1 00:00:00,080 --> 00:00:02,520 Speaker 1: You got a lot today, do you? I do got 2 00:00:02,520 --> 00:00:05,280 Speaker 1: to put up these Halloween decorations. Will It's time to 3 00:00:05,360 --> 00:00:07,240 Speaker 1: do it, dude? The rest I do need to know. 4 00:00:07,360 --> 00:00:19,639 Speaker 2: On fifty five krs the talk station tonight, New Tariff 5 00:00:19,680 --> 00:00:23,119 Speaker 2: Talk rattles the markets. You're listening to Simply Money, presented 6 00:00:23,120 --> 00:00:26,639 Speaker 2: by all Worth Financial on Bob Sponseller along with Brian James. 7 00:00:26,680 --> 00:00:28,240 Speaker 3: Well, everything had been pretty. 8 00:00:27,960 --> 00:00:32,800 Speaker 2: Much smooth sailing for months now, lots of green nearly 9 00:00:32,880 --> 00:00:36,440 Speaker 2: every day, and then Friday happened. Brian, you and I 10 00:00:36,479 --> 00:00:39,680 Speaker 2: have been talking about people pulling profits off the table, 11 00:00:39,800 --> 00:00:44,280 Speaker 2: filling up their emergency fund, all the important and responsible 12 00:00:44,320 --> 00:00:46,680 Speaker 2: things that we're supposed to do, and. 13 00:00:46,800 --> 00:00:49,360 Speaker 3: Friday's volatility is the reason why. 14 00:00:49,440 --> 00:00:54,920 Speaker 2: But all Worst Chief Investment Officer Andy Stout joins us tonight. Andy, 15 00:00:55,040 --> 00:00:58,960 Speaker 2: walk us through what are not really new tariff threats. 16 00:00:59,080 --> 00:01:01,640 Speaker 2: I mean, President truck has been talking about this for 17 00:01:01,680 --> 00:01:04,240 Speaker 2: a while, but I guess no one thought he would 18 00:01:04,280 --> 00:01:06,840 Speaker 2: actually do it, and he kind of lowered the boom 19 00:01:06,880 --> 00:01:08,040 Speaker 2: on Friday midday. 20 00:01:09,120 --> 00:01:13,839 Speaker 4: Well yeah, he lowered the boom. However, the boom didn't 21 00:01:13,880 --> 00:01:18,000 Speaker 4: really quite land at least yet. So when you think 22 00:01:18,000 --> 00:01:20,720 Speaker 4: about what the threat was and what was going on 23 00:01:20,720 --> 00:01:24,080 Speaker 4: on Friday when he saw this massive stock market sell off. 24 00:01:24,640 --> 00:01:29,480 Speaker 4: What you really saw was the retaliation from President Trump 25 00:01:29,880 --> 00:01:32,320 Speaker 4: in regards to something that China did where they started 26 00:01:32,319 --> 00:01:36,840 Speaker 4: to talk about how they were going to essentially add 27 00:01:37,000 --> 00:01:38,520 Speaker 4: new export restrictions on. 28 00:01:38,480 --> 00:01:39,959 Speaker 3: These rare earth minerals. 29 00:01:40,000 --> 00:01:42,959 Speaker 4: Now rare earth minerals sound fancy, but it's really just 30 00:01:43,000 --> 00:01:46,440 Speaker 4: things that I might be using electronics, think like AI infrastructure. 31 00:01:46,560 --> 00:01:51,200 Speaker 4: It's also using a lot of defense areas, like you 32 00:01:51,200 --> 00:01:55,200 Speaker 4: know weapons as an example. Now this is something that's 33 00:01:55,320 --> 00:01:58,760 Speaker 4: not really new. China put some restrictions back in April. 34 00:01:59,360 --> 00:02:02,680 Speaker 4: Export restrict is on seven. There's fifteen rare earth minerals 35 00:02:02,800 --> 00:02:04,840 Speaker 4: that did on seven. They added five more. So now 36 00:02:04,840 --> 00:02:07,240 Speaker 4: twelve of the fifteen half some export restrictions. And this 37 00:02:07,280 --> 00:02:09,560 Speaker 4: just means they need to get some permission before exporting 38 00:02:09,560 --> 00:02:11,720 Speaker 4: it out, but it certainly makes it more challenging. So 39 00:02:11,760 --> 00:02:14,800 Speaker 4: what President Trump did in retaliation was essentially threatened one 40 00:02:14,880 --> 00:02:17,679 Speaker 4: hundred percent tariffs starting on November first. 41 00:02:17,760 --> 00:02:18,679 Speaker 3: Next say, he threatened. 42 00:02:18,919 --> 00:02:22,120 Speaker 4: That's why I mentioned that the boom hasn't quiet landed. 43 00:02:22,600 --> 00:02:26,240 Speaker 4: But also keep in mind that President Trump and Chinese 44 00:02:26,280 --> 00:02:32,079 Speaker 4: President Jijiping are scheduled to meet later this month. In Korea, 45 00:02:32,680 --> 00:02:35,600 Speaker 4: the meetings are somewhere around either October thirty first or 46 00:02:35,639 --> 00:02:38,760 Speaker 4: November first. It's not necessarily set in stone yet, but 47 00:02:38,800 --> 00:02:41,240 Speaker 4: that's when the EI they're scheduled to meet. So not 48 00:02:41,400 --> 00:02:44,679 Speaker 4: really thinking that this is anything at this time more 49 00:02:44,720 --> 00:02:47,600 Speaker 4: than a grand bargaining posturing. 50 00:02:48,120 --> 00:02:50,320 Speaker 5: So any we've seen these kinds of things before, this 51 00:02:50,720 --> 00:02:53,480 Speaker 5: feels to me like just a bunch more saber rattling 52 00:02:53,520 --> 00:02:56,440 Speaker 5: because whenever we see these kinds of conflicts, and like 53 00:02:56,440 --> 00:02:58,640 Speaker 5: you said, we saw this back in April too, it 54 00:02:58,760 --> 00:03:02,720 Speaker 5: just seems like everybody's gonna threaten, take their ball and 55 00:03:02,760 --> 00:03:04,560 Speaker 5: go home, right up until the point where they don't 56 00:03:04,560 --> 00:03:06,760 Speaker 5: and we come to some kind of conclusion. Seems like 57 00:03:06,840 --> 00:03:08,800 Speaker 5: you can see this over hundreds of years worth of 58 00:03:08,880 --> 00:03:11,560 Speaker 5: history of trade negotiations. Is there anything going on here 59 00:03:11,720 --> 00:03:12,919 Speaker 5: really that we haven't seen before? 60 00:03:14,160 --> 00:03:14,640 Speaker 3: Not really. 61 00:03:14,680 --> 00:03:17,000 Speaker 4: I mean when you think about just market cycles and 62 00:03:17,040 --> 00:03:20,480 Speaker 4: how markets work, it really just follows your typical pattern. 63 00:03:20,800 --> 00:03:23,560 Speaker 4: You see things going smoothly, then all of a sudden 64 00:03:23,600 --> 00:03:26,040 Speaker 4: there is a catalyst. The only thing that really changes 65 00:03:26,080 --> 00:03:28,920 Speaker 4: too much from period to period is what that catalyst is. 66 00:03:29,400 --> 00:03:33,560 Speaker 4: So I think what's really critical for investors is to 67 00:03:33,720 --> 00:03:38,480 Speaker 4: understand how markets work. Understand the cycles of markets. If 68 00:03:38,480 --> 00:03:40,960 Speaker 4: you're if you know ahead of time, yeah, markets go 69 00:03:41,080 --> 00:03:43,240 Speaker 4: up over a period of time. Yes, there are going 70 00:03:43,320 --> 00:03:46,480 Speaker 4: to be these ten percent, twenty percent, even thirty percent pullbacks. 71 00:03:46,560 --> 00:03:49,240 Speaker 4: But when you look at the broad cycle, what you 72 00:03:49,320 --> 00:03:53,120 Speaker 4: see is how it works, and you start to understand that, 73 00:03:53,480 --> 00:03:56,200 Speaker 4: then that allows you to avoid panic selling because what 74 00:03:56,320 --> 00:03:58,960 Speaker 4: you see, you see these cadalines, and you get freaked out, 75 00:03:59,720 --> 00:04:02,680 Speaker 4: and that's not something that is really conducive to making 76 00:04:02,800 --> 00:04:06,400 Speaker 4: smart decisions. When your emotions takeover, that's when bad things happen. 77 00:04:06,440 --> 00:04:08,320 Speaker 4: Because if you think about it, you know, one thing 78 00:04:08,480 --> 00:04:11,400 Speaker 4: we were talking about before the show was how you 79 00:04:11,440 --> 00:04:14,200 Speaker 4: look back over the past just ten years, but we've 80 00:04:14,200 --> 00:04:18,600 Speaker 4: seen about eight instances of you know, ten percent market pullbacks, 81 00:04:19,120 --> 00:04:21,880 Speaker 4: So it's common, it happens, and if you if you 82 00:04:22,000 --> 00:04:23,880 Speaker 4: reacted to every single one of those, you'd be in 83 00:04:23,880 --> 00:04:25,800 Speaker 4: a really bad position because you end up what you 84 00:04:25,960 --> 00:04:29,520 Speaker 4: usually would probably end up doing is essentially not buying 85 00:04:29,560 --> 00:04:32,760 Speaker 4: low and selling high, but essentially buying high and selling low, 86 00:04:32,800 --> 00:04:34,640 Speaker 4: which is the exact wrong thing you want to do. 87 00:04:34,800 --> 00:04:37,560 Speaker 4: And here's the one last thing, to keep in mind, 88 00:04:37,760 --> 00:04:40,680 Speaker 4: we're only like three percent off of market highs. I mean, 89 00:04:40,760 --> 00:04:44,480 Speaker 4: let's just kind of put everything into into perspective, take 90 00:04:44,480 --> 00:04:47,320 Speaker 4: a step back, calm down. It's not as if you 91 00:04:47,360 --> 00:04:49,520 Speaker 4: know the world's coming to it, and it's not like, 92 00:04:49,880 --> 00:04:53,039 Speaker 4: you know, we're where the Bengals are where they're on 93 00:04:53,080 --> 00:04:57,479 Speaker 4: their fifth quarterback of the year. And fortunately it looked 94 00:04:57,480 --> 00:04:59,960 Speaker 4: a little bit better on Sunday with Flago behind the helm. 95 00:05:00,160 --> 00:05:02,760 Speaker 4: Still didn't quite you know, finish it. Uh, but you know, 96 00:05:02,760 --> 00:05:06,000 Speaker 4: we're not there yet, and you know, understanding how things work, 97 00:05:06,040 --> 00:05:08,560 Speaker 4: and that's really critical, all right. 98 00:05:08,440 --> 00:05:11,279 Speaker 2: Andy, I was watching the market Friday afternoon. I always 99 00:05:11,360 --> 00:05:13,640 Speaker 2: like to watch the close of the market rather than 100 00:05:13,680 --> 00:05:17,320 Speaker 2: the open, and we did pretty much close at session 101 00:05:17,400 --> 00:05:21,080 Speaker 2: lows on Friday, which kind of surprised me because any 102 00:05:21,120 --> 00:05:25,000 Speaker 2: of this, you know, President Trump, you know, Tara threatening stuff, 103 00:05:25,040 --> 00:05:28,440 Speaker 2: has typically been a great buy the dip kind of moment. 