Welcome to the Payne Points of Wealth: The podcast that addresses all the pain points that come with creating your wealth, growing your wealth, and sustaining your wealth. Hosted by the Family Wealth Experts of Payne Capital Management, Bob, Ryan & Chris Payne. On a weekly basis, they deliver timely strategies and solutions for the pain points that come with building, preserving and managing your wealth.
Episodes
Wednesday Jul 07, 2021
Wednesday Jul 07, 2021
It's episode 43 of Payne Points of Wealth and the major indices continue to March higher. Everything is focused on the fed right now. Are they going to raise interest rates? Are they going to do it next year? The year after? Is the economy getting too hot? Is it going to slow down? Are we just going to get one big burst of demand from people with their stimulus checks before everything slows down and the market crashes? Well, that's what's on investor's minds today. We're going to address all those issues. We're going to give you our playbook this week for how you have to think about the markets and the economy. On the tipping point today, we're going to talk about all the biggest concerns our clients at Payne capital management have right now when it comes to their portfolio and financial plan so that you can address the same issues in yours.
You will want to hear this episode if you are interested in...
- The market is partying like it’s 1999 and the Fed is trying to take the punch bowl! [1:16]
- Let’s be real… what we know [3:25]
- Value stocks are where the money is right now [6:54]
- The Tipping Point [11:16]
- Should you be doing anything to lower your taxes? [16:40]
- Hidden Facts of Finance [21:26]
Who cares if the Fed raises interest rates in two years!
It doesn't matter what Jay Powell says or when they're going to raise interest rates, the market's going to determine it way before they do. And let's be real here, we have outrageously cheap money. We've got trillions of dollars that consumers are sitting on and we know consumers drive the US economy. It's all about spending money. We know wages are going up. We've got a labor shortage. We've been talking about this week after week. And at the end of the day, if you're an investor, it's all about earnings going up. And earnings continue to come in better and better. Companies are going to make a lot of money and prices are going up. What else do we need to know? It doesn't matter if the Fed's going to raise interest rates in two years. Who cares? It's not news.
This week on the tipping point: Pressing financial issues people are facing
One question we are getting from clients right now is, is my portfolio in a good position for inflation? What are we going to do if inflation goes to where it was back in the 1970s? It’s an issue that should be on everybody's mind. It’s been on Bob's mind since the day he started back in 1975. Inflation is real, even though it's hidden, it's insidious, it's hideous, but it's always there. It's constant. We're hearing all about what's going to happen with this coming inflation, but what about the inflation that's already here? We run financial plans for our clients every day and we do these wealth projections. We're showing that even at 2% inflation, the cost of living is going to double every 20 years and a lot of you aren't prepared for that.
The other question we're getting is, should we be doing anything to lower our taxes? How are we going to pay for all this stimulus and government spending? You don't need to be an economist to figure out that taxes are probably going up. Someone's going to pay for these trillions of dollars worth of infrastructure projects and all of the benefits that we've been giving out over the course of the last year. So the question is, how do you prepare for higher taxes? Give unto Caesar that of which is Caesar's, but don't give him any of yours. In other words, don't pay more taxes than you have to and there's a lot of things in your portfolio that you can do to reduce the amount of taxes you're paying. Things like owning exchange-traded funds or municipal bonds, for example. Check out the episode for more!
This week’s hidden facts of finance
In a recent research paper, under-performance at public retirement plans was mainly attributed to overpaying for alternative asset managers who could be replaced by cheap index funds, saving something like $70 billion a year. Here's a little hidden fact of finance... the markets are a zero-sum game so if somebody's winning, that means somebody's losing. Does it surprise you that public retirement plans are on the losing end? No shock here.
We all get offered all these alternative and brokerage products, hoping that we can gain the market. If I'm a $30 billion pension plan who has access to the best managers and they can't gain the market, what chance do you and I have? Low-cost indexes or the name of the game! I wish I could let every public retirement plan know my favorite Bob-ism and that's “Wall Street is full of ordinary people promising to give you extraordinary results.”
