EP. 140 More Knowledge, More Wealth: AM 590 Radio Show

Transcript:

Announcer:

This is More Knowledge, More Wealth, with your host, Gabriel Shahin. Gabriel is a certified financial planner and a registered investment advisor at Falcon Wealth Planning. This show is not intended to provide personalized investment advice through this broadcast and does not represent that the services or securities discussed, are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast, in the process of making a full informed investment decision. More Knowledge, More Wealth, on AM 590 The Answer. Now here's your host, Gabriel Shahin.

Gabriel Shahin:

Good afternoon. This is Gabriel Shahin certified financial planner, and your host of more knowledge, more wealth here on every weekend talking about all onboard topics of personal finance. Our goal is to give you the knowledge you need to increase your wealth. Now to the listener, you can always reach out to myself or one of our colleagues here at Falcon Wealth Planning. Our phone number is (855) 963-2526, that's (855) 96, Falcon like the bird, or visit our website @falconwealthplanning.com, that's falconwp.com for short. Now, I'm a principal of Falcon Wealth Planning, a register investment advisory firm. We are a fee only financial planning firm that also manages money as well. But folks, we go over all important topics of personal finance that goes over where you are today, how retirement looks like go over investments, estate planning, insurance, where you are today, how retirement looks like, folks, anything that involves a dollar sign we handle. And we are offering a one to two hour, one to two meeting assessment of your situation to really help relate those show to your specific situation.

And we help people all across the country folks, we have multiple offices in multiple states. I would love to help you out. Our headquarters is here in the Inland Empire in Southern California, but give us a call. We'd love to help you at no cost, folks. We grow ridiculously off referrals. Our phone number yet again is (855) 963-2526, that's (855) 96, Falcon like the bird. We'll put a personal confidential assessment together to help relate this show to your situation.

So I wanted to talk to you about this volatile stock market guys. I mean, this is no joke. There is some substantial drops that are happening currently. And it seems like there is almost no rhyme or reason, because we've seen this movie before. They're talking about COVID, they're talking about what's going on in the tech world, Elon Musk went ahead and bought Twitter just because he felt like he wasn't happy with what's going on with it. Just at the end of the day, earnings are starting to come out and there seems to be some type of a repricing that's going on and I'll keep it as simple as this.

If you look at the largest five companies in the S&P 500, you're pretty much looking at... Let's say in the world, excuse me, not just the S&P 500. Largest five companies in the world, they're all tech companies. Between the Apples, the Googles, the Amazons, the Microsofts and the you name it. So they're all tech companies. And when you look at the valuation of tech companies and what they're currently valued tech as a whole is more overvalued than it was back in the .com bubble. Okay? These are serious issues because right now people are getting so excited of the performance of what tech has done over the past five years or so. Yes, you've made it killing, but when is enough? When is enough enough? What did you buy it for? You didn't buy it for income or the dividends because those things don't pay you much or anything at all. So you bought it for growth.

Well, you made the money so stop being greedy. You have to think about this. This could be a perfect time to re-assess your portfolio as we're seeing the stock market doing repricing right now. I mean, you have to understand a company, let's say your business, you net a $100,000 a year. You know what you're going to get when you sell it for just normal businesses that are out there that are not in hyper growth, so on and so forth and that's, after you add back all your expenses, whether the personal or whatnot, your salary. Let's say, nets a 100,000 a year, you know what you're going to sell for? A 100,000 a year, maybe 200,000, if you're lucky and if you're super duper lucky, maybe 400,000. That's why business owners ends up being some of the most successful people out there.

Look at the billionaires in the world, look at it like this. Let's just say you overpaid four times what they net on annual basis, that's a 25% return. You get my point? Where normally, if it nets 100, you're buying it for 100 to 200,000 or if you're the seller you're selling it for that much. That's almost 100% return, a 50 to a 100% return in one year. Now, if you're a Fortune 500 company, historically, you're selling it for 18 times what you net on an annual basis, 18X. Okay? So if it nets a billion a year, the company's worth $18 billion a year, that's typically what it goes for. Well, some of these tech companies right now as a whole big picture is about 40X. And there is companies that's infinityX. Yeah, I said that right. They're losing billions, but are worth mega billions, hundreds of billions.

And people are realizing that. This could be with companies like Rubian, Lucid, a lot of these... What are them? I'm trying to say the car companies that are out there. All these electric cars, there's a fad. Just like 10 years ago the fad was solar. So fad doesn't mean it goes away. I recommend solar on many situations, but my point is, it may not always make sense. And if the 2000 companies that are out there, are they all going to last? Well, no, they didn't last. And the same thing's happening with the electric EV market, the electrical vehicle market. Because Tesla, the leader in the space that sells the most out of anybody was on the brink of bankruptcy, almost sold it to Apple in the dark days of Tesla, as Elon says. So you are looking at large-cap growth companies, tech companies.