104 00:05:29,040 --> 00:05:31,840 Speaker 2: Perhaps it didn't happen on Friday. I'm just speculating here. 105 00:05:31,880 --> 00:05:34,080 Speaker 2: I'd love to get your perspective because we got two 106 00:05:34,120 --> 00:05:37,680 Speaker 2: other things going on right now simultaneously. One is a 107 00:05:37,720 --> 00:05:40,880 Speaker 2: government shut down, which is entering its second week, and 108 00:05:40,920 --> 00:05:43,680 Speaker 2: then also we're moving into earning season, you know, in 109 00:05:43,720 --> 00:05:46,640 Speaker 2: earnest beginning this week. Does that have anything to do 110 00:05:46,720 --> 00:05:49,839 Speaker 2: with the fact that people just weren't interested in buying 111 00:05:49,880 --> 00:05:52,000 Speaker 2: stocks on the dip on Friday afternoon. 112 00:05:53,040 --> 00:05:56,360 Speaker 4: I think the reason, and this is just anybody's speculation, 113 00:05:56,680 --> 00:06:00,279 Speaker 4: but my speculation for the reason clou closing near the 114 00:06:00,279 --> 00:06:03,719 Speaker 4: the lows on Friday was people people Wall Street traders 115 00:06:04,000 --> 00:06:08,039 Speaker 4: didn't want to carry risk into the weekend. So you 116 00:06:08,120 --> 00:06:09,720 Speaker 4: got a long period of time and they don't want 117 00:06:09,760 --> 00:06:11,520 Speaker 4: to have that risk on the books because who knows 118 00:06:11,520 --> 00:06:13,719 Speaker 4: what could happen over the weekend. It's a long period 119 00:06:13,760 --> 00:06:16,039 Speaker 4: of stretch, and when you have this high level of uncertainty, 120 00:06:16,240 --> 00:06:18,760 Speaker 4: that's when they don't want to essentially have too much 121 00:06:18,839 --> 00:06:21,080 Speaker 4: on the book. So they were essentially selling some position 122 00:06:21,200 --> 00:06:25,240 Speaker 4: so they would be coming into the week essentially, you know, 123 00:06:25,560 --> 00:06:28,039 Speaker 4: free and clear, if you will. Now what we saw 124 00:06:28,080 --> 00:06:31,880 Speaker 4: on Sunday, though, is President Trump and some words from 125 00:06:31,960 --> 00:06:35,679 Speaker 4: j Vice President jadvanced as well, was that essentially walking 126 00:06:35,720 --> 00:06:39,560 Speaker 4: back those threats, right, you know, President Trump said on 127 00:06:39,600 --> 00:06:42,200 Speaker 4: his truth social that everything's going to be fine now. 128 00:06:42,240 --> 00:06:44,800 Speaker 4: President g it was just basically having a bad day, 129 00:06:44,880 --> 00:06:48,560 Speaker 4: if you will, so they walk that back, so not 130 00:06:48,800 --> 00:06:52,679 Speaker 4: too material, and to your point, Bob, it does open 131 00:06:52,720 --> 00:06:55,880 Speaker 4: the door for future negotiations, which is a good thing. 132 00:06:56,240 --> 00:06:58,279 Speaker 4: But then there's also the things we all need to 133 00:06:58,279 --> 00:07:02,000 Speaker 4: look at, which is corporate earning season coming up, which 134 00:07:02,040 --> 00:07:05,240 Speaker 4: is the ongoing government shut down. So there's definitely some 135 00:07:05,360 --> 00:07:07,200 Speaker 4: other things that are moving right now. 136 00:07:08,520 --> 00:07:11,040 Speaker 5: So Okay, what should we be excited about? What should 137 00:07:11,080 --> 00:07:13,360 Speaker 5: we be terrified about? Is there any reason that it's 138 00:07:13,400 --> 00:07:14,080 Speaker 5: time to panic? 139 00:07:14,120 --> 00:07:15,880 Speaker 3: Andy? I always want to know when does the calendar 140 00:07:15,920 --> 00:07:17,080 Speaker 3: turn to panic day? Right? 141 00:07:17,120 --> 00:07:19,160 Speaker 5: Shouldn't we be out there really just worried about the 142 00:07:19,200 --> 00:07:21,080 Speaker 5: end of the world and everybody going over the cliff? 143 00:07:21,080 --> 00:07:22,240 Speaker 3: Are we there yet? Are we there yet? Are we 144 00:07:22,280 --> 00:07:26,040 Speaker 3: there yet? Well, we'll sarcasm there for you. Andy. 145 00:07:26,720 --> 00:07:29,920 Speaker 4: Wow, this is the worst than driving my kids down 146 00:07:29,920 --> 00:07:30,720 Speaker 4: to Hilton tod. 147 00:07:30,600 --> 00:07:32,080 Speaker 3: Are we there yet? Are the area? 148 00:07:32,440 --> 00:07:32,840 Speaker 1: Wow? 149 00:07:33,480 --> 00:07:35,680 Speaker 3: No, we're not there yet. 150 00:07:36,200 --> 00:07:40,280 Speaker 4: And you know, even when we do get there, it's 151 00:07:40,320 --> 00:07:43,040 Speaker 4: probably an opportunity in all honesty, because that's when you 152 00:07:43,080 --> 00:07:45,680 Speaker 4: see some really good values and that's where you know 153 00:07:46,640 --> 00:07:49,880 Speaker 4: you want to sell before you're there, Ryan, right, you 154 00:07:49,920 --> 00:07:53,280 Speaker 4: want to But knowing what to sell and when to 155 00:07:53,320 --> 00:07:57,280 Speaker 4: sell is tricky because you know, as one of the 156 00:07:57,280 --> 00:08:01,320 Speaker 4: most legendary investors economists of all times, Cain's one said, 157 00:08:01,360 --> 00:08:05,040 Speaker 4: markets can remain irrational longer than you can remain solvent. 158 00:08:05,360 --> 00:08:08,640 Speaker 4: So you know, good luck timing that. I would suggest 159 00:08:08,680 --> 00:08:11,520 Speaker 4: just you know, sticking with that trip and you know, 160 00:08:11,680 --> 00:08:15,200 Speaker 4: not you know, going over the cliff with any sort 161 00:08:15,200 --> 00:08:19,920 Speaker 4: of decision making. So are we there yet? No, we're 162 00:08:19,960 --> 00:08:21,720 Speaker 4: not there yet. But you know, some things to watch 163 00:08:21,760 --> 00:08:25,240 Speaker 4: this week. You do have the ongoing government shut down. 164 00:08:25,880 --> 00:08:27,640 Speaker 6: You do have that. 165 00:08:27,680 --> 00:08:30,160 Speaker 4: Entering its second full week. Doesn't look like there's any 166 00:08:30,240 --> 00:08:35,360 Speaker 4: real progress yet. And you know, with some of the 167 00:08:35,400 --> 00:08:38,520 Speaker 4: things that have occurred over the weekend, it certainly suggests that, 168 00:08:38,760 --> 00:08:41,040 Speaker 4: you know, this might drag out a bit longer. You know, 169 00:08:41,080 --> 00:08:43,040 Speaker 4: one thing that we haven't been getting during this whole 170 00:08:43,080 --> 00:08:48,000 Speaker 4: time is some very important economic data releases. However, uh, 171 00:08:48,640 --> 00:08:51,120 Speaker 4: we are going to get the CPI data. The BLS, 172 00:08:51,240 --> 00:08:55,240 Speaker 4: the Bureau of Labor Statistics, recalled back its workforce so 173 00:08:55,280 --> 00:08:58,360 Speaker 4: they could get the CPI out for the month of September. 174 00:08:58,400 --> 00:09:00,720 Speaker 4: And the reason for that is that data is actually 175 00:09:00,800 --> 00:09:04,439 Speaker 4: needed for the cost of living adjustments to calculate the 176 00:09:04,440 --> 00:09:07,480 Speaker 4: twenty twenty six social Security checks, So that's why they're 177 00:09:07,520 --> 00:09:10,240 Speaker 4: doing that. On a positive side note, that's really great 178 00:09:10,240 --> 00:09:12,199 Speaker 4: news for the Federal Reserve because that gives them a 179 00:09:12,320 --> 00:09:14,960 Speaker 4: very important piece of data heading into its end of 180 00:09:15,040 --> 00:09:20,680 Speaker 4: month meeting. So that's something that's I guess good ish 181 00:09:20,720 --> 00:09:22,360 Speaker 4: if you want to focus on that. Another thing that's 182 00:09:22,400 --> 00:09:26,000 Speaker 4: good is the earning season. So heading into earning season, 183 00:09:26,040 --> 00:09:29,640 Speaker 4: what Wall Street's looking for about seven percent a year 184 00:09:29,679 --> 00:09:31,520 Speaker 4: over year growth, and what we normally see is a 185 00:09:31,520 --> 00:09:34,520 Speaker 4: beat rate of you know, seventy five eighty percent of 186 00:09:34,559 --> 00:09:39,240 Speaker 4: companies reporting better than expected earnings, and that essentially allows 187 00:09:39,320 --> 00:09:43,160 Speaker 4: that spread over what the preseason estimate is to what 188 00:09:43,200 --> 00:09:46,680 Speaker 4: we actually see of around maybe two to five percent. 189 00:09:46,800 --> 00:09:48,080 Speaker 4: So I want to be shocked at all if we 190 00:09:48,080 --> 00:09:51,040 Speaker 4: get a ten percent a year over year earnings growth, 191 00:09:51,520 --> 00:09:55,320 Speaker 4: which would be just another you know, essentially you know, 192 00:09:55,600 --> 00:09:59,679 Speaker 4: notch in the Wall Streets cap if you will, where 193 00:10:00,080 --> 00:10:03,840 Speaker 4: to get consistently strong earnings. And if you think about 194 00:10:03,840 --> 00:10:06,800 Speaker 4: what drives markets, what drives your returns, what drives your 195 00:10:07,200 --> 00:10:10,600 Speaker 4: ability to retire, it's companies making money and that's what 196 00:10:10,640 --> 00:10:11,240 Speaker 4: they keep doing. 197 00:10:12,800 --> 00:10:16,240 Speaker 2: All right, Andy, I trust your recession scorecard that you 198 00:10:16,280 --> 00:10:19,080 Speaker 2: and your team put together way more than the Federal 199 00:10:19,120 --> 00:10:23,360 Speaker 2: Bureau of Labor Statistics. So that being said, any data, 200 00:10:23,440 --> 00:10:25,600 Speaker 2: I know, you guys collect data all the time and 201 00:10:25,640 --> 00:10:29,640 Speaker 2: you update that scorecard. Any changes over the last week, 202 00:10:30,559 --> 00:10:33,640 Speaker 2: good or bad, when you factor all the real data 203 00:10:33,720 --> 00:10:37,160 Speaker 2: out there into your recession scorecard. Any changes over the 204 00:10:37,240 --> 00:10:39,240 Speaker 2: last week that we need to be made aware of. 205 00:10:40,160 --> 00:10:40,360 Speaker 1: Yeah. 206 00:10:40,400 --> 00:10:42,400 Speaker 4: One of the nice things about, you know, some of 207 00:10:42,400 --> 00:10:44,400 Speaker 4: the indicators we look at is that they're not all 208 00:10:44,440 --> 00:10:47,280 Speaker 4: based on data from the government. We're looking at some 209 00:10:47,360 --> 00:10:50,680 Speaker 4: real time market indicators that we're looking at a few other. 210 00:10:52,400 --> 00:10:52,920 Speaker 1: Factors. 211 00:10:53,440 --> 00:10:53,640 Speaker 3: You know. 212 00:10:53,720 --> 00:10:56,400 Speaker 4: With that said, you know there are certainly some reliance 213 00:10:56,440 --> 00:10:58,800 Speaker 4: on data coming from the government, So a little bit 214 00:10:58,840 --> 00:11:03,040 Speaker 4: on pause for some of those indicators. That said, when 215 00:11:03,040 --> 00:11:05,160 Speaker 4: you look at just the data as a whole, including 216 00:11:05,160 --> 00:11:07,520 Speaker 4: some of the market related data, you know, we're still 217 00:11:07,760 --> 00:11:09,959 Speaker 4: I've called it medium risk. So when we look out 218 00:11:09,960 --> 00:11:14,520 Speaker 4: over the next six to nine months, Yeah, not high risk, 219 00:11:15,120 --> 00:11:17,280 Speaker 4: certainly not a non zero riscovery session. 