opportunities?

And Paula talk's about refinancing, right, I mean, if you have a mortgage that has six to seven percent interest Right now, we know or we have the expectation that interest rates are going to start to decrease, and when they start to go back down to that five to four percent level again, that could take some time. Right the Fed is going to cut interest rates slowly, and at least they say they are over the course of the next few months and potentially over the next couple

of years. You want to refinance your mortgage and lock in that lower rate. Obviously, you know, having a lower interest rate is optimal. Mortgage rates are as high. You know, they're pretty high right now in comparison to where they have been the past couple of years. So you really want to, you know, just kind of gauge the situation.

And you also don't want to jump too quickly, right just because the Fed makes one rate cut and you don't refinancer mortgage five times every time they make a rate cut, right, You kind of want to wait and let you know, the dust settle and see what happens with an inflation and see what's your own power decides

to do moving forward. And when it comes to buying a new home, you have to think about what mortgage product is the right mortgage product for you, right, So maybe a variable rate mortgage right now would be a good idea because we have the expectation that interest rates are going to start to decrease. And then you also have something called an adjustable rate mortgage, right, And that's

something I have on my property. So you know, back a couple months back, I had gotten adjustable rate mortgage, so I locked in my mortgage rate for ten years. Right, But you get a lower rate than the market rate for fixed conventional mortgages currently, and that rate is locked in for ten years. But the expectation is within those ten years mortgage rates are going to drop back down too close to where they were a couple of years back.

So you know, but using that adjustable rate mortgage, you refinance orm sorry you don't refinance, You basically grab a fixed rate mortgage when those interest rates drop back down. And that's really a great strategy strategy that I'm you using, right, you want to take advantage of those lower interest rates.

It's really crucial and really important. And then another thing, you know, I wanted to mention is that when we work with clients, a lot of times they have these short term cash needs, right, And they have maybe their four one K they rolled over to an IRA and or managing it for them, and they need one two hundred thousand dollars and they have nowhere to pull the cash from. But they need this amount of money for

you know, whatever reason. Maybe they want to do home improvements, maybe they want to buy a boat, It could be anything. But the one thing that I try to steer my clients away from doing is pulling that much money out of your IRA and having all of that taxbill income

in one any given year. You don't want to bump yourself up to a high tax bracket number one, and you don't want to increase your Medicare premiums because your Medicare premiums are based off of your adjusted gross income on your tax return, right, So obviously, pulling money out of your IRA, you're going to be increasing your tax fbile income and increasing your adjustic gross income, and that could pretty you don't have a substantial effect on your

Medicare premiums. So one of the things I, you know, advise a lot of my clients to do is to use secure lines of credit or you know, a home equity loan to finance these short term cash needs, especially you know in the realm of one hundred and two hundred thousand dollars, because you just want to avoid putting yourself in a high tax bracket and increasing those medicare premiums. I mean, having that debt and having that home equity, you could really go a long way, you know, with

those short term cash needs. So just a couple of things. You utilize your real estate, you know, in the best way possible, and you just make sure you're getting the right mortgage product for you.

If we have more demand, is that going to send housing prices even higher? And that is one side of the equation. It certainly could. But you know, I was thinking about it. I was looking on some you know,

some economic data on there's some some housing data. And the other side of this equation is when interest rates come down, I think that's going to increase the supply of homes right because think about how many people right now are sitting in their homes that are willing to move, ready to move, but don't want to because if they sell their home, they're going to give away they're two and a half or they're three percent thirty year mortgage and they're going to be locking in something north of

six and a half to seven percent. So now with interest rates coming down, that's going to create a lot more flexibility for current homeowners that are looking to sell because now they're alternative. Well, yes, they're still going to be giving up alid interest rate at two and a half three percent, they're now looking at potentially four and a half five percent, like Vinny talked about. And I

think that will help counterbalance. You know that which we've seen for for the last three years is so much more demand out there than there was supply, and that's been having you know, such a surge in home values is because of that that drastic imbalance. I mean, it's very similar to when we see inflation in the economy.

