More Knowledge, More Wealth - Ep. 192: The Right Time to Buy/Sell Stock - More Knowledge, More Wealth

  📍 📍 Good day. This is Gabriel Shane, certified financial planner and your host of More Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance. My 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 anyone of my 📍 colleagues here at Falcon Wealth Planning.

Our phone number is eight five five nine six three. 25 26. That's 8 5 5 96 Falcon like the Bird, or visit our website@falconwealthplanning.com. That's falcon wp.com for short. You can check out our knowledge center where you have any one of these video casts along with a bunch of YouTube. Information from our knowledge center to help just answer the questions that you may have normally.

And if you have a specific question that you want to talk about, please send it to radio@falconwp.com. That's radio@falconwp.com. Now I'm the president of Falcon Wealth Planning. We are a fee only non-commissioned true fiduciary folks. We talk about all important topics of personal finance. That's where you are today, how retirement looks like.

Talking about investments, estate planning, insurance, taxes, folks, you name it. Anything that involves a dollar sign we can help with, and we are offering a free financial assessment where we can help relate this. Show to your specific situation. Just give us a buzz. We'll give you one to two hours, one to two meetings of our time, folks at no cost.

Our phone number is (855) 963-2526. That's 8 5 5 96 Falcon. Like the bird. So we'll go over a bunch of different topics here and I wanted to talk about today, about what's gone on for the first half of the year. And a lot of this is just big picture items first. And really I wanted to discuss consumer confidence.

Okay, so this number is as of April actually, but I wanted to discuss when you look at what does low consumer confidence mean for the US stocks Now, historically speaking, when you look at, uh, the consumer confidence, it's relatively low and. Uncertainly remains persistent. Now falling past periods of low confidence, US stock performance has tend to pick up.

And you can see this from May, 1980. And then really there was a almost a 20% run up from, uh, to May of, uh, 1984. Uh, when you look at May or October of 1990, when you look at March of 2003, November of 2008, August of 2011, and you can even look at that when you look at February of 2020. Now that is when it was, uh, pretty high consumer confidence and where now, uh, the actual bottom of it was, uh, relatively in June of last year.

And it's slowly creeping up folks. So that's important because when you historically look at market returns, the market returns do do well. Especially coming after a low consumer confidence. And so you have to ask yourself how confident are you? And I remember going to Wall Street in October of 2008, and I remember, uh, while I was in Wall Street, they were, uh, commenting, kind of sharing with me just kind of knowledge of how the business goes.

And they say when the shoe shiner on Wall Street, just outside Wall Street, when the shoe shiner starts to tell you about a stock they're looking to buy. So I'll, I'll tell you in a different way. When the, when your grandmother, when your parents, when one of your elders starts telling you of a stock that you know they're thinking about purchasing, that's probably the time to get out of it.

You get what I'm saying? The party is over at that point. So, I mean, yet again, these are just classic signs of what Warren Buffet says all the time when people are greedy. Be fearful and when people are fearful, be greedy. These are classic concepts in just life. It's not a contrarian approach, it's just common sense because when com consumer confidence is low, that means people have gotten out and they've sold, and things are supply and demand.

When the demand is low, because everybody's sold, okay, supply is high. People are wanting to buy on sale. That's what times like this could be, and that's what we're seeing in the stock market. We've seen the up rise. I'm not the only person who saw this. We're not the only ones who bought stock for our clients in June of last year to April of this year.

We're not the only ones that done that. And we frankly, for the non-clients out there, we need you freaking out. We need you to freak out to drive the prices low. So we're buying, don't you ever wonder why it does it go to zero? Because there's always people buying on the other side. We need you to lose money so our clients could make money.

Now, I'm not saying this spitefully. I'm just telling you, this is the reality. I'm trying to hell teach you right now of what you should be doing, and that is don't freak out. And I see it all far too often. I don't know why you do it. It's human nature. That's why you do it. It's so easy to freak out. But you gotta be better.

You gotta be disciplined. That's why people hire us. People hire us cause we're disciplined. And I say this all the time, you could probably do a better job managing my money than I can my own money. Why? Because you don't care if it loses, you're gonna stay disciplined. I buy when it's my money. I'm like, dang it, man.