220 00:11:17,480 --> 00:11:20,200 Speaker 2: But when you when you say sorry to interrupt, no, 221 00:11:20,360 --> 00:11:23,400 Speaker 2: sorry to interrupting, but when you say medium risk, talk 222 00:11:23,440 --> 00:11:25,760 Speaker 2: to us about what that means in terms of data. 223 00:11:25,760 --> 00:11:28,400 Speaker 2: And here here's the context of my question. We're I 224 00:11:28,440 --> 00:11:31,000 Speaker 2: think we're going to get good earnings this quarter. The 225 00:11:31,040 --> 00:11:34,160 Speaker 2: Fed is starting to lower interest rates. Inflation seems to 226 00:11:34,240 --> 00:11:37,840 Speaker 2: be you know, under control. Uh, what are the risks 227 00:11:37,880 --> 00:11:40,920 Speaker 2: out there in the economy, you know, as you pull 228 00:11:41,000 --> 00:11:45,080 Speaker 2: you know, take all the all the biases and whatever aside. 229 00:11:45,120 --> 00:11:47,280 Speaker 2: What are the risks to the economy right now that 230 00:11:47,320 --> 00:11:48,520 Speaker 2: maybe we're not thinking about. 231 00:11:49,600 --> 00:11:51,760 Speaker 4: So first off, to answer your first question, I say 232 00:11:51,800 --> 00:11:54,480 Speaker 4: medium risk. I would say there's less than a fifty 233 00:11:54,520 --> 00:11:57,680 Speaker 4: percent chance that we see a recession in the next 234 00:11:57,720 --> 00:12:00,880 Speaker 4: six to nine months now when we look, you know, 235 00:12:00,920 --> 00:12:03,840 Speaker 4: the different factors out there that are concerning you know, 236 00:12:03,880 --> 00:12:07,600 Speaker 4: certainly the labor market has shown some cracks here recently 237 00:12:08,160 --> 00:12:11,760 Speaker 4: with the data coming from the government, which is now 238 00:12:11,800 --> 00:12:14,320 Speaker 4: on pause because we haven't really seen that. But the 239 00:12:14,440 --> 00:12:19,079 Speaker 4: payrolls from employers before the shutdown showed someone like the 240 00:12:19,760 --> 00:12:23,840 Speaker 4: weakest stretch essentially since since COVID we look like a 241 00:12:23,880 --> 00:12:27,679 Speaker 4: four month period. The last four months it's been shaky. 242 00:12:27,720 --> 00:12:30,640 Speaker 4: So what that suggests from the Federal reserves perspective, and 243 00:12:30,640 --> 00:12:33,120 Speaker 4: this is why they are cutting rates, is that the 244 00:12:33,360 --> 00:12:35,440 Speaker 4: you can't look at the labor market as coming from 245 00:12:35,440 --> 00:12:38,720 Speaker 4: a position of strength, but more a position of fragility, 246 00:12:38,800 --> 00:12:41,600 Speaker 4: and that's really going to allow them to cut race 247 00:12:41,679 --> 00:12:44,720 Speaker 4: despite inflation being higher than where it is. So you 248 00:12:44,760 --> 00:12:47,800 Speaker 4: see some weakness there. You see some weakness. The housing 249 00:12:47,840 --> 00:12:50,839 Speaker 4: markets you know, not strong, Manufacturing isn't strong. These are 250 00:12:50,920 --> 00:12:55,360 Speaker 4: areas that continue to i'll call it stagnate more than 251 00:12:55,400 --> 00:12:57,440 Speaker 4: anything else. And when you look at it all together, 252 00:12:57,840 --> 00:13:00,800 Speaker 4: you know it's certainly some stagnation across in some areas, 253 00:13:00,920 --> 00:13:03,640 Speaker 4: but there's strength in other areas. And that's like consumer 254 00:13:03,720 --> 00:13:06,440 Speaker 4: spending continues to be strong, and certainly part of that's 255 00:13:06,520 --> 00:13:10,240 Speaker 4: due to your top income earners. They represent forty nine 256 00:13:10,240 --> 00:13:13,000 Speaker 4: point two percent of total consumer spending. And where the 257 00:13:13,040 --> 00:13:17,720 Speaker 4: market's going higher, that just emboldens the upper cohort essentially 258 00:13:17,720 --> 00:13:19,640 Speaker 4: to keep spending because they have a large portion. They're 259 00:13:19,640 --> 00:13:21,880 Speaker 4: well tied up into the stock market, and they feel 260 00:13:21,920 --> 00:13:23,559 Speaker 4: better and they're going to keep spending and that's going 261 00:13:23,640 --> 00:13:25,840 Speaker 4: to keep the economy growing. So it's good in the 262 00:13:25,880 --> 00:13:27,640 Speaker 4: near term, but we would like to see a little 263 00:13:27,640 --> 00:13:30,280 Speaker 4: bit more broad based growth. And all honesty, all. 264 00:13:30,240 --> 00:13:33,160 Speaker 2: Right, good stuff, Andy, thanks as always for joining us tonight. 265 00:13:33,200 --> 00:13:35,400 Speaker 3: Here's the all Worth Advice Market Swings. 266 00:13:35,559 --> 00:13:35,760 Speaker 4: Ah. 267 00:13:35,800 --> 00:13:39,840 Speaker 2: They come and go, but they shouldn't change your long 268 00:13:39,920 --> 00:13:45,040 Speaker 2: term investment strategy and your overall financial plan. New research 269 00:13:45,120 --> 00:13:49,120 Speaker 2: suggests more couples are keeping their portfolios separate. Is that 270 00:13:49,240 --> 00:13:52,840 Speaker 2: independence or a warning sign? We'll explore that coming up next. 271 00:13:52,840 --> 00:13:55,680 Speaker 2: You're listening to Simply Money, presented by all Worth Financial 272 00:13:55,679 --> 00:13:58,520 Speaker 2: on fifty five KRC the talk station. 273 00:14:00,040 --> 00:14:00,199 Speaker 4: Day. 274 00:14:00,240 --> 00:14:02,640 Speaker 1: This guy's are calm, the guns are silent in a 275 00:14:02,760 --> 00:14:05,800 Speaker 1: new Middle East. You are the President of peace the 276 00:14:05,880 --> 00:14:08,480 Speaker 1: day's news hostages being released. Who's going to be the 277 00:14:08,480 --> 00:14:11,679 Speaker 1: International Security forces? On Open the Government, Day thirteen of 278 00:14:11,720 --> 00:14:15,160 Speaker 1: the shutdown, fifty five KRC, the talk station. 279 00:14:15,400 --> 00:14:19,680 Speaker 6: Allworth Financial a registered investment advisory firm. Any ideas presented 280 00:14:19,720 --> 00:14:23,280 Speaker 6: during this program are not intended to provide specific financial advice. 281 00:14:23,440 --> 00:14:26,680 Speaker 6: You should consult your own financial advisor, tax consultant, or 282 00:14:26,680 --> 00:14:29,680 Speaker 6: a state planning attorney to conduct your own due diligence. 283 00:14:35,320 --> 00:14:38,000 Speaker 2: You're listening to Simply Money, present of a Allworth Financial 284 00:14:38,000 --> 00:14:40,360 Speaker 2: on Bob Sponseller along with Brian James. 285 00:14:41,080 --> 00:14:42,400 Speaker 3: Pay off the house. 286 00:14:42,280 --> 00:14:45,360 Speaker 2: Or let the low rate ride? What if your spouse 287 00:14:45,520 --> 00:14:49,480 Speaker 2: totally disagrees and does paying off debt always make you 288 00:14:49,520 --> 00:14:52,320 Speaker 2: feel richer? Or could it cost you in the long run. 289 00:14:52,360 --> 00:14:55,640 Speaker 2: We'll sort all that stuff out straight ahead at six 290 00:14:55,840 --> 00:14:59,040 Speaker 2: forty three. Well, it used to be when you got 291 00:14:59,080 --> 00:15:02,640 Speaker 2: married you e merged everything, the dishes, the dog, and 292 00:15:02,680 --> 00:15:06,280 Speaker 2: the money. But that's changing, Brian. According to a new 293 00:15:06,360 --> 00:15:09,640 Speaker 2: study from Schwab and Fidelity have come out with what 294 00:15:09,840 --> 00:15:14,800 Speaker 2: separate studies on this issue, and I see an anecdotally 295 00:15:14,880 --> 00:15:17,480 Speaker 2: in some of the client's idea with this is interesting stuff. 296 00:15:18,160 --> 00:15:21,200 Speaker 5: Yeah, it's a different approach. You don't have to have 297 00:15:21,280 --> 00:15:24,520 Speaker 5: all your money smushed together. Some people do prefer to, uh, 298 00:15:24,600 --> 00:15:26,520 Speaker 5: to kind of keep things separate. So we're we're not 299 00:15:26,640 --> 00:15:29,320 Speaker 5: talking about hiding assets from each other or secret offshore 300 00:15:29,360 --> 00:15:31,640 Speaker 5: accounts those kinds of things. We're talking about people that 301 00:15:31,720 --> 00:15:34,680 Speaker 5: did generally communicate and there aren't really any problems going on, 302 00:15:34,840 --> 00:15:38,320 Speaker 5: just kind of prefer to have their own finances independent 303 00:15:38,360 --> 00:15:40,880 Speaker 5: of each other. You could kind of call this a 304 00:15:40,920 --> 00:15:42,720 Speaker 5: pre nup for retirement if you will. 305 00:15:43,160 --> 00:15:43,280 Speaker 1: Uh. 306 00:15:43,600 --> 00:15:45,840 Speaker 5: The things that does have to stay the same though, 307 00:15:46,080 --> 00:15:47,800 Speaker 5: is the goals, because at the end of the day, 308 00:15:47,800 --> 00:15:50,000 Speaker 5: you're sharing your you're sharing a household and that has 309 00:15:50,000 --> 00:15:53,000 Speaker 5: its own expenses, and presumably there's some kind of connection 310 00:15:53,120 --> 00:15:56,440 Speaker 5: between what you each are trying to accomplish. So when 311 00:15:56,480 --> 00:15:58,800 Speaker 5: I have requests occasionally have somebody to come in, they'll say, 312 00:15:58,840 --> 00:16:00,520 Speaker 5: you know, my spouse really wants to their own thing. 313 00:16:00,520 --> 00:16:02,800 Speaker 5: They're not really interested in the financial planning process and 314 00:16:02,840 --> 00:16:05,000 Speaker 5: so on and so forth. And I kind of say, well, 315 00:16:05,040 --> 00:16:07,800 Speaker 5: that's great, but we have to identify what of their resources. 316 00:16:07,840 --> 00:16:09,160 Speaker 5: And it doesn't mean that, you know, you have to 317 00:16:09,200 --> 00:16:11,160 Speaker 5: do anything different with their resources. We got we got 318 00:16:11,200 --> 00:16:12,880 Speaker 5: to know a little bit about what they are, what 319 00:16:13,080 --> 00:16:15,880 Speaker 5: goals is that spouse covering, so that we know what 320 00:16:15,960 --> 00:16:17,920 Speaker 5: we're truly, I can't build a plan, you know, with 321 00:16:18,040 --> 00:16:20,120 Speaker 5: only half the information. This is kind of like telling 322 00:16:20,160 --> 00:16:22,480 Speaker 5: your doctor only half your symptoms and expecting a solution. 