I mean, the reason why we saw such heightened inflation starting in twenty twenty one until you know, we still you know, are facing in some parts of the economy, is there so much more demand than there is supply, right, so that that type of imbalance is going to create the surge and pricing. And you know, again, I think that we could see some counterbalance in the housing market with the prospect that dropping rate, So that's a positive.

the day. But yeah, I mean that's one of the huge issues that's going on in the housing market right now as well.

step out into home ownership for their first time. The cost of capital, right, the down payment, you know, gathering that money, the bidding process. You know, you go to put in your bid, just for your real estate agent to tell you you're one out of fifty bids, and already somebody's putting a bid in at all cash over you know, one hundred thousand over what the asking price is. It's been a very challenging time. Now you just got to hope, you know, just like equity markets, the housing

market it's cyclical. There's Heiser lows, and we're certainly in a housing market, you know boom cycle right where home values are dramatically increase. It's always an eye opener. And again Zillow's estimates are never taking it for an absolute fact that would take it more as a grain of salt. But just interesting seeing those those home values just increase month over month. It just it seems it seems ludicrous.

But again, I think, you know, while one camp might think lowering of rates is only going to perpetuate that even further, I personally feel like the lowering of rates is really going to help the supply as well, because current homeowners will feel more comfortable about, you know, stepping out of their thirty year mortgage and getting into new areas, you know, in new home home home places, you know.

And then you know, the other thing too that any brought up was the liquidity that you could pull off your home, and I think that's important. You know, I've worked with a good amount of clients that just recently, you know, had a he lock that was added on

to their home. And you're looking at you know, interest rates around seven and a half eight percent for those and with interest rates coming down, those are gonna be some good opportunities to readjust your home equity line of credit that you potentially have on your home, and those have been great liquidity sources for people. Right if you just have an IRA, you retired, you rolled over your four to one k you rolled it into an IRA as if any pointed out you go to take that

money out, that's all going to be realized income. So you know, using your home as a liquidity source pulling that money out, Yes you're paying interest on it, but that is also tax free income can be a great alternative. And you know, if you're somebody that went out within the last you know, let's say a year and a half and secure a home equity line of credit, most

likely your interest rate is quite high. And you know, again with the Fed cutting rates, this is going to produce and create an opportunity to readjust those those interest

rates at a much lower and attractive rate. So you know, we're we're coming up, you know, getting close to the half of the show and getting into the second half of the show, and really what we're going to want to focus on is let's talk about some more portfolio positioning, right, you know, I talked about it a little bit earlier in the show. How tech really has been the main driver of market performance, you know, all throughout twenty twenty

three and second half of twenty twenty two. So maybe where are some other areas you could be thinking about to have some exposure to create some more diversification and hopefully some outperformance within your portfolio. And you know, the other big element too is interest rates are coming down. That's going to create some opportunities for bonds. What are

you doing. Are you somebody that's sitting in pure cashtill in a money market clip in five and a quarter percent, or have you been you know, adding some treasury, some corporate debt, some mortgage backed securities, some collateralized loan obligations. Well, what have you been adding in your portfolio? And what is right to add there? I think, you know, this is a very unique environment right now that we find ourselves in, where the economy looks good, the economy is strong,

we have the prospect of interest rates coming down. Everybody was throwing around that Goldie lock scenario at the end of twenty twenty three, in the beginning of two twenty four, and you know, it's starting to feel like, okay, maybe this is that soft landing that the you know, the FED discussed that that potentially could happen in the timing

of that. So what is the correct way to really position your portfolio for a soft landing, but also make sure that you have some nice protection in your portfolio as well, and in case, you know, you see some volatility. So a lot of good data on the second half of the show, So I really hope that you do stay with us through the break, and again we're gonna love to hear from you. That number is gonna be

one eight hundred talk WGY. That's one eight hundred eight two five, five, nine, four nine, and you're listening to Let's Talk Money. Let's Talk Money by brought to you by the Bouchet Financial Group. Thank you, hello, and thank you for tuning in and listening through the break. My name is Paulo la Fietra, one of the wealth advisors along with portfolio strategists here at the Bluchet Financial Group. I am joined with my colleague Vincenzo Testa, who is

a Certified Financial Planner and CPA. We spent the first half of the show talking about, you know, you know a little bit of a market recap. We also talked about in the prospect of interest rates coming down, what that means for the housing market, what that means for refinancing, and also kind of giving a precursor to what we're going to talk about in the second half of the show some portfolio positioning and some equity positioning as well. But again, just want to say Happy Labor Day to

all the folks that are listening. This is my favorite time of year. You know, it's the ending of the track season. Vinnie and I are up here in our Saratoga office. I'm sure we'll be walking over to the track this afternoon. It's always great weather and you know, kind of like crowds, so if you get your space, you're not sweating. It's you know, a little bit overcast today, but for the most part, can't complain about the weather.