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
- Follow on Twitter
- Follow on Facebook
- Follow on LinkedIn
- Subscribe on YouTube
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Wednesday Jun 30, 2021
Wednesday Jun 30, 2021
It's episode 42 of Payne Points of Wealth and the Fed has come out and admitted that inflation might not be transitory. Just like we've been telling you week after week. They're looking to maybe raise interest rates sooner than expected. No kidding! However, in other news, the bond market interest rates actually went down. So what's the deal? Is inflation transitory? Is inflation here to stay? Are interest rates going higher, lower? We're going to break it down for you today on the show. On the tipping point, we're going to talk about pain points that you have when it comes to your finances. What's stopping you right now from getting on your path to financial independence. We're going to talk about the psychology of money and some of the things that you need to be dealing with when it comes to your finances to get over those mental hurdles.
You will want to hear this episode if you are interested in...
- Is this a breather for commodity prices and inflation or a new trend? [1:24]
- Thinking about the big picture [4:23]
- You heard it here first! [7:10]
- The Tipping Point [10:41]
- The fear of running out of money [11:14]
- Anxiety about taxes [15:03]
- Fearing an impending market crash [17:08]
- Hidden Facts of Finance [21:14]
A breather for commodity prices and inflation or a trend?
CPI, consumer price index, which is the measure of inflation was up 5% year over year in May. That's a huge number. We haven't seen inflation like that in literally decades. Prices are going up everywhere. As we were recording this oil was at $73 a barrel. Inflation's everywhere.
Meanwhile, lumber has dropped 45% since May. Copper futures are down now 12% from their record high and all of a sudden these commodity prices, which have been so strong are starting to weaken. So maybe it is transitory.
When it comes to markets, one of the dynamics that you have is that nothing goes in a straight line. Yes, commodity prices have come down but look at copper, for instance, it's still up 50% from a year ago, even though it's come down in the last couple of weeks. I mean, commodity prices are still way higher than they were. When you're thinking about your investment portfolio specifically, it's not about winning the battle. It's about winning the war. And the question is, is this just a breather for commodity prices and inflation? Or is this a new trend?
This week on the tipping point: Pain points holding you back from financial independence
Everyone has a specific pain point. Something that’s holding you back when it comes to getting to that place of financial independence. So in this episode, we talk about some of those bigger pain points that we experience and how to get over them so we can ditch the anxiety when it comes to our money.
In the episode, we talk about the pains of taxes and market crashes but one of the biggest fears clients seem to have is running out of money. Especially when they are in the transitional phase of having an income to tapping into their wealth in the distribution years. Healthy fear is a good motivator but going overboard can suck the fun out of your life in the here and now. Check out the episode for tips on managing this balance!
This week’s hidden facts of finance
Despite a jump in taxes during World War II, total disposable personal income in 1944 was double what it was in 1940. America's gross domestic product tripled from 1940 to 1950 in dollar terms. The economy just boomed after the war. Just because taxes are going up doesn't mean that the economy is going to suffer or your personal income is going to suffer? So don't be afraid of taxes. You have to make money for the taxman to take money!
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
- Follow on Twitter
- Follow on Facebook
- Follow on LinkedIn
- Subscribe on YouTube
- Follow on Instagram
Subscribe to Payne Points of Wealth
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Wednesday Jun 23, 2021
Wednesday Jun 23, 2021
What's up! It's episode 41 Payne Points of Wealth. As always, a lot is going on right now. We're starting to see inflationary pressures cool off a little bit. Tech stocks on the move again. Is it time to adjust your portfolio? Is inflation really transitory? The Paynes are going to break down the three major forces that are driving everything economically right now, everything in your portfolio that you need to know about. And on the tipping point today, we're going to talk about doing research. There's a lot of good ways and bad ways you can educate yourself with all the information out there. We're going to show you how to dissect the information, pick out good information versus bad financial information. So you can make some better decisions.
You will want to hear this episode if you are interested in...
- Force #1: Labor shortage & irreversible wage increases [1:28]
- Force #2: The weaker dollar [4:28]
- Force #3: Supply chain pressure [8:00]
- The Tipping Point [12:07]
- Bad information from talking heads on tv [12:36]
- The most dangerous thing to your personal and financial health [15:01]
- A good investment strategy allows you to ignore the noise [18:38]
- Hidden Facts of Finance [23:08]
- A thank you from the Paynes [26:01]
Labor inflation and weak dollars
Business owners are complaining about things becoming more expensive and that they can't get anybody to work. And that people that are coming to work are demanding higher pay. That's the big underpinning issue here when you talk about inflationary pressure. Lumber costs are coming down now, but they just tripled, it's not going to triple again. The longer-term stickler when it comes to inflation is labor costs. When you have to pay your employees more, you can't just say, you know what, I know I gave you a raise, but now I'm going to lower your income. It's very hard to reverse that trend.