That's a, that's a big drop. So you gotta be smart about this. And consumer confidence is perfect to validate what this shows and these DALBAR studies that's been out for decades now proves an average investor only returns maybe 4% a year. Bravo, Bravo. You get what I'm saying? You gotta calm down, stay disciplined, keep your eye on the prize and think long term.

Now I, I want to also focus on the US stock market right now cause that's had a fantastic upbringing. Large cap growth. We'll talk Nasdaq up over 30% for the year. Now, keep in mind, we've talked about this almost every year. That's great. But you know, there are hidden risks in the stock market folks, seven of the largest 10 companies, okay, in the s and p 500 are growth stocks.

Okay. And there are no value stocks that broke into the top 10. Now, and here's another thing, uh, let me list them for you, by the way, apple number one, Microsoft. Number two, Google or alphabet. Number three, Amazon Nvidia. Talk about a tear that's had this year. Berkshire Hathaway, which, oh by the way, 40% of Berkshire Hathaway is apple by itself, and Berkshire Hathaway is considered not large growth yet again, even though they're pretty much Apple.

They're large blend, okay, meta platforms, okay, which is kind of crazy. That's considered large blend right now cuz meta is Facebook, so I'm gonna argue even still. Then you got Tesla large growth, then you have VI visa. Which is large growth. The United Health Group, which is probably the only one that's large blend.

And then the other one, the last one on this list that's worth 500 billion roughly is ExxonMobil. Okay. I mean, this is, this is just crazy. So you gotta be careful, you gotta be logical because a majority of the returns of the market are coming from those stocks. And when you look as of May 31st. Now keep in mind, June has been fantastic for these stocks.

As of April, uh, excuse me, as of May 31st, apple was up almost 40%. Microsoft up almost 40%. Google up almost 40% Amazon up. Over 40%. 44% roughly. Nvidia. Remember as of N M A up a hundred and almost 60% Berkshire Hathaway, 4%. Now, why do you say because they had large cast positions as well, folks. Meta platforms up 120%.

Tesla up 65%, which has had a hell of a June. That's not even including that. Visa up 7%. UnitedHealthcare down 7%, and Exxon Mobile. Down 5%. Like guys, be careful. So you hear this all the time, the majority of the returns come from. Just five companies. Five stocks. Why? Because it's market cap. Wait it? So you have to be careful.

By the way, folks, if you're just joining me, you're listening to Gabriel Shane, certified financial planner and your host, more knowledge, more wealth on every weekend, talking about all important topics of personal finance. Say we're just talking markets, why not? I talk tax often. I talk about ways to save you money.

I talk about situations with real estate, so much I talk to you about. But let's just focus on the stock market. I mean, we're in a bull market. It's up over 20% from its lows last October. Let's rock and roll baby. And what are you doing about it? You're still freaking out. You're still enjoying that 5% money market rate, that 4% money market rate.

I mean, you get what I'm saying? Make a move. Don't just sit there. It's 5% gonna do it for you. Well, hell, inflation was what? 10% year over year. Come on guys, make a decision. Be disciplined. Think long term. Don't think of what's going on now. Sure you're mad at politics. Great. Oh, you're mad that, uh, about Biden, what's happening in the White House?

Great. You're mad about Trump, uh, going to jail. That's great. I don't care. You're still gonna operate, you're still gonna wake up tomorrow. You're still gonna eat your food. You're still gonna go on the internet. You're still gonna get in your car. Come on. Like, who cares? Like, I, listen, I don't wanna be cavalier about the whole thing, but be positive.

Don't always think about the negative sides of things. You get what I'm saying? So when you look at the large cap market, you've got majority of the returns coming from growth. Be careful. And we are, you look at the largest along growth cycle in history, folks we're like, we're, we're like in it. Okay? I mean, the outperformance of growth has been, uh, overvalued.