These are the ones you see in NASDAQ. You're seeing this and you're seeing extreme volatility with over 20% drop year to date. Why? Because it was overvalued to begin with. A lot of money, went there during COVID because of technological advances using Zoom and buying new computers and getting ready for working a home world, which made sense. But stability is now being seen. By the way, folks, if you're just joining us, you're listening to Gabriel Shahin, certified financial planner, your host of more knowledge, more wealth here in AM 590 The Answer and for those on podcasts and Spotifys, I appreciate it as well. My point is, is you have to take a look at your overall strategy of what's going on and how you're invested. And you've been happy as a clam for the past, maybe decade with Google and Amazon and Apple and so on.

But you also have to look at the sales of each situation. And as the sales of these are slowing down, like in Apple, the largest company in the world. Yes, sure the profits are going up, they're becoming more profitable, but you have to look at the innovation. I mean, this thing has dropped substantially. Along with Amazon. Amazon is selling more, netting more but still could be argued. It's overpriced. It still has to capture a lot more market share for it to be worth it's while and Google as well. I can argue if there's a company that's going to last in a 100 years from now would be Google, but nobody knows what's going to happen. You could have something come out that the CEO or founders say some inappropriate or racial items that people start banning Google and don't want to work with them anymore. These are things that can happen.

And so you have to re-address and re-look at your portfolio right now, especially as re-pricing is happening in the market right now. I have a TV in my office. So I'm over here staring like you guys know what I'm looking at but the point I'm making here guys, is that you have to re-address it. And global diversified portfolio makes the most sense because we're talking as large-cap growth companies are overvalued. You also have to take a look at large-cap value and mid-cap and small-cap and international are undervalued right now. You have to understand where the money has been flowing, where the excitement has been and there is deep discounts the markets are offering.

Folks, if you want to help looking at your portfolio, if you want to take a look at your individual stock, seeing what you could do, understanding the tax ramifications to make changes in your portfolio, give us a call, we can help. We are offering a financial assessment to you at no cost where we give one to two hours, one to two meetings of our time for free. So our phone number is (855) 963-2526, that's (855) 96, Falcon like the bird. Would love to help you put this together to make sure that you are put in a position of success and not worrying about this volatility. You shouldn't have your million dollars dropping 800,000 or more, or your a 100,000 dropping at 80,000, you should be putting your money for a goal. And what we see people buying growth stock and they don't take their money off the table if they're made one, two or three X on their money, where they've tripled their money in a timeframe of less than 10 years, which is annualized return of 20, 30% and they're still not doing it, something's wrong.

I don't know what you're doing. I really do not know what you're doing or what you're expecting. You know what that tells me though, there's just no strategy. That's where you have to re-evaluate what you're doing. Get that second opinion to let you know of what you should be doing and the most strategic ways to do it. Because you may be charitably inclined, you may want to give to your kids, you may want to do certain things in your tax situation where it may be fruitful and easy, cheap, and arguably free to sell these investments. But we don't see people make these strategic moves. We just see people buy and hold and it served you well but we are entering a period of potentially a 40 year change where we're entering a rising interest rate environment compounded with high inflation numbers.

This could have been for multiple reasons. Could be from the $10 trillion we printed over the past 24 months, it could be because of geopolitical issues with Ukraine and Russia, this could be because of oil prices and us and supply and demand, this could be with housing prices, this could be from multiple things that are coming up that could be affecting our current pricing and system and economy. Nonetheless, you have to prepare yourself accordingly. And I know you might have a diversified portfolio, but the bonds you have may be not appropriate in this rising interest rate environment. The fed said the raising rates six times this year, you can anticipate one and a half percent increase in rates. And a lot of you fixate a lot on prime because that's where a lot of the retail is on, but there's also fed funds, bank to bank borrowing, discount rates, there's a lot of other things that matter that affect your situation. And this is why there is no substitute to talking into a professional, to taking a look at your situation.

A lot of you people are taking cash and paying down debt. Debt is your savior when it comes to inflation. You want debt because your house that's 500,000 now that you owe 200,000 on, well with inflation, that house could be worth a million, but guess what? Your debt's only 2000 or 200,000. And you've probably seen this for multiple people and I'll probably speak for you now, assuming you held your home for at least five years is you can't even rent for as cheap as your mortgage is. And by the way, your mortgage is a write-off number one and number two, it's paying down the principle. With or without the mortgage, your home will appreciate. Talk to a financial professional that does this on a daily basis whose goal is to increase your net worth. That's who we are, that's what we are.