The king dollar seems to have fallen off the throne. It's been going down now for almost 12 months. The dollar has been weak since last March when all the stimulus started. That's how it works, right? If the government keeps printing more money, it's called dilution. It's a simple concept where the more dollars you print, the less valuable they are. Last time I looked the government's looking to print another $6 trillion or so over the course of the next year. So that's very bad for the dollar.
The third leg of this stool is supply chain pressure. Check out the episode to hear more about that!
This week on the tipping point: Good and bad ways to educate yourself about finances
We all want to feel informed about our options when it comes to making decisions about our finances. So we thought we could discuss some of the good and bad ways we try to educate ourselves when it comes to our finances and the best way that we can inform ourselves to make sure we're always making the best decisions. Unfortunately, most of the bad financial information that our clients talk about comes from watching tv and the internet.
A good investment strategy— like the ones we build— is built so that you can ignore all the noise. You have to build a strategy that drowns out all the current opinions because good investing is not about what's happened currently. It's what's going to transpire over the next couple of decades.
This week’s hidden facts of finance
The total number of internet connections globally will increase from 0.76 billion today to 3.6 billion by 2025. Hyper-connectivity impacts other unstoppable trends, including the rise of Asia. Many millions of people in Asia will gain internet access for the first time transforming their consumer behavior. You've got one of the largest increasing populations in the world getting connected to the best shopping wall in the world. I think being an investment in emerging markets is going to help in the future here guys.
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
- Follow on Twitter
- Follow on Facebook
- Follow on LinkedIn
- Subscribe on YouTube
- Follow on Instagram
Subscribe to Payne Points of Wealth
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Wednesday Jun 02, 2021
Wednesday Jun 02, 2021
Welcome to episode 40 of Payne Points of Wealth! Major indices aren't going anywhere fast. If you look at the Dow and the S&P we're basically in the same place now as the last two months. The NASDAQ—big tech— has been in the same place since mid-January. When you start looking under the surface cryptocurrencies are getting rocked right now. That inflationary pressure we've been talking about, we're still seeing it in commodity prices. As we're recording this oil is going through the roof! This big rotation continues to happen. We're going to talk about strategically what you need to be doing and what to be thinking about with your portfolio. On the tipping point, we're going to talk about all those shiny objects in the financial world. The financial services industry loves to sell you things that you don't need. We're going to point them out and show you how to avoid all those shiny objects at all costs.
You will want to hear this episode if you are interested in...
- The greatest restructurer of all [1:50]
- Two common mistakes investors are making [5:41]
- Summer trends to consider [9:08]
- The Tipping Point [10:35]
- Cherry-picked past promising a perfect future [15:19]
- Hidden Facts of Finance [20:27]
You haven’t missed the boat yet!
A big trend to think about this summer is travel is definitely happening! Everyone I've talked to is going on a trip this summer. Either they're flying, going to be in their car, on their boats, everyone is moving around. Do you realize the amount of oil that's going to be used! And as we're recording this oil is at another recent high. All these trends are just going to continue to ramp up. Like they're not going to slow down. The most obvious thing happening in plain sight right now is the fact that all these cyclical stocks, these more boring companies that didn't do as well the last 10 years, are going to be up. This is going to last a long time so you've got to readjust your portfolio, you haven't missed the boat, yet.
This week on the tipping point: Shiny things to avoid
Given a collection of around 75 years of experience and a high volume of portfolio reviews each month we’ve seen every strategy under the sun! So let’s talk about these offers or what we call shiny objects that a lot of financial services firms like to pitch and sell you. Because we do the analysis and we break these products down all the time we see a lot of buyer beware products. A lot of things that Wall Street is trying to sell you right now shockingly are not in your best interest. In our industry price compression is making everything is less expensive. Less expensive to trade and less expensive to invest in portfolios. That helps us as consumers and investors, but it really hurts Wall Street. They have to keep coming up with these new ideas— FYI, there are never any new ideas, just old ideas repackaged— and it comes wrapped in this shiny brochure. If you get that shiny brochure and you read all the way through it, like a textbook, and you get to the fine print at the end and there's one caviar, one thing that happens and the entire product blows up, you can bet that one thing will happen. Your shiny product will blow up and you’ll be left with nothing but ashed in your account.
