Ep 174: The Looming Recession - More Knowledge, More Wealth

Listen as host, Gabriel Shahin CFP® talks about concern over the looming recession and what it could mean for you.

If anything in this episode relates to you or you have other questions, feel free to reach out to us at and schedule your free assessment today!

 Transcript: This is More knowledge, more Wealth with your host, Gabriel Shaheen. Gabriel is a certified financial planner and a registered investment advisor at Falcon Wealth Planning. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the services or securities discussed are suitable for any.

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. Now, here's your host, Gabriel Shaheen. Good day. This is Gabriel Sheen, certified financial planner and your host of More Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance.

Our goal is to give you the knowledge you need to. You're well now to the listener. 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 8 5 5 96. Falcon like the bird. or visit our website@falconwealthplanning.com. That's falcon wp.com for short.

Now folks, I'm the president of Falcon Wealth Planning. We are a fee only non-commissioned true fiduciary fee only advisory firm. Folks. We have a registered investment advisory firm and we are actually one of the fastest in the country. . I'm a nominated one of the top RAs in the country as well. Through RA Intel, through wealth management, through city Wire, through pretty much any major publication in our industry.

Folks, we are offering a free financial assessment where we can help relate this show to your situation and our free financial assessment will go over anything that involved a dollar shine. That's where you are today, how retirement looks like. Talk about taxes, investments is state planning. Insurance folks, you.

Anything. Like I said, that involves a dollar sign. Folks, we have offices all across the place. We help people nationwide. We would love to help. Our phone number is (855) 963-2526. That's 8 5 5 96. Falcon like the bird. We could help put a personal assessment for you. To relate this show to your specific situation that gives you one to two hours, one to two meetings of our time at no cost.

Folks, we would love to help. Now today I want to go over a handful of items cuz as people continue to talk about the recession, I want to talk about truly the recession determinants. Today I wanna talk about the six different items that people look at, and also understanding when times like this happen and when there's volatility and when there's issues going around.

This is where insurance sales reps really come out of the woodworks and try to sell you those variable annuities, fixed annuities, wherever it may be. These insurance products, these index universal life insurance policies. This is where you have to be careful because it sounds fantastic, and tell you, ask them the question, Hey, could you show me somebody who's been in this product for 20 years?

And I wanna see if it, what you said back then was, today, and the answer's always gonna be the same because they'll guarantee you you can't lose money. They'll show you how you can make 7% of your returns. They'll show you how it's liquid, they'll show you how it's tax free. And the reality is that is all junk.

Smokey mirrors, all comments with very. Little merit with very little proof and they're taking one small aspect of the truth and extrapolating that to an extreme where it is truly never gonna happen. And how they show you, you could make potentially 7% without losing money. Well, hell, they show you how the first 10 years in those policies as you're normally losing money.

Why? Cuz of all the upfront commission that was paid into it. If you ever wanted to know how much the commission was, just look at the surrender fee the first. , you get what I'm saying? You put in a hundred grand on an annuity and you can only pull out 80 after the first year on some of them, $20,000 commission, 20% commission.

You put a money into a universal life policy, whole life index, universal life, whatever the case is, and a majority of it. Goes to commission. This is why when you look at the FINRA watch list, the beware list, the state lists of what to be on the lookout for. Some of the top two in the majority of the states are insurance products and annuities.

Most people are, they misre represent of how they work. This is crucial folks. Because that's truly a nice way of saying lying. They lie to you of how this thing works. And you know what? These people are commission-based people trying to take advantage of you, especially during times that people are freaked out about a recessionary periods and you overhear almost taking advantage of it.

This is why I recommend take getting a second opinion, an unbiased second opinion. Somebody who doesn't make commissions, somebody who doesn't sell items, doesn't sell things, they sell brain. . Okay. This is sadly, our industry is positioned where 98% of our industry gets compensated from a product facing point of view, and the sad part is you're at the butt of that.