Stocks have been substantial. Now, here's the thing, okay, here, here's the thing. Let me, let me, uh, wrote this down here. All right. So yes, we've witnessed like the longest growth cycle in history, okay. Lasting almost 10 years, lasting nine years. Previous cycles of such outperformance have led to value stocks outperforming over the following 10 years.

Now I know what you're thinking. You're thinking tech wreck right away you're thinking the.com bubble. Right, cuz it took 14 years for NASDAQ to get back to where they were. I get what you're saying and where your mind's at, but hold on a second. When you look November, 1939. Okay. The peak returns following that, the 10 years after November of 1939, value companies outperformed a 364%.

The following 10 years were growth only doubled. It was up a 99.6%. Okay. Up a hundred percent. Over 10 years, which is bad. It's a 7% return, but yet again, value, almost a 400% return. Let's continue. We're February of 2000. Yuck, right? It was just right. We're just entering into New Year. Everybody was worried about y2k, so January of 2000 was the first month and the new millennium, and then all of a sudden the peak returns of NASDAQ of growth companies is February of 2000.

10 years after that, which arguably is February of 2010, value companies have earned 20% while growth companies were down 17% over the following 10 years after its peak high. Let's go to August of 2020. Okay, now, Yet again, peak high during Covid, so on and so forth. Growth companies. Now, from what we're tracking today, from what we're tracking to the end of May, uh, or from August 20th to now, growth has done 15.9% and value has done 29.4% yet again from September 1st to May 31st.

Okay, so this is important just for y'all to know. You can't have it all, you, it's not everything is just easy peasy and it's just, you know, buy, uh, NASDAQ or buy whatever case is, and you think you'd be fine just buying into tech or buying into Apple, or buying into Google, or buying into Facebook. No, folks, these don't last forever.

What goes up must come down and being diversified is key because here's the thing, when we're in a rising bull market, sure almost everything does well. You know what does really well? Growth does really well, especially in a low interest rate environment, which, oh, by the way, we're not in anymore. So all I'm telling you is be diversified.

Folks, if you need help with this, if you wanna identify your portfolio, if you wanna take a look at what you're doing, folks, we're offering a free financial assessment where we can help relate to show to your specific situation, answer these questions, and seeing what you're doing. Folks, give us a call.

We'd love to help. Our phone number is (855) 963-2526. That's 8 5 5 96. Falcon like the bird. Give us a call. We'll be happy to help. We'll be right back after a few words. 📍 📍

Welcome back folks. This is Gabriel Sheen, certified financial planner and your host More Knowledge, more wealthy on every weekend, talking about all important topics of personal finance. The goal is to give you the knowledge you need to increase your wealth. Now today we're just talking about markets in general, and I we're just talking about globally diversified.

I talked about growth, I talked about value. I talked about. Consumer confidence and we're gonna talk a little bit more about international bonds and so on. So let's look at this. Okay. I wanted to just go over just international versus US equities. Okay. Because it's really seemed like US equities have done a great job, overperforming.

So I just wanted to focus on a couple notes I have and that is just talking about like the international outperformance is a trend that looks. Really to have staying power. And when you look at just in general, just international assets, just the tick up the cycle may be turning a little bit. And I like to just comment just really from the seventies, 71 to 78, where international stocks, that 150% return versus the US stock market, 43% return.

Um, and then I'd like to discuss, uh, now this was all falling. Right following things. So then you had 79 to 82, where then US stock has actually outperformed. It did 81% to 23% international, then 83 through 88, that's the big boom, and that's China and so on. 462% return to only 150% return for US stocks.

Keep in mind, that was only a five year period. Inflation was crazy at that time too, which yet again, is why it's a great time to invest with just inflation going up. Things of items in general just go up, which means higher profits to companies that, oh, by the way, you're investing in, let's look at 89 to 2001.

That was a big boom with the internet boom and the dotcom bubbles just before 1989. 2001 40, Sixmo, 46.8% international, 461.9% us. Now here it is, 2002, 2007. 123% returns for international, only 42% for us. Now, when you look at 2008 compared two th uh, to through 2001 great recession, uh, US stocks did really, really well.