323 00:16:22,680 --> 00:16:24,840 Speaker 5: We got to know what all the resources are and 324 00:16:24,920 --> 00:16:26,880 Speaker 5: all the goals so that we can coordinate everything. Doesn't 325 00:16:26,880 --> 00:16:29,240 Speaker 5: mean things need to change. Sometimes we're just going to 326 00:16:29,320 --> 00:16:31,520 Speaker 5: work around whatever the other half of those things is 327 00:16:31,960 --> 00:16:34,600 Speaker 5: are and. 328 00:16:34,280 --> 00:16:36,640 Speaker 3: Address the stuff that we can control more readily. 329 00:16:37,960 --> 00:16:41,160 Speaker 2: Yeah, I'd say, Brian, the key word here is communication, 330 00:16:41,440 --> 00:16:43,640 Speaker 2: and it's a word you and I talk about all 331 00:16:43,720 --> 00:16:47,480 Speaker 2: the time on this show. Communication, communication. And what I 332 00:16:47,680 --> 00:16:50,680 Speaker 2: find is, you know, there might be good reasons for 333 00:16:50,760 --> 00:16:53,640 Speaker 2: the spouses to keep some assets separate, especially in a 334 00:16:53,720 --> 00:16:58,320 Speaker 2: second marriage situation or blended families. But I do find, Brian, 335 00:16:58,720 --> 00:17:04,040 Speaker 2: when all the money is separate, communication around finances tends 336 00:17:04,080 --> 00:17:08,800 Speaker 2: to dwindle, and that impacts I think, the relationship and 337 00:17:08,840 --> 00:17:11,000 Speaker 2: the goals and even having any goals. 338 00:17:11,160 --> 00:17:14,520 Speaker 3: And you know, so it really is important. 339 00:17:14,560 --> 00:17:16,879 Speaker 2: And I've had this happen this year with one couple 340 00:17:16,880 --> 00:17:21,280 Speaker 2: in particular, where the wife has a good financial advisor, 341 00:17:21,359 --> 00:17:22,400 Speaker 2: a good money manager. 342 00:17:22,440 --> 00:17:24,440 Speaker 3: I'll say things are. 343 00:17:24,359 --> 00:17:28,160 Speaker 2: Working well, she's comfortable, she doesn't want to make any changes, 344 00:17:28,200 --> 00:17:31,840 Speaker 2: and that's fine, but they have not communicated about some 345 00:17:32,040 --> 00:17:35,600 Speaker 2: major life goals like how much to travel, you know, 346 00:17:36,040 --> 00:17:39,280 Speaker 2: how to give to the kids, a state planning consideration. 347 00:17:39,480 --> 00:17:42,680 Speaker 3: So thankfully she was able. She was willing to come. 348 00:17:42,480 --> 00:17:46,760 Speaker 2: Into the office and sit down with me, even though 349 00:17:46,880 --> 00:17:48,600 Speaker 2: you know I put on the table right away. 350 00:17:48,920 --> 00:17:50,680 Speaker 3: This is not a play to. 351 00:17:50,720 --> 00:17:54,560 Speaker 2: Move all your assets from your other investment advisor. We 352 00:17:54,680 --> 00:17:56,679 Speaker 2: just need to get both spouses in a room to 353 00:17:56,840 --> 00:18:00,879 Speaker 2: talk and set some goals together. And thankfully she was 354 00:18:00,920 --> 00:18:03,040 Speaker 2: willing to do that and ended up being a productive 355 00:18:03,040 --> 00:18:07,080 Speaker 2: couple of sessions. But man, the communication, you know, that's 356 00:18:07,119 --> 00:18:09,520 Speaker 2: what that's what this money is for you know, to 357 00:18:10,280 --> 00:18:13,439 Speaker 2: spend it and deploy it in ways that are fulfilling 358 00:18:13,560 --> 00:18:15,399 Speaker 2: for both spouses and their family. 359 00:18:15,640 --> 00:18:17,440 Speaker 5: Yeah, and I would say for for a lot of 360 00:18:17,440 --> 00:18:20,120 Speaker 5: people in this situation. You're probably also in a tax 361 00:18:20,160 --> 00:18:23,440 Speaker 5: situation where it makes the most financial sense to file jointly. 362 00:18:23,520 --> 00:18:25,320 Speaker 5: So some of your stuff's going to be the same, 363 00:18:25,359 --> 00:18:27,520 Speaker 5: no matter how much you want to keep it apart. 364 00:18:27,760 --> 00:18:31,240 Speaker 5: And that has everything to do with roth conversion strategies, 365 00:18:31,280 --> 00:18:35,320 Speaker 5: for example, or or can coordinating your required minimum distributions. 366 00:18:35,359 --> 00:18:37,440 Speaker 5: If you've reached that age, there's a lot of things 367 00:18:37,440 --> 00:18:39,280 Speaker 5: that are connected, whether you want them to be or not, 368 00:18:39,600 --> 00:18:41,400 Speaker 5: so you really have to have a plan that governs 369 00:18:41,400 --> 00:18:42,960 Speaker 5: all those things. And again, it has nothing to do 370 00:18:43,000 --> 00:18:45,280 Speaker 5: with where your assets are located or whether you're making 371 00:18:45,320 --> 00:18:48,600 Speaker 5: decisions on your own or you have some other outside advisor. 372 00:18:48,840 --> 00:18:51,080 Speaker 5: But if you're going to keep things separate, then that 373 00:18:51,160 --> 00:18:54,160 Speaker 5: makes you at some level, you yourself. Even though you've 374 00:18:54,160 --> 00:18:56,480 Speaker 5: got two advisors in the mix, you yourself are the 375 00:18:56,560 --> 00:18:58,719 Speaker 5: ultimate advisor because you're going to be getting information from 376 00:18:58,760 --> 00:19:01,040 Speaker 5: two different sources, and you do have to decide which 377 00:19:01,080 --> 00:19:02,880 Speaker 5: you're most comfortable with or. 378 00:19:02,920 --> 00:19:06,199 Speaker 2: Not getting information from two separate advisors. It's funny you 379 00:19:06,240 --> 00:19:10,160 Speaker 2: bring that up about the RMD strategy. I mean this lady, 380 00:19:10,200 --> 00:19:12,080 Speaker 2: and it's not a knock on her, it's kind of 381 00:19:12,119 --> 00:19:15,120 Speaker 2: a knock on her investment advisor. She had never heard 382 00:19:15,119 --> 00:19:18,080 Speaker 2: of a ROTH conversion. She had never heard of a 383 00:19:18,200 --> 00:19:21,879 Speaker 2: qualified charitable distribution from an IRA. So we're able to 384 00:19:21,960 --> 00:19:26,359 Speaker 2: talk through those concepts, and when I had the data available, 385 00:19:26,480 --> 00:19:28,440 Speaker 2: just model some of those concepts. 386 00:19:28,880 --> 00:19:30,360 Speaker 3: And yeah, when you've. 387 00:19:30,200 --> 00:19:33,560 Speaker 2: Got two separate you know, households in terms of money, 388 00:19:34,040 --> 00:19:37,800 Speaker 2: and two separate advisors, there tends to be no coordination. 389 00:19:38,359 --> 00:19:41,200 Speaker 2: And then a lot of these most effective strategies never 390 00:19:41,240 --> 00:19:44,960 Speaker 2: get talked about in the first place, much less implemented. 391 00:19:46,000 --> 00:19:48,560 Speaker 5: Yeah, and these again, this is why it's important to 392 00:19:48,600 --> 00:19:50,640 Speaker 5: the communication. I don't think we can say it quite enough. 393 00:19:50,680 --> 00:19:52,760 Speaker 5: We need to need to be in a situation where 394 00:19:52,760 --> 00:19:56,000 Speaker 5: the communication lines are clear, everyone is comfortable. Because this 395 00:19:56,080 --> 00:19:58,800 Speaker 5: has much more to do with an overall how do 396 00:19:58,840 --> 00:20:01,439 Speaker 5: we connect all the puzzle pe than it does with 397 00:20:01,680 --> 00:20:04,560 Speaker 5: just where's all the money? Because there's the money, there's 398 00:20:04,600 --> 00:20:07,680 Speaker 5: the resources, and there's the needs, the goals, and that's 399 00:20:07,720 --> 00:20:10,080 Speaker 5: what has to be coordinated. You've got income sources and 400 00:20:10,080 --> 00:20:12,639 Speaker 5: piles of money, and you've got goals. Whether you've clearly 401 00:20:12,680 --> 00:20:15,520 Speaker 5: identified them, that's a different question, but those exist for everybody. 402 00:20:16,119 --> 00:20:17,159 Speaker 3: Here's the all Worth advice. 403 00:20:17,200 --> 00:20:20,240 Speaker 2: A little financial independence in retirement isn't a bad thing 404 00:20:20,280 --> 00:20:22,919 Speaker 2: at all, as long as it comes with a lot 405 00:20:23,359 --> 00:20:28,240 Speaker 2: of communication. Coming up next, why sudden money can actually 406 00:20:28,280 --> 00:20:30,600 Speaker 2: make you broke over time and how to make sure 407 00:20:30,640 --> 00:20:34,560 Speaker 2: your windfall doesn't just blow away. You're listening to Simply Money, 408 00:20:34,640 --> 00:20:37,600 Speaker 2: presented by all Worth Financial on fifty five KRC the 409 00:20:37,960 --> 00:20:38,480 Speaker 2: Talk Station. 410 00:20:39,760 --> 00:20:42,640 Speaker 1: It's one policy going to take our capital back. We're 411 00:20:42,640 --> 00:20:44,240 Speaker 1: taking it back after another. 412 00:20:44,400 --> 00:20:46,160 Speaker 3: You burn a flag, you get one year in jail 413 00:20:46,280 --> 00:20:47,399 Speaker 3: and it goes on your record. 414 00:20:47,520 --> 00:20:50,520 Speaker 1: Who knows what he'll check off next? On fifty five 415 00:20:50,600 --> 00:20:55,879 Speaker 1: KRC the Talk Station. I've KRC an iHeartRadio station. 416 00:21:00,359 --> 00:21:03,120 Speaker 2: You're listening to Simply Money, presented by all Worth Financial 417 00:21:03,119 --> 00:21:07,560 Speaker 2: on Bob Sponsorller along with Brian James. Well, everyone dreams 418 00:21:07,600 --> 00:21:11,600 Speaker 2: of a big financial windfall, a sudden inheritance, a business sale, 419 00:21:11,960 --> 00:21:14,640 Speaker 2: maybe that stock you've been sitting on that finally goes 420 00:21:14,680 --> 00:21:19,679 Speaker 2: through the roof. But new research shows that suddenly sudden money, 421 00:21:20,240 --> 00:21:22,600 Speaker 2: you know, money that you can get your hands on 422 00:21:22,720 --> 00:21:27,800 Speaker 2: quickly can actually destroy wealth faster than it creates it. Brian, 423 00:21:27,880 --> 00:21:30,600 Speaker 2: there's some new research out there, and walk us through 424 00:21:30,600 --> 00:21:31,040 Speaker 2: it today. 425 00:21:31,800 --> 00:21:33,680 Speaker 3: Yep, newsflash, new research. 