The brunt of our industry is focusing on making sure they can get paid by you buying. . Now for us here at Falcon Wealth Planning, we do thousands of assessments on an annual basis for prospects. Okay? Now, of that, certain percentage of 'em do become clients, but we sell brain. We give them the information before ever hiring us, which is why we're offering a free financial assessment, one to two meetings, one to two hours of our time at no cost for, and this can help analyze what you're being sold and position and if you bought or if you're thinking about buying.

Accurate was smart, and if there's still a way to get out of it. Folks, this is where we can help. And this is why people come to us to make sure before they make a decision, a hasty decision, and something at a free dinner seminar at your local Flemings, a really nice steakhouse where you're able to make sure that you are not gonna be purchasing something that is jammed down your throat.

This is where we can help folks. Give us a call. We can help no matter where you are. Our phone number is eight five five nine six three twenty five. 26. That's 8 55 96. Falcon like the Burr, because right now, as we're here in this purgatory of recession, you're having more and more people freaked out because of the volatility.

All the people that made their money on their Googles and their apples, and their Teslas, and their Amazons, well, they've lost a bunch of money. So now they're looking for alternatives. Now they're finally ready for advice. Now they're finally saying, you know, Growth companies, as I've said in multiple episodes, have been absolutely smashed.

And why have they been smashed? Because high interest rates go up. These companies that were losing billions and pound, billions of dollars, they can't just continue to sell a dream saying, you know what? We're one day gonna make multiple billions. Kind of like what Tesla did, speaking of Tesla and Amazon and Apple and Microsoft, they were losing money, and then finally they turn a profit.

Now money's not cheap anymore. They can't just get this blind money to be investing or cheap money. This is why they're getting smacked. And proof of that is when you take a look at the value index compared to the growth index, the value index outperformed growth by almost 30%. That's one of the largest discrepancies since the.com bubble, which, oh, by the way, yes, it was a.com bubble.

We can argue what we saw. Was a bubble. By the way, folks, if you're just joining us, this is Gabriel Shane, certified financial planner and your host, more Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance. And today we're just talking about the markets in general and you needing to be aware of what's out there.

Cause we're talking about the volatility and how most people made a killing in 1999. In 2000 and 2001 in 2000, and. And they made a killing throughout this period. Even though there's been volatility, they maintained to make a lot of money. Well, they virtually gave it all back from 2020 and more with some of these high flying companies that have lost a lot.

So this is a time where you need to analyze your situation and regroup because you can't wait 14 years for it to come back to where it used to be. . Why? Because that's exactly what happened during the.com bubble and people went and never invested again. I can't tell you how many people I met in their sixties and seventies that never invested again after the.com bubble.

It's insane. It's sad. It's the unsophistication in of investing and I don't blame them. They literally were sold, the people selling them items and stocks were the people at the broker houses. The three to 5% commissions per sale. So I get that part of it. But what you have to understand is, is that was a transactional based business.

And the people today, there were self directors that lost all their money. The people that went to the Robinhood app, And they were buying a dream of a company that was worthless. Literally like the budget renter cars like AMC and GameStop, where these, as you hear meme stocks, really was taken off with no merit at all, just cuz a lot of people were buying them.

The supply and demand made it very favorable or the stock price went up. This is the second coming of what we saw in the.com bubble, and we literally are seeing it now. The growth stocks are continuing to. And you need to have a better plan in place by buying on the dips. Listen, that could make a lot of sense, but who's to say it's gonna stop, especially as rates are gonna continue to rise to q2, which is end of June to q3, which is end of September of 2023.

This is where you really have to take a look. And this is where, and this is what Warren Buffet says all the time. When the tide comes in, you see who's swimming naked. And this is where from an investment point of view where you're proud of your portfolio, you need to see. How you are doing. You don't want to be invested in things where people are actually naked out there.