And most importantly, if you listen to the first half of the show, you know that I'm a big football fan. So we got a lot of good college football this weekend, and then next weekend we kick off the NFL season, So go Raiders for any Raiders fans that are listening on today's show. So I will get into some portfolio positioning, and I would love to hear about any questions that you have either about your current portfolio or what your ideas are moving forward. And that number is one eight

hundred talk WGY. That's one eight hundred eight two five, five, nine four nine. But before I get into portfolio positioning, I actually want to tap Vinnie back in here because Vinnie is truly one of the most foremost experts in this category that I have seen in my ten years in this industry, and I think that this is expertise that really isn't found in many other firms or wealth

management shops. And I really wanted Vinnie to kind of share some basics here and maybe this is something that you're dealing with or potentially you know a loved one to friend, a relative that has a situation like this, so Vinnie could kind of give you a basic understanding of how equity compensation works. So Vinnie, do you mind for a few minutes kind of sharing about your thoughts and your knowledge on equity compensation.

restricted restricted stock units. That's just your company giving you stock. So basically, this designation gives me the expertise. And you know, studying for it was pretty vigorous, and you know, I learned a lot. But the main points to touch on when it comes to folks that are receiving equity compensation is, in my eyes, is tax planning right and risk mitigation.

So you know, there's multiple types of equity comps. You have ISOs which are incentivized stock options, r s us, which are restricted stock units.

a recession? Right? Because the biggest fear when the Fed initially raises rates is if they hold on to higher rates for long enough, it's eventually going to cause a recession for the economy, meaning that you know, consumer spending is going to drastically slow, You're going to see unemployment drastically rise, and corporations across the board will be affected

from that. So a soft landing scenario is that the Fed had successfully tackled the inflationary front that they're dealing with and are able to bring down interest rates before any recession could happen and bypass a recession all around.

And you know, we've seen that before in the early nineties, and certainly a lot of data is supporting that this could be a very similar scenario now, Frankie, I think where you're asking the correct question here is though, Okay, if that is the scenario that is presented to us,

what should my portfolio look like? And it certainly shouldn't be all growth, all tech, right, because although the prospects of a soft landing are out there and can be achieved, we don't want to expose our full portfolio to be fully correlated into growth. So it's you know, very important to diversified, diversified, diversify, it's portfolio management one oh one. So while you want to have some technology in your portfolio, you also want to have some other areas that focus

on different, uh, you know, schemes within the market. So that could be profitability, that could be dividend growth, you know, that could be some value positionings. So it's really important that you're not just looking at one area of the markets, but more so diversifying all around. And again that could also be in a market cap weighted meaning you have some small and mid cap positions in your portfolio as well. Does that make sense, Frankie.

point so point five zero percent. But right now the market thinks that there is certainly a chance and a somewhat probable chance that they could go all the way up to a full one percent, which would bring us all the way down to four point two five percent

to four point five percent. So I know this isn't the exact sharp answer you're looking for, but it's really going to be data dependent, and I think you know right now would be more safe to say anywhere from point two five percent to point seventy five percent that would should be the more confident range.

I mean, if you're working at a public company and you have stock options, and you have RSUs, you have non qualified options, it's very important not to just do and you know, start selling an ad hoc and just going willy nilly in terms of your plan to exit these positions. There's a lot that goes into it. Right, Each individual type of equity conversation has its own tax implications,

and they're all different. And you know, if you think about it, you don't want to, like I was saying before with the IRA distributions, you don't want to pull and create all of this taxible income in one any given year because it's going to put in the highest tax bracket and you could find yourself paying almost fifty cents on the dollar in tax liability on your on

the income you're recognizing. Right, So when it comes to equity comp you really want to spread it across as many years as possible, and you just want to keep you know, you want to minimize your tax liability from exiting the equity comp But on the flip side is you also don't want to leave yourself too exposed, right, and that's where that risk mitigation comes into play. So you know, we've had clients that worked or General Electric, right.