426 00:21:33,760 --> 00:21:36,439 Speaker 5: One in five people who inherit a million dollars or 427 00:21:36,480 --> 00:21:39,080 Speaker 5: more lose half of it within five years. Well, every now, 428 00:21:39,160 --> 00:21:40,960 Speaker 5: we hear these stories every now and then from people 429 00:21:41,000 --> 00:21:42,840 Speaker 5: who you know, win the lottery, those kinds of things, 430 00:21:42,840 --> 00:21:44,639 Speaker 5: and you hear the horror stories about how they just 431 00:21:44,680 --> 00:21:48,520 Speaker 5: weren't prepared for it and just couldn't their brains simply 432 00:21:48,560 --> 00:21:51,720 Speaker 5: couldn't handle that situation. That's not bad luck, it's normally 433 00:21:51,760 --> 00:21:55,520 Speaker 5: bad behavior, bad decision making. This isn't just lottery winners though, Bob. 434 00:21:55,520 --> 00:21:58,520 Speaker 5: It's people who sell a business, you know, really anybody 435 00:21:58,560 --> 00:22:00,960 Speaker 5: who has some kind of a assive windfall where a 436 00:22:01,000 --> 00:22:03,359 Speaker 5: bunch of cash falls out of the sky with no 437 00:22:03,440 --> 00:22:06,359 Speaker 5: strings attached at a relatively short period of time. This 438 00:22:06,400 --> 00:22:09,200 Speaker 5: can be cashing out of a career, getting a large inheritance, 439 00:22:09,200 --> 00:22:11,720 Speaker 5: those kinds of things. The faster the money comes, Bob, 440 00:22:11,760 --> 00:22:13,760 Speaker 5: and all the faster it can leave. So we're gonna 441 00:22:13,800 --> 00:22:16,320 Speaker 5: kind of jump into the different effects here that can 442 00:22:16,359 --> 00:22:18,359 Speaker 5: happen and how to handle it. So if you're in 443 00:22:18,359 --> 00:22:20,680 Speaker 5: the situation, we're gonna we'll start off with the first 444 00:22:20,760 --> 00:22:23,719 Speaker 5: one of the windfall effect here. What really happens when 445 00:22:23,760 --> 00:22:26,560 Speaker 5: you get a windfall, Well, psychologists have actually done some 446 00:22:26,600 --> 00:22:28,680 Speaker 5: work on this. They call it sudden wealth syndrome, which 447 00:22:28,680 --> 00:22:30,919 Speaker 5: sounds completely fake, but this is a real thing. You 448 00:22:31,040 --> 00:22:33,639 Speaker 5: literally go from thinking in terms of thousands of dollars 449 00:22:33,720 --> 00:22:35,879 Speaker 5: to thinking in millions overnight, and this will give your 450 00:22:35,920 --> 00:22:36,920 Speaker 5: brain whiplash. 451 00:22:37,040 --> 00:22:37,680 Speaker 3: Think of it this way. 452 00:22:37,760 --> 00:22:40,800 Speaker 5: You've been driving a nice, compact, reasonable car for twenty years, 453 00:22:40,800 --> 00:22:42,159 Speaker 5: and all of a sudden, you have the keys to 454 00:22:42,200 --> 00:22:45,280 Speaker 5: a Formula one race car that you have all the 455 00:22:45,440 --> 00:22:47,439 Speaker 5: complete freedom to go do whatever you want to do with. 456 00:22:47,800 --> 00:22:50,040 Speaker 5: Obviously it's pretty powerful and fast, but if you don't 457 00:22:50,080 --> 00:22:51,920 Speaker 5: know how to drive that kind of car, you're gonna 458 00:22:51,960 --> 00:22:55,080 Speaker 5: you're gonna have some kind of accident. So it happens financially, 459 00:22:55,160 --> 00:22:57,560 Speaker 5: the rains come off, and all of a sudden, you 460 00:22:57,600 --> 00:22:59,960 Speaker 5: don't have the same sets of habits and the guardrail 461 00:23:00,640 --> 00:23:03,320 Speaker 5: because everything just drops. You think I can afford it, 462 00:23:03,359 --> 00:23:05,560 Speaker 5: and you can. We see this all the time. With 463 00:23:05,880 --> 00:23:08,160 Speaker 5: this kind of a windfall, it's very easy to throw 464 00:23:08,200 --> 00:23:10,920 Speaker 5: money at problems when there is money around with which 465 00:23:10,960 --> 00:23:13,280 Speaker 5: to do so. But then if that gets baked into 466 00:23:13,280 --> 00:23:16,919 Speaker 5: the ongoing spending, you know, that can come alongside the investment, 467 00:23:17,000 --> 00:23:18,919 Speaker 5: start to get riskier because I feel like I've got 468 00:23:18,960 --> 00:23:21,959 Speaker 5: a bigger cushion, I can afford some riskier stuff, and 469 00:23:22,040 --> 00:23:23,680 Speaker 5: a lot of the discipline that you had that got 470 00:23:23,720 --> 00:23:26,359 Speaker 5: you to this pace starts to go away. So eventually 471 00:23:26,400 --> 00:23:28,560 Speaker 5: you get to a point where that money is controlling 472 00:23:28,600 --> 00:23:30,600 Speaker 5: you instead of vice versa. 473 00:23:30,680 --> 00:23:33,879 Speaker 2: It's funny you brought up that Formula one race car analogy, 474 00:23:33,920 --> 00:23:37,040 Speaker 2: because that reminds me of an actual client situation. You know, 475 00:23:37,160 --> 00:23:40,960 Speaker 2: business sale, millions of dollars coming in the door, and 476 00:23:41,240 --> 00:23:45,080 Speaker 2: this client went from buying one kind of exotic collector 477 00:23:45,160 --> 00:23:48,240 Speaker 2: car to now they own like eight to ten. 478 00:23:48,720 --> 00:23:51,040 Speaker 3: Well, what happened after that? They needed to build a 479 00:23:51,080 --> 00:23:52,200 Speaker 3: big barn. 480 00:23:52,359 --> 00:23:55,880 Speaker 2: Or garage to hold all the cars, and then you've 481 00:23:55,880 --> 00:23:59,840 Speaker 2: got the trips going to custom car shows transporting these. 482 00:24:00,600 --> 00:24:02,119 Speaker 3: You know, it becomes a lifestyle. 483 00:24:02,200 --> 00:24:04,919 Speaker 2: You're hanging out with people that can afford you know, 484 00:24:05,080 --> 00:24:08,040 Speaker 2: eight ten different cars and shipping them all over the country. 485 00:24:08,480 --> 00:24:10,359 Speaker 3: And it leads to our less our. 486 00:24:10,520 --> 00:24:15,280 Speaker 2: Our next example, which is just lifestyle creep or lifestyle inflation. 487 00:24:16,600 --> 00:24:19,040 Speaker 2: You treat yourself a little bit, and then all of 488 00:24:19,080 --> 00:24:22,919 Speaker 2: a sudden you've really ramped up into an overall lifestyle 489 00:24:22,960 --> 00:24:27,199 Speaker 2: that costs thousands and thousands more dollars per year, and 490 00:24:27,520 --> 00:24:30,080 Speaker 2: some people forget to just check and say, can we 491 00:24:30,119 --> 00:24:31,120 Speaker 2: really afford this? 492 00:24:31,320 --> 00:24:32,600 Speaker 3: Is this sustainable? Brian? 493 00:24:33,119 --> 00:24:35,640 Speaker 5: Yeah, that that that big house comes along a lot 494 00:24:35,680 --> 00:24:38,240 Speaker 5: of times with maybe it's a it's a homeowner's association 495 00:24:38,440 --> 00:24:41,840 Speaker 5: fee that you didn't really account for. Definitely, property taxes 496 00:24:41,840 --> 00:24:44,120 Speaker 5: can sneak up. And I'll throw another one out there. 497 00:24:44,200 --> 00:24:46,600 Speaker 5: I ever spent fifteen thousand dollars on a tractor to 498 00:24:46,640 --> 00:24:49,160 Speaker 5: mow your your new acreage. You know, there are lots 499 00:24:49,200 --> 00:24:50,960 Speaker 5: of things out there that can that you don't You 500 00:24:50,960 --> 00:24:54,160 Speaker 5: don't really see coming, uh and until you're actually living 501 00:24:54,160 --> 00:24:56,639 Speaker 5: in this situation. So we've seen people spend like that 502 00:24:56,720 --> 00:24:59,000 Speaker 5: when the lottery, except they really didn't. They inherited a 503 00:24:59,000 --> 00:25:01,479 Speaker 5: million or more and it came ten million in their minds. 504 00:25:01,960 --> 00:25:04,199 Speaker 5: And then not to mention, you have to pay taxes 505 00:25:04,200 --> 00:25:06,000 Speaker 5: on all these things. So it's not nearly you know, 506 00:25:06,320 --> 00:25:09,439 Speaker 5: is a bottomless supply of money as it seems like 507 00:25:09,720 --> 00:25:11,920 Speaker 5: it's kind of like eating your Thanksgiving dinner every night. 508 00:25:11,960 --> 00:25:13,879 Speaker 5: It sounds great at first, but eventually it's gonna make 509 00:25:13,920 --> 00:25:17,360 Speaker 5: you throw up. So indulging ourselves too much can can 510 00:25:17,440 --> 00:25:18,959 Speaker 5: kind of ruin the fund that comes along with it. 511 00:25:19,640 --> 00:25:23,119 Speaker 2: All right, here's another big behavioral area to look out for. 512 00:25:23,240 --> 00:25:23,359 Speaker 3: It. 513 00:25:23,359 --> 00:25:26,320 Speaker 2: It's just the area of overconfidence. People that make a 514 00:25:26,320 --> 00:25:28,560 Speaker 2: lot of money or have sold a business for a 515 00:25:28,560 --> 00:25:31,440 Speaker 2: big chunk of money. You know, their mind says, hey, 516 00:25:31,840 --> 00:25:35,480 Speaker 2: I made a fortune, I'm really good with money. But Brian, 517 00:25:35,640 --> 00:25:37,840 Speaker 2: you and I know this all too well. There is 518 00:25:37,880 --> 00:25:41,600 Speaker 2: a big difference between the ability to make money in 519 00:25:41,680 --> 00:25:47,000 Speaker 2: some other industry versus actually managing money once you've got 520 00:25:47,040 --> 00:25:49,639 Speaker 2: it in your account, and a lot of people have 521 00:25:49,680 --> 00:25:52,080 Speaker 2: to learn that lesson the hard way. They jump into 522 00:25:52,119 --> 00:25:55,200 Speaker 2: a bunch of private investment deals, you know, get over 523 00:25:55,240 --> 00:25:59,639 Speaker 2: allocated to crypto or high risk startups. They forget that 524 00:25:59,760 --> 00:26:04,240 Speaker 2: we both preservation is a completely different skill set, and 525 00:26:04,280 --> 00:26:07,840 Speaker 2: I think sometimes, Brian, these people are bored by just 526 00:26:07,960 --> 00:26:12,239 Speaker 2: you know, traditional act allocation stuff. They're addicted to the 527 00:26:12,240 --> 00:26:16,080 Speaker 2: adrenaline rush, and they always constantly need to be going 528 00:26:16,119 --> 00:26:18,640 Speaker 2: out and taking risk. And you just got to put 529 00:26:18,680 --> 00:26:22,120 Speaker 2: the governor switch on that sometimes to keep from losing 530 00:26:22,200 --> 00:26:24,520 Speaker 2: something that you've spent a lifetime building. 