And a lot of these tech companies were absolutely naked where they were selling a dream. Some of these were truly selling fraud. I mean, there was an American greed that was done on Cola, uh, which was a Tesla's, uh, Counterpart where they were an EV company that was really based on fraud. So some, there are a lot of things out there that people are investing in that really has no purpose at all.

The point is to stay disciplined. Folks, I would recommend just continually investing in the in indexes. Nobody has been able to outperform the market on a consistent basis. It just doesn't happen and it doesn't exist. So why do you think you can do the same? Nobody can. We can argue the. that since nobody ever in the history of investing has been able to do two things.

Number one, I'll perform the market. And number two, choose individual. Individual stock. Who's to say you can. and we, I've seen people that said, oh, I'm a day trader. Oh, they were doing great. They were very cocky into, uh, during the covid crash in 2001, and now they're in misery. I saw this with a lot of mortgage brokers back in 2008.

Mortgage brokers in 2020 and 21 were making so much money. Heck, even in 2019 and 18 and 17, they were, now they're struggling a bit with higher interest. , this is the time you need to be disciplined in your investing. This is the time you need to focus on long term and to get a regrouping in place. A lot of our clients, they are properly diversified.

They didn't lose nearly as much as the markets. Markets are down 20, 30 plus percent. Our clients are down, oh, I'm not trying to say they're not down, but they were down what, 10 to 15%. The market. Now, granted, they were maybe taking half the risk, but even on the safe money, the bond index was still down over 15%.

So historically speaking, if you're taking half the risk and you lose 10 per and the market loses 10, you should only lose five. But in this case, You lost 10, even with the market taking 10 because it would happen at interest rates. So you have to be careful of what's going out there. Folks, if you need help, give us a call.

We would love to help. Our phone number is (855) 963-2526. That's 8 5 5 96. Falcon like the bird. Folks, we're gonna go on a quick break. And we'll be right back after a few words. This is Gabriel Shaheen, certified financial Planner. Your host of More Knowledge, more Wealth. That's on every weekend. We're going over all important topics of personal finance.

We're going over retirement planning, making sure you're prepared for retirement, social security. And strategies, real estate taxes, avoiding them now and in the future, investments, reducing fees, commissions, and so on. Insurance and estate planning. Folks, we are offering a free financial assessment that you could take advantage of.

We have offices all across Southern California, including the Inland Empire. Give us a call to take advantage. It's a $500 offer. Our phone numbers eight five five. 6 3 25 26. That's 8 5 5 96. Falcon like the bird, or visit our website, falcon wealth planning.com. That's falcon wp.com for short. Enjoy the show.

We look forward to serving you.

Welcome back folks. This is Gabriel Sheen, certified financial planner and your host, more Knowledge, more Wealth here and every weekend talking about all important talks of personal finance. And today we're talking about the looming recession, how everybody's still discussing the probabilities of that happening as a market has still been volatile, which could be good volatile of going up.

but also as we've seen, just the first day of the quarter of the year has dropped and so, and with Tesla that day dropping over 10%. So I mean, the volatility is there. My whole point to you. is this, that right now when you take a look at what's happening, recession, non-res recession, staying diversified is everything.

I mean, really, that's all you need to be focusing on because what we see from time and time again, people try to choose specific indexes, specific sectors. or specific. So stocks, and even though you may be right once, the fact is okay, you were right, but when do you get out? When do you sell? Most people don't know when to do that, and they find themselves in a hole.

My point to you is by staying properly diversified, you won't get into a situation where you cannot crawl yourself out, where you become puck, puck committed to an investment where you keep dollar cost averaging into it. Heck, these things can go outta business. Even a company. Uh, Jeff Bezos used to say, Amazon's gonna go outta business one day.

It's his job to keep it out of business. Apple biggest company in the world is in business. As long as maybe a competitor company will call it Banana puts him outta business. Look what happened to General Electric. Look what happened to Sears. Look what happened to Radio Shack, Lehman Brothers, Barretts Stears.