We are a fee only financial planning firm. There's other people that talk a big game but they're commission based trying to sell you insurance products like annuity, or life insurance policies or non-public trade REITs. I know it folks. I hear them on the radio, hitting my head all the time saying, "Do not listen to these fools." Folks, give us a call, we'll be happy to help. Our phone number is (855) 963-2526, that's (855) 96, Falcon like the bird folks. We're going to go on a quick break. Want you to come back with us. We're going to talk a lot more about this market and what you should be doing. We'll talk to you soon.

Welcome back folks, this is Gabriel Shahin certified financial planner and your host of more knowledge, more wealth here on every weekend talking about all important topics of personal finance. And today we are talking about those crazy stock markets going up few 100 points, going down a few 100 points. It's all over the place folks and we just want to make sure that you are prepared for this. And especially those who've been happy investing in large-cap tech companies the past few years, which you did great, but we are seeing a repricing that's happening right now. You need to be prepared for it. Okay? Large-cap growth is all based on the current value of a company and what they're expected to make in the future. We are starting to see slow downs in these growth companies as people are really trying to under... And you're seeing that with Netflix, you're seeing with Robinhood, you're seeing with a bunch of other things right now. People are really starting to take a look at their finances.

And more importantly, the market investors are taking a look at these investments and realizing they are expensive. So when you take a look with some of these companies that are not profitable losing billions of dollars on an annual basis or hundreds of millions at the least, and they're slowing down, their revenues are increases but their net profits are not going up. So it's like, what are we really talking about here? That's almost like excited about lifting a bunch of weight but you're never losing weight in the gym, you're never getting stronger. You just keep lifting the exact same amounts expecting for a different result, that's called insanity. So you have to understand your situation and take a look at what you should be doing, that's first and foremost. The second part is you have to look at the overall markets and where discounts are available and you can easily see discounts in the international markets right now through emerging markets and international develop.

You have to understand how much you need to have in there depending on your situation and are you invested in the right thing. No, don't be buying individual stocks or anything like that but you can buy indices that are out there where you're able to capture diversification and cheap markets indices through large-cap, mid-cap, small-cap of international only. Yet again, there's emerging markets and developed markets. This is why globally diversified portfolio is important. In the past few years, they have underperformed US large-cap, mostly because of the growth companies. But yet again, when you take out value versus growth and you look at the discounts in the market, the overvalue is in the growth. The large-cap value companies like the Johnson & Johnson, the Procter & Gamble. Some of these companies that you see and use on always you are seeing their trading at a very strong discount.

I'm not telling you to go buy those specific companies but what I am telling you to do, it's important to have tilt in your portfolio towards value, especially at a time of repricing. What happened with the globally diversified portfolio? This reminds me, history repeats itself over 20 years ago in the.com bubble. Yes, large tech got destroyed. And because of that S&P 500 lost double digits for three years in a row, but a globally diversified portfolio made money. Why? International was helpful. So it's important to build that portfolio where it could sustain not just making money in short periods, but over long periods. And no matter what the market happens, whether it's a war that happens, whether it's inflation that happens, whatever it is, you have to make sure that you are prepped for volatility. And that's the one thing we can explain in 2022, is volatility.

And by having tilted your portfolio towards value and being globally diversified through international, through emerging markets and developed markets, you can really put yourself in a good hedge because the valuation outside of America is cheap right now. There are strong discounts and you should be putting yourself in a position for those. If you need help with this, if you want to help customize your portfolio, give us a call, we can talk. Our phone number is (855) 963-2526, that's (855) 96, Falcon like the bird. We can help put this together for you. We can eliminate overvaluations in your portfolio that could cause extreme volatility. Yet again, you bought it for growth, it's grew. So take your profits off the table, reposition it to another strong purchase. A lot of people don't do that and we heavily recommend that you do.

And the other side of the portfolio I want to spent some time on is bonds. Long term bonds have gotten smacked around as interest rates are up. They're down anywhere between 10 to 20% that bonds, the safe money. Markets are down this year over 10%. The safe money is supposed to go up, no, bonds have also dropped. You need to make changes in your portfolio if you're not happy with your performance is because you're not doing anything. Don't get upset that you're sick if you've never seen a doctor, come on. You have to take care of this. And if you want to help being pointed in the right direction with this, that's what we can help with. We are a fee only advisor. Do you know what that means? We do not charge commission or sell any products, we only get paid directly from our clients. And in the contrary, we are offering two free assessments, two free meetings for an assessment that can help relate to show to your specific situation.