531 00:26:25,080 --> 00:26:27,880 Speaker 5: Making money is not the same as keeping money. It's 532 00:26:27,880 --> 00:26:31,159 Speaker 5: two different, very two different mindsets, two different approaches. So 533 00:26:31,160 --> 00:26:35,080 Speaker 5: people who build wealth over decades, these might be entrepreneurs, savers, 534 00:26:35,240 --> 00:26:37,439 Speaker 5: or just disciplined investors pumping money into their four oh 535 00:26:37,440 --> 00:26:39,520 Speaker 5: one case four or three b's for years. They tend 536 00:26:39,600 --> 00:26:41,720 Speaker 5: to respect money more because they know how hard it 537 00:26:41,840 --> 00:26:44,800 Speaker 5: was to earn. Then we see, you know, sometimes it's 538 00:26:44,880 --> 00:26:47,760 Speaker 5: generation too that doesn't have that same benefit of having 539 00:26:47,800 --> 00:26:50,560 Speaker 5: built it from nothing and so doesn't value it as much. 540 00:26:50,600 --> 00:26:52,840 Speaker 5: It appears to them to have been easy to acquire, 541 00:26:53,040 --> 00:26:54,400 Speaker 5: therefore they treat it as such. 542 00:26:54,400 --> 00:26:57,200 Speaker 3: So what should we do? First step up, build a team. 543 00:26:57,240 --> 00:26:59,480 Speaker 5: Make sure you've got people around you, a financial plannert, 544 00:26:59,480 --> 00:27:02,560 Speaker 5: a quarterback everything, a CPA or a some kind of 545 00:27:02,600 --> 00:27:04,840 Speaker 5: accounting outlet to help you with the taxes, and an 546 00:27:04,960 --> 00:27:07,600 Speaker 5: estate planning attorney. If this is truly a significant pile 547 00:27:07,640 --> 00:27:10,040 Speaker 5: of money, not the people selling you something. These are 548 00:27:10,040 --> 00:27:12,920 Speaker 5: people who behave in fiduciary manners on what will help 549 00:27:12,960 --> 00:27:15,359 Speaker 5: you with their future. So the next step is figure 550 00:27:15,400 --> 00:27:17,600 Speaker 5: out what you want. Once you've got your team in place. Now, 551 00:27:17,680 --> 00:27:19,719 Speaker 5: think about what it is that you want. And this 552 00:27:19,800 --> 00:27:21,480 Speaker 5: also assumes that we didn't go out and do a 553 00:27:21,480 --> 00:27:24,040 Speaker 5: bunch of things immediately. Really, i'm gonna call it Step 554 00:27:24,160 --> 00:27:27,000 Speaker 5: zero is don't do anything, just stop and think before 555 00:27:27,040 --> 00:27:28,840 Speaker 5: you build that team. Then you need to have that 556 00:27:28,880 --> 00:27:31,320 Speaker 5: discussion about what is it that I want. Do I 557 00:27:31,320 --> 00:27:33,200 Speaker 5: want to use this to retire earlier? Do I want 558 00:27:33,200 --> 00:27:36,359 Speaker 5: to benefit myself my family? You know, maybe charities or 559 00:27:36,400 --> 00:27:40,360 Speaker 5: something like that. Generational wealth without some kind of purpose, 560 00:27:40,480 --> 00:27:43,080 Speaker 5: money tends to get spent just because it's sitting there. 561 00:27:43,560 --> 00:27:46,440 Speaker 2: Here's the all Worth advice. Wealth is not a finish line. 562 00:27:46,520 --> 00:27:50,200 Speaker 2: It's a responsibility. The more you have, the more discipline 563 00:27:50,200 --> 00:27:53,919 Speaker 2: it takes to keep it. You've built up two million dollars, 564 00:27:53,960 --> 00:27:57,280 Speaker 2: how do you protect it without missing growth? We'll cover risk, 565 00:27:57,480 --> 00:28:00,200 Speaker 2: income and a little peace of mind coming up next. 566 00:28:00,440 --> 00:28:03,000 Speaker 2: You're listening to Simply Money, presented by all Worth Financial 567 00:28:03,000 --> 00:28:05,560 Speaker 2: on fifty five KRC the talk station. 568 00:28:06,119 --> 00:28:09,440 Speaker 1: A series of events. The most important events. 569 00:28:09,160 --> 00:28:12,080 Speaker 2: Make for eventful days happening every day. 570 00:28:12,280 --> 00:28:14,000 Speaker 3: The political violence in this country. 571 00:28:14,080 --> 00:28:16,280 Speaker 1: I'm seeing more and more events like this. This is 572 00:28:16,320 --> 00:28:18,560 Speaker 1: a Trump shut down refusal. 573 00:28:18,720 --> 00:28:23,120 Speaker 2: He's fired in these eventful times, very serious times. 574 00:28:23,160 --> 00:28:26,280 Speaker 1: All the time, it's time for action in any event. 575 00:28:26,440 --> 00:28:28,200 Speaker 1: We're following these events. 576 00:28:27,720 --> 00:28:29,840 Speaker 3: On and off the field on the streets of our city. 577 00:28:30,000 --> 00:28:32,119 Speaker 6: Check in, we'll check it out, checking into it. 578 00:28:32,280 --> 00:28:34,680 Speaker 1: Fifty five krs the talk station. 579 00:28:35,440 --> 00:28:38,200 Speaker 2: Hey, Brian Thomas with Steve from USA and tenions are 580 00:28:38,320 --> 00:28:39,000 Speaker 2: welcome to here. 581 00:28:39,120 --> 00:28:41,200 Speaker 3: I do think he is too old to run. 582 00:28:41,400 --> 00:28:42,440 Speaker 6: In twenty twenty. 583 00:28:42,160 --> 00:28:45,080 Speaker 1: Four, fifty five KRC the talk station. 584 00:28:50,840 --> 00:28:53,400 Speaker 2: You're listening to Simply Money, presented by all Worth Financial 585 00:28:53,400 --> 00:28:56,160 Speaker 2: on Bob Sponseller along with Brian James. Do you have 586 00:28:56,240 --> 00:28:58,640 Speaker 2: a financial question you'd like for us to answer. There's 587 00:28:58,680 --> 00:29:00,800 Speaker 2: a red button you can click while you're listening to 588 00:29:00,840 --> 00:29:03,840 Speaker 2: the show right on the iHeart app. Simply record your 589 00:29:03,920 --> 00:29:07,000 Speaker 2: question and it will come straight to us, all right. 590 00:29:07,040 --> 00:29:10,000 Speaker 2: Brian Derek in Oakley leads us off tonight. He says, 591 00:29:10,000 --> 00:29:14,240 Speaker 2: our advisor keeps suggesting private equity and private credit. How 592 00:29:14,240 --> 00:29:18,320 Speaker 2: do we tell if these alternatives are true diversification or 593 00:29:18,520 --> 00:29:22,360 Speaker 2: just higher risk along with a sales pitch yep. 594 00:29:22,480 --> 00:29:24,760 Speaker 5: So we want to make sure that whenever these things 595 00:29:24,760 --> 00:29:26,560 Speaker 5: are coming up more and more often lately, and we 596 00:29:26,600 --> 00:29:28,520 Speaker 5: want to make sure we understand the moving parts that 597 00:29:28,560 --> 00:29:31,040 Speaker 5: are involved when these types of questions come up. So, 598 00:29:31,040 --> 00:29:33,040 Speaker 5: private equity, what are we talking about While we're talking 599 00:29:33,040 --> 00:29:36,120 Speaker 5: about investing in small businesses that are not publicly traded, 600 00:29:36,240 --> 00:29:38,760 Speaker 5: kind of sort of the same thing as buying stocks, 601 00:29:39,440 --> 00:29:41,360 Speaker 5: but these are not out there on markets. You're just 602 00:29:41,400 --> 00:29:44,600 Speaker 5: literally connecting with somebody who has run a business. There 603 00:29:44,640 --> 00:29:46,520 Speaker 5: are funds and things that will do this for you, 604 00:29:47,240 --> 00:29:50,000 Speaker 5: and that's presumably what Derek is referring to here. 605 00:29:50,040 --> 00:29:51,360 Speaker 3: So private equity. 606 00:29:51,000 --> 00:29:53,880 Speaker 5: Fundraising hit over one point two trillion dollars globally in 607 00:29:53,920 --> 00:29:56,880 Speaker 5: twenty four, slowing down a little bit, but still probably 608 00:29:56,960 --> 00:29:58,800 Speaker 5: going to be out there. So the kind of questions 609 00:29:58,800 --> 00:30:00,680 Speaker 5: you want to ask, you want to make sure you 610 00:30:00,960 --> 00:30:02,880 Speaker 5: understand what the lock up period is, Can you get 611 00:30:02,920 --> 00:30:05,200 Speaker 5: your money back out? Liquidity is always going to be 612 00:30:05,240 --> 00:30:08,480 Speaker 5: a gonna be a factor for these things. 613 00:30:08,800 --> 00:30:11,160 Speaker 3: What is the fee structure? These are going to be expensive. 614 00:30:11,160 --> 00:30:13,600 Speaker 5: Don't look for the no load version of private equity 615 00:30:13,680 --> 00:30:16,080 Speaker 5: doesn't exist. These things are expensive because there's a lot 616 00:30:16,120 --> 00:30:17,800 Speaker 5: going into them, and there's a lot of people wanting 617 00:30:17,840 --> 00:30:20,160 Speaker 5: to make money off of them, and so how do 618 00:30:20,200 --> 00:30:23,920 Speaker 5: you verify the returns? Are these audited self reported valuations, 619 00:30:24,160 --> 00:30:27,280 Speaker 5: are there default rates, recovery rates on the private credit side. 620 00:30:27,600 --> 00:30:29,720 Speaker 5: What information can you get so that you can understand 621 00:30:29,760 --> 00:30:32,160 Speaker 5: what you're looking at. These can be very valuable tools, 622 00:30:32,560 --> 00:30:34,360 Speaker 5: but you can also hurt yourself with them, so just 623 00:30:34,600 --> 00:30:36,880 Speaker 5: do your research, be careful what you're what you're getting into. 624 00:30:37,280 --> 00:30:39,440 Speaker 5: All Right, We're going to move south to Marty down 625 00:30:39,480 --> 00:30:42,480 Speaker 5: in Florence who says they have a big unrealized gain 626 00:30:43,480 --> 00:30:46,040 Speaker 5: on the in their brokeer's account. First off, congratulations, that's 627 00:30:46,040 --> 00:30:48,320 Speaker 5: a common problem these days. Uh, And Marty wants to 628 00:30:48,320 --> 00:30:50,040 Speaker 5: know if there's anything they can do to trim those 629 00:30:50,080 --> 00:30:53,080 Speaker 5: positions without taking that huge hit tax hit all at once. 630 00:30:53,120 --> 00:30:56,240 Speaker 2: What do you think, Bob, Well, Marty, there's definitely ways 631 00:30:56,280 --> 00:30:58,960 Speaker 2: to trim the positions without taking a huge tax hit. 632 00:30:59,040 --> 00:31:01,400 Speaker 2: So good of you to ask the question before you 633 00:31:01,520 --> 00:31:04,520 Speaker 2: just took the tax hit. So you know, I don't 634 00:31:04,520 --> 00:31:07,200 Speaker 2: know from your question whether this big gain is in 635 00:31:07,360 --> 00:31:11,320 Speaker 2: one heavily concentrated position or whether you've just been sitting 636 00:31:11,320 --> 00:31:13,680 Speaker 2: on a bunch of you know, mutual funds and ETFs 637 00:31:13,720 --> 00:31:15,800 Speaker 2: over years that you know, you got a bunch of 638 00:31:15,840 --> 00:31:18,320 Speaker 2: positions with a lot of unrealized capital gains. 