333% to only 52% return. So it go, it keeps going back and forth, folks. Now here's the thing, when you just look here recently, all of 2022 to the end of May, US stock market down 4%, while the US stock market's down over 10%, 10.6 to be exact. Um, this is crucial cuz it kind of is painting a story poke and there is trends where one does better or another.

And you could actually see this with the resurgence, with the confidence of other countries. Somebody like France and their president saying that they don't want to depend on America. You look at what's going on in China right now, the strengths they're happening, they're getting involvement in the Middle East right now, trying to be a world power and settle that with Russia.

They're kind of teaming up with them. You have other global alliances coming folks. This is a cycle. America likes to be in charge. People trust America the most. We are losing a little bit of economic power right now, which is what you'll eventually start, see, uh, what will lead to slowing down in number one US economy.

And number two, the increase in international economies. I'm not telling you to go up there and buy a bunch of international I'm. This is a economic conversation for you to know. Here's the thing, you wanna know how to make mil, millions, billions, and trillions of dollars. Take the information I tell you and try to extrapolate that 10 years.

You get what I'm saying? It's hard to do. There's way too many variables. My comment to you is simple, and that is just got to take a look at what's going on and see what are you doing to hedge yourself? Is your portfolio globally diversified? Are you staying disciplined? Are you chasing the next return that's going up?

Actually, it's funny, I see some people buy, they bought Water Brothers cuz it was down a bunch and now they're even down even more down 15% in a day. Now they're down 65%. So the same thing people do with Disney. Like, guys relax. You can't always just think because you're gonna buy a big company after it dropped.

It's gonna make a bunch of money. Long term, it doesn't work that way. Just stay disciplined. Do you really need 20, 30% returns? Because that 20 to 30% returns that you're trying to chase by buying something that's down may affect you and your retirement, where you're not averaging the eight, 10, 12% return.

You're not averaging that because now you lost money on these other sides. So now you're only stuck with six, 7% returns, which I know are great. I'm just talking big picture, what the stock market does. You don't have to take on all this unnecessary risk. Now, here's an important one that I like to talk about, because right now the Feds recently just didn't raise rates.

Right? They met, they talked market, liked it the day after, not so much the day of, everything's fine and dandy. Now, here's the important part, okay? Typically, his historically speaking, since 1955, okay? When fed fund rates finally catch up to inflation, which, oh, by the way, it is, Okay. It happened in May. When that happens, historically speaking, core bonds, which means more intermediate term bond funds do better.

Okay, I, I actually have a specific note here to myself. Let's see, let's read it here. Amid talk a potential rate pause from the feds. We note that the Fed fund rate has finally caught up to current inflation. When this happens in the past, core bonds tend to benefit, and when you look at, when the Fed fund trails inflation, the core bonds typically do 3.2%.

Now, when it catches up, it historically does 7.5%. That's pretty substantial. Now is it at at 7.5% now? No. But then when you're buying it now you're able to catch up. You're able to get it at a discount, and so the total return is able to get that portfolio to return of the average of 7.5%, which is average returns since 1955.

All we're saying, and we have charts here that we're looking at, that is showing you from literally December of 1954 to March of 2023, you're able to see the benefits and value. And when it catches up and you could see it here, it's just a logical thing cuz now people are going more intermediate cause they're able to capture a good return and lock it in for longer periods of time.

By the way, folks, if you're just joining me, you're listening to 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. And today I just wanted to talk to you about just big picture, what's going on in the market.

We call it the Falcon Flyover at our company. And so, and I now, we've brought the radio station, we've brought in the actual, uh, station and the recording devices all in our headquarters here in Southern California. And we do have offices all. Cross the area, but you know, I reside in Southern California, so that's where we do it.

So I no longer have to drive to the radio station. So the idea here is to take a look at your situation and we're making it more convenient and we're able to have access to data much faster and much, uh, more accurate as well. But when you look at just the buying signs that are out there on the bond side, I know a lot of people are thinking you can get a savings account in the three percents.

You can get money markets and the four percents and some of us are kind of touching at 5%. You get a short term. Three month treasury over 5%, which is risk free rate of return. I get it. It's not much enticing to go into bonds right now after you can get those 5% returns, but. Only the third period in history when short term bonds have lost money over a two year period, only the third time that's happened.