You get what I'm saying? Everything is great until it's. So you need that diversification and the core amount of somebody's portfolio needs to be put that way because if you put into diversification, and even when you have it taken half of the risk of the market, as I was saying before, when the bond markets drop, like in 2022, down 15 plus percent, you're safe.

Money was also down 15%. So most people lost 20 to 30% of the market. Now, that was true if you had straight stocks like. s and p 500 or the Nasdaq V versus uh, and bonds versus just a full stock portfolio. So you have to be able to put your money into different baskets. And sometimes it's not just the traditional bonds, cuz you saw what happened in a rising interest rate environment.

There are still. Treasury inflated, protected securities treasury directs with one to two year treasuries earning four, four and a half percent. Also, looking at private debt, which was a fantastic way to get additional yield that didn't lose nearly as much money as bonds as it was only down one to 3% for the year where bonds are down over 15.

These are key attributes that I think are often missed in our industry because number one, most people are just trying to sell you junk. Number two, most people are trying to sell a story of why you need to make a change. And number three, most people are not academics now. Now I'm not talking about you.

I don't expect you to be an academic. I'm talking about my industry. In the finance world, they don't sell the academic side. You know why? Because it's boring. It's boring to say stick in indexes. It's just boring to say you should be in large cap. Mid-cap and small stock, uh, cap stocks with growth and value.

Subcategories between those two. So that's technically six indexes right there. Plus international developed markets, emerging markets, each having large value growth, having maybe REITs in the portfolio, liquid REITs, not the ones that are sold at free dinner seminars, of course, maybe putting into there some commodities as well, like oil, gas, just something else in the portfolio to add, add.

Alpha. My point is, is when you are not doing that, not disciplined, you miss out folks, this is why we're offering a free financial assessment. And individual stocks sounded great, but you gotta be careful, aggressively be careful going forward in a rising interest rate environment, folks, this is why we're offering that free financial assessment, one to two meetings, one to two hours of our time at no cost spokes.

Give us a call, we'd be happy. Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon like the Bird, or visit our website@falconwealthplanning.com. That's falcon wp.com for short. We're happy to put a personal assessment for you to really help this. Related to your situation, because really the biggest thing that I've seen now and what's going on and why I see annuity seals through the roof is everybody's talking about recession.

They're trying to sell you the uncertainty. They're trying to sell you that gold has lost money. They're trying to sell you how crypto has lost money. They're gonna try to tell you how bonds lost money. How stocks lost money, how everything lost money. Real estate has lost money, so they're trying to find an alternative.

And I'm here to say, before you start going to those free dinner seminars and trying to be sold to buy something that's absolutely useless to you, let me kind of first identify what a recession is, how the just key determinants of what a recession is. I want to kind of go on the first one here. The first one is gonna be real personal income, less transfers, and so what your actual income is.

And then minusing out the transfers, uh, of that. And so when you take a look and you really got to see personal income drop significantly during the covid crash, but there was also some months that also dropped, such as November or January when the peaks hit in 2020. You also saw that again of January of 2022 and March of 22, 22 and June of 2022.

And you see a progressive slowdown from July of 20. onward. So this is a big deal because this is one of the six core categories of what a recession is. The other one is kind of silly, but we'll just acknowledge it cuz this is still real non-farm payroll employment. So for example, you got to see the Q4 of 2022, where that has dropped.

Okay. And that when was the last time it dropped that bad was during the Covid crash when nobody could work. That's another example of one of the six core recession determinants. Okay? Now this is all used by the n B er, of course. Okay. The Natural Bureau of Economics. So, uh, now continuing this conversation, you have house.

Survey of Employment. So this also has been bad Q4 of last year. Now it wasn't really bad this year, which is, or excuse me, in 2022, which is why they never fully called the recession cuz this is one of the key attributes that they do look for. When was it bad? . Well, it was bad then during the Covid crash.