639 00:31:18,360 --> 00:31:20,480 Speaker 3: So depending on what your situation is. 640 00:31:20,520 --> 00:31:24,240 Speaker 2: The first thing, get that stuff into a tax managed 641 00:31:24,240 --> 00:31:27,760 Speaker 2: a count where you've got some tax loss harvesting going 642 00:31:27,800 --> 00:31:32,120 Speaker 2: on in the background. Direct indexing strategies are out there, 643 00:31:32,560 --> 00:31:35,320 Speaker 2: and indexed exchange programs are out there, And what. 644 00:31:35,240 --> 00:31:38,240 Speaker 3: This really means is you can go slow. 645 00:31:38,720 --> 00:31:42,080 Speaker 2: You can harvest some short term losses in a diversified 646 00:31:42,120 --> 00:31:46,240 Speaker 2: portfolio and use that to gradually trim those gains in 647 00:31:46,280 --> 00:31:50,320 Speaker 2: your positions. If you are sitting on one big concentrated 648 00:31:50,360 --> 00:31:54,800 Speaker 2: stock positions, that's where things like collars uh, selling a 649 00:31:54,840 --> 00:31:58,560 Speaker 2: covered call and buying a protective put on the downside 650 00:31:58,640 --> 00:32:01,440 Speaker 2: might come into play. And that way you could protect 651 00:32:01,560 --> 00:32:05,400 Speaker 2: your gains in that position and kind of have the 652 00:32:05,440 --> 00:32:07,720 Speaker 2: options market pay to do that for you. 653 00:32:07,840 --> 00:32:09,880 Speaker 3: So a lot of different options out there. 654 00:32:09,920 --> 00:32:12,280 Speaker 2: The best thing to do is probably sit down with 655 00:32:12,360 --> 00:32:15,760 Speaker 2: a good fiduciary advisor and walk through some of those 656 00:32:15,800 --> 00:32:18,680 Speaker 2: options and get you set up. Hope that helps all, right. 657 00:32:18,840 --> 00:32:21,600 Speaker 2: Eric in Westchester says, our kids are in their thirties 658 00:32:21,640 --> 00:32:25,200 Speaker 2: and they're successful, but they don't know much about money. 659 00:32:25,240 --> 00:32:27,160 Speaker 3: What's the best way to start. 660 00:32:26,800 --> 00:32:30,840 Speaker 2: Involving them in family financial discussions. Brian, this is a 661 00:32:30,880 --> 00:32:31,520 Speaker 2: great question. 662 00:32:31,680 --> 00:32:34,400 Speaker 5: More and more common question these days as wealth is 663 00:32:34,440 --> 00:32:37,400 Speaker 5: reaching new heights, and you know a lot of people 664 00:32:37,400 --> 00:32:39,200 Speaker 5: who are in their fifties and sixties and that have 665 00:32:39,360 --> 00:32:42,800 Speaker 5: been themselves successful now have kids who are doing okay 666 00:32:42,920 --> 00:32:45,440 Speaker 5: and successful as well. But they're starting to worry that 667 00:32:45,240 --> 00:32:48,600 Speaker 5: these kids are not have not quite been through the 668 00:32:48,640 --> 00:32:52,960 Speaker 5: wealth management you know, and training and you know, financial planning, 669 00:32:52,960 --> 00:32:55,600 Speaker 5: those kinds of things that they themselves have. So why 670 00:32:55,640 --> 00:32:58,080 Speaker 5: this is important, Well, there's trillions of dollars are going 671 00:32:58,160 --> 00:33:00,680 Speaker 5: to change hands the next twenty years. About eighty trillion 672 00:33:00,760 --> 00:33:02,840 Speaker 5: is going to move from Baby boomers to Gen X 673 00:33:03,000 --> 00:33:07,680 Speaker 5: and millennials by twenty forty five. And so this often 674 00:33:07,720 --> 00:33:10,480 Speaker 5: comes along with people change. Either the kids will change 675 00:33:10,600 --> 00:33:12,640 Speaker 5: who they want to talk to in terms of working 676 00:33:12,640 --> 00:33:14,600 Speaker 5: with a financial advisor or if they want to at all, 677 00:33:14,760 --> 00:33:18,240 Speaker 5: because those conversations haven't simply haven't occurred. So here's here's 678 00:33:18,240 --> 00:33:20,640 Speaker 5: a couple steps to start bringing them in. Start with 679 00:33:20,800 --> 00:33:23,440 Speaker 5: values and not the numbers. Talk about how you built, 680 00:33:23,440 --> 00:33:26,440 Speaker 5: what you built, why it's important to you, and it 681 00:33:26,960 --> 00:33:27,680 Speaker 5: connect them. 682 00:33:27,520 --> 00:33:28,080 Speaker 3: To their history. 683 00:33:28,080 --> 00:33:29,480 Speaker 5: They're going to remember some of the stories you told 684 00:33:29,480 --> 00:33:31,160 Speaker 5: them because it would have affected them along the way. 685 00:33:31,440 --> 00:33:33,720 Speaker 5: Sometimes it's good to have a family State of the 686 00:33:33,800 --> 00:33:36,240 Speaker 5: Union meeting. A lot of families do this around the holidays, 687 00:33:36,880 --> 00:33:39,000 Speaker 5: just to talk about here's what we've built, here's here's 688 00:33:39,000 --> 00:33:41,720 Speaker 5: the goals that mom and I have, or dad and 689 00:33:41,760 --> 00:33:44,320 Speaker 5: I have, Here's what we're thinking about, and here's why 690 00:33:44,360 --> 00:33:46,640 Speaker 5: we're thinking it. And let them share in the in 691 00:33:46,680 --> 00:33:48,960 Speaker 5: the feedback of that, and they'll they'll start to hear 692 00:33:49,000 --> 00:33:51,320 Speaker 5: how you've gotten to that point, and you know, eventually 693 00:33:51,320 --> 00:33:52,840 Speaker 5: get to the point where you do show them open 694 00:33:52,920 --> 00:33:54,600 Speaker 5: the vault, show them what's in there. If you trust 695 00:33:54,640 --> 00:33:56,840 Speaker 5: that they can handle it, then I think it's really 696 00:33:56,920 --> 00:33:59,720 Speaker 5: valuable to understand why it is that you are able 697 00:33:59,760 --> 00:34:01,640 Speaker 5: to live the way that you do, what is behind 698 00:34:01,680 --> 00:34:04,600 Speaker 5: all that, rather than having them assume it's just plain easy. 699 00:34:05,160 --> 00:34:08,439 Speaker 5: So in any case, I hope that helps. And big 700 00:34:08,480 --> 00:34:11,799 Speaker 5: discussions here coming up during the holidays. One more here 701 00:34:12,080 --> 00:34:15,040 Speaker 5: from from Janet down in Fort Thomas. Thank you for 702 00:34:15,080 --> 00:34:17,960 Speaker 5: defending our forts. Down there, Janet and her husband are 703 00:34:18,000 --> 00:34:21,359 Speaker 5: having a discussion about their mortgage. He apparently wants to 704 00:34:21,440 --> 00:34:23,360 Speaker 5: just offload the debt, not think about it anymore, and 705 00:34:23,400 --> 00:34:25,879 Speaker 5: she wants to keep those dollars free to invest, so 706 00:34:26,520 --> 00:34:28,560 Speaker 5: how do we think about that in terms of financial planning? 707 00:34:28,560 --> 00:34:30,040 Speaker 3: How do you evaluate that trade off? 708 00:34:30,080 --> 00:34:33,880 Speaker 2: Bob well Janet used the word how do we evaluate 709 00:34:33,960 --> 00:34:34,640 Speaker 2: the trade off? 710 00:34:34,880 --> 00:34:35,480 Speaker 3: Logically? 711 00:34:35,920 --> 00:34:40,080 Speaker 2: And that's always that's always an interesting topic logically because listen, 712 00:34:40,120 --> 00:34:42,560 Speaker 2: there's a logical way to handle this stuff, and there's 713 00:34:42,719 --> 00:34:46,920 Speaker 2: always an emotional reason why people make any kind of decisions. 714 00:34:46,920 --> 00:34:49,560 Speaker 3: So I tend to look at this two ways. 715 00:34:49,600 --> 00:34:51,640 Speaker 2: One, if you do want to look at it logically, 716 00:34:51,760 --> 00:34:54,920 Speaker 2: look at the after tax rate of return that you 717 00:34:54,960 --> 00:34:58,120 Speaker 2: can expect based on your personal risk tolerance you're in 718 00:34:58,160 --> 00:35:02,840 Speaker 2: your husband, on how you and money, and then compare 719 00:35:02,880 --> 00:35:05,399 Speaker 2: that to your mortgage rate. So you know, if you're 720 00:35:05,440 --> 00:35:09,080 Speaker 2: a growth investor, and even if you're netting on average, 721 00:35:09,160 --> 00:35:13,120 Speaker 2: you know, say seven eight percent a year, and you're 722 00:35:13,160 --> 00:35:15,320 Speaker 2: sitting on a two and a half two point seventy 723 00:35:15,320 --> 00:35:18,360 Speaker 2: five two point eight percent mortgage, you know, it doesn't 724 00:35:18,440 --> 00:35:21,240 Speaker 2: logically make sense to pay that off because you're earning 725 00:35:21,280 --> 00:35:26,440 Speaker 2: more money keeping your money invested. However, if the psychological 726 00:35:26,520 --> 00:35:29,799 Speaker 2: part of this is just causing one spouse to lose 727 00:35:29,840 --> 00:35:33,560 Speaker 2: sleep at night, it it, you know, to keep marital 728 00:35:33,600 --> 00:35:36,120 Speaker 2: harmony and keep peace in the family, it might make 729 00:35:36,160 --> 00:35:38,560 Speaker 2: sense to just knock this thing out. So I think 730 00:35:38,600 --> 00:35:41,600 Speaker 2: it's important to look at it logically from a net 731 00:35:41,719 --> 00:35:45,440 Speaker 2: rate of return standpoint, and then also discuss risk tolerance 732 00:35:45,480 --> 00:35:46,799 Speaker 2: and hopefully you can come up with a. 733 00:35:46,719 --> 00:35:47,880 Speaker 3: Good decision together. 734 00:35:48,719 --> 00:35:51,520 Speaker 2: All Right, Wall Street's newest game, lets you bet on 735 00:35:51,719 --> 00:35:55,520 Speaker 2: real world events. Is it investing or just high stakes fun? 736 00:35:55,600 --> 00:35:57,960 Speaker 2: We'll sort all that out next. You're listening to simply 737 00:35:58,000 --> 00:36:00,839 Speaker 2: Money is thated by all Worth Financial on fifty five 738 00:36:00,920 --> 00:36:02,800 Speaker 2: KRC the talk station. 739 00:36:03,680 --> 00:36:08,120 Speaker 1: It's become a big story. Big things are happening. We 740 00:36:08,200 --> 00:36:10,440 Speaker 1: are in a government shutdown, a big fight in Congress. 741 00:36:10,520 --> 00:36:13,640 Speaker 1: It's big, some might even say huge, huge news. And 742 00:36:13,760 --> 00:36:15,279 Speaker 1: to keep it with government. 743 00:36:15,080 --> 00:36:17,680 Speaker 6: Layoffs and continuing negotiation. 744 00:36:17,200 --> 00:36:20,759 Speaker 1: You'll need massive amounts of information. Massive the impact that's 745 00:36:20,760 --> 00:36:23,360 Speaker 1: going to have on every American. This is a funding 746 00:36:23,440 --> 00:36:27,360 Speaker 1: by a healthcare fighter. Again for the latest on every 747 00:36:27,400 --> 00:36:30,279 Speaker 1: big store, some very big things. This is no small matter. 748 00:36:30,400 --> 00:36:34,719 Speaker 2: Fifty five krs the talk station, the most comprehensive, and 749 00:36:34,840 --> 00:36:36,239 Speaker 2: the countries are going to hell. 750 00:36:36,560 --> 00:36:38,040 Speaker 1: Something is happening. 751 00:36:37,680 --> 00:36:40,080 Speaker 4: Would be Trump assess and Ryan Ruth guilty. 