The other two resulted in outside gains over money market funds. Now when you look, what does that mean? When you look after a two year loss period, which happened in 2022 and 2021, historically speaking. Okay. Historically speaking, the following two years where money market funds would average 3.9%, this is from 1974 to 1976, the short-term bonds were almost 14% returns.

That's 13.9% to money markets at 3.9. Let's fast forward to the great recession, 2008, 2010. Now, keep in mind, money rates got cut significantly, so money markets rates were only 0.1%. They were nothing. They were earning zero point nothing. And the short term bonds, were at 7.3%. When you look at the average periods of all these periods, that's happened to, it's a 2% return with a 9.5% return on the bond side.

Keep in mind it wasn't a big characteristic of, uh, a data that we have, but it's crucial. It's common sense. It makes a lot of sense on your guys' end when you start to see stability, when you start to see when things are going down, these are times to buy and the question you have to ask yourself in the bond world, are interest rates gonna continue to go up?

Our Fed said they're gonna stop q2, Q3 of this year. By the way, they just stopped in June. They did not raise it. Maybe one more quarter percent raises what I'm thinking. But here's the thing. If they're not gonna raise it, if our Fed says they're not gonna raise it, then what does that mean? There's only one room for it to go, and that is damn.

What happens to bonds when interest rates go down? Bonds go up. You get what I'm saying? This could make a lot of sense for you now to restructure your portfolio. Take a look at what you're doing, understanding the bonds and, uh, mutual funds that you're in currently with money market funds and starting to reallocate to get your portfolio.

Conservative, again, start to take maybe from short term even start looking at intermediate term. This would have even a bigger pop in times of rising interest rate, envi, or excuse me, lowered interest rate environments in the current high interest rate environment. So this is why you need to talk to a professional folks.

This is why it's so difficult to do it on your own. There's so many variables. They take into consideration, and this is why we're offering a free, free natural assessment where we're giving you one to two meetings, one to two hours of our time to really help relate this show to your very specific situation.

Folks, give us a call. We'd be happy to help. We got offices all over, uh, headquartered here in Southern California, but we've got offices from Illinois to Northern California, even in Washington. Folks. 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 sure. We can help put together an assessment for you to answer the questions that you may have. Sure. Today we're talking portfolio. You may have a question on taxes. You may have a question on real estate insurance, estate planning folks, you name it. Anything that involves a dollar sign we can help with, and that's the thing.

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Just be the good person we believe in. Good guys will fit and gals will finish First we just do. Why? Because we have proven, we just got Rising Star Award from RA Intel. It's our second time being nominated with them. Third nomination, uh, we've got the only company to be nominated for two separate things this past week, and we've got it through the Wealth Management magazine as well.

We got, uh, attending a 40 under 40 event where two of our advisors are going to in, um, Middle of, uh, late June. So we are just blessed that we're getting a lot of accolades and it's why, it's because, and we don't pay for these accolades. You don't, we we're not paying to say some, some of them out there, like the Forbes magazine, these Forbes ranking, they want money from you.

They want five to 6,000 to be published as a top advisor. That's garbage. Are you really a top advisor? You get what I'm saying? It's, it's just silly. So sure. There's nominations that happen and they rank 'em based on how. Much assets you have, how many clients you have, the growth that you have, the uh, 📍 the, the history and disclosures of errors and so on.

Obviously, that's. We're blessed. We don't have any, we, we've always been very clean, so give us a call. We'd be happy to help. Folks. Folks, that was a fast, fast show. I wanna thank you for tuning in with us. Feel free to reach out to myself or any one of my 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, and feel free to tune in every weekend as we go over all important topics of personal finance. You can go on our knowledge center online where you get the video cast of this, along with a bunch of YouTubes of great recommendations and strategies for you.

And feel free to send in a question at radio@falconwp.com. That's radio@falconwp.com. We'd be happy to answer it and read it on the air. Folks, have a fantastic weekend. Have a great week and God bless.