General Electric was one of the most valued companies years ago, right, And a lot of these folks had their four one K and it had you know, a ton of General Electric stocks. They have had equity comp from General Electric, right, so they were really exposed. A lot of their net worth was tied to General Electric, and not only that, their income was tied to General Electric. Right, so you're really exposed when your company, all your net worth is

tied up in your company stock and you're working there. Right, So if something were to go you know, downhill at your company, then not only is your job at risk, your income's at risk, but then your portfolio is at risk too. So you really want to be able to mitigate your risk. And you don't have all your eggs in one basket. I mean, some of these folks that worked General Electric, I mean they couldn't retire. I mean General Electric stock took a pretty significant dip. I mean, Polo,

I mean your polews on the investment team. He knows better than anybody. General Electric was one of the highest valued companies years ago, and since their stock has taken a dip. And if you had, you know, the majority of your net worth tied to General Electric, you know things aren't looking too good for you.

tax liability and pay fifty centsiment dollar. So while you're holding onto it, and while you're planning and you know, strategizing to exit your equity compensation over the course of multiple years, you can hedge you know, the downside risk of if your company company stock work was to take a dip and you know you're just not fully exposed. It's really a huge issue to have all of your

net worth tied up in your company. So the two main points I want to make is like the tax playing aspect of it is so important, and the risk mitigation aspect that of it is so important. I mean, your entire retirement plan can go into shambles if you're not planning around your equity compensation, you know, in the correct.

And that's you know, a slew of different options that are available for that, you know, most specifically using a lot of derivatives, you know, putting collars or uh you know, writing calls and putting puts on certain positions to create some cushion and custom you know, customize that to exactly what you're looking for, whether that's just pure downside protection or some downside protection, but you also want to provide income or some downside protection, but you also want some

market participation in the company that you currently have as well. So that's what options are available, uh to do so, and those are fully customizable depending on each and every client's need. So, Vinnie, if I was a potential client or a current client, and I had, say, you know a lot of money in Regeneron, I think Regeneron is

a great company. So say, you know, I believed in Regeneron, saved all my RSUs and stock options to start to build up what would you need from me to get that conversation started, for you to see my full situation and be able to start a full analysis.

kind of do a stress test. Right, so you know, the tax brackets are what's really important.

are the most efficient from a tax perspective. Right. You know, we have another client, I mean there's something called the donor revised fund. Right, you know, we have a client that has equity comp and they donate fifty thousand dollars

a year of their church. So the Donor Advised Fund is a fund that we can manage, right, So you contribute obviously cash, you can contribute cash or stock to the fund, right, and the initial contribution to the fund is what's considered a charitable donation, and then you write

checks out of that fund moving forward. So you could write checks, you know, any given day, any given year, but the initial contribution to the fund is what is considered the charitable contribution, and that's a write off on your taxes if you itemize. Right. So we had a client who had some built in gains in their equity compensation, so I took their RSUs which had these pretty significant long term cap little gains, and we pushed it into the Donor Advice Fund, and we put five years worth

of their donations in the Donor Advice Fund. And you can invest the funds that are in the Donor Advice Fund as well. So it's really a great strategy. So there's a ton of tax planning opportunities and wage you can kind of you know, save yourself taxes and just you know, minimize your tax liability overall.

to have you here at the firm. So Vinnie shared a lot, you know again about equity compensation, some portfolio mitigation, some tax planning, and you know where I really want to take the remaining you know, probably ten minutes or so of the show is what should you be doing in your portfolio? I know, we got a great question from Frankie from water VOLEIAD that was talking about a soft landing and how he should be positioning his portfolio

if we do achieve that soft landing. And you know, I think regardless of a soft landing or not, you really should be looking at your portfolio. And let's start top down quickly, right, So what is your investment vehicles in your portfolio? If they're mutual funds, you should revisit that, right.

Mutual funds they're not tax efficient, meaning at the end of the year, they pay out something called a capital gains distribution regardless if you sell the fund or not, so that's not advantageous, especially if you have it in a taxable account. And there's also higher fees on mutual funds. Right, Over ninety percent of mutual funds are actively managed, so you're paying an active manager fee on that mutual fund,

so you're paying over one percent. Where ETFs exchange traded funds they do not have any capital gains distribution, then you're not paying that active management fee, so they're much lower costs. One of our core positions in our portfolios SHP that expense ratios point zero three percent. So for the long term, those are the funds you want to focus on. And if you have single stocks in your portfolio,

that's okay. Sometimes we like to hold single stocks in the portfolio currently we do hold two individual stocks in the portfolio. You just want to make sure that you're building around them right. Portfolio concentration can be challenging, right, So, if you held onto the video solely at the end of you know, through twenty twenty three and twenty twenty four,

that worked perfectly for you. But if you just held onto Navidia in twenty twenty two when you were down fifty five percent, you wouldn't be singing that same tune. So if you do hold single stocks, look for more diversification. And then from a portfolio composition standpoint, again, we think that the economy is still strong heading in the right direction. We have some economic data coming up. We got jobs at the end of next week, then we have CPI the week after that, then we head into the FED