This is where you need to adjust the bonds. Because even if you think you're invested safely well, with bonds right now you might be losing money safely. So take a look at it, we'll be happy to help. Our phone numbers (855) 963-2526 that's (855) 96, Falcon like the bird. We've got offices all across the west coast, we help people nationwide, we love to help. Now, if you're just joining us, this is Gabriel Shahin certified financial planner, your host of more knowledge, more wealth here and every weekend talking about all important copies of personal finance. So we already talked about the volatility we are seeing in the market right now. And you may not be happy with it and you should not be happy with it, but what are you going to do about it? Right?

It was just like me a few years ago, I was upset I kept gaining weight. Okay? So I would get upset and eat because I was so upset about gaining weight. That makes no sense. Finally, one day my little brother said, "Well, if you have a problem with it, just work out. Shut up and work out." Well, that's like the same thing in the stock market. You complaining about losing money? Well, shut up and do something about it. Address your portfolio. You're having a regional firm out here that can help and we've got offices all across the country. We can help put together something, a plan to tell you what you should do, whether you use us or not, that is fine. We grow ridiculously off referrals as some of our strongest people who send us clients are people who ended up just taking advantage of the free assessment. So we can help you with that folks but I just don't want you to do nothing.

There is a lot of different things you could do to have safe money invested. You can look at different options outside of just bonds. You don't want to do anything crazy like insurance products or annuities or any garbage like that. That sadly, a lot of people are trying to sell or real estate or something like that, buying this real estate fund or whatever that case is. No, there are liquid options that you can do that also is hedged against inflation and rising interest rates. It depends on your situation if it makes sense for you, but there are things that are there and there's no fee to get in and no fee to get out, right? When your fee only you have no choice, you don't get commissions. So if you don't get commissions for selling anything, then you can get out of it time because the company who has it, doesn't have to recoup the commission they paid the person selling it to you.

Just like when annuity or insurance product or any of this other garbage that you hear out there on the radio, on podcasts, or Spotify, on infomercials, on the internet. Guys, you have to be your number one advocate out there and don't get sold to. We have a strong initiative in education. We feel the more we help people selflessly, will selfishly benefit us later. Just do a good deed and it will get repaid because next time you know somebody that needs help, you'll send them our way. Education is a big focus of ours.

And that's why we have some very strong commitments through the Inland Empire chamber and through our regional council for finance. Where we have presented with our state treasurer, Fiona Mall and a few others to really help with financial literacy. And it's extremely important to focus on financial literacy because frankly, folks, we are illiterate when it comes to our finances. Something as simple as me explaining to you, yes, it's economics, yes, it's geopolitical, yes, it's finance related but the fact that we don't even want to hear it, or we think it's over our head is proof that we didn't get trained at an early age. This is my profession. Entered finance in 2003, going on 19 years. Yes, it's easy for me because I do this every day but even then you have to be your best advocate.

You have to know what you don't know, right? If you have to do some work at the house, you're not going to build or do an extension on your house, right? Your tooth hurts, you're not going to do your own dentistry, and there's times you have to go to the doctor. It's the same thing with finance folks, we can help with that. There are a lot of variables going out in the financial world and right now you are seeing a repricing in the stock market right now. And if you're not liking your performance and the volatility in the market right now, it's not that the market sucks. It's like you need to address your portfolio and how it's invested and what you should be doing. It could be from over valuations and large growth companies, it could be from poor bonds that you're in, it could be to no exposure to international and value companies, that could be a great time to do it.

We just don't see that happening. We feel people spend more time on their next vacation than they do in their finances and retirement or whatever their goals are. Give us a call and we can help, so what we do on a daily basis, our phone number is (855) 963-2526, that's (855) 96, Falcon like the bird or visit our website @falconwealthplanning.com. That's falconwealthplanning.com, falconwp.com for short. These are the things that you have to address and look at. Take action of your finances. There's always an excuse, right? The first quarter of the year, first three months, "I'm busy with taxes. I got to pay for property tax. A lot going on right now." Then the summer it's like, "Kids are at home." Or it's, "I'm doing vacation, travel. There's a lot going on."

Then the fall comes around you're like, "I got to prepare for the holidays." There's always going to be something that's going on. Now is the time to act folks, this is the time. There should be no reason for procrastination anymore. If you need help, we'll be happy to help. Our phone number's (855) 963-2526, that's (855) 96, Falcon like the bird. Folks that was a fast, fast show. I want to thank you for tuning in with us this weekend. You can always reach out to myself or any one of our colleagues here at Falcon Wealth Planning. Our phone number is (855) 963-2526, that's (855) 96, Falcon like the bird. We'll be happy to put a personal confidential conversation together to help relate this show to your specific situation. Our goal is to give you the knowledge you need to increase your wealth. I want to thank you for listening. We want you to enjoy your weekend, have a great week and God bless.