752 00:36:40,480 --> 00:36:43,920 Speaker 2: Shock, Trump shutdown, Antifa, shreky in All Day Charlie Kirk 753 00:36:44,200 --> 00:36:45,280 Speaker 2: it's always something. 754 00:36:45,440 --> 00:36:49,680 Speaker 1: I forgive him fifty five krs. The talk station. 755 00:36:53,800 --> 00:36:56,400 Speaker 2: You're listening to Simply Money, presented by all Worth Financial 756 00:36:56,440 --> 00:37:00,600 Speaker 2: on Bob Sponseller along with Brian James. Well, for decades, 757 00:37:00,640 --> 00:37:02,400 Speaker 2: if you wanted to place a bet, you had to 758 00:37:02,440 --> 00:37:05,400 Speaker 2: go to Las Vegas flashing lights, free drinks in a 759 00:37:05,440 --> 00:37:08,400 Speaker 2: weekend you probably don't tell your accounting about. 760 00:37:08,680 --> 00:37:11,360 Speaker 3: But now you don't even have to leave the couch. 761 00:37:11,520 --> 00:37:14,600 Speaker 2: Vegas might still have the shows and the buffets, but 762 00:37:14,719 --> 00:37:17,360 Speaker 2: the action, the real betting action. 763 00:37:17,640 --> 00:37:19,839 Speaker 3: It's all moving online, and not. 764 00:37:20,120 --> 00:37:24,120 Speaker 2: Just to sports betting sites like DraftKings or fan duels. 765 00:37:24,200 --> 00:37:27,400 Speaker 2: It's actually moving right into Wall Street's neighborhood. 766 00:37:27,480 --> 00:37:28,800 Speaker 3: Brian, Hey, I've. 767 00:37:28,640 --> 00:37:32,520 Speaker 2: Seen commercials on this often in recent days, I think 768 00:37:32,560 --> 00:37:37,040 Speaker 2: on interactive brokerages running these commercials tell us about what's 769 00:37:37,080 --> 00:37:40,359 Speaker 2: going on, about the opportunity to make bets on what's 770 00:37:40,400 --> 00:37:42,040 Speaker 2: gonna happen next in the economy. 771 00:37:42,280 --> 00:37:44,520 Speaker 5: Well, first off, we're not calling them bets, Bob, that's 772 00:37:44,560 --> 00:37:47,480 Speaker 5: a dirty world. We're calling these prediction markets. Come on, 773 00:37:47,600 --> 00:37:50,160 Speaker 5: get with the times, all right. This is a whole 774 00:37:50,200 --> 00:37:52,120 Speaker 5: new word. I mean, it's betting, it's gambling, just like 775 00:37:52,160 --> 00:37:54,319 Speaker 5: anything else. You're betting on a certain outcome. I think 776 00:37:54,320 --> 00:37:56,480 Speaker 5: it's gonna be a not B and I'm going to 777 00:37:56,520 --> 00:37:58,200 Speaker 5: bet twenty bucks on it. This is a whole new 778 00:37:58,200 --> 00:38:00,959 Speaker 5: world where people are trading contracts on just these real 779 00:38:00,960 --> 00:38:04,239 Speaker 5: world events. Who wins an election, uh, when or if 780 00:38:04,239 --> 00:38:06,080 Speaker 5: the FED is going to cut rates, how far they're 781 00:38:06,080 --> 00:38:07,680 Speaker 5: going to cut rates, or even who takes home the 782 00:38:07,760 --> 00:38:10,480 Speaker 5: Super Bowl? That last one's pretty common. But these, these, 783 00:38:10,640 --> 00:38:13,280 Speaker 5: these next, these other ones come from just playing the headlines. 784 00:38:13,800 --> 00:38:16,520 Speaker 2: Could this be while why Jerome Palell is not cutting 785 00:38:16,520 --> 00:38:19,680 Speaker 2: interest rates because he's got some futures bets. 786 00:38:19,400 --> 00:38:23,360 Speaker 5: I've already placed that could very well be bob and 787 00:38:23,440 --> 00:38:25,360 Speaker 5: and maybe that's something that we should have a We 788 00:38:25,360 --> 00:38:29,400 Speaker 5: should have an election or an elected committee investigate to 789 00:38:29,400 --> 00:38:29,759 Speaker 5: make sure. 790 00:38:29,760 --> 00:38:32,560 Speaker 2: All right, well, I digress. Please walk us through what 791 00:38:32,760 --> 00:38:33,799 Speaker 2: the actual topics these are. 792 00:38:33,960 --> 00:38:37,000 Speaker 5: These aren't technically bets, right, this is the the the 793 00:38:37,200 --> 00:38:40,440 Speaker 5: regulatory bodies don't don't consider this gambling. These are financial 794 00:38:40,480 --> 00:38:44,359 Speaker 5: instruments called event contracts. They sound like bets to me anyway, Uh. 795 00:38:44,840 --> 00:38:47,200 Speaker 5: Regular These aren't regulated by the gaming boards, but rather 796 00:38:47,239 --> 00:38:50,120 Speaker 5: by the Commodity Futures Trading Commission, which is really the 797 00:38:50,239 --> 00:38:54,240 Speaker 5: closest government body to uh. Since since things like oil, 798 00:38:54,360 --> 00:38:57,080 Speaker 5: corn and currency futures are really only worth what people 799 00:38:57,160 --> 00:38:59,640 Speaker 5: think they're worth, there aren't they don't have their own profits, 800 00:38:59,640 --> 00:39:01,960 Speaker 5: they don't bit out dividends, they don't create their own products. 801 00:39:02,120 --> 00:39:05,080 Speaker 5: This is as close to these these types of events 802 00:39:05,080 --> 00:39:07,440 Speaker 5: as we can possibly get. Therefore, that's why it's the 803 00:39:07,480 --> 00:39:10,520 Speaker 5: same folks who oversee oil, corn and currency futures are 804 00:39:10,520 --> 00:39:11,600 Speaker 5: the ones who are looking at this. 805 00:39:12,000 --> 00:39:14,520 Speaker 3: So for example, there's there's just how big this is. 806 00:39:14,560 --> 00:39:17,600 Speaker 5: The Intercontinental Exchange, which is which happens you probably never 807 00:39:17,640 --> 00:39:20,280 Speaker 5: heard of, same company that owns the New York Stock Exchange, 808 00:39:20,280 --> 00:39:22,719 Speaker 5: which probably have heard of. They're investing up to two 809 00:39:22,840 --> 00:39:26,839 Speaker 5: billion dollars in a platform called Polymarket, and one you 810 00:39:26,880 --> 00:39:27,520 Speaker 5: may have heard of. 811 00:39:27,520 --> 00:39:28,880 Speaker 3: Another one out there is Robinhood. 812 00:39:28,960 --> 00:39:32,440 Speaker 5: Robinhood is already pretty popular with the with the smaller 813 00:39:32,480 --> 00:39:36,120 Speaker 5: investors already trading more than four billion of these event contracts. 814 00:39:36,320 --> 00:39:37,319 Speaker 3: So so think of this way. 815 00:39:37,360 --> 00:39:39,120 Speaker 5: The reason that they're doing this, Well, you can open 816 00:39:39,160 --> 00:39:41,520 Speaker 5: your Robinhood app, buy some stock and Apple or whatever 817 00:39:41,560 --> 00:39:44,680 Speaker 5: other company in the exact same session, invest in whether 818 00:39:44,719 --> 00:39:46,759 Speaker 5: the FED is going to cut rates next quarter via 819 00:39:46,800 --> 00:39:48,440 Speaker 5: these these event type bets. 820 00:39:49,719 --> 00:39:52,960 Speaker 2: Well, look, while the horse has seemingly already left the 821 00:39:53,000 --> 00:39:57,479 Speaker 2: barn here, the Commodities, Futures and Trading Commission is still 822 00:39:57,520 --> 00:39:59,680 Speaker 2: trying to figure out how to regulate these things. 823 00:39:59,719 --> 00:40:01,000 Speaker 3: So imagine that. 824 00:40:00,920 --> 00:40:03,600 Speaker 2: Let's let's let let's get everybody involved in this and 825 00:40:03,680 --> 00:40:07,480 Speaker 2: then add the regulation later. What could possibly go wrong? 826 00:40:08,040 --> 00:40:11,440 Speaker 2: I'm thinking back to the housing crisis, but again one company, 827 00:40:11,600 --> 00:40:15,120 Speaker 2: Calshe tried to launch a political event market and got 828 00:40:15,200 --> 00:40:20,120 Speaker 2: stopped cold by regulators. But in terms of the risk here, 829 00:40:20,160 --> 00:40:23,000 Speaker 2: the thing we got to call out is liquidity and pricing. 830 00:40:23,280 --> 00:40:27,320 Speaker 2: These aren't like stocks with billions of dollars in daily volume. 831 00:40:27,640 --> 00:40:32,279 Speaker 2: These are pretty low volume trades and positions you can 832 00:40:32,320 --> 00:40:35,480 Speaker 2: get in and out at bad prices. In other words, 833 00:40:35,480 --> 00:40:38,359 Speaker 2: there's big spreads between the bid and ass on these things, 834 00:40:38,400 --> 00:40:40,560 Speaker 2: and you might not realize that, you know, when you 835 00:40:40,600 --> 00:40:41,200 Speaker 2: get into it. 836 00:40:41,800 --> 00:40:45,040 Speaker 5: Yeah, and remember the taxation is also a question. It's 837 00:40:45,120 --> 00:40:46,799 Speaker 5: unclear how this is going to be tax These are 838 00:40:46,800 --> 00:40:48,560 Speaker 5: short term types of things. I'm gonna bet that the 839 00:40:48,560 --> 00:40:50,799 Speaker 5: Fed's gonna do something this or that next week, and 840 00:40:50,840 --> 00:40:52,479 Speaker 5: that may or may not happen. Well, that's a short 841 00:40:52,560 --> 00:40:55,600 Speaker 5: term hold and there are plenty of examples where the IRS. 842 00:40:55,280 --> 00:40:57,520 Speaker 3: Taxes obscure things a little differently than what you expect. 843 00:40:58,120 --> 00:40:59,080 Speaker 3: Here's the all Worth advice. 844 00:40:59,120 --> 00:41:01,880 Speaker 2: When Wall Street's art to look like Vegas, remember the 845 00:41:02,040 --> 00:41:06,319 Speaker 2: house usually always wins. Don't make your retirement part of 846 00:41:06,360 --> 00:41:08,800 Speaker 2: the show. Thanks for listening tonight. You've been listening to 847 00:41:08,840 --> 00:41:11,440 Speaker 2: Simply Money, presented by all Worth Financial on fifty five 848 00:41:11,560 --> 00:41:13,359 Speaker 2: KRC the talk station. 849 00:41:14,400 --> 00:41:17,560 Speaker 1: Something is happening. It's time to end the failed experiment 850 00:41:17,640 --> 00:41:18,600 Speaker 1: of open borders. 851 00:41:18,760 --> 00:41:20,239 Speaker 3: Your countries are going to hell. 852 00:41:20,600 --> 00:41:24,480 Speaker 1: Something in our country, Charlie Kirk, I forgive him. Antifa 853 00:41:24,520 --> 00:41:25,640 Speaker 1: across this country would be. 854 00:41:25,640 --> 00:41:28,440 Speaker 6: Trump assess and Ryan Ruth guilty on all five charges. 855 00:41:28,560 --> 00:41:29,640 Speaker 1: Something in our world. 856 00:41:29,760 --> 00:41:33,600 Speaker 2: Jato countries should shoot down Russian ear crash in all 857 00:41:33,680 --> 00:41:34,280 Speaker 2: day they. 858 00:41:34,320 --> 00:41:37,120 Speaker 1: Enter their ear speed. It's always something, yes, I do. 859 00:41:37,360 --> 00:41:42,000 Speaker 1: It's a very important moment. Fifty five KRC the talk station. 860 00:41:42,760 --> 00:41:43,920 Speaker 1: You ever wonder why Veron