So everything I'm about to say was terrible during the Covid crash, which is why we hit recession then. So for people to say we haven't had a recession in over 10 years, arguably 13, 14 years is not true because we hit a recession during the Covid crash when everything shut down. . So yet again, the other one was household survey of employment in general.

The other one is real consumer spending. Now, this actually didn't fully go down. Now there was some bad times in the summer of 2022. Same thing in Q1 and Q2 of 21, and it really. Crazy spending happened after Covid. Why? Well, because everybody had to buy things cuz they were suppressed for two months. So consumer real, consumer spending is extremely important.

Now the next part is, is real wholesale and retail sales. This yet again, had a very bad summer of 2022, but did pick up a smidgen in 20, uh, late 2022. So this is another key attribute. Okay, now the last one is industrial production. This you are starting to see a slowdown as well in the fall. Now, historically speaking, they do pretty well.

So historically speaking, you do CQ four s pick up the production. Why? Cuz they were doing it during the holiday seasons and to ramp up for the new year. And it's always been a pretty nifty strategy. To load up on, uh, by end of the year on your inventory to pay less tax. By the way, folks, if you're just joining us, you're listening to Gabriel Sheen, certified financial planner and your host of More knowledge, more Wealth on every weekend, talking about all important topics of personal finance.

My goal is to kind of share with you, there are more things to look at. I mean, I listen, I agree. Two quarters of negative GDP should be enough cuz that's the most simplest way to talk about these other determinates. of a, a recession. I mean, and frankly speaking, this is very specific. This is a micro aspect of what a recession is, but the reality is if the GDP is decreasing, that should be enough, right?

It's been enough for the past 50, 60, 70 years of determining what a recession is. But of course now they're looking at it in more detail because unemployment is so low. My point is, Freak out. As you can see, there are still positive things going on in the industry. There are still positive outlook in the economy.

There are still, no matter what, what negative use you take, uh, take, there's still positive outcomes from that. So my point to you is stay positive and if you need help being talking off of Cliff to go all cash or if you're already on ca on all cash and now it's time for you to get back and invest, give us a.

because depending on your situation, you might not have a choice but to invest. Depending on your situation, you may have to act sooner rather than later because the markets are still at a discount. Even though there could have been slight popups, we are still not where we were and we still have a little bit of a storm ahead.

That doesn't mean when we talk about volatility, that doesn't mean that it's always bad volatility. Volatility could be measured on the upsides as. You don't want to miss out on that. Folks, if you need help, give us a call. We'd love to help you out. We help all across the country. Our headquarters is here in Southern California.

Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon. Like the bird, we can help put a personal assessment for you to truly help relate this show to your specific situation. Folks, I want to just make sure you are aware of all the sales pos that are out there to make sure you can avoid any of that nonsense, because sadly people get taken advantage of.

All the time, and part of my goal is to truly help people. That's why I started this industry, is to make sure you can avoid that nonsense, that sales pitch, that garbage of people trying to take advantage of you. That's why our firm, Falcon Wealth Planning is fee only. We are fee only, not fee based. Not, definitely not commission based, but fee only.

We can only get paid directly from our clients. It's, that's transparent of how we get paid as possible, folks, that's why I sit up this way. Sure. They make more than us the other guys that are selling you crap. Excuse me. The SCC didn't like it last time I said that. Uh, the only comment they had for us, uh, uh, when they sell you things that they get paid very heavily on.

but you know what? We grow in volume, right? Because there's very few people that do what we do, so give us a call. We would love to help. Our phone number is eight five five and 9 6 3 25 26. That's 8 5 5 96. Falcon like the Bird. Folks, that was a fast, fast show and thank you for tuning in with us. Feel free to reach out to us.

We would love to help relate this show to your specific situation. Enjoy your weekend. Have a great week and God bless.