This week’s hidden facts of finance
Conventional thinking is usually wrong. Remember how millennials weren't going to buy homes? Well, now home sales are at their highest levels since the housing bust. Remember how today's consumers valued experiences over things? Well, spending on recreational vehicles and goods such as televisions and boats is up 14%. Remember last March at the bottom of the pandemic when everybody said the market's going to take years to recover, we should get out now because it's not going to get better for a long time. Well, guess what? That didn't happen either. Isn't it amazing when people think in groups how wrong they are? The other thing was millennials will never use financial advisors but I think the fastest-growing segment of our client base is millennials. So much for Robo-advisors!
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
- Follow on Twitter
- Follow on Facebook
- Follow on LinkedIn
- Subscribe on YouTube
- Follow on Instagram
Subscribe to Payne Points of Wealth
On Apple Podcasts, On Google Podcasts, On Spotify
Wednesday May 26, 2021
Wednesday May 26, 2021
HELLO Americans! It's episode 39 of Payne Points of Wealth and crypto is getting crushed! There's so much going on right now. Looks like we’re going to have a bonafide labor shortage going into the end of the year. We’ll hit on that great rotation we're talking about a week after week. Tech is bleeding money. We're seeing all those work from home stocks get destroyed. But commodity prices are going up. How do you make sense of any of this?
We're going to give you our playbook today and we'll discuss exactly how we see the next couple of months playing out. On the tipping point, we're going to talk about the right questions you need to be asking to make sure you're going to be on your way to financial independence. What are those questions you should be asking versus the questions you shouldn't be asking? Well, we're going to give you our playbook for that too.
You will want to hear this episode if you are interested in...
- Is crypto collapsing? [1:16]
- The masks are OFF! [3:01]
- Normalcy on steroids! [5:05]
- Shortages of labor and supplies [6:43]
- The Tipping Point [10:19]
- Question #1 [10:53]
- Question #2 [14:06]
- Question #3 [15:49]
- Hidden Facts of Finance [20:21]
And the masks are off...FINALLY!
As we're recording this, roughly a week ago, the CDC came out and said if you're vaccinated you don't have to wear a mask indoors or outdoors. It's crazy because Chris was in New York a week ago, it was cloudy and rainy, you know that April/May weather. Everyone's wearing a mask and people looked dour and sad. Then literally within two days the sun was shining and the CDC came out with the big announcement and it was almost like “Pandemic? What pandemic?” It was a complete 180° and it’s wonderful to see!
This week on the tipping point: Asking the right questions
Often one of the biggest mistakes people make is not asking the right questions when it comes to financial planning and trying to get on that path to financial independence. We thought we'd throw out some of the questions people ask and then reposition those questions so you're asking the right question.
The most asked question is “How much money do I need to save in order to be financially independent?” A better question is “How much income will I need and how much will my savings give me?” In other words, how much income from the investments that your portfolio generates each year is going to help you sustain your lifestyle?
Then we get “Should I get long-term care or just roll the dice?” The better question would be “What are all my options for covering long-term care expenses?” You know, there's not just one answer, or solution, to this complicated question.
Another is “How can I get the highest possible return on my money?” It's not about the return on your money as much as the return of your money. So the real question is “How do I make sure my money gets returned to me?”
Things are changing. You've got to ask the right questions. Now, more than ever, if you want to be financially independent you've got to start being proactive. Start making proactive decisions about your portfolio, reverse engineer to figure out what your goals are, then go back to the drawing board and building that perfect portfolio. That's going to get you to those goals. If you want to hear our answers to these questions check out the episode!
This week’s hidden facts of finance
Small businesses were hit hardest by the pandemic and are actually responsible for half of all US employment. So small businesses, like ours, employ half of Americans. Of course, this explains why we had the unemployment number go through the roof back in February-March because all of these businesses couldn't stay open. You had a pandemic, no fault of their own they lost everything. It was the saddest part of the pandemic besides losing lives of course. But here's the greatest thing about the US economy, our world works on one premise, find a need and fill it. There are going to be enormous needs and all these companies that are gone are going to be replaced by new companies. Because we are the greatest country in the world, the best in entrepreneurs and they're going to find those needs and they're going to fill them. Then unemployment's going to drop like a stone!