seventeenth and eighteenth of September. But for the most part, everything looks good. So we still like technology, we still like growth. QQQ has always been the powerhouse of our portfolio and that won't change. But you want to make sure that you have other characteristics, other styles within the portfolio to create that diversifiction. Like we talked about personally,

we like profitability and the dividend growers. We capture those through uh, you know a few different ETFs and we don't have any you know, real sector specific positions in the portfolio. We do have a nice overweight to healthcare. We like healthcare a lot from the free cash flow element, the strong balance sheets, the dividend paying and the back

door AI play there as well. We're seeing a lot of AI, you know, development and drugs and you know cancer, uh, you know, cures and other different types of you know, medical advancements. AI is really playing a major play there. So we do have some AI, some healthcare overweight there. But you know, one sector I've been you know, keeping an eye on and we don't have a drastic overweight in the portfolio on there, but I'm starting to really

like them, and that's financials. So financials has not been anybody's favorite for you know, the last twelve months or so. And I mean this brings us all the way back to Silicon Valley Bank and you know, the drastic rise of interest rates and the collapse of banks, and then you look at you know, kind of commercial real estate and how buildings aren't being filled anymore. And we live in this new work from Home Era and these bank balance sheets are just not right and you should stay away,

and they got punished, they certainly did. Financials were down quite a But again, when we talk about this scenario that we've been talking about on today's show, where you know, a venture the Fed's going to start cutting rates, the consumer is still in a healthy spot, you know, labor should stabilize, inflation came down. This is a nice breeding ground for financials because what does that mean, right, So if the consumer's still healthy and interest rates are coming down,

that will create more demand on borrowing. Right, You're going to be much more incentivized to go out get a mortgage, refi your mortgage, get a you know, collateralized loan on either your home, get a new loan, whatever the case, man base, you're going to see a drastic, you know, uptick in the demand for loans. But also with interest rates coming down, they're still going to be elevated from

what we've seen over the last fifteen years. So you're still going to see people continue to deposit into high yield savings accounts and such because they're still going to be earning you know, four four and a half percent. And I still think even though we've seen a nice rebound in financials, I still feel like financials are being a little bit over sold from you know, the late twenty twenty three and I think that still present, you know,

creates an opportunity for for some area financials. Now where and where you decide to go is it can make

a very big difference. You know, so large cap financials, you know, the big banks, the JP Morgans, the Morgan, Stanleys, the Wells, Fargos, uh, you know, Berkshire Hathaway, that they're going to be less exposed to commercial real estate compared to more of the small mid regional banks are going to have a much higher exposure to the commercial real estate space, which is an area that a lot of investors say that they want to stay away from because

eventually those debts are going to come do and there's going to be a lot of insolvency on these banks balance sheets and that could create some volatility. So there are different areas of where you can get exposure to for financials. But one last point I want to talk about the portfolio is let's talk about fixing come because it's been kind of the forgotten child over the last decade. But now with interest rates coming up, that's made bonds attractive.

It's been a little painful ride up because as we know, there's an inverse relationship between interest rates and bond prices, So as interest rates come up, bond prices go down. And that was the year like twenty twenty two where bond prices got hammered. They Barclay's aggregate bondednext, which is essentially the S and P five hundred buffer bonds was down about seventeen eighteen percent, just as much as that.

But now that we've gone through this pain of you know, the rising interest rates all throughout twenty twenty two and so on the twenty twenty three and now we're at the point of the prospect of interest rates coming down. This is creating a nice outlook, a nice five year outlook for bonds. So if you've just been sitting on cash and you're looking for ways to step back into the market, specifically on the fixed income side, you need

to start thinking about where you want to go. Do you want treasury exposure, do you want corporate debt exposure, do you want MBS exposure? You know, how far out are you going on your duration, meaning how how far out are you going on on your loan term? So you want to stick, you want to stick between one year or three or five year or ten years. And these are the questions you need to start thinking about for going to get that cash reinvested in your portfolio.

So a lot of good information and as always, folks, really appreciate everybody that is listening. You know, I know Vinnie and I are both grateful for all the listeners on today's show. I hope everybody has a wonderful, wonderful Labor Day weekend. Hopefully the weather continues to cooperate again. Any Raiders fans out there, go Raiders, and you are listening to Let's Talk Monday, brought to you by the Bouchet Financial Group, where we help our clients prioritize their

health while we manage their wealth for life. Thank you,