Luck, Strategy, Or A Little Bit Of Both, Ep #99

What's up? It's episode 99 of Payne Points of Wealth and there is no good news. Inflation is not coming down as quickly as expected. The FED continues to talk tough and interest rates are skyrocketing. There is a threat of nuclear war in Eastern Europe. As usual, we're going to break it down for you today and talk about our views on where everything is going. Are we going to have this huge recession that we're hearing about week after week? On the Tipping Point today we're going to talk about roulette, chess, and poker and what they have to do with your financial life. Go have a listen!

You will want to hear this episode if you are interested in...

• If it weren’t for mistakes the FED wouldn’t make any decisions [1:03]
• Only things going up are yields and inflation [3:51]
• Having a Revenge of the Nerds portfolio [6:55]
• The Tipping Point [10:40]
• To pay taxes or not to pay? [13:55]
• Playing stock picking roulette [17:27]
• Hidden Facts of Finance [20:58]

Finally seeing real, positive, yields!

The only thing going up this year has been inflation and short-term money market yields. As financial advisors and planners, we're in a position where we have portfolios that we can actually sink our teeth into. 

You have forward earnings at about 16 times, which means stocks are valued where they are in the average PE ratio. You have bond yields that are significant, where there’s a decent return in our intermediate bond portfolio and there's great opportunity. We were more concerned in January when we saw interest rates at zero than we are today. Now we know we can generate the income, generate the total return, that we need to help all of our clients overcome unexpected inflation and taxes to achieve their financial goals.

We don't wanna have a portfolio that's cool. We want to have a portfolio that's like the revenge of the nerds, and that is the kind of market we have now! Yes, having bonds that come due, how boring. I love it! Having dividend stocks that increase their dividend every year. How boring. I love it! That's where we have to be. The key is you have to take action. If you have losses, do some tax swaps because you want to put money in the loss bank. We are taught as children to put money in the piggy bank, put some money in the loss bank, there will be gains in the future.

This week on the tipping point: Chess, poker, or roulette?

Today we compare some different strategies that we see deployed in the financial world to chess, poker, and roulette. Rollette is basically luck and how the dice roll. If it's chess, it's a real strategy. And poker we'd say is both a little bit of luck and a little bit of strategy. 

The first strategy that we see deployed a lot in our industry is market timing. Another strategy that we see is deciding how much money to convert from an IRA to a Roth IRA where the money is tax-free for the rest of your life. The other one that comes up, especially when we're doing our annual reviews, is deciding on when to retire. What's the date in the future that you're going to definitively say, okay, I'm done, I'm going to live off my portfolio. The last strategy we compare is going to be picking stocks. Which of these strategies is comparable to which game? Check out the episode to find out!

This week’s hidden facts of finance

• At some point in late 2022, the 8 billionth human being will enter the world ushering in a new milestone for humanity. In just 48 years, the world population has doubled in size, jumping from 4 to 8 billion people.
• 12% of bosses surveyed by Microsoft say workers are just as productive working remotely compared to 87% of workers who argue they are more productive. Sounds like bosses want you back in the office.
• The original handwritten lyrics for David Bowie's Starman have been sold to an unidentified Aussie bidder at auction for $224,000. That's a lot of money for a bunch of lyrics written on a piece of paper. 

Resources & People Mentioned

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