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
- Follow on Twitter
- Follow on Facebook
- Follow on LinkedIn
- Subscribe on YouTube
- Follow on Instagram
Subscribe to Payne Points of Wealth
On Apple Podcasts, On Google Podcasts, On Spotify
Wednesday May 19, 2021
Wednesday May 19, 2021
What's up! It's episode 38 of Payne Points of Wealth and inflation is officially here! Not that you didn't know (and feel) that already but last week the official numbers came in and they were way higher than expected. Surprising the markets, surprising economists, but not surprising you and me. We knew the cost of everything was already going up. We know inflation is real. We know rotations going on. Companies can't hire fast enough. We've got a labor shortage. It's getting crazy out there!
On our tipping point segment today we are talking about what's going on with your retirement date, your date of financial independence. Are you planning for it? How do you plan for it? How do you get to a position where you have the freedom to do everything you want to do because you saved enough. You made that big pile of cash. You've invested it right. You grew it and now you have that date where you can live life the way you want to. We're going to tell you how. Check it out.
You will want to hear this episode if you are interested in...
- Competing with unemployment [2:11]
- The oscillation between fear and greed [7:16]
- Ending trends [8:37]
- The Tipping Point [10:47]
- Playing “what if” with your financial independence date [14:07]
- Hidden Facts of Finance [18:15]
Are labor shortages and wage inflation what’s coming next?
We all know raw material costs are going up, that's been very obvious. We've talked about it week after week and now it’s showing up in the numbers. What's interesting is that there were very weak job numbers. Everyone thought they were going to create another million jobs last month but it was only around 266,000. Way less! Part of the problem is that people are getting so much more money in their unemployment stimulus checks at home that they don't want to go back to work. This puts pressure on companies to give bonuses. Like $50 just to show up to a fast-food interview or an $800 starting bonus from a convenience store because they need people that desperately. This is likely going to lead to wage inflation. What's crazy is that right now for a company to compete with unemployment, they'd have to exceed a $32,000 a year paycheck.
This week on the tipping point: Your date for financial independence
One of the biggest problems we work to solve for the 2000 or so families we advise at Payne Capital Management is the date when it will be safe to be financially independent. Which in a way is all of our dreams, right? We use money so that we can have freedom down the line. That's just a great term. Financial independence.
Sometimes people love what they do and they have worked hard to get where they are and to them, retirement just isn't’ something they ever want to do. So, why would you plan for retirement if you don’t have plans to actually retire? This is why we talk about financial independence. That point when you only work because you want to not because you have to. There is freedom in knowing that come injury, illness, or pandemic shutdown you will be ok, financially. You won’t be relying on a stimmy check to pay the bills. We help people find their way to this magic date. We advise them on how to get there. We talk about it in the episode so go check it out!
This week’s hidden facts of finance
Earlier this year on this podcast, we discussed how we were moving back from the virtual world to the real world. We discussed companies like Peloton, the proverbial work from home stock, since that time has lost 53% of its value and could continue to go lower. We're wondering if we could start up a service where we get companies to pay us not to mention how overvalued their stocks are so they can save the value of the company. What do you think guys?
The US's physical infrastructure is ranked only 16th globally by the world economic forum. The proposed spending plan, which would be implemented over eight years would return government investment in the real economy to its highest level since the 1960s. That's great news because here in Philly we have potholes the size of Volkswagens! So a $3 trillion investment in our infrastructure will certainly make driving more pleasurable here in Philly.
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
- Follow on Twitter
- Follow on Facebook
- Follow on LinkedIn
- Subscribe on YouTube
- Follow on Instagram
Subscribe to Payne Points of Wealth
On Apple Podcasts, On Google Podcasts, On Spotify
Wednesday May 12, 2021
Wednesday May 12, 2021
What's up!! It's episode 37 of Payne Points of Wealth and earning season is upon us. Companies are blowing the doors off earnings. Tech stocks have put mind-blowing numbers up there on the earnings board. Yet tech stocks are doing nada! Meanwhile, commodity prices are going up. Real estate investment trusts are going up. Value stocks are going up. There's a lot going on in the market.
How do you play it? Is tech finally dead? Should you get out or move your money around? We're going to break it down for you today. And on our Tipping Point segment, we're going to talk about consolidation. Is your money everywhere? Is it a mess? Do you have a plan? We're going to show talk about what you should be doing to organize and get on track for financial independence.
You will want to hear this episode if you are interested in...
- This could be the greatest recovery in the history of the country [1:17]
- Tech earnings are up but the stocks aren’t doing jack! [2:38]
- Pipelines and their commodities [4:35]
- Factoring in how high inflation can go [7:39]
- The Tipping Point [11:21]
- How consolidating to one advisor can save you big! [14:44]
- Hidden Facts of Finance [19:49]
Positive surprises from boring companies
When it comes to markets it's about what are the surprises in the positive? Big tech blowing up their earnings is not a surprise. We're buying more stuff online. We're advertising on Facebook. Duh! The one thing that no one's factoring in is how high inflation can go. Each week that we have an unexpected surprise and inflation goes up it positively affects the bottom line of a lot of companies we're talking about like Procter & Gamble, Caterpillar, and Bank of America. These boring old companies that no one wanted to own for the last decade.
This week on the tipping point: Consolidating your financial life.
If you think your advisor's working for free, you're paying more than anybody in the industry. They hide these charges but they are there! One thing that we despise more than anything is being overcharged and if you're overcharging yourself, well... shame on you.
Here’s the thing, if you give one advisor $500k and you give another advisor $200k and yet another $300k then each of these firms is treating you like a small account. But if you consolidate it you're entitled to a discount on all the money together. Other problems with spreading it out is that you end up having overlap in your portfolio and paying high fees on all your accounts because you're a little investor at each firm.
Recently we had a client that had millions of dollars and they were being overcharged so much that we figured we could save them 2% a year in fees, that was $80k a year in fees they could drop! Can you imagine what they were losing on the returns that $80k invested over time would have profited them? It doesn’t pay to “diversify” like this!
This week’s hidden facts of finance
The Census Bureau recently put out its first raw numbers and found that the U.S. population grew at its slowest rates since the great depression and that did not include the death toll from the pandemic.
According to Warren Buffet, there were about 2000 companies that entered the auto business in the 1900s because investors and entrepreneurs expected the industry to have an amazing future. Like electric vehicles today. However, in 2009 there were only three carmakers left and two went bankrupt.
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
- Follow on Twitter
- Follow on Facebook
- Follow on LinkedIn
- Subscribe on YouTube
- Follow on Instagram
Subscribe to Payne Points of Wealth
On Apple Podcasts, On Google Podcasts, On Spotify
Wednesday May 05, 2021
Wednesday May 05, 2021
Hey, what's up! It's episode 36 of Payne Points of Wealth. We've got a special guest for you today, Kenny Polcari. He's Managing Partner at Kace Capital Advisors, Chief Market Strategist at Slatestone Wealth, and Managing Director at Campfire Capital. Most importantly, he was one of the most famous stock exchange traders going back to the ‘80s and no one gives you a better tour of the New York Stock Exchange than Kenny! We're going to talk with him about what's going on with inflation, the economy, and investing. On the tipping point, we're going to talk about bonds. Bonds are going down. Do you own bond funds? We're going to let some sunlight in and tell you exactly what you should be doing with bonds.
You will want to hear this episode if you are interested in...
- Is there more inflation coming than our Federal Reserve Chief is telling us? [1:40]
- Housing prices & interest rates [3:41]
- Ken’s thoughts on crypto [7:23]
- Why would we listen to a strategist? [12:26]
- The Tipping Point [15:32]
- How bonds work [17:18]
- The difference between an individual bond and a bond fund [18:19]
- Hidden Facts of Finance [22:16]
Kenny Polcari’s thoughts on inflation
Kenny and Ryan seem to agree that there's a lot more inflation coming our way than our Federal Reserve Chief is telling us.
Here are Kenny's thoughts on inflation right now "I've been saying it for a while and I've been writing about it my note and we've been talking about it on television, but you can feel it, right? If you live in this world, if you go out shopping, out to the stores, you can feel the price increases. You can see it. And so therefore I don't need the CPI or some government report telling me that there's no inflation when I go out there and I feel that there's plenty of inflation all around, right? I mean, everybody sees it. Everybody's talking about it but the government doesn't want to admit that we've got it. And so my sense is that it's building and it's building. And it's going to rear its ugly head. It's not going to be temporary and transitory the way that the fed keeps telling us it's going to be. I think we're going to see this spike in the next month or the month after. But then it's going to remain and that's going to change the whole story, the whole fed story, the CPI story, the inflation story, how hot is hot? Define hot? You and I can define it one way. The fed is going to define it a different way to fit their story, to fit their narrative. And that's going to be the part where I think the market's going to have a difficult time and investors are going to have to figure out what's the definition of hot to them. And then what's that mean to valuations?"
This week on the tipping point: Bond Funds
When you own bonds outright it's simple, you know who you're lending to, you know what they're going to pay you in interest to borrow your money, and you know the set date in the future that they're going to return your money. But when Wall Street packages these bonds into a bond fund it takes away the permanence and definition and that's the big problem with owning a bond fund. Not only does the permanency and definition go away but there's also the question of quality. A prime example is back in 2015, there were a lot of municipal bond funds that were being AAA-rated, meaning they're the highest possible credit rating, that still held Puerto Rican bonds and Puerto Rico defaulted on their debt, which means that the holders of those bonds lost their money. Bonds are good, bond funds...not so much.
This week’s hidden facts of finance
Exchange-traded funds took in a record $502 billion in investor cash last year. Traditional mutual funds on the other hand said goodbye to a record $289 billion. Exchange-traded funds are typically less expensive and more tax-efficient and as we say here at Payne Capital Management, any money saved in taxes and fees is just as green as money made in the market. Exchange-traded funds are new school and mutual funds are old school, you heard it here first.
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Connect with Kenny Polcari
Kenny Polcari
Financial Services Executive | Business Commentator | Speaker | Industry Advocate
As the founder and Managing Partner at Kace Capital Advisors and a CNBC Market Analyst - I have dedicated my career to helping my clients and their families achieve their financial goals in life. As Chief Market Strategist at Slatestone Wealth I have a range of investment strategy responsibilities including U.S. market and economic analysis and client engagement. I am also a contributor to TDAmeritrade Internal Network and a keynote speaker at many industry and retail events.
A 38 year member of the New York Stock Exchange (NYSE) I bring over 30 years of executive management experience in institutional equities and wealth management, and twenty-five years of stewardship in industry advocacy.
I am on the board of the National Organization of Investment Professionals (NOIP), and the Headstrong Project, a nonprofit providing free treatment to 9/11 combat veterans suffering from PTS.
Regularly quoted in The Wall Street Journal, Kiplingers, MarketWatch, Thompson Reuters, TheStreet.com and others.
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Wednesday Apr 28, 2021
Wednesday Apr 28, 2021
It's episode 35 of Payne Points of Wealth and we're going to talk about everything going on around the globe. People are spending, Americans love to spend, but so does the rest of the world. We're seeing people spending money everywhere. Inflation continues to kick in just like we told you. We're looking at economic growth at the end of the year that's going to blow your mind. So how do you play it? How do you position your portfolio? You've got Coinbase going public. Crypto is going crazy and so is the world! We're going to give you some common sense advice today. On the Tipping Point, we're going to talk about procrastination. How do you procrastinate when it comes to your finances? Well, we're going to call you out on it. We're going to tell you how to get on top of those finances, get yourself financially independent, and get on the right track! Join us!
You will want to hear this episode if you are interested in...
- Spending like drunken sailors with Louis Vuitton bags! [1:25]
- Insane increases in real estate and lumber [4:21]
- Stocks own real assets [6:19]
- The Tipping Point [10:20]
- Procrastinating because it’s stressful and overwhelming [13:23]
- Taking the first steps [16:35]
- Hidden Facts of Finance [18:44]
Equities and commodities as inflation hedges
The idea is to have stocks that own real assets, right? So as the value of those underlying real assets go up in value, the stock goes up in value, business is booming. As they do more business, their earnings go up. As they make more money, they pay more dividends. That’s what a terrific hedge against inflation looks like.
Equities are the core holding as an inflation hedge, but then there are also commodities. We don't see anyone owning commodities right now, except for our clients. Also, look at real estate. Real estate is going up. You want to have real estate as a hedge in your portfolio. You don't want to have bond funds, but what I see people owning right now are long-dated bond funds—which are down 13-14% this year— and gold which is down 10%. What a horrible combination. The bottom line here is you want to own what we call productive assets.
This week on the tipping point: Overcoming procrastination
The first step is just telling us the assets that you have. The reason we have a job is that most people don't want to do this by themselves. Then starting to look at what you spent. Then when you're armed with that data, the sky's the limit! Then we can play.
What if you can start looking at what-ifs. What if I retired a little bit early? What if I worked longer? What if I saved a little bit more? What impact does it have? And that's the fun part. There is a fun part to financial planning. That's the part where you get to play and dream. What if you get to dream a little bit and start looking at where you can be if you make some tweaks and adjustments to your portfolio and into your time horizons? That's the good stuff. That's the part that's fun for us too.
This week’s hidden facts of finance
If you invested $1000 into the following investments on January 1st of this year, you'd have this much as of April 16th... Tesla, your thousand dollars would have turned into $1,012. GameStop, you'd have $9000. Bitcoin, your thousand would have turned into 2000. And if you'd had $1000 Dogecoin it would be worth $55,000! Man, we missed that investment. The one message you have when you have this type of return in three months is that it can go down just as fast as it went up. Most likely faster.
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Wednesday Apr 21, 2021
Wednesday Apr 21, 2021
Welcome to episode 34 of Payne Points of Wealth. We're going to talk about the roaring ‘20s today! There is so much going on. The economy's revving up and earnings are going to heat up as we begin earning season. Wondering what you need to do with your portfolio? Taxes are probably going up and we're going to give you strategies. On the tipping point, we're going to talk about the fine print. The financial industry always has caveats with what they're trying to sell you. We're going to give you the buyer beware and show you exactly what to look for. We've got lots of fun, fascinating facts of finance today too. It’s gonna be another great show, don’t miss it!
You will want to hear this episode if you are interested in...
- The roaring ’20s are back! [1:09]
- The most dangerous words in investing [4:01]
- One theme over the last year [7:04]
- The Tipping Point [8:21]
- The annuity [8:50]
- The mutual fund [10:25]
- The real estate investment trust [12:33]
- Hidden Facts of Finance [16:42]
It’s different this time...?
If you weren't in the industry back in the ‘70s, then you haven't seen a bear market in bonds. That has consequences for investors because all these newbie advisors haven't seen what happens. They haven't seen the devastation caused when interest rates go up in those dreaded weapons of mass financial destruction, some people call bond funds.
One thing we've been putting out week after week is that inflation just keeps creeping in and one of the gauges that we love is the producer's price index. What the heck is that? Simply put it's what it costs companies to produce goods and that's going up... a lot. Companies are going to pass those costs on to us, the consumer, which causes inflation. That's what rising prices are all about.
The four most dangerous words in investing are "it's different this time".
Well, guess what? It is different this time! The GDP is going through the roof. It's the strongest US global economic recovery in almost 50 years. It's even longer than Bob’s been in the business. This recovery is going to be the best ever. We're seeing economic growth around the globe, unlike anything anybody who's listening to this right now, has seen since they've been investing.
This week on the tipping point: Financial products aren’t bought, they’re sold
When a financial product is sold it's like eating Chinese food. It tastes so good going down, but you feel so empty later. One big culprit is the annuity industry. You’ll never hear of anyone who went online and bought an annuity. It's always been sold to them and the person selling it doesn't do it for nothing. The commissions are astronomical on a lot of these products.
Then you have another group of investments called mutual funds. They're not necessarily good or bad. It all comes down to whether or not they're appropriate. What could go wrong with a mutual fund? Well, one example, is if you have a manager of that fund that's trying to outperform their underlying index a lot of times they'll take a lot more risks than they need. Then end up getting less returns because they're trying to time the market as well as charging higher fees.
Lastly, we have non-traded REITs. Every time we see a non-traded REIT and ask the investor if they went out and found this to buy it the answer is always "Oh no, the guy who sold it to me told me said it was good." REIT stands for Real Estate Investment Trust. The crazy thing about these is they're sold because people feel like they're getting a "private real estate deal". On the flip side, you can buy a portfolio of REITs in an exchange-traded fund, which is 100% liquid meaning you can buy and sell it all day long. We’ve found that it's usually better than these private REITs where you can never get out of them.
This week’s hidden facts of finance
Warren Buffett's Berkshire Hathaway bought Coca-Cola stock in the late ’80s and the early ’90s. Today, those shares are projected to generate $672 million a year in annual dividend income. That is a 51% annual yield based on the original $1.3 billion it cost to buy the stock. On top of it all, today the stock is worth $21 billion in their portfolio. Goes to show that time passes and markets operate! Who wouldn't want a 51% yield? But to get it you have to be patient, be an investor, and own great companies that don't just pay a dividend, but also increase that dividend every year like Coke has for the last 60 years.
Resources & People Mentioned
See if you qualify for a complimentary financial review from the Paynes
Connect With Ryan, Bob, and Chris
- http